CMS Energy Q4 2025 CMS Energy Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 CMS Energy Corp Earnings Call
Speaker #1: Cost available in CMS ENERGY's website in the investor relations section. This call is being recorded. After the presentation, we will conduct some question-and-answer sessions, and instructions will be provided at that time.
Speaker #1: any time during the conference you need to reach an operator, please press star followed by zero. And just a reminder, there will be a rebroadcast of this conference call today beginning at 12:00 PM Eastern Time running through February If at 12th.
Speaker #1: This presentation is also being webcast and is available on CMS ENERGY's website in the investor relations section. At this time, I would like to turn the call over to Mr. Jason Shore, Treasurer and Vice President of Investor
Speaker #2: Thank
Speaker #2: you, Adam. Good morning, everyone. And thank you for joining us Relations. today. With me are Garrick Rochow, President and Chief Executive Officer and Rejji Hayes, Executive Vice President and Chief Financial Officer.
Speaker #2: This presentation contains forward-looking statements, which are subject to risks and uncertainties. Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actual results to defer materially.
Speaker #2: This presentation also includes non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted on our website.
Speaker #2: And now I'll turn the call over to Garrick.
Speaker #3: Thank you, Jason. And good morning, everyone. Before we get into the financial results, I'm very proud of the team in 2025. As you see highlight a few of the big wins the from the slide, and I want to CMS ENERGY team delivered in 2025.
Speaker #3: First, I'm very pleased with our large load tariff, which was approved in November. Supply and energy for data centers is a national story, and the rush to serve is on the mind of utility leaders.
Speaker #3: And I'm very proud of the tariff the team worked so hard on this year because it's strategic and thoughtful. It protects our customers and supports growth in the state.
Speaker #3: This tariff provides certainty for our load onto the system and ensures existing customers don't pay a investments. And in some cases, they will see tangible benefits as this new load supports more affordable rates as we grow Michigan.
Speaker #3: Next, we received approval for our 20-year renewable energy plan. Another area the team worked hard on to put the right plan together that meets the requirements in our state's energy law.
Speaker #3: More importantly, this approval highlights the constructive regulatory environment in Michigan and provides visibility and certainty for our long-term investments in solar and wind. Providing roughly $14 billion of customer investment opportunity over the next decade.
Speaker #3: On this last one, we have a saying around here. Victory loves preparation. And I want to talk about our gas business. It's been a cold start to the winter, and as always, we have been prepared to serve our customers.
Speaker #3: That doesn't happen by luck, or accident. That is a deliberate commitment of our team who work every day to buy gas at the lowest price, store it, and some of the largest storage fields in the nation and deliver it safely and reliably to our customers.
Speaker #3: We're reducing the price of gas when it is needed most by our customers. This is affordability in action. This reflects our ongoing work to replace this important storage and delivery of infrastructure.
Speaker #3: Investing over $1 billion in the year so we are there when our customers expect us. At CMS ENERGY, we wake up every day committed to serve and deliver value for all our stakeholders, and 2025 marks our 23rd year performance.
Speaker #3: As we prepare for these calls, we do a lot of work on slides. And we all have our favorites. In this next one, it's mine.
Speaker #3: team's commitment to excellence and It highlights the what we are able to achieve and it shows results. Proof points of the great regulatory construct in Michigan.
Speaker #3: I know you hear from Rejji and me all the time when we're on the road. Our long history of constructive outcomes, multiple years, multiple cases, and then add the unique reduction and on PPAs.
Speaker #3: mechanisms like incentives on energy waste All of which is built into the energy law. It's an outstanding construct. And more importantly, we have been successful getting top-tier outcomes to support our long track record of performance.
Speaker #3: And this year, it rate orders, electric and gas, both was no different. Two approved with constructive outcomes, delivering big wins for our customers. Supporting critically important work to improve electric reliability and ensure gas safety across our system.
Speaker #3: Our 20-year renewable energy plan, approved over $14 billion of customer investment opportunity to achieve the state's energy law by 2040. Visibility and certainty for the recovery of our investments.
Speaker #3: We also delivered on the first-ever storm deferral mechanism, approved in June. Our large load tariff was approved in November, priming the pump for growth.
Speaker #3: Like I said, my favorite slide. These important outcomes provide visibility and certainty for necessary customer investments in our electric and gas systems. And this track record of constructive outcomes continues to highlight what the CMS ENERGY team is able to achieve.
Speaker #3: And further reaffirms Michigan's top-tier regulatory environment. When I look forward, I have confidence in our ongoing electric rate case. Given the reactions to our recent proposal for decision, I would remind the investment community that this is simply a step in the process and it is not reflective or consistent with our strong track record of performance.
Speaker #3: The MPSE staff, professionals, have spent significant time with the testimony and merits of this case. Staff position is constructive, and I would argue much closer to the expected rate case outcome.
Speaker #3: I would also note that the commissioner's previous public comments from the bench support the need for an improved electric grid and constructive ROEs. This case is built on the fundamentals of a reliability roadmap, the MPSE Commission Liberty Distribution Audit, and the necessary customer investments to support electric reliability, while maintaining affordability.
Speaker #3: I expect the constructive outcome for our customers and investors I also expect the ROE to be 9.9% or better. In our recently filed gas rate case, I am confident in the investments to ensure the gas system is safe, reliable, and clean.
Speaker #3: And the value to customers of our proposed full gas decoupling. As I shared a moment ago, our gas price is on the decline. And our residential the national average, striking the right balance between investment in the system and affordability for our customers.
Speaker #3: Now, onto the financials. For 2025, we exceeded our adjusted earnings per share guidance and delivered $3.61 per share. This is up over 8% from 2024's actual result.
Speaker #3: And delivers that compounding of earnings you have come to expect from CMS ENERGY. Throughout 2025, we continue to see strong performance at the utility.
Speaker #3: Largely driven by constructive regulatory outcomes and robust performance at Northstar, driving full-year results. This performance allowed us the opportunity to exceed or beat guidance at year-end, deliver better service for our customers, and de-risk the business for the coming year.
Speaker #3: For 2026, we are raising our annual guidance by $0.03, to $3.83, to $3.90. Which represents 6 to 8% growth off of 2025 actual results.
Speaker #3: And we continue to guide toward the high end. Our practice of rebasing higher off-of-actuals is a differentiator in this sector and provides a higher quality of earnings for our investors.
Speaker #3: And we deliver year-end and year-out easy, straightforward math, compounding growth, and bringing greater value. How we've done it for years. We are also reaffirming our long-term guidance range of 6 to 8% toward the high end.
Speaker #3: And as part of our total shareholder return, we'll continue to grow the dividend as we have for over 20 years. Targeting a dividend payout ratio of approximately 55% over time.
Speaker #3: Finally, remain confident in our ability to manage the business and execute year-end and year-out, regardless of circumstances. 23 years now. A consistent industry-leading performance.
Speaker #3: On slide six, we've highlighted our five-year, 24 billion utility customer investment plan, up $4 billion from our prior plan. These investments are necessary to deliver better customer service through improved reliability.
Speaker #3: Both in distribution and supply. I want to take a moment to connect the dots. Why I'm excited and confident in our ability to execute on this plan.
Speaker #3: First, we've increased our electric generation investment by approximately 2.5 billion over the previous plan. Most of this customer investment is already approved in the renewable energy plan, with the visibility and certainty I mentioned earlier.
Speaker #3: Another customer investment that I communicated on previous calls is the addition of natural gas generation and battery storage. Our integrated resource plan that will file in mid-2026 will detail additional capacity needed to replace retired plants and support existing and future growth.
Speaker #3: This customer investment opportunity is not contingent on new data centers, but growth already or soon-to-be connected to our system. And no, we are well on our way in planning and preparation to deliver this capacity in this five-year window.
Speaker #3: Second, we continue to roll more of our electric reliability roadmap into our five-year plan to strengthen our electric distribution system which is—excuse me—which has increased by approximately 1.2 billion over the previous plan.
Speaker #3: This work and these investments are well aligned with the Michigan Public Service Commission and the results of the Liberty Distribution Audit. We've also seen constructive support of our investment recovery mechanism in the rate case our gas investments also increased in this plan.
Speaker #3: And the amount of approximately $400 million. This aligns with our 10-year natural gas delivery plan and is a result of greater demand across the gas transmission system, for power generation, and industrial growth.
Speaker #3: So when I step back and objectively look at our five-year customer investment plan, there is visibility and certainty around the investments. We have an efficient workforce to get the work done.
Speaker #3: The work provides significant value to our customers and I have confidence we can do it affordably. This plan supports 10.5% rate-based growth through 2030.
Speaker #3: In addition to our robust customer investment plan, we have meaningful growth drivers outside traditional rate-based, which are unique to Michigan and CMS ENERGY and are sometimes overlooked.
Speaker #3: The financial compensation mechanism, which allows us to earn on PPAs, grows over the five-year period, offering nearly $50 million of incentives by the end of the decade.
Speaker #3: And there's approximately $65 million per year of incentives through our energy-efficiency programs enhanced by the 2023 energy law. We also expect incremental earnings from our non-utility business, Northstar Clean Energy, as we continue to see attractive pricing from capacity and energy sold at Dearborn Industrial Generation.
Garrick Rochow: Growth through 2030. In addition to our robust customer investment plan, we have meaningful growth drivers outside traditional rate base, which are unique to Michigan and CMS Energy and are sometimes overlooked. The financial compensation mechanism, which allows us to earn on PPAs, grows over the five-year period, offering nearly $50 million of incentives by the end of the decade. There's approximately $65 million per year of incentives through our energy efficiency programs, enhanced by the 2023 energy law. We also expect incremental earnings from our non-utility business, NorthStar Clean Energy, as we continue to see attractive pricing from capacity and energy sold at Dearborn Industrial Generation or DIG. Now, we make all these investments with a strong focus on customer affordability.
Garrick Rochow: Growth through 2030. In addition to our robust customer investment plan, we have meaningful growth drivers outside traditional rate base, which are unique to Michigan and CMS Energy and are sometimes overlooked. The financial compensation mechanism, which allows us to earn on PPAs, grows over the five-year period, offering nearly $50 million of incentives by the end of the decade. There's approximately $65 million per year of incentives through our energy efficiency programs, enhanced by the 2023 energy law. We also expect incremental earnings from our non-utility business, NorthStar Clean Energy, as we continue to see attractive pricing from capacity and energy sold at Dearborn Industrial Generation or DIG. Now, we make all these investments with a strong focus on customer affordability.
Investment plan, we have meaningful growth drivers outside traditional rate base, which are unique to Michigan and CMS energy and are sometimes overlooked.
The financial compensation mechanism, which allows us to earn on Ppas grows over the five year period offering nearly $50 million of incentives by the end of the decade.
Speaker #3: Or DIG. Now, we make all these investments with a strong focus on customer affordability. We have a proven track record of driving customer savings through the CE Way and digital automation.
And there is approximately $65 million per year of incentives through our energy efficient efficiency programs enhanced by the 2023 energy law.
Speaker #3: Episodic cost-saving opportunities, low growth, and energy waste reduction. This creates capital headroom, which maintains affordability as we make important and needed investments in our system.
We also expect incremental earnings from our non utility business Norstar clean energy as we continue to see attractive pricing from capacity and energy sold at Dearborn industrial generation.
Speaker #3: To offer a few examples, in 2025, we had another great year leveraging the CE Way to deliver work more efficiently. Over 100 million in savings.
For dig.
Okay.
Now we make all of these investments with a strong focus on customer affordability, we have a proven track record of driving customer savings through the CE way and digital automation.
Speaker #3: In 2025, our energy waste reduction program will save our customers approximately $1.2 billion reducing our customers' bills. Because when you use less, you pay less.
Garrick Rochow: We have a proven track record of driving customer savings through The CE Way and digital automation, episodic cost-saving opportunities, low growth, and energy waste reduction. This creates capital headroom, which maintains affordability as we make important and needed investments in our system. To offer a few examples, in 2025, we had another great year leveraging The CE Way to deliver work more efficiently, over $100 million in savings. In 2025, our energy waste reduction program will save our customers approximately $1.2 billion, reducing our customers' bills, because when you use less, you pay less. Our efforts here are making an impact. Today, our customers' utility bills remain roughly 3% of their total expenses or what is often referred to as share of wallet.
Garrick Rochow: We have a proven track record of driving customer savings through The CE Way and digital automation, episodic cost-saving opportunities, low growth, and energy waste reduction. This creates capital headroom, which maintains affordability as we make important and needed investments in our system. To offer a few examples, in 2025, we had another great year leveraging The CE Way to deliver work more efficiently, over $100 million in savings. In 2025, our energy waste reduction program will save our customers approximately $1.2 billion, reducing our customers' bills, because when you use less, you pay less. Our efforts here are making an impact. Today, our customers' utility bills remain roughly 3% of their total expenses or what is often referred to as share of wallet.
<unk> cost saving opportunities low growth in energy waste reduction this great capital headroom, which maintains affordability as we make important and needed investments in our system.
Speaker #3: Our efforts here are making an impact. Today, our customers' utility bills remain roughly 3% of their total expenses, or what is often referred to as share of wallet.
To offer a few examples.
In 2025, we had another great year, leveraging the CE way to deliver work more efficiently.
Speaker #3: 150 basis points from This is down a decade ago. While we've invested significantly in our system, to the tune of roughly $24 billion. I'm also pleased to share that our recent electric bill increases are among the lowest in the country.
Over $100 million in savings.
In 2025, our energy waste reduction program will save our customers approximately $1 2 billion.
Reducing our customers' bills.
Because when you use less.
You pay less.
Speaker #3: We are committed to keeping our residential bills below the national average, Midwest average too, and plan to be over the five-year plan period. This is an important commitment.
Our efforts here are making an impact.
Today, our customers utility bills remain roughly 3% of their total expenses or what is often referred to as share of wallet. This is down 150 basis points from a decade ago.
Speaker #3: Every penny we spend on our infrastructure investments is done with customer affordability, at the center. As I've said before, Michigan is growing and I continue to be positive.
Garrick Rochow: This is down 150 basis points from a decade ago, while we've invested significantly in our system to the tune of roughly $24 billion. I'm also pleased to share that our recent electric bill increases are among the lowest in the country. We are committed to keeping our residential bills below the national average, Midwest average too, and plan to be over the five-year plan period. This is an important commitment. Every penny we spend on our infrastructure investments is done with customer affordability at the center. As I've said before, Michigan is growing, and I continue to be positive and confident about the progress of the data center we announced on the Q2 call. The large load tariff was an important milestone to provide clarity for the data centers and to protect our existing customers.
Garrick Rochow: This is down 150 basis points from a decade ago, while we've invested significantly in our system to the tune of roughly $24 billion. I'm also pleased to share that our recent electric bill increases are among the lowest in the country. We are committed to keeping our residential bills below the national average, Midwest average too, and plan to be over the five-year plan period. This is an important commitment. Every penny we spend on our infrastructure investments is done with customer affordability at the center. As I've said before, Michigan is growing, and I continue to be positive and confident about the progress of the data center we announced on the Q2 call. The large load tariff was an important milestone to provide clarity for the data centers and to protect our existing customers.
While we've invested significantly in our system to the tune of roughly $24 billion.
I'm also pleased to share that our recent electric bill increases are amongst the lowest in the country.
Speaker #3: And confident we announced on the Q2 call. The large load tariff was an about the progress of the data center important milestone to provide clarity for the data centers and to protect our existing customers.
We are committed to keeping our residential bills below the national average Midwest average two and plan to be over the five year plan period.
Speaker #3: I'm pleased to share that there has been great progress with the data centers that are considering locating in our service area. Regarding the data center referenced on the Q2 call, Andy picked it on the slide.
This is an important commitment every penny we spend on our infrastructure investments is done with customer affordability.
At the center.
Speaker #3: We've reached commercial terms on the extraordinary facilities agreement, which is similar to an ESA or electric service agreement. We're also at near final terms in our rate agreement.
As I've said before Michigan is growing.
I continue to be positive and confident about the progress of the data center, we announced on the Q2 call.
The large low tariff was an important milestone to provide clarity for the data centers and to protect our existing customers.
Speaker #3: Our agreements have a path to serve their peak demand and we know both the timing and incremental supply resources that are needed to serve this load.
Garrick Rochow: I'm pleased to share that there has been great progress with the data centers that are considering locating in our service area. Regarding the data center referenced on the Q2 call, Andy picked it on the slide. We've reached commercial terms on the Extraordinary Facilities Agreement, which is similar to an ESA or Electric Service Agreement. We're also at near final terms in our rate agreement. Our agreements have a path to serve their peak demand, and we know both the timing and incremental supply resources that are needed to serve this load. We also know the expected ramp timeline. That timeline would have their data center online as early as 2028. Keep in mind, the data center is not yet reflected in our five-year customer investment plan.
Garrick Rochow: I'm pleased to share that there has been great progress with the data centers that are considering locating in our service area. Regarding the data center referenced on the Q2 call, Andy picked it on the slide. We've reached commercial terms on the Extraordinary Facilities Agreement, which is similar to an ESA or Electric Service Agreement. We're also at near final terms in our rate agreement. Our agreements have a path to serve their peak demand, and we know both the timing and incremental supply resources that are needed to serve this load. We also know the expected ramp timeline. That timeline would have their data center online as early as 2028. Keep in mind, the data center is not yet reflected in our five-year customer investment plan.
I'm pleased to share that there has been great progress with the data centers that are considering locating in our service area.
Speaker #3: We also know the expected ramp timeline. That timeline would have their data center online as early as 2028. Keep in mind, the data center is not yet reflected in our five-year customer investment plan.
Regarding the data center referenced on the Q2 call Andy picked it on the slide we've reached commercial terms on the extraordinary facilities agreement with dissimilar to an Esa or electric service agreement.
Speaker #3: In addition, we are advanced talks with the second data center that has been public about their expansion in Michigan and specifically in our service area.
We're also at near final terms in our rate agreement.
Our agreements have a path to serve their peak demand and we know both the timing and incremental supply resources that are needed to serve this low.
Speaker #3: While we can't give more details at this point, I can say we are working with them on their needs. We are looking forward to serving this prospective customer.
We also know the expected ramp timeline.
Speaker #3: Our pipeline for growth is exciting and robust in Michigan and in our service area. We are well equipped and prepared to serve data center and manufacturing customers.
That timeline would have their data center online as early as 2028.
Keep in mind the data center is not yet reflected in our five year customer investment plan.
Speaker #3: On that high note, let me hand the call over to Reggie to offer additional details.
In addition, we are in advanced talks with a second data center has been public about their expansion in Michigan and specifically in our service area.
Garrick Rochow: In addition, we are in advanced talks with a second data center that has been public about their expansion in Michigan and specifically in our service area. While we can't give more details at this point, I can say we are working with them on their needs. We are looking forward to serving this prospective customer. Our pipeline for growth is exciting and robust in Michigan and in our service area. We are well equipped and prepared to serve data center and manufacturing customers. On that high note, let me hand the call over to Reggie to offer additional details.
Garrick Rochow: In addition, we are in advanced talks with a second data center that has been public about their expansion in Michigan and specifically in our service area. While we can't give more details at this point, I can say we are working with them on their needs. We are looking forward to serving this prospective customer. Our pipeline for growth is exciting and robust in Michigan and in our service area. We are well equipped and prepared to serve data center and manufacturing customers. On that high note, let me hand the call over to Reggie to offer additional details.
Speaker #2: Thank you, Garrick, and good morning, everyone. To elaborate on the strength of our financial performance in 2025, on slide nine, you'll note that we met or exceeded all of our key financial objectives for the adjusted earnings per year.
While we can't give more details at this point I can say, we are working with them on their needs. We're looking forward to serving this perspective customer.
Speaker #2: Most notably, our share. To avoid being repetitive, I'll just note that we successfully invested $3.8 billion largely in line with our original guidance to make our electric and gas systems safer, more reliable, and cleaner on behalf of our 3 million customers at the utility.
Our pipeline for growth is exciting and robust in Michigan and in our service area. We are well equipped and prepared to serve data center and manufacturing customers.
On that high note, let me hand, the call over ready to offer additional details.
Thank you Derek and good morning, everyone.
Rejji Hayes: Thank you, Garrick, and good morning, everyone. To elaborate on the strength of our financial performance in 2025, on slide 9, you'll note that we met or exceeded all of our key financial objectives for the year, most notably our adjusted earnings per share. To avoid being repetitive, I'll just note that we successfully invested $3.8 billion, largely in line with our original guidance, to make our electric and gas systems safer, more reliable, and cleaner on behalf of our 3 million customers at the utility. We managed to do this while funding the business in a cost-efficient manner, largely through operating cash flow, well-priced bond and equity financings, and tax credit transfers.
Rejji Hayes: Thank you, Garrick, and good morning, everyone. To elaborate on the strength of our financial performance in 2025, on slide 9, you'll note that we met or exceeded all of our key financial objectives for the year, most notably our adjusted earnings per share. To avoid being repetitive, I'll just note that we successfully invested $3.8 billion, largely in line with our original guidance, to make our electric and gas systems safer, more reliable, and cleaner on behalf of our 3 million customers at the utility. We managed to do this while funding the business in a cost-efficient manner, largely through operating cash flow, well-priced bond and equity financings, and tax credit transfers.
Speaker #2: We managed to do this while funding the business in a cost-efficient manner largely through operating cash flow, well-priced bond and equity financings, and tax credit transfers.
To elaborate on the strength of our financial performance in 2025 on slide nine you will note that we met or exceeded all of our key financial objectives for the year, most notably our adjusted earnings per share.
Speaker #2: This prudent funding strategy enabled us to maintain our solid investment-grade credit metrics and associated ratings as affirmed by each of the rating agencies over the course of the year.
To avoid being repetitive I'll just note that we successfully invested $3 8 billion largely in line with our original guidance to make our electric and gas systems safer more reliable and cleaner on behalf of our 3 million customers at the utility.
Speaker #2: Most recently, by S&P for our parent company, CMS ENERGY, in December. Moving on to our 2026 EPS guidance on slide 10, you'll note the rebasing off the range higher off of our 2025 adjusted EPS actuals as per our historical practice.
We managed to do this while funding the business in a cost efficient manner, largely through operating cash flow well priced bond and equity financings and tax credit transfers.
Speaker #2: More specifically, our 2026 adjusted EPS guidance range has increased by $0.03 per share on both ends of the range to $3.83 to $3.90 per share.
Rejji Hayes: This prudent funding strategy enabled us to maintain our solid investment grade credit metrics and associated ratings, as affirmed by each of the rating agencies over the course of the year, most recently by S&P for our parent company, CMS Energy, in December. Moving on to our 2026 EPS guidance on Slide 10, you'll note the rebasing off the range higher off of our 2025 adjusted EPS actuals as per our historical practice. More specifically, our 2026 adjusted EPS guidance range has increased by $0.03 per share on both ends of the range to $3.83 to $3.90 per share. Our increased 2026 EPS guidance implies 6% to 8% growth with continued confidence toward the high end of the range, as Garrick noted, which is effectively 7% to 8%, given our historical performance.
Rejji Hayes: This prudent funding strategy enabled us to maintain our solid investment grade credit metrics and associated ratings, as affirmed by each of the rating agencies over the course of the year, most recently by S&P for our parent company, CMS Energy, in December. Moving on to our 2026 EPS guidance on Slide 10, you'll note the rebasing off the range higher off of our 2025 adjusted EPS actuals as per our historical practice. More specifically, our 2026 adjusted EPS guidance range has increased by $0.03 per share on both ends of the range to $3.83 to $3.90 per share. Our increased 2026 EPS guidance implies 6% to 8% growth with continued confidence toward the high end of the range, as Garrick noted, which is effectively 7% to 8%, given our historical performance.
This prudent funding strategy enabled us to maintain our solid investment grade credit metrics and associated rain ratings.
As a firm by each of the rating agencies over the course of the year. Most recently by S&P for a parent company CMS energy in December.
Speaker #2: Our increased 2026 EPS guidance implies 6 to 8% growth with continued confidence toward the high end of the range as Garrick noted. Which is effectively 7 to 8% given our historical performance.
Moving on to our 2026 EPS guidance on slide 10, you'll note the re basing off the range higher off of our 2025 adjusted EPS actuals as per our historical practice more specifically our 2026 adjusted EPS guidance range has increased by <unk> <unk> per share on both ends of the range to.
Speaker #2: As you can see in the segment details, our EPS will primarily be driven by the utility providing $4.28 to $4.33 of adjusted earnings as we plan for normal weather, constructive regulatory outcomes, and earned returns at or near authorized levels.
<unk> $3 83 to $3 90 per share.
Our increased 2026, EPS guidance implies 6% to 8% growth with continued confidence toward the high end of the range as Gary noted where does the fact that was 7% to 8% given our historical performance.
Speaker #2: At Northstar, we're assuming an EPS contribution of 25 to 30 cents, which incorporates normalized operations at DIG, benefiting from an increasingly favorable mix of capacity contracts, and the completion of select renewable projects.
As you can see in the segment details our EPS will primarily be driven by the utility providing $4 28.
Rejji Hayes: As you can see in the segment details, our EPS will primarily be driven by the utility, providing $4.28 to $4.33 of adjusted earnings as we plan for normal weather, constructive regulatory outcomes, and earn returns at or near authorized levels. At NorthStar, we're assuming an EPS contribution of 25 to 30 cents, which incorporates normalized operations at DIG, benefiting from an increasingly favorable mix of capacity contracts and the completion of select renewable projects. Lastly, our financing assumptions remain conservative at the parent segment, with expected equity issuances of approximately $700 million to support the increased capital plan at the utility. Our guidance in the parent segment also includes a full year of interest expense from last year's successful convertible debt offering in Q4 and assumes the absence of liability management transactions.
Rejji Hayes: As you can see in the segment details, our EPS will primarily be driven by the utility, providing $4.28 to $4.33 of adjusted earnings as we plan for normal weather, constructive regulatory outcomes, and earn returns at or near authorized levels. At NorthStar, we're assuming an EPS contribution of 25 to 30 cents, which incorporates normalized operations at DIG, benefiting from an increasingly favorable mix of capacity contracts and the completion of select renewable projects. Lastly, our financing assumptions remain conservative at the parent segment, with expected equity issuances of approximately $700 million to support the increased capital plan at the utility. Our guidance in the parent segment also includes a full year of interest expense from last year's successful convertible debt offering in Q4 and assumes the absence of liability management transactions.
Speaker #2: Lastly, our financing assumptions remain conservative at the parent segment with expected equity issuance of approximately $700 million to support the increased capital plan at the utility.
To $4 33 of adjusted earnings as we plan for normal weather.
Constructive regulatory outcomes and earned returns at or near authorized levels.
Speaker #2: Our guidance in the parent segment also includes a full year of interest expense from last year's successful convertible debt offering in the fourth quarter and assumes the absence of liability management transactions.
Northstar, we're assuming an EPS contribution of 25% to 30, which incorporate which incorporates normalized operations at dig benefiting from an increasingly favorable mix of capacity contracts and the completion of select renewable projects.
Speaker #2: To elaborate on the glide path to achieve our 2026 adjusted EPS guidance range, you'll see the usual waterfall chart on slide 11. For clarification purposes all of the variance analyses herein are measured on a full year basis and are relative to 2025.
Lastly, our financing assumptions remain conservative at the parent segment with expected equity issuances of approximately $700 million to support the increased capital plan at the utility.
Our guidance and the parents segment also includes a full year of interest expense from last year's successful convertible debt offering in the fourth quarter and assumes the absence of liability management transactions.
Speaker #2: From left to right, we plan for normal weather, which in this case amounts to 22 cents per share of negative variance given the absence of favorable temperatures experienced in 2025, largely in our electric business.
To elaborate on the glide path to achieve our 2026 adjusted EPS guidance range Youll see the usual waterfall chart on slide 11 for clarification purposes. All of the variance analysis herein are measured on a full year basis on a relative to 2025.
Rejji Hayes: To elaborate on the glide path to achieve our 2026 adjusted EPS guidance range, you'll see the usual waterfall chart on slide 11. For clarification purposes, all of the variance analyses herein are measured on a full year basis and are relative to 2025. From left to right, we plan for normal weather, which in this case amounts to $0.22 per share of negative variance, given the absence of favorable temperatures experienced in 2025, largely in our electric business. Additionally, we anticipate $0.37 per share of pickup attributable to rate relief, driven by the residual benefits of last year's gas and electric rate cases, and the expectation of constructive outcomes in our pending electric and gas rate cases.
Rejji Hayes: To elaborate on the glide path to achieve our 2026 adjusted EPS guidance range, you'll see the usual waterfall chart on slide 11. For clarification purposes, all of the variance analyses herein are measured on a full year basis and are relative to 2025. From left to right, we plan for normal weather, which in this case amounts to $0.22 per share of negative variance, given the absence of favorable temperatures experienced in 2025, largely in our electric business. Additionally, we anticipate $0.37 per share of pickup attributable to rate relief, driven by the residual benefits of last year's gas and electric rate cases, and the expectation of constructive outcomes in our pending electric and gas rate cases.
Speaker #2: Additionally, we anticipate 37 cents per share of pickup attributable to rate relief driven by the residual benefits of last year's gas and electric rate cases and the expectation of constructive outcomes in our pending electric and gas rate cases.
From left to right, we plan for normal weather, which in this case amounts to 22 per share of negative variance given the absence of favorable temperatures experienced in 2025, largely in our electric business.
Speaker #2: Outside of the general rate cases, we also expect to see earnings contributions from our investments in renewable generation assets in accordance with our recently approved renewable energy plan.
Speaker #2: As always, our rate relief figures are stated net of investment-related costs, such as and utility interest expense. As we turn to the cost structure in 2026, you'll note 12 cents per share of positive variance due to the anticipation of continued productivity driven by the CEWA and more normalized storm activity in our service territory.
Additionally, we anticipate 37 per share of pickup attributable to rate relief driven by the residual benefits of last year's gas and electric rate cases, and the expectation of constructive outcomes in our pending electric and gas rate cases.
Rejji Hayes: Outside of the general rate cases, we also expect to see earnings contributions from our investments in renewable generation assets in accordance with our recently approved Renewable Energy Plan. As always, our rate relief figures are stated net of investment-related costs such as depreciation, property taxes, and utility interest expense. As we turn to the cost structure in 2026, you'll note $0.12 per share of positive variance due to the anticipation of continued productivity driven by the CE Way and more normalized storm activity in our service territory. It is also worth noting that our projected operating expenses reflect the benefits of operational pull-aheads executed in 2025, and as always, we will adjust our cost assumptions in accordance with rate case outcomes, given the financial flexibility inherent in the forward-looking test year.
Rejji Hayes: Outside of the general rate cases, we also expect to see earnings contributions from our investments in renewable generation assets in accordance with our recently approved Renewable Energy Plan. As always, our rate relief figures are stated net of investment-related costs such as depreciation, property taxes, and utility interest expense. As we turn to the cost structure in 2026, you'll note $0.12 per share of positive variance due to the anticipation of continued productivity driven by the CE Way and more normalized storm activity in our service territory. It is also worth noting that our projected operating expenses reflect the benefits of operational pull-aheads executed in 2025, and as always, we will adjust our cost assumptions in accordance with rate case outcomes, given the financial flexibility inherent in the forward-looking test year.
Outside of the general rate cases, we also expect to see earnings contributions from our investments in renewable generation assets in accordance with our recently approved renewable energy plan.
Speaker #2: It is also worth noting that our projected operating expenses reflect the benefits of operational pull aheads executed in 2025 assumptions in accordance with rate case outcomes.
As always our rate really figures are stated net of investment related costs, such as depreciation property taxes and utility interest expense.
Speaker #2: Given the financial flexibility inherent in the forward-looking test year, lastly, in the penultimate bar on the right-hand side, you'll note a modest variance, which largely consists of growth at Northstar per my earlier comments.
As we turn to the cost structure in 2026, Youll note <unk> 12 per share of positive variance due to the anticipation of continued productivity driven by the CE way and more normalized storm activity in our service territory.
Speaker #2: This bucket also includes the rolloff of 2025 liability management transactions and the usual conservative assumptions around parent financing costs and taxes among other items.
It is also worth noting that our projected operating expenses reflect the benefits of operational pull ahead executed in 2025 and as always we will adjust our cost assumptions in accordance with rate case outcomes, given the financial flexibility inherent in the forward looking test year.
Speaker #2: In aggregate, these assumptions equate to a variance of negative 5 cents to positive 2 cents per share. As always, we'll adapt to changing conditions throughout the year.
Rejji Hayes: Lastly, in the penultimate bar on the right-hand side, you'll note a modest variance, which largely consists of growth at NorthStar, per my earlier comments. This bucket also includes the roll-off of 2025 liability management transactions and the usual conservative assumptions around parent financing costs and taxes, among other items. In aggregate, these assumptions equate to a variance of -$0.05 to +$0.02 per share. As always, we'll adapt to changing conditions throughout the year to capitalize on opportunities and mitigate risks to deliver on our operational and financial objectives to the benefit of customers and investors. On slide 12, we have a summary of our near- and long-term financial objectives. As Garrick noted, from a dividend policy perspective, we're targeting a payout ratio of approximately 60% in 2026 and roughly 55% over the course of our five-year plan.
Rejji Hayes: Lastly, in the penultimate bar on the right-hand side, you'll note a modest variance, which largely consists of growth at NorthStar, per my earlier comments. This bucket also includes the roll-off of 2025 liability management transactions and the usual conservative assumptions around parent financing costs and taxes, among other items. In aggregate, these assumptions equate to a variance of -$0.05 to +$0.02 per share. As always, we'll adapt to changing conditions throughout the year to capitalize on opportunities and mitigate risks to deliver on our operational and financial objectives to the benefit of customers and investors. On slide 12, we have a summary of our near- and long-term financial objectives. As Garrick noted, from a dividend policy perspective, we're targeting a payout ratio of approximately 60% in 2026 and roughly 55% over the course of our five-year plan.
Lastly, in the penultimate bar on the right hand side, you'll note a modest variance, which largely consists of growth at north star for my earlier comments.
Speaker #2: To capitalize on opportunities and mitigate risks, to deliver on our operational and financial objectives, to the benefit of customers and investors. On slide 12, we have a summary of our near and long-term financial objectives.
This bucket also includes the roll off of <unk>.
125 liability management transactions and the usual conservative assumptions around parent financings.
Speaker #2: As Garrick noted from a dividend policy perspective, we're targeting a payout ratio of approximately 60% in 2026 and roughly 55% over the course of our five-year plan.
And costs and taxes among other items and.
In aggregate these assumptions.
Equate to a variance negative five two.
Speaker #2: Given the elevated cost of capital environment and the breadth and depth of customer investment opportunities before us, we continue to believe that it is prudent to retain more earnings to fund growth.
Two.
Positive <unk> <unk> per share.
And as always.
So we will adapt to changing conditions throughout the year to capitalize on opportunities and mitigate risks to deliver on our operational and financial objectives to the benefit of customers and investors.
Speaker #2: From a balance sheet perspective, we continue to target solid investment-grade credit ratings and will continue to manage our key credit metrics business. As such, we intend to continue our at-the-market or ATM equity issuance program in the amount of approximately $700 million in 2026, as mentioned earlier.
On slide 12, we have a summary of our.
For near and long term financial objectives as Eric noted from a dividend policy perspective, we're targeting a payout ratio of approximately 60% in 2026 and roughly 55% over the course of our five year plan.
Speaker #2: Over the course of the five-year plan, our aggregate equity needs will be consistent with our historical ratio of 40 cents of equity for every dollar of incremental CapEx.
Rejji Hayes: Given the elevated cost of capital environment and the breadth and depth of customer investment opportunities before us, we continue to believe that it is prudent to retain more earnings to fund growth. From a balance sheet perspective, we continue to target solid investment-grade credit ratings and will continue to manage our key credit metrics accordingly as we balance the needs of the business. As such, we intend to continue our at-the-market, or ATM, equity issuance program in the amount of approximately $700 million in 2026, as mentioned earlier. Over the course of the five-year plan, our aggregate equity needs will be consistent with our historical ratio of 40 cents of equity for every dollar of incremental CapEx, and equates to an average of approximately $750 million per year, given the substantial increase in our five-year customer investment plan.
Rejji Hayes: Given the elevated cost of capital environment and the breadth and depth of customer investment opportunities before us, we continue to believe that it is prudent to retain more earnings to fund growth. From a balance sheet perspective, we continue to target solid investment-grade credit ratings and will continue to manage our key credit metrics accordingly as we balance the needs of the business. As such, we intend to continue our at-the-market, or ATM, equity issuance program in the amount of approximately $700 million in 2026, as mentioned earlier. Over the course of the five-year plan, our aggregate equity needs will be consistent with our historical ratio of 40 cents of equity for every dollar of incremental CapEx, and equates to an average of approximately $750 million per year, given the substantial increase in our five-year customer investment plan.
Given the elevated cost of capital environment, and the breadth and depth of customer investment opportunities before us. We continue to believe that it is prudent to retain more earnings to fund growth.
Speaker #2: And equates to an average of approximately the substantial increase in our five-year customer investment plan. And while we do have some capacity remaining, with our existing ATM new prospectus supplement to reflect our updated needs later this year.
From a balance sheet perspective, we continue to target solid investment grade credit ratings and we will.
And we will continue to manage our key credit metrics accordingly, as we balance the needs of the business.
As such we intend to continue our aftermarket or ATM equity issuance program and the amount of approximately $700 million in.
Speaker #2: Lastly, we also expect select large multi-year economic development projects to begin ramping up in 2026, yielding approximately 3% weather normalized load growth for the year with run rate assumptions of 2 to 3% in the outer years of our plan.
In 2026 as mentioned earlier.
Over the course of the five year plan, our aggregate equity needs will be consistent with our historical ratio of 40% of equity for every dollar of incremental capex and equates to an average of approximately $750 million per year, given the substantial increase in our five year customer investment plan.
Speaker #2: Slide 13 offers more specificity on the funding needs in 2026 at the utility and the parent. At the utility, we're planning to issue a little over $1.7 billion in aggregate.
Speaker #2: And at the parent, you'll note that our debt financing needs were pulled ahead in November of 2025, which leaves the aforementioned equity issuance needs of roughly $700 million.
And while we do have some capacity remaining with our existing ATM program you can expect us to file a new prospectus supplement to reflect our updated needs later this year.
Rejji Hayes: While we do have some capacity remaining with our existing ATM program, you can expect us to file a new prospectus supplement to reflect our updated needs later this year. Lastly, we also expect select large, multiyear economic development projects to begin ramping up in 2026, yielding approximately 3% weather-normalized load growth for the year, with run rate assumptions of 2% to 3% in the outer years of our plan. Slide 13 offers more specificity on the funding needs in 2026 at the utility and the parent. At the utility, we're planning to issue a little over $1.7 billion in aggregate. At the parent, you'll note that our debt financing needs were pulled ahead in November 2025, which leaves the aforementioned equity issuance needs of roughly $700 million.
Rejji Hayes: While we do have some capacity remaining with our existing ATM program, you can expect us to file a new prospectus supplement to reflect our updated needs later this year. Lastly, we also expect select large, multiyear economic development projects to begin ramping up in 2026, yielding approximately 3% weather-normalized load growth for the year, with run rate assumptions of 2% to 3% in the outer years of our plan. Slide 13 offers more specificity on the funding needs in 2026 at the utility and the parent. At the utility, we're planning to issue a little over $1.7 billion in aggregate. At the parent, you'll note that our debt financing needs were pulled ahead in November 2025, which leaves the aforementioned equity issuance needs of roughly $700 million.
Speaker #2: Needless to say, we'll remain opportunistic throughout the year and will continue to monitor the markets for attractive issuance windows. On slide 14, we've refreshed our sensitivity analysis planning assumptions.
Lastly, we also expect select large multiyear economic development projects to begin ramping up in 2026, yielding approximately 3% weather normalized load growth for the year.
With run rate assumptions of 2% to 3% in the outer years of our plan.
Speaker #2: As you'll note, with reasonable planning assumptions and our track record of risk mitigation, the probability of large variances from our plan is minimized. Our model has served and will continue to serve all stakeholders well.
Slide 13 offers more specificity on the funding needs in 2026 at the utility and the parent.
At the utility we're planning to issue a little over $1 7 billion in aggregate.
Speaker #2: Our customers receive safe, reliable, and clean energy at affordable prices, our diverse committed, to our purpose-driven and battle-tested workforce remains organization, and our investors benefit from consistent industry-leading financial performance.
And at the parent you'll note that our debt financing needs were pulled ahead in November of 2025, which leaves the aforementioned equity issuance needs of roughly $700 million.
Needless to say, we'll remain opportunistic throughout the year.
Rejji Hayes: Needless to say, we'll remain opportunistic throughout the year, and we'll continue to monitor the markets for attractive issuance windows. On slide 14, we've refreshed our sensitivity analysis on key variables for your planning assumptions. As you'll note, with reasonable planning assumptions and our track record of risk mitigation, the probability of large variances from our plan is minimized. Our model has served and will continue to serve all stakeholders well.... Our customers receive safe, reliable, and clean energy at affordable prices. Our diverse and battle-tested workforce remains committed to our purpose-driven organization, and our investors benefit from consistent industry-leading financial performance. And with that, I'll hand it back to Garrick for his final remarks before the Q&A session.
Rejji Hayes: Needless to say, we'll remain opportunistic throughout the year, and we'll continue to monitor the markets for attractive issuance windows. On slide 14, we've refreshed our sensitivity analysis on key variables for your planning assumptions. As you'll note, with reasonable planning assumptions and our track record of risk mitigation, the probability of large variances from our plan is minimized. Our model has served and will continue to serve all stakeholders well.... Our customers receive safe, reliable, and clean energy at affordable prices. Our diverse and battle-tested workforce remains committed to our purpose-driven organization, and our investors benefit from consistent industry-leading financial performance. And with that, I'll hand it back to Garrick for his final remarks before the Q&A session.
Speaker #2: And with that, I'll hand it back to Garrick for his final remarks before the Q&A session. Thanks, Reggie. At CMS ENERGY, we deliver. 23 years now of consistent of changing circumstances.
And we will continue to monitor the markets for attractive issuance windows.
On slide 14, we've refreshed our sensitivity analysis on key variables for your planning assumptions as you'll note with reasonable planning assumptions and our track record of risk mitigation. The probability of large variances from our plan is minimized.
Speaker #2: industry-leading performance regardless Year in and year out, you can all of its count on CMS ENERGY to deliver for stakeholders. With that, Adam, please open the lines for Q&A.
Our model has served and will continue to serve all stakeholders well.
Our customers receive safe reliable and clean energy at affordable prices are diverse and battle tested workforce remains committed to our purpose driven organization and our investors benefit from consistent industry, leading financial performance and with that I'll hand, it back to Gary for his final remarks before the Q&A session.
Speaker #3: Thank you very much, Garrick. The question in our session will like to ask a question, please do so by pressing the star key followed by the digit one on your be conducted electronically.
Speaker #3: If you would using a speaker function, please make sure you pick up your signal us, and we'll take as many questions as time permits.
Yeah.
Garrick Rochow: Thanks, Rejji. At CMS Energy, we deliver. 23 years now of consistent industry-leading performance, regardless of changing circumstances. Year in and year out, you can count on CMS Energy to deliver for all of its stakeholders. With that, Adam, please open the lines for Q&A.
Garrick Rochow: Thanks, Rejji. At CMS Energy, we deliver. 23 years now of consistent industry-leading performance, regardless of changing circumstances. Year in and year out, you can count on CMS Energy to deliver for all of its stakeholders. With that, Adam, please open the lines for Q&A.
Thanks Reggie at.
At Siemens energy, we deliver.
23 years now of consistent industry, leading performance regardless of changing circumstances.
Speaker #3: line is open.
In and year out you can count on CMS energy to deliver for all of its stakeholders.
Speaker #4: Hey, good morning, team. Thank you guys very much. As always, appreciate your infectious energy. You convey on these calls. If I can kick it off here as it pertains to the data center opportunity you guys alluded to here.
Adam.
These open the lines for Q&A.
Thank you very much Derrick the question and answer session will be conducted electronically. If you would like to ask a question. Please do so by pressing the star Kiefer about the tissue one on your.
Operator: Thank you very much, Garrick. The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit one on your touchtone telephone. If you're using a speaker function, please make sure you pick up your headset. We'll proceed in the order you signal us, and we'll take as many questions as time permits. If you do find that your question has been answered, you may remove yourself by pressing the star key followed by the digit two on your touchtone telephone. We'll pause for just a second. Our first question comes from Julien Dumoulin-Smith from Jefferies. Julien, please go ahead. Your line is open.
Operator: Thank you very much, Garrick. The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit one on your touchtone telephone. If you're using a speaker function, please make sure you pick up your headset. We'll proceed in the order you signal us, and we'll take as many questions as time permits. If you do find that your question has been answered, you may remove yourself by pressing the star key followed by the digit two on your touchtone telephone. We'll pause for just a second. Our first question comes from Julien Dumoulin-Smith from Jefferies. Julien, please go ahead. Your line is open.
Speaker #4: Obviously, you're an advanced talk, so you characterize it here. Can you give us a little bit more of a sense as to where we stand on data centers in Michigan?
Touchtone telephone.
If you're using a speaker function. Please make sure you pick up your headset.
Speaker #4: Obviously, there's been a lot of discussion in the state, more broadly, maybe not necessarily specifically as to the second slide here, but how are you thinking about that opportunity and how would you set expectations on the timeline?
Or are you sticking with us and we'll take as many questions as time permits. If you do find out. Your question has been answer you may remove yourself by pressing the stock he felt by the digit too when you touch tone telephone.
Just a second.
Speaker #4: too many details, but at least from Obviously, you can't give a financial update and frankly, in terms of a role forward of your overall plan, you've put a lot of progress in here with the ten and a half percent rate-based CAGR.
Our first question comes from Julien Dumoulin Smith from Jefferies. Chilean. Please go ahead. Your line is open.
Hey, good morning team. Thank you guys very much as always appreciate your infectious energy you convey on these calls.
Julien Dumoulin-Smith: Hey, good morning, team. Thank you guys very much. As always, appreciate your, your infectious energy, you convey on these calls. I - look, if, if I can kick it off here as it pertains to the data center opportunity you guys alluded to here. Obviously, you're in advanced talks, as you characterized it here. Can you give us a little bit more of a sense as to where we stand on data centers in Michigan? Obviously, there's been a lot of discussion of the state, more broadly, maybe not necessarily specifically as to the second site here. But how are you thinking about that opportunity, and how would you set expectations on the timeline?
Julien Dumoulin-Smith: Hey, good morning, team. Thank you guys very much. As always, appreciate your, your infectious energy, you convey on these calls. I - look, if, if I can kick it off here as it pertains to the data center opportunity you guys alluded to here. Obviously, you're in advanced talks, as you characterized it here. Can you give us a little bit more of a sense as to where we stand on data centers in Michigan? Obviously, there's been a lot of discussion of the state, more broadly, maybe not necessarily specifically as to the second site here. But how are you thinking about that opportunity, and how would you set expectations on the timeline?
Speaker #4: of timing on a second data Just want to see how you would marry up any kind center here against your wider financial plan here ultimately.
Look bad.
If I can kick it off here as it pertains to the data center opportunity you guys alluded to here obviously.
Speaker #4: At least as best you can tell right now. Can you hear from you?
Speaker #2: Yeah, Julien. Good morning. I'm very pleased with the progress from a data center perspective. And you look at that entire funnel, and that funnel is actually grown.
We are in advanced talks with you characterized that here can you give us a little bit more of a sense as to where we stand on data centers, Michigan, obviously, there's been a lot of discussion of the state or broadly maybe not that's what I see.
Speaker #2: We've had just in the last month another two data centers join the grouping there. Again, they're kind of at the top of the funnel, so they haven't worked their way through.
Typically after the second site here, but how are you thinking about that opportunity and how would you set expectations with the timeline.
Speaker #2: Even in broader economic development, there's two large manufacturing customers that are also in that funnel too that are relatively new in the thing. And so Michigan's economic development story looks very, very strong from my funnel.
Julien Dumoulin-Smith: Obviously, you can't give too many details, but at least from a financial update, and frankly, in terms of a roll forward of your overall plan, you've put a lot of progress in here with the 10.5% rate base CAGR. Just want to see how you would marry up any kind of timing on a second data center here against your wider financial plan here, ultimately. At least as best you can tell right now.
Julien Dumoulin-Smith: Obviously, you can't give too many details, but at least from a financial update, and frankly, in terms of a roll forward of your overall plan, you've put a lot of progress in here with the 10.5% rate base CAGR. Just want to see how you would marry up any kind of timing on a second data center here against your wider financial plan here, ultimately. At least as best you can tell right now.
Obviously, you can't give too many details, but at least from a fee.
Financial update and frankly in terms of a roll forward of your overall plan you've put a lot of progress in here with us at a 9% rate base CAGR just wanted to see how you would marry up any kind of.
Speaker #2: And we've blown a couple of them out in my again, referencing the one we announced in Q2 with a tentative agreement, that's continued to move forward.
Timing on a second datacenter here against your wider financial plan here ultimately.
At least as best we can help you to hear from me.
Garrick Rochow: Julien, good to hear from you. Yeah, Julien, good morning. Look, I'm very pleased with the progress from a data center perspective, and you look at that entire funnel, and that funnel has actually grown. We've had, just in the last month, another two data centers join the grouping there. Again, they're kind of at the top of the funnel, so they haven't worked their way through. Even in broader economic development, there's two large manufacturing customers that are also in that funnel, too, that are relatively new in the thing. And so like, Michigan's economic development story looks very, very strong from my perspective. And then they're continuing to move through that funnel, and we've blown a couple of them out in my prepared remarks.
Garrick Rochow: Julien, good to hear from you. Yeah, Julien, good morning. Look, I'm very pleased with the progress from a data center perspective, and you look at that entire funnel, and that funnel has actually grown. We've had, just in the last month, another two data centers join the grouping there. Again, they're kind of at the top of the funnel, so they haven't worked their way through. Even in broader economic development, there's two large manufacturing customers that are also in that funnel, too, that are relatively new in the thing. And so like, Michigan's economic development story looks very, very strong from my perspective. And then they're continuing to move through that funnel, and we've blown a couple of them out in my prepared remarks.
Yeah Julien.
Speaker #2: The first piece was getting that data center tariff in place. That prepared remarks. And so really paves the way for these. They know the terms.
Got it.
But I am very pleased with the progress from a from a data center perspective, and you look at that entire funnel and that all has actually grown.
Speaker #2: They know the conditions. And so getting the facilities are extraordinary facilities agreement in place was a big win. And again, that's comparable to a service agreement or electric service agreement in other utilities.
We've had just in the last month. Another two two data centers joined the joined the grouping there again, they're kind of at the top of the funnel. So they haven't worked their way through even in broader economic development. There's two large manufacturing customers that are also in that funnel two that are relatively new and thing and so.
Speaker #2: And then this rate construct or rate contract is at near final. And that's necessary to go through the regulatory process of approving the contract.
Michigan Economic development story looks very very strong from my perspective, and then they're continuing to move through that funnel and we put we bought a couple of them out in my prepared remarks, and so like again referencing the.
Speaker #2: And so I feel good about that. That should be a short process because we've done all these pre-approvals. And so again, that's a good glide path.
Speaker #2: And we continue to work with these customers is headed in the right direction on finalizing zoning. And so everything here. Which gives me a lot of confidence about our ability to secure, well, a couple of data centers potentially, but certainly what I'm focused on is the one where we're closest with the contract terms and conditions.
Garrick Rochow: And so, like, again, referencing the, you know, the one we announced in Q2 with a tentative agreement, that's continued to move forward. The first piece was getting that data center tariff in place. That really paves the way, right, for these. They know the terms, they know the conditions, and so getting the Extraordinary Facilities Agreement in place was a big win. And again, that's comparable to a service agreement or Electric Service Agreement in other utilities. And then this rate construct or rate contract is at near final, and that's necessary to go through the regulatory process of approving the contract, right? And so I feel good about that. That should be a short process because we've done all these preapprovals, right?
Garrick Rochow: And so, like, again, referencing the, you know, the one we announced in Q2 with a tentative agreement, that's continued to move forward. The first piece was getting that data center tariff in place. That really paves the way, right, for these. They know the terms, they know the conditions, and so getting the Extraordinary Facilities Agreement in place was a big win. And again, that's comparable to a service agreement or Electric Service Agreement in other utilities. And then this rate construct or rate contract is at near final, and that's necessary to go through the regulatory process of approving the contract, right? And so I feel good about that. That should be a short process because we've done all these preapprovals, right?
The one we announced in Q2 with a with a tentative agreement that's continued to move forward.
First piece was getting that data center tariff in place that really paves the way for these they know that they know the terms they know the conditions and so again the facilities are extraordinary facilities agreement in place was a big win and again, that's comparable to a service agreement or electric service agreement and other utilities and then this rate construct your rate contract is at <unk>.
Speaker #2: Is that helpful,
Speaker #2: Julien?
Speaker #4: Yeah, absolutely. Then maybe
Speaker #4: secondly, I mean, you guys just gave this big update on the plan here. I just flipped the nitpick a little bit around it in as much as it really puts a lot of latitude within the sixth aid about or walk through a little bit what's in and what's out of here.
Near final and that's necessary to go through the regulatory process of approving the contract right and so I feel good about that that should be a short process. Because we've done all of these pre approvals right and so again, that's a good glide path and we continue to work with these customers on finalizing zoning and so everything is headed in the right direction here.
Speaker #4: the plan and how you would think about the pieces here. Because you've got a ten and a half percent against the sixth to eighth.
Garrick Rochow: And so again, that's a good glide path, and we continue to work with these customers on finalizing zoning. And so everything is headed in the right direction here, which gives me a lot of confidence about our ability to secure, well, a couple data centers, potentially. But like, certainly what I'm focused on is the one that's where we're closest with the, with the contract terms and conditions. Is that helpful, Julien?
Garrick Rochow: And so again, that's a good glide path, and we continue to work with these customers on finalizing zoning. And so everything is headed in the right direction here, which gives me a lot of confidence about our ability to secure, well, a couple data centers, potentially. But like, certainly what I'm focused on is the one that's where we're closest with the, with the contract terms and conditions. Is that helpful, Julien?
Speaker #4: Obviously, you guys are talking about a certain degree of dilution against $50 million pre-tax FCM, you talked about some $65 million of energy incentives, or energy efficiency incentives.
It gives me a lot of confidence about our ability to secure.
Well a couple of data centers potentially but like certainly what I'm focused doesn't one where we're closest with are the contract terms and conditions.
Speaker #4: You talk about North Star DIG recontracting. that. But separately, you talked about a If you take the rate-based plus sixth to eighth and what's in and what's not encompassed in the So would love to think formal plan today?
Helpful Julien.
Yeah, absolutely and then maybe secondly, I mean, you guys just give big update on the plan here.
Julien Dumoulin-Smith: Yeah, absolutely. Then maybe secondly, I mean, you guys just gave this big update on the plan here. I just want to nitpick a little bit around it in as much as it really puts a lot of latitude within the 6 to 8 here. So would love to think about or walk through a little bit what's in and what's out of the plan and how you would think about the pieces here. Because you get a 10.5% against the 6 to 8. Obviously, you guys are talking about, you know, a certain degree of dilution against that. But separately, you talked about a $50 million pre-tax FCM. You talked about some $65 million of energy incentives or energy efficiency incentives. You talk about NorthStar and DIG contracting.
Julien Dumoulin-Smith: Yeah, absolutely. Then maybe secondly, I mean, you guys just gave this big update on the plan here. I just want to nitpick a little bit around it in as much as it really puts a lot of latitude within the 6 to 8 here. So would love to think about or walk through a little bit what's in and what's out of the plan and how you would think about the pieces here. Because you get a 10.5% against the 6 to 8. Obviously, you guys are talking about, you know, a certain degree of dilution against that. But separately, you talked about a $50 million pre-tax FCM. You talked about some $65 million of energy incentives or energy efficiency incentives. You talk about NorthStar and DIG contracting.
Speaker #4: of much of the data I'm cognizant center discussion we just had is not
I, just flipped a nitpick a little bit around it and as much as it really puts a lot of latitude within the six to eight here. So would love to think about or walk through a little bit what's in and what's out of the plan and how you would think about the pieces here because you've got a tenant at 5% against the six to eight obviously you guys are talking about a certain degree of dilution against that but separately.
Speaker #4: explicitly. Yeah, just to confirm that, the
Speaker #2: data center piece is not in. That would be incremental. Investments. And again, we know what that timeline looks like, and those resources and how to accommodate those to deliver for the customers.
Speaker #2: But Reggie, I'll walk through a little bit of the math here in the sixth to eighth percent.
You talked about a $50 million pretax MCM I talked about the 65 million of energy incentives.
Speaker #4: thought we'd get that question within the first three or so questions. So you did meet Yeah, Julien, we the over/under on that, so well done.
Our energy efficiency incentives you talk about Northstar dig re contracting.
Speaker #4: Yeah, and so I think you've got the components right where you've got ten and a half percent rate-based CAGR over this five-year window. And then if you add North Star opportunities as well as the FCM, both of which have grown versus the prior vintage, that adds about another point on top of that ten and a half percent.
Julien Dumoulin-Smith: Like, if you take the rate base plus some of these other items, how are you feeling about the 6 to 8 and what's in and what's not encompassed in the formal plan today? I'm cognizant of much of the data center discussion we just had is not explicitly.
Julien Dumoulin-Smith: Like, if you take the rate base plus some of these other items, how are you feeling about the 6 to 8 and what's in and what's not encompassed in the formal plan today? I'm cognizant of much of the data center discussion we just had is not explicitly.
You take the rate base plus some of these other items, how do you feel about six eight and.
What's in and what's not.
Encompassed in the formal plans that I'm I'm cognizant of much of the data center.
Discussion, we just had is not explicitly.
Speaker #4: And then there's some other puts and takes that we can certainly spend some time on offline. And so that gives you, I would say, a low double-digit CAGR with North Star FCM plus rate-based growth.
Yes, just to just to confirm that the data center piece is not in that would be incremental investments and we again, we know what that timeline looks like and those resources and how to accommodate those to deliver for the customers, but Roger will walk through a little bit of the math here.
Garrick Rochow: Yeah, just to confirm that, the data center piece is not, and that would be incremental investments. And we again, we know what that timeline looks like and those resources and how to accommodate those to deliver for the customers. But Reggie will walk through a little bit of the math here in the 6 to 8%.
Garrick Rochow: Yeah, just to confirm that, the data center piece is not, and that would be incremental investments. And we again, we know what that timeline looks like and those resources and how to accommodate those to deliver for the customers. But Reggie will walk through a little bit of the math here in the 6 to 8%.
Speaker #4: What bridges it down to the guide of sixth to eighth with that confidence toward the high end, which is, as I said in my prepared remarks, is call it, let's call it seven to eight, and let's realistically call it seven and a half to eight percent.
In the 6% to 8%, yes, Julian we thought we'd get that question within the first three or so question. So you did meet the over under on that so well done.
Rejji Hayes: Yeah, Julien, we thought we'd get that question within the first three or so questions, so you, you did meet the over-under on that, so well done. Yeah, and so, I think you've got the components right, where you've got 10.5% rate base CAGR over this 5-year window. And then if you add NorthStar opportunities as well as the FCM, both of which have grown versus the prior vintage, that adds about another point on top of that 10.5%. And then there's some other puts and takes that we can certainly spend some time on offline. And so that gives you, I would say, a low double-digit CAGR with NorthStar, FCM, plus rate-based growth.
Rejji Hayes: Yeah, Julien, we thought we'd get that question within the first three or so questions, so you, you did meet the over-under on that, so well done. Yeah, and so, I think you've got the components right, where you've got 10.5% rate base CAGR over this 5-year window. And then if you add NorthStar opportunities as well as the FCM, both of which have grown versus the prior vintage, that adds about another point on top of that 10.5%. And then there's some other puts and takes that we can certainly spend some time on offline. And so that gives you, I would say, a low double-digit CAGR with NorthStar, FCM, plus rate-based growth.
Speaker #4: What bridges it down to that is just the funding cost because we are issuing more equity in this plan versus the prior half percent just given our market cap today.
And so.
I think you've got the components right, where you've got 10, 5% rate base CAGR over this five year window and then if you add north Star <unk>.
Speaker #4: And again, the quantum of equity. And so you're going from a low double-digit CAGR that equity that, again, is around three and a half percent.
Opportunities as well as the STM, both of which have grown versus the prior vintage that adds about another point on top of that 10, 5% and then theres. Some other puts and takes that we can certainly spend some time on offline and so that gives you I would say a low double digit CAGR.
Speaker #4: other driver of sort of downward The of growth netted down by is just the fact that we've got about a billion seven of parent refinancings over the course of this five-year plan.
Northstar MCM plus our rate base growth, what bridges, you down to the guide of six to eight with that confidence towards the high end, which as I said in my prepared remarks is call. It let's call. It seven to eight and let's realistically call. It seven 5% to 8% our bridges you down to that is just the funding cost because we are issuing more equity in this plan versus the prior vintage we've quantified.
Rejji Hayes: What bridges it down to the guide of 6 to 8 with that confidence toward the high end, which, as I said in my prepared remarks, is call it - let's call it 7 to 8, and let's realistically call it 7.5 to 8%. What bridges you down to that is just the funding cost, because we are issuing more equity in this plan versus the prior vintage. We've quantified that as about 3.5%, just given our market cap today and again, the quantum of equity. And so you're going from a low double-digit CAGR of growth, netted down by that equity, that again, is around 3.5%.
Rejji Hayes: What bridges it down to the guide of 6 to 8 with that confidence toward the high end, which, as I said in my prepared remarks, is call it - let's call it 7 to 8, and let's realistically call it 7.5 to 8%. What bridges you down to that is just the funding cost, because we are issuing more equity in this plan versus the prior vintage. We've quantified that as about 3.5%, just given our market cap today and again, the quantum of equity. And so you're going from a low double-digit CAGR of growth, netted down by that equity, that again, is around 3.5%.
Speaker #4: that unlike the prior sort of 15 years or the first 15 years of this century, money is no And it's important to remember longer free.
Speaker #4: And so unfortunately, we'll be refinancing those parent bonds at issuance levels higher than initially they were funded at. And so there's a little bit of a negative arbitrage.
That is about three 5%.
Just given our market cap today, and again, the quantum of equity and so youre going from a low double digit CAGR of growth netted down by that equity that again is around three 5%. The other driver of sort of downward pressure on that growth is just the fact that we've got about $1 billion seven.
Speaker #4: We're re not alone in this. The entire sector will be impacted by that. But needless to say, it's important to remember that at the parent company, those financing costs are non-recoverable.
Speaker #4: And so it's a combination of the equity needs, and just parent refinancings that will drive us back down to that seven and a half to eight percent.
Rejji Hayes: The other driver of sort of downward pressure on that growth is just the fact that we've got about $1.7 billion of parent refinancings over the course of this five-year plan. And it's important to remember that unlike the prior sort of 15 years or the first 15 years of this century, money is no longer free, and so unfortunately, we'll be refinancing those parent bonds at issuance levels higher than initially they were funded at. So there's a little bit of a negative arbitrage. We are not alone in this. The entire sector will be impacted by that, but needless to say, it's important to remember that at the parent company, those financing costs are non-recoverable.
Rejji Hayes: The other driver of sort of downward pressure on that growth is just the fact that we've got about $1.7 billion of parent refinancings over the course of this five-year plan. And it's important to remember that unlike the prior sort of 15 years or the first 15 years of this century, money is no longer free, and so unfortunately, we'll be refinancing those parent bonds at issuance levels higher than initially they were funded at. So there's a little bit of a negative arbitrage. We are not alone in this. The entire sector will be impacted by that, but needless to say, it's important to remember that at the parent company, those financing costs are non-recoverable.
Speaker #4: And the last thing I'll note is just even if you do that math out and you say, "Okay, well, there's a little bit of cushion," that kind of gets me to about eight and a half percent.
Apparent refinancings over the course of this five year plan and it's important to remember that unlike the prior set of 15 years and the first 15 years of this century.
Speaker #4: Remember, we compound off of actuals every year as Garrick noted in his prepared remarks. We think that's a higher quality of earnings. And you do have to build in some contingency to be able to do that year in and year out like we've done for the past 23 years.
He is no longer free and so unfortunately, we will be refinancing those parent bonds at.
Speaker #4: And then, of course, as we've talked about before, we do not have fully coupling yet on gas and certainly not on electric. And we have storm activity.
Issuance levels higher than initially they were funded that so theres a little bit of a negative arbitrage. We are not alone in this the entire sector will be impacted by that but needless to say, it's important to remember that at the parent company of those financing costs are non recoverable and so it's a combination of the equity needs and just parent refinancings that will drive us back down to that seven.
Speaker #4: cushion as well for weather risk. And so for And so you have to build in some all those reasons, we feel good about the guide today.
Rejji Hayes: And so it's a combination of the equity needs and just parent refinancings that will drive us back down to that 7.5 to 8%. And the last thing I'll note is just even if you do that math out and you say, "Okay, well, there's a little bit of cushion, that kind of gets me to about 8.5%." Remember, we compound off of actuals every year, as Garrick noted in his prepared remarks. We think that's a higher quality of earnings, and you do have to build in some contingency to be able to do that year in and year out, like we've done for the past 23 years.
Rejji Hayes: And so it's a combination of the equity needs and just parent refinancings that will drive us back down to that 7.5 to 8%. And the last thing I'll note is just even if you do that math out and you say, "Okay, well, there's a little bit of cushion, that kind of gets me to about 8.5%." Remember, we compound off of actuals every year, as Garrick noted in his prepared remarks. We think that's a higher quality of earnings, and you do have to build in some contingency to be able to do that year in and year out, like we've done for the past 23 years.
Speaker #4: And that's how you bridge from that high teens or, sorry, not high teens, but low double-digit CAGR down to the sixth to eighth and really call it seven and a half to eight percent.
5% to 8% and the last thing I'll note is just.
Speaker #4: Is that helpful?
Even if you do that math out and you say, okay, well, there's a little bit of cushion that kind of gets me to about eight 5% remember we compound off of actuals every year as Gary noted in his prepared remarks, we think that's a higher quality of earnings and you do have to build in some contingency to be able to do that year in and year out like we've done for the past 23 years, and then of course as we've talked.
Speaker #2: Julien, just maybe I just add some yeah, Let me may I just I want to add a little more clarity even on the to Reggie's good remarks.
Speaker #2: And this will reflect here on 2025. Constructive regulatory outcomes outperformance at North Star, that allowed us to reinvest back in the business. Reggie talked about it from a customer service.
Rejji Hayes: Then, of course, as we've talked about before, we do not have a full decoupling yet on gas or—and certainly not on electric, and we have storm activity, and so you have to build in some cushion as well for weather risk. And so for all those reasons, we feel good about the guide today, and that's how you bridge from that high teens or—sorry, not high teens, but low double-digit CAGR down to the 6 to 8, and really call it 7.5 to 8%. Is that helpful?
Rejji Hayes: Then, of course, as we've talked about before, we do not have a full decoupling yet on gas or—and certainly not on electric, and we have storm activity, and so you have to build in some cushion as well for weather risk. And so for all those reasons, we feel good about the guide today, and that's how you bridge from that high teens or—sorry, not high teens, but low double-digit CAGR down to the 6 to 8, and really call it 7.5 to 8%. Is that helpful?
Before we do not have.
Speaker #2: We were able to do that this year. poll ahead perspective. Additional tree trimming, work on the gas Better system. We also de-risked future years.
Decoupling, yet on gas or and certainly not on electric and we have storm activity and so you have to build in some cushion as well for rather weather risk and so for all those reasons, we feel good about the guide today and that's how you bridge from that high teens or sorry, not high teens, but low double digit CAGR down to the six to eight and really call. It seven 5% to 8% is that helpful.
Speaker #2: And then there was upside that we were able to pass on to our investors. And then we had the confidence to, again, compound off that and so this should speak to the strength of our plan and our confidence in the plan.
Speaker #2: And growth.
Speaker #2: And so again, don't underestimate this compounding piece, sixth to eighth to the high end in this compounding. Of add three cents to our guide.
Garrick Rochow: Let me. Look, may I just-
Garrick Rochow: Let me. Look, may I just-
Let me just.
Rejji Hayes: No, that's excellent.
Julien Dumoulin-Smith: No, that's excellent.
Garrick Rochow: I want to add a little more clarity, even on to, to Rejji's good remarks. And just reflect here on 2025, constructive regulatory outcomes, outperformance at NorthStar, that allowed us to reinvest back in the, in the business. Rejji talked about from a pull-ahead perspective, better customer service. We were able to do that this year, additional tree trimming, work on the gas system. We also de-risked future years, and there was upside that we were able to pass on to, to our investors. And then we had the confidence to, again, compound off that and add $0.03 to our guide. And so, like, this should speak to the, the strength of our plan and our confidence in the plan. And so again, don't underestimate this compounding piece, 6 to 8 to the high end in this compounding, of growth.
Maybe I'll just add some yes.
Garrick Rochow: I want to add a little more clarity, even on to, to Rejji's good remarks. And just reflect here on 2025, constructive regulatory outcomes, outperformance at NorthStar, that allowed us to reinvest back in the, in the business. Rejji talked about from a pull-ahead perspective, better customer service. We were able to do that this year, additional tree trimming, work on the gas system. We also de-risked future years, and there was upside that we were able to pass on to, to our investors. And then we had the confidence to, again, compound off that and add $0.03 to our guide. And so, like, this should speak to the, the strength of our plan and our confidence in the plan. And so again, don't underestimate this compounding piece, 6 to 8 to the high end in this compounding, of growth.
I want to add a little more clarity even under Reg is good remarks.
Reflect here on 2025 constructive regulatory outcomes outperformance of Northstar that allowed us to reinvest back in the business right you talked about from a pull ahead perspective, better customer service, we're able to do that this year additional tree trimming work on the gas system. We also derisked future years, and there was upside that we're able to pass on to.
Speaker #4: Appreciate the comprehensive nature of that response That's awesome. Thank you so much. and also appreciate I'm on the bingo card today. All right, guys, all the
Speaker #4: best. The next question comes from Nick Campanella
Speaker #5: from Barclays. Nick, please go ahead. Your line is
Speaker #5: open.
Speaker #6: Hey, good morning, everyone. Thanks for the answers on the rate-based to earnings walk. That was very Maybe just a large component of the plan is also just the authorized returns.
To our investors and then we have the confidence to again compound off that and add three through our guide and so like.
This should speak to the strength of our plan and our confidence in the plan and so again don't underestimate. This compounding piece six day to the high end and this compounding of growth.
Speaker #6: And I hear the comments about expecting something closer to a 9.9, but just the PFD, I would say, is just quite concerning from seeing an eight and change ROE significantly below the national average.
That's awesome. Thank you so much I appreciate the comprehensive nature of that response.
Rejji Hayes: That's awesome. Thank you so much. Appreciate the comprehensive nature of that response, and also appreciate I'm on the bingo card today. All right, guys, all the best.
Julien Dumoulin-Smith: That's awesome. Thank you so much. Appreciate the comprehensive nature of that response, and also appreciate I'm on the bingo card today. All right, guys, all the best.
Speaker #6: Not really representative of the cost of capital environment that you guys kind of spoke to in the prepared. So just maybe kind of talk a little bit about what the feedback from stakeholders has been since this has come out tree into March here and just overall confidence for a constructive outcome.
I appreciate how long the bingo card today, alright, guys all the best.
The next question comes from Nick Campanella from Barclays. Please go ahead. Your line is open.
Operator: The next question comes from Nick Campanella from Barclays. Nick, please go ahead. Your line is open.
Operator: The next question comes from Nick Campanella from Barclays. Nick, please go ahead. Your line is open.
Hey, good morning, everyone. Thanks for thanks for the answers on the rate base to earnings walk that was very helpful.
Nick Campanella: Hey, good morning, everyone. Thanks for, thanks for the answers on, the rate base to, to earnings walk. That was very helpful. You know, maybe, you know, maybe just a, a large component of the plan is also just, you know, the authorized returns. And, you know, I hear the comments about, you know, expecting, you know, something closer to a 9.9. But just, you know, the PFD, I, I would say, is just quite concerning from, you know, seeing an 8 and change ROE significantly below the national average, not really representative of the, the cost of capital environment that you guys kind of spoke to in the prepared.
Nick Campanella: Hey, good morning, everyone. Thanks for, thanks for the answers on, the rate base to, to earnings walk. That was very helpful. You know, maybe, you know, maybe just a, a large component of the plan is also just, you know, the authorized returns. And, you know, I hear the comments about, you know, expecting, you know, something closer to a 9.9. But just, you know, the PFD, I, I would say, is just quite concerning from, you know, seeing an 8 and change ROE significantly below the national average, not really representative of the, the cost of capital environment that you guys kind of spoke to in the prepared.
Speaker #3: Look, I'm not concerned about the be super clear, this team, ALJ PFD at all. Just to the CMS ENERGY team, is delivered. And we've got a track record of
Maybe maybe this is a large component of the plan is also just the authorized returns and I hear the comments about.
As.
Expecting.
Speaker #3: performance. And credit goes to the team and a very constructive regulatory environment. And as I shared, just to and how you're kind of viewing the decision I expect an ROE of 9.9 or better.
Something closer to a 99, but just the PSP I would say it was just quite concerning from seeing an eight and change row significantly below the national average not really representative of the cost of capital environment that you guys kind of spoke to in the prepared so just maybe kind of talk a little bit about what the feedback from stakeholders have been since.
Speaker #3: better. In the context of this Not close to 9.9, 9.9 or case. And let's just take that 8.2. It's an outlier. It's not well supported.
Nick Campanella: So just maybe kind of talk a little bit about what the feedback from stakeholders has been since this has come out, and you know, how you're kind of viewing the decision tree, into March here and just overall confidence for a constructive outcome.
Nick Campanella: So just maybe kind of talk a little bit about what the feedback from stakeholders has been since this has come out, and you know, how you're kind of viewing the decision tree, into March here and just overall confidence for a constructive outcome.
Speaker #3: It doesn't discounted in this case. But I will point match the environment. to this. Take the It's going to be revenue deficiency, the ALJ offer.
This has come out and how you're kind of viewing the decision tree.
And into March here in just the overall confidence for a constructive outcome.
Speaker #3: $168 million. Apply a prevailing ROE of be clear, we expect a constructive outcome. And 9.9. It's like the number goes to 314. Right? That's actually in the ballpark where staff is at.
Look I'm not concerned about that.
Garrick Rochow: Look, I'm not concerned about the ALJ PFD at all. Just to be super clear, this team, the CMS Energy team, has delivered, and we've got a track record of performance, and credit goes to the team and a very constructive regulatory environment. And as I shared, just to be clear, we expect a constructive outcome, and I expect an ROE of 9.9 or better. Not close to 9.9, 9.9 or better in the context of this case. And let's just take that 8.2, like it's an outlier. It's not well supported. It doesn't match the environment, like it's gonna be discounted in this case. But I will point to this: take the revenue deficiency that the ALJ offered, $168 million, apply a prevailing ROE of 9.9. It's like the number goes to $314, right?
Garrick Rochow: Look, I'm not concerned about the ALJ PFD at all. Just to be super clear, this team, the CMS Energy team, has delivered, and we've got a track record of performance, and credit goes to the team and a very constructive regulatory environment. And as I shared, just to be clear, we expect a constructive outcome, and I expect an ROE of 9.9 or better. Not close to 9.9, 9.9 or better in the context of this case. And let's just take that 8.2, like it's an outlier. It's not well supported. It doesn't match the environment, like it's gonna be discounted in this case. But I will point to this: take the revenue deficiency that the ALJ offered, $168 million, apply a prevailing ROE of 9.9. It's like the number goes to $314, right?
ALJ PFD at all just to be Super clear. This team the <unk> team has delivered.
Speaker #3: It's actually a lot closer. And so There's good justification for the capital investments. There's good justification for what we need to do in O&M and tree trimming and storm restoration and the like.
And we've got a track record of performance and credit goes to the team and a very constructive regulatory environment and as I shared just to be clear, we expect a constructive outcome and I expect an ROE of nine nine or better not close to $9 99.9 or better in the context of this case and let's just take that $8 to like it's an outlier it's not.
Speaker #3: And then turn to staff's position. Right? Like I said in my prepared remarks, professionals. Amazing public servants who are dedicated to understanding this industry.
Speaker #3: And there's a lot of stuff that goes on outside of the cases. IRPs and REPs and building outside the case for the next case.
Well support it doesn't match the environment like it is going to be discounted in this case, what I will point to this.
Take the revenue deficiency that the ALJ offer $168 million.
Speaker #3: And then you CMS ENERGY team, does an amazing job of having improved our testimony and justification and business cases. For these reliability roadmaps. We're building a case like we're very constructive as well.
Speaker #3: go into the case. Right? It's three And this team, the of 423. And so there is a clear path to a constructive outcome. In terms of ROEs, we've heard it from the bench.
Why a prevailing ROA of $99, it's like the number goes to $3 14.
Right, that's actually in the ballpark, where staff are that there's actually a lot closer.
Garrick Rochow: That's actually in the ballpark where staff is at. It's actually a lot closer. And so that speaks to the merits of the case. Like, there's good justification for the capital investment. There's good justification for what we need to do in O&M, and tree trimming, storm restoration, and the like, and then turn to staff's position, right? Like I said in my prepared remarks, professionals, amazing public servants who are dedicated to understanding this industry. And there's a lot of stuff that goes on outside of the cases, IRPs and REPs and reliability roadmaps. We're building a case, like we're building outside the case for the next case, and then you go into the case. And this team, the CMS Energy team, does an amazing job of and have improved our testimony and justification and business cases for these investments.
Garrick Rochow: That's actually in the ballpark where staff is at. It's actually a lot closer. And so that speaks to the merits of the case. Like, there's good justification for the capital investment. There's good justification for what we need to do in O&M, and tree trimming, storm restoration, and the like, and then turn to staff's position, right? Like I said in my prepared remarks, professionals, amazing public servants who are dedicated to understanding this industry. And there's a lot of stuff that goes on outside of the cases, IRPs and REPs and reliability roadmaps. We're building a case, like we're building outside the case for the next case, and then you go into the case. And this team, the CMS Energy team, does an amazing job of and have improved our testimony and justification and business cases for these investments.
That speaks to the merits of the case like Theres good justification for the capital investment Theres. Good justification for what we need to do in O&M and tree trimming and storm restoration and the like.
And then turned to staffs position.
Right like I said in my prepared remarks professionals.
Speaker #3: From the chair that excess has been driven out. And I believe supported by testimony, again, clear testimony, supports these ROEs, that this commission sees the importance of attractive and attracting capital to Michigan.
Amazing public servants, who are dedicated to understanding this industry and there's a lot of stuff that goes on outside of the cases Rfps Rfps reliability Roadmaps. We're building a case like were building outside the case for the next case and then you go into the case and this team the CMS Energy's team does an amazing job and have improved our testimony and justification.
Speaker #3: And including our customers. So that gives me a great confidence that we'll be able to achieve a successful outcome in this rate case as well as an ROE of 9.9 or
Business cases for these investments and the revenue deficiency for staff is very constructive as well right. It's three three <unk> I guess I'm asking.
Garrick Rochow: The revenue deficiency from staff is very constructive as well, right? It's $317, against an ask of $423. So, like, there is a clear path to a constructive outcome. In terms of ROEs, we've heard it from the bench, from the chair, that excess has been driven out, and I believe, supported by testimony, again, clear testimony supports these ROEs, that this commission sees the importance of attractive and attracting capital to Michigan, and that's important for all stakeholders, including our customers. So that gives me great confidence that we'll be able to achieve a successful outcome in this rate case, as well as an ROE of 9.9 or better.
Garrick Rochow: The revenue deficiency from staff is very constructive as well, right? It's $317, against an ask of $423. So, like, there is a clear path to a constructive outcome. In terms of ROEs, we've heard it from the bench, from the chair, that excess has been driven out, and I believe, supported by testimony, again, clear testimony supports these ROEs, that this commission sees the importance of attractive and attracting capital to Michigan, and that's important for all stakeholders, including our customers. So that gives me great confidence that we'll be able to achieve a successful outcome in this rate case, as well as an ROE of 9.9 or better.
Speaker #3: better. All right.
Speaker #6: Thanks for those thoughts. Really appreciate that. And then just on the IRP can you maybe kind of one to two talk about how the impacts the capacity need and just or maybe just level set without this?
423.
So.
Like there is a clear path to a constructive outcome in terms of ROE.
We've heard it.
From the bench from the chair that excess has been driven out and I believe supported by testimony again clear testimony support. These ROE that this commission sees the importance of attractive and attracting capital to Michigan and that's important for all stakeholders, including our customers. So that gives me great confidence that we'll be able to achieve.
Speaker #6: What is kind of the outlook for the capacity need out to the early 2030s? And then a follow-on is just when you would wrap in the one to two gigs, do you see it as truly incremental to the 10 and a half CAGR that the large low tariffs should protect customers from a rate standpoint and this should purely translate to additional rate-based growth?
<unk> successful outcome in this rate case as well as a an ROA of 99 or better.
Alright. Thanks, Thanks for those thoughts appreciate that and then just on.
Nick Campanella: ... All right. Thanks, thanks for those thoughts. Really, really appreciate that. And then just, you know, on the IRP, can you maybe kind of talk about how the 1 to 2 gigawatts in final stages kind of impacts the capacity need and just or maybe just level set, you know, without this, what is kind of the outlook for the capacity need out to the, you know, early 2030s? And then, you know, a follow-on is just when you would wrap in the 1 to 2 GW, do you see it as truly incremental to the 10.5 CAGR that you outlined today, just given the Large Load Tariff should protect customers from a rate standpoint, and, you know, this should purely translate to additional rate base growth? Thanks.
Nick Campanella: ... All right. Thanks, thanks for those thoughts. Really, really appreciate that. And then just, you know, on the IRP, can you maybe kind of talk about how the 1 to 2 gigawatts in final stages kind of impacts the capacity need and just or maybe just level set, you know, without this, what is kind of the outlook for the capacity need out to the, you know, early 2030s? And then, you know, a follow-on is just when you would wrap in the 1 to 2 GW, do you see it as truly incremental to the 10.5 CAGR that you outlined today, just given the Large Load Tariff should protect customers from a rate standpoint, and, you know, this should purely translate to additional rate base growth? Thanks.
On the ERP.
Speaker #2: Just to are not in the plan. So any growth from the be clear on this, the data centers
Can you maybe kind of talk about.
How the one to two.
Speaker #2: data centers that are in that funnel are not included in the customer investment plan. Just to be clear about that. And so when I think about this Thanks.
Gigawatts in final stages kind of impacts the capacity need and just or maybe just level set without this what is kind of the outlook for the capacity need.
Speaker #2: integrated resource plan, and I've shared this in some of the calls, we got a renewable energy law. Or clean energy law. And so much of that's already been approved in the renewable energy plan.
Out to the early 2000 Thirty's.
And then a follow on is just.
Speaker #2: So you're going to see that within this IRP. But there's a gap in capacity. You can put all this clean energy in, but you need to fill the gaps when the sun's not shining and the wind's not blowing.
When you when you would wrap in the one to two gigs do you see it as truly incremental to the pennon half CAGR that you outlined today, just given the large low tariff should should protect customers from a rate standpoint, and this should purely translate to additional rate base growth. Thanks.
Speaker #2: You just have to do that. And you're going to do that with batteries. And you're going to do that with natural gas. That's going to be have to be part of the mix.
Speaker #2: And so then when we look forward, we also know this, right? We've got low growth in the state. Again, separate from those that funnel.
Just to be clear on this the data centers are not in the plan. So any growth from the data centers that are in that funnel are not included in the customer investment plan just to be clear about that and so when I think about this integrated resource plan and I've shared this in some other calls we've got a we've got a renewable energy law, a clean energy law and so.
Garrick Rochow: Just to be clear on this, the data centers are not in the plan. So any growth from the data centers that are in that funnel are not included in the customer investment plan. Just to be clear about that. So when I think about this Integrated Resource Plan, and I've shared this in some of the calls, we got a renewable energy law, a Clean Energy Law. Much of that's already been approved in the Renewable Energy Plan. So you're gonna see that within this IRP. But there's a gap in capacity. You can put all this clean energy in, but you need to fill the gaps when the sun's not shining and the wind's not blowing. Just. You just have to do that.
Garrick Rochow: Just to be clear on this, the data centers are not in the plan. So any growth from the data centers that are in that funnel are not included in the customer investment plan. Just to be clear about that. So when I think about this Integrated Resource Plan, and I've shared this in some of the calls, we got a renewable energy law, a Clean Energy Law. Much of that's already been approved in the Renewable Energy Plan. So you're gonna see that within this IRP. But there's a gap in capacity. You can put all this clean energy in, but you need to fill the gaps when the sun's not shining and the wind's not blowing. Just. You just have to do that.
Speaker #2: 450 megawatts of connected load last year. That was on our slide last quarter, right? Those have already been next year alone. And we forecast 2 to 3% over the five-year plan.
Speaker #2: 3% low growth just 2031. Right? That's a roughly a gigawatt of capacity. And so those capacity needs that we're foreshadowing here have to play out in this next IRP and are built into this 24 billion dollar customer investment plan.
Speaker #2: And so we've got to be able to deliver on that, right? And then you look forward and you've got some retirements. We've got current connected.
And much of that has already been approved in the renewable energy plan, so youre going to see that within the Saar ERP, but there is a gap in capacity you can put all those clean energy and but you need to fill the gaps when funds not shining and the wind's not blowing.
Just have to do that and you're gonna do that with batteries and youre going to do that with natural gas that's going to be have to be part of the mix and so then when we look forward. We also know this right. We've got load growth in the state again separate from those that funnel 450 megawatts of connected load last year that was on a slide last quarter right those have already been <unk>.
Garrick Rochow: You're gonna do that with batteries, and you're gonna do that with, you know, natural gas. That's gonna have to be part of the mix. So then when we look forward, we also know this, right? We've got load growth in the state. Again, separate from those that funnel. 450MW of connected load last year. That was on our slide last quarter, right? Those have already been connected. It's 3% load growth just next year alone, and we forecast 2% to 3% over the 5-year plan. So we've got to be able to deliver on that, right? Then you look forward and you've got some retirements. We've got current three and four, that's, you know, oil-fired peakers that are gonna retire in 2031, right? That's roughly 1GW of capacity.
Garrick Rochow: You're gonna do that with batteries, and you're gonna do that with, you know, natural gas. That's gonna have to be part of the mix. So then when we look forward, we also know this, right? We've got load growth in the state. Again, separate from those that funnel. 450MW of connected load last year. That was on our slide last quarter, right? Those have already been connected. It's 3% load growth just next year alone, and we forecast 2% to 3% over the 5-year plan. So we've got to be able to deliver on that, right? Then you look forward and you've got some retirements. We've got current three and four, that's, you know, oil-fired peakers that are gonna retire in 2031, right? That's roughly 1GW of capacity.
Speaker #6: Yeah, Nick, this is Reggie. All I would add to Garrick's good comments is that, and I think we've shared this sensitivity in the past, but generally, every gigawatt of additional load we bring under the system will need anywhere from, call it, two and a half billion dollars to about five, five plus billion dollars.
It is 3% load growth just next year alone and we forecast, 2% to 3% over the or the five year plan and so we got to be able to deliver on that and then you look forward and you've got some retirements, we've got current three and four.
Speaker #6: And that is a combination of the distribution-related resources needed to interconnect the load opportunity as well as additional supply. And I think this point that Garrick has raised is critical.
Oil fired Peters, they're going to retire in 2031.
Alright, that's roughly a gigawatt of capacity and so those capacity needs.
Speaker #6: And our differentiation versus perhaps some of our peers, this CAPEX backlog that we're laying out for you today, this five-year plan, the 24 billion not predicated on us landing these large load opportunities.
Garrick Rochow: And so those capacity needs that we're foreshadowing here have to play out in this next IRP and are built into this $24 billion customer investment plan.
Garrick Rochow: And so those capacity needs that we're foreshadowing here have to play out in this next IRP and are built into this $24 billion customer investment plan.
We're foreshadowing here have to play out in this next ERP and are built into this $24 billion.
Customer investment plan.
Speaker #6: So that creates incremental CAPEX and direct to directly ask answer one of the parts of your would, in fact, go up if we landed one question.
Yeah. Nick this is raging all I would add to <unk> comments is that and I think we've shared the sensitivity in the past, but generally every gigawatt of additional load we bring onto the system will need anywhere from call. It $2 $5 billion to about $5 five plus billion dollars and that is a combination of the distribution.
Rejji Hayes: Yeah, Nick, this is Rejji. All I would add to Garrick's good comments is that, and I think we've shared this sensitivity in the past, but generally, every gigawatt of additional load we bring onto the system will need anywhere from, call it, $2.5 billion to about five, $5+ billion. And that is a combination of the distribution-related resources needed to interconnect the load opportunity as well as additional supply. And I think this point that Garrick has raised is critical in our differentiation versus perhaps some of our peers. This CapEx backlog that we're laying out for you today, this five-year plan, the $24 billion, not predicated on us landing these large load opportunities.
Rejji Hayes: Yeah, Nick, this is Rejji. All I would add to Garrick's good comments is that, and I think we've shared this sensitivity in the past, but generally, every gigawatt of additional load we bring onto the system will need anywhere from, call it, $2.5 billion to about five, $5+ billion. And that is a combination of the distribution-related resources needed to interconnect the load opportunity as well as additional supply. And I think this point that Garrick has raised is critical in our differentiation versus perhaps some of our peers. This CapEx backlog that we're laying out for you today, this five-year plan, the $24 billion, not predicated on us landing these large load opportunities.
Speaker #6: of these opportunities and had to build out more capacity The rate-based CAGR to accommodate its needs. So obviously, a lot of opportunity on the outside looking in and look forward to giving you updates later in the year.
Related resources needed to interconnect the load opportunity as well as additional supply and I think this point the gara because raised is critical and our differentiation versus perhaps some of our peers. This capex backlog that we're laying out for you today. This five year plan and the $24 billion not predicated on us landing these large <unk>.
Speaker #4: Hey, thanks a lot. That's really clear. And appreciate the time. Thank you.
Speaker #5: The next question comes from Shaw Pereza from Wells Fargo. Shaw, your line is open. Please go
Speaker #5: ahead. Good morning.
Speaker #7: This is Marcella Pettiprin on for Shaw. Thanks for taking our question.
Speaker #2: Yeah, good morning.
The opportunities so that creates incremental capex and direct to directly ask answer one of the parts of your question the rate base CAGR would in fact go up if we landed one of these opportunities and had to build out more capacity to accommodate its needs. So obviously a lot of opportunity on the outside looking in and look forward to giving you updates later in the year.
Rejji Hayes: So that creates incremental CapEx, and to directly answer one of the parts of your question, the rate-based CAGR would in fact go up if we landed one of these opportunities and had to build out more capacity to accommodate its needs. So obviously, a lot of opportunity on the outside looking in, and look forward to giving you updates later in the year.
Rejji Hayes: So that creates incremental CapEx, and to directly answer one of the parts of your question, the rate-based CAGR would in fact go up if we landed one of these opportunities and had to build out more capacity to accommodate its needs. So obviously, a lot of opportunity on the outside looking in, and look forward to giving you updates later in the year.
Speaker #7: Thanks. So you highlight bill growth compared to the national average and to share of wallet, as well as potential addition. And we've seen rates be a really big topic in Google tutorial elections.
Speaker #7: So last year savings with a one gigawatt data center with Nike Cheryl in New Jersey and just this you thinking about affordability going into the election week with Josh Shapiro in Pennsylvania.
Speaker #7: How are year in Michigan?
Hey, Thanks, a lot that's really clear and I appreciate the time. Thank you.
Nick Campanella: Hey, thanks a lot. That's really clear, and appreciate the time. Thank you.
Nick Campanella: Hey, thanks a lot. That's really clear, and appreciate the time. Thank you.
Speaker #2: Marcella, it is a great question. And the good thing is this isn't our first rodeo. We've been doing the affordability and the cost savings for a long, long time.
The next question comes from Sean <unk> from Wells Fargo. Charley. Your line is open. Please go ahead.
Operator: The next question comes from Shar Pourreza from Wells Fargo. Shar, your line is open. Please go ahead.
Operator: The next question comes from Shar Pourreza from Wells Fargo. Shar, your line is open. Please go ahead.
Speaker #2: But this issue, as you pointed out, is not a Michigan issue. It's broader national issue. And frankly, when you got a K-shaped economy, this president is going to have some challenges in this midterm election.
Good morning, My follow up had a plan on for Shar, It's trickled down question.
Marcella Pedapran: Good morning. This is Marcella Pedapran on for Shar. Thanks for taking our question.
Marcella Petiprin: Good morning. This is Marcella Pedapran on for Shar. Thanks for taking our question.
Yes, good morning.
Garrick Rochow: Yeah, good morning.
Garrick Rochow: Yeah, good morning.
Okay.
Marcella Pedapran: Thanks. So you highlight bill growth compared to the national average and to share of wallet, as well as potential savings with a 1-gigawatt data center addition. And we've seen rates be a really big topic in gubernatorial elections, so last year with Mikie Sherrill in New Jersey and just this week with Josh Shapiro in Pennsylvania. How are you thinking about affordability going into the election year in Michigan?
Marcella Petiprin: Thanks. So you highlight bill growth compared to the national average and to share of wallet, as well as potential savings with a 1-gigawatt data center addition. And we've seen rates be a really big topic in gubernatorial elections, so last year with Mikie Sherrill in New Jersey and just this week with Josh Shapiro in Pennsylvania. How are you thinking about affordability going into the election year in Michigan?
Speaker #2: And so when you look at across the nation, and particularly look at energy costs, it's most pronounced in PJM. And reminder, we are not PJM.
So I think bill growth compared to the national average and to share of wallet as well as potential savings with a one gigawatt Edison condition and we've seen rates it really big topic, and it's really an election, that's right. Thank you Charlotte in New Jersey.
Speaker #2: We're MISO. And PJM, all those costs are flowing through the customer. All those supply and energy and capacity dynamics are flowing right to the customer.
Josh Shapiro in Pennsylvania, how are you thinking about affordability going into the election here in Michigan.
Speaker #2: 50% of the bill. And it's happening with deregulated utilities, right? All that flows through and impacts the residential customer. The good thing about us, again, we're not PJM.
Marsal. It is a great question and the good thing is this isn't our first rodeo we've been doing the affordability and the cost savings for a long long time, but this this issue as you pointed out is not a michigan issue its broader national issue and frankly, when you got a case shaped economy like this price.
Garrick Rochow: Marcella, it is a great question, and the good thing is, this isn't our first rodeo. We've been doing the affordability and the cost savings for a long, long time. But this, this issue, as you pointed out, is not a Michigan issue, it's a broader national issue. And frankly, when you got a K-shaped economy, like this president is gonna have some challenges in this midterm election. And so when you look at across the nation, and particularly look at energy costs, it's most pronounced in PJM. And reminder, we are not PJM, we're MISO. In PJM, all those costs are flowing through to the customer. All those supply and energy and capacity dynamics are flowing right to the customer, 50% of the bill. And it's happening with deregulated utilities, right? All that flows through and impacts the residential customer.
Garrick Rochow: Marcella, it is a great question, and the good thing is, this isn't our first rodeo. We've been doing the affordability and the cost savings for a long, long time. But this, this issue, as you pointed out, is not a Michigan issue, it's a broader national issue. And frankly, when you got a K-shaped economy, like this president is gonna have some challenges in this midterm election. And so when you look at across the nation, and particularly look at energy costs, it's most pronounced in PJM. And reminder, we are not PJM, we're MISO. In PJM, all those costs are flowing through to the customer. All those supply and energy and capacity dynamics are flowing right to the customer, 50% of the bill. And it's happening with deregulated utilities, right? All that flows through and impacts the residential customer.
Speaker #2: We're MISO. And also, we're a regulated utility. And we own generation. So we're able to hedge that cost. And I showed on my first slide, just this year alone, in 2025, we saved our customers $250 million by self-generating with our own units that are a good heat rate, versus buying from the market.
<unk> is going to have some challenges in this mid term election, and so when you look at across the nation in particularly we've got energy costs. It's most pronounced in PJM and reminder, we are not PJM, where MISO and PJM all of those costs are flowing through to the customer of supply and energy and capacity dynamics or flown.
Speaker #2: And the exposure to the volatility of the market. 250. And if you go back a year ago, it was over 200 million. If you go back three years ago, it was approaching 200 million dollars.
Speaker #2: It's in all, if you go back to Q4 calls and the slide deck, you'll see all that information. So that's why I say it's not our first rodeo.
Right to the customer 50% of the Bill and it is happening it with deregulated utilities right all of that flow through and hit back impacts of residential customer. The good thing about US again, we're not PJM, where MISO and also we're a regulated utility and we own generation. So we're able to hedge that cost and I showed on my first slide just.
Speaker #2: our gas business. We buy gas in the We do the same thing in summer. We have the largest natural gas storage fields in the world.
Garrick Rochow: The good thing about us, again, we're not PJM, we're MISO, and also we're a regulated utility, and we own generation, so we're able to hedge that cost. I showed on my first slide, just this year alone, in 2025, we saved our customers $250 million by self-generating with our own units that are at a good heat rate versus buying from the market and an exposure to the volatility market, 250. If you go back a year ago, it was over $200 million. If you go back 3 years ago, it was approaching $200 million. It's an all. If you go back to 4 calls in the slide deck, you'll see all that information. So like, that's why I say it's not our first rodeo. We do the same thing in our gas business.
Garrick Rochow: The good thing about us, again, we're not PJM, we're MISO, and also we're a regulated utility, and we own generation, so we're able to hedge that cost. I showed on my first slide, just this year alone, in 2025, we saved our customers $250 million by self-generating with our own units that are at a good heat rate versus buying from the market and an exposure to the volatility market, 250. If you go back a year ago, it was over $200 million. If you go back 3 years ago, it was approaching $200 million. It's an all. If you go back to 4 calls in the slide deck, you'll see all that information. So like, that's why I say it's not our first rodeo. We do the same thing in our gas business.
Speaker #2: And we deliver that low-cost gas in the winter. Keep our gas supply costs low. This affordability is not new to us. I talked about it in my prepared remarks.
This year alone in 2025, we saved our customers $250 million by self generating with.
Speaker #2: 100 million dollars of savings through the CUA. 450 over the last five years. 1.2 billion of customer measures from energy efficiency perspective, right? I can go on and on about the things we do.
Our own units that are a good heat rate versus buying from the market and an exposure to the volatility market 250, and if you go back a year ago. It was over 200 million. If you go back three years ago. It was approaching $200 million. It's in all if you go back to Q4 calls in the slide deck Youll see all of that information. So that's why I say, it's not our first rodeo we do the same thing in our <unk>.
Speaker #2: here's some data. And you can look to the Detroit And news on this. Richard Zuba, Hold, Michigan residents, Michigan voters, and they asked about this question on cost of living.
Speaker #2: And 80%, that's a huge number in a poll, 80% of Michigan residents said the issue with cost of living was groceries. Groceries. It wasn't energy.
<unk> business, we buy gas in the summer we have a net largest natural gas storage fields in the world and we deliver that low cost gas in the winter keep our gas supply cost low. This affordability is not new to us I talked about in my prepared remarks $100 million of savings through the CE way 450 over the last five.
Garrick Rochow: We buy gas in the summer, we have the largest natural gas storage fields in the world, and we deliver that low-cost gas in the winter, keep our gas supply costs low. This affordability is not new to us. I talked about in my prepared remarks, $100 million of savings through the CUA, $450 million over the last five years, $1.2 billion of customer measures from energy efficiency perspective, right? I can go on and on about the things we do. Here's some data, and you can look to the Detroit News on this. Richard Czuba told Michigan residents, Michigan voters and they asked about this question on cost of living, and 80%, that's a huge number in a poll. 80% of Michigan residents said the issue with cost of living was groceries. Groceries.
Garrick Rochow: We buy gas in the summer, we have the largest natural gas storage fields in the world, and we deliver that low-cost gas in the winter, keep our gas supply costs low. This affordability is not new to us. I talked about in my prepared remarks, $100 million of savings through the CUA, $450 million over the last five years, $1.2 billion of customer measures from energy efficiency perspective, right? I can go on and on about the things we do. Here's some data, and you can look to the Detroit News on this. Richard Czuba told Michigan residents, Michigan voters and they asked about this question on cost of living, and 80%, that's a huge number in a poll. 80% of Michigan residents said the issue with cost of living was groceries. Groceries.
Speaker #2: It's a different fact pattern here in Michigan. And so we continue to focus on it. And that's why we're able to talk about being below the Midwest average and the national average, because we deliver.
Speaker #2: Now, you brought up the important piece of this affordability in the election. And just to be clear, we've got 10 people running for governor.
Here's $1 2 billion of customer measures from energy efficiency perspective, right I can go on and on about the things, we do and here's the here's some data and you can look at the Detroit News on this.
Speaker #2: It's a crowded field, right? And everyone's trying to find their little lane. And they talk about different extremes. So extreme politics, like dead catting.
Richard Zuba old Miss.
Michigan residents, Michigan voters and they asked about this question on cost of living and 80%. That's a huge number and about 80% of Michigan residents. So the issue with cost of living was groceries groceries. It wasn't energy like it's a different fact pattern here in Michigan.
Speaker #2: There's all kinds of ways to describe all this stuff. But again, you got to look at the polling numbers here. And the other important piece is, so who's polling?
Speaker #2: And so we know that. We work with them. That's an important piece. But also remember another piece in this. There's plenty of information that shows that rate freezes in Michigan are legal.
Garrick Rochow: It wasn't energy. Like, it's a different fact pattern here in Michigan. So we continue to focus on it, and that's why we're able to talk about being below the Midwest average and the national average, because we deliver. Now, you brought up the important piece of this affordability in the election. Just to be clear, we've got 10 people running for governor. It's a crowded field, right? Everyone's trying to find their little lane, and, you know, they talk about different extremes, you know, extreme politics, like, dead catting. There's all kinds of ways to describe all this stuff, but again, you got to look at the polling numbers here. The other important piece is, so who's polling? So we know that. We work with them. That's an important piece.
Garrick Rochow: It wasn't energy. Like, it's a different fact pattern here in Michigan. So we continue to focus on it, and that's why we're able to talk about being below the Midwest average and the national average, because we deliver. Now, you brought up the important piece of this affordability in the election. Just to be clear, we've got 10 people running for governor. It's a crowded field, right? Everyone's trying to find their little lane, and, you know, they talk about different extremes, you know, extreme politics, like, dead catting. There's all kinds of ways to describe all this stuff, but again, you got to look at the polling numbers here. The other important piece is, so who's polling? So we know that. We work with them. That's an important piece.
And so we continue to focus on it and that's why we're able to talk about being below the Midwest average than the national average because we deliver now you brought up the important piece of this affordability in the election.
Speaker #2: Go back to Act III of 1939. Go to public act 191 of 1982. Go back Michigan in Michigan, in the Michigan Supreme Court. So again, we've got a good fact pattern affordability.
And just to be clear, we've got 10 people running for governor, it's a crowded field right and everyone's trying to find their little lane and they talk about different extremes.
Speaker #2: We've got good case law and good precedent. But that's not all we to case law of do. We go meet with these candidates, these gubernatorial candidates.
Extreme politics like dead Caddy, and there's all kinds of ways to describe all this stuff, but again you got to look at the polling numbers here and the other important pieces. So who's point and so we know that we work with them. That's an important piece, but also remember in other piece and that there's plenty of information that shows the rate freezes in Michigan Our Lee.
Speaker #2: And I pull out two pieces of paper, double-sided, two pieces of paper. And I present them with 10 policy things. Policy and legislative things that they can do to improve affordability.
Garrick Rochow: But also remember another piece in this, there's plenty of information that shows that rate freezes in Michigan are legal. Go back to Act 3 of 1939. Go to Public Act 191 of 1982. Go back to case law of Michigan, in Michigan, in the Michigan Supreme Court. So again, we've got a good fact pattern affordability, we've got good case law and good precedent, but that's, that's not all we do. Well, we go meet with these candidates, these gubernatorial candidates, and I pull out two, two pieces of paper, double-sided, two pieces of paper, and I present them with 10 policy things, policy and legislative things that they can do to improve affordability. And I will tell you, Rs like some of them, and Ds like some of them, but you know what? That changes the conversation. Now I'm with them. Now I'm a partner.
Garrick Rochow: But also remember another piece in this, there's plenty of information that shows that rate freezes in Michigan are legal. Go back to Act 3 of 1939. Go to Public Act 191 of 1982. Go back to case law of Michigan, in Michigan, in the Michigan Supreme Court. So again, we've got a good fact pattern affordability, we've got good case law and good precedent, but that's, that's not all we do. Well, we go meet with these candidates, these gubernatorial candidates, and I pull out two, two pieces of paper, double-sided, two pieces of paper, and I present them with 10 policy things, policy and legislative things that they can do to improve affordability. And I will tell you, Rs like some of them, and Ds like some of them, but you know what? That changes the conversation. Now I'm with them. Now I'm a partner.
Speaker #2: And I will tell you, ours, like some of them, and these like some of them. But you know what that changes the conversation? Now I'm with them.
<unk>.
Going back to add three or 1939 go to public at 191 of 1982 go back the case law of Michigan, and Michigan and the Michigan Supreme Court.
Speaker #2: Now I'm a partner. Now we're able to provide solutions to continue to take this great affordability equation we have and make it even better here in our capital in Lansing, Michigan.
Again, we've got a good fact pattern affordability, we've got good case law good precedent, but that's that's not all we do we.
Speaker #2: And so here's part of our success. 23 years of consistent financial performance. That doesn't happen by luck or accident, right? It's because we've got good energy law.
We go meet with these candidates as gubernatorial candidate and I pull out.
Speaker #2: That's a big piece of it. But also our job is to be solution providers, to work with everybody on either side of the aisle.
Two pieces of paper double sided <unk> paper.
Speaker #2: And when you can come and be a solution provider, man, that's how you get good outcomes. And that's why this works, this investment thesis works, and why we're able to do what we do.
Present them with 10 policy things policy and legislative things that they can do to improve affordability.
And I will tell you are like some of them and these like some of them, but you know what that changes the conversation.
Speaker #2: Great question, Marcella.
Speaker #7: Thanks. That's super helpful. I'll leave it there. Appreciate it.
With them now I'm a partner now we're able to provide solutions to continue to take those great affordability equation, we have and make it even better here.
Garrick Rochow: Now we're able to provide solutions to continue to take this great affordability equation we have and make it even better here in our capital in Lansing, Michigan. And so, like, here's part of our success, 23 years of consistent financial performance. That doesn't happen by luck or accident, right? It's because we've got good energy law; that's a big piece of it. But also our job is to be solution providers, to work with everybody on either side of the aisle. And when you can come and be a solution provider, man, that's how you get good outcomes, and that's why this works, this investment thesis works, and why we're able to do what we do. Great question, Marcel.
Garrick Rochow: Now we're able to provide solutions to continue to take this great affordability equation we have and make it even better here in our capital in Lansing, Michigan. And so, like, here's part of our success, 23 years of consistent financial performance. That doesn't happen by luck or accident, right? It's because we've got good energy law; that's a big piece of it. But also our job is to be solution providers, to work with everybody on either side of the aisle. And when you can come and be a solution provider, man, that's how you get good outcomes, and that's why this works, this investment thesis works, and why we're able to do what we do. Great question, Marcel.
Speaker #1: The next question comes from David Alcarre from Morgan Stanley. David, please go ahead. Your line is open.
And our capital in Lansing, Michigan and so.
Speaker #8: Hey, thank you. Good morning. A bit of a follow-on to that thread and a really hey, really appreciate the comments Garrick. I was wondering if you could touch on the data load tariff side.
Like here's part of our success 23 years of consistent financial performance that doesn't happen by luck or accident right because it becomes got good energy law, that's a big piece of it but also our job is to be solution providers to work with everybody on either side of the aisle and when you can call them and be a solution provider.
Speaker #8: And I guess one effort that we've seen maybe getting more common data centers paying their full share of all costs. We saw Microsoft present that initiative on their side.
Man.
How do you get good outcomes and that's why this works this investment thesis works and why we're able to do what we do great question myself.
Thanks.
Andrew Weisel: Thanks. That's super helpful. I'll leave it there. Appreciate it.
Marcella Petiprin: Thanks. That's super helpful. I'll leave it there. Appreciate it.
I'll leave it there.
Speaker #8: But I was wondering maybe talk about the large load tariff and are there ways I mean, there are some costs that are more challenging to allocate, whether it's the full generation cost where it's the full transmission cost.
The next question comes from David <unk> from Morgan Stanley. David. Please go ahead. Your line is open.
Operator: The next question comes from David Arcaro from Morgan Stanley. David, please go ahead. Your line is open.
Operator: The next question comes from David Arcaro from Morgan Stanley. David, please go ahead. Your line is open.
Hey, Thank you good morning.
David Arcaro: Hey, thank you. Good morning. A bit of a follow-on to that, thread and I really appreciate the comments, Garrick. Was wondering if you could touch on the data center piece of things on the large load tariff side. And I guess one effort that we've seen, maybe getting more common, you know, data centers paying their full share of all costs. You know, we saw Microsoft present that initiative on their side. But I was wondering, you know, maybe talk about the large load tariff and are there ways. I mean, there are some costs that are more challenging to allocate, whether it's the full generation cost, whether it's the full transmission cost. How can you, you know, how do you plan to insulate customers from large loads?
David Arcaro: Hey, thank you. Good morning. A bit of a follow-on to that, thread and I really appreciate the comments, Garrick. Was wondering if you could touch on the data center piece of things on the large load tariff side. And I guess one effort that we've seen, maybe getting more common, you know, data centers paying their full share of all costs. You know, we saw Microsoft present that initiative on their side. But I was wondering, you know, maybe talk about the large load tariff and are there ways. I mean, there are some costs that are more challenging to allocate, whether it's the full generation cost, whether it's the full transmission cost. How can you, you know, how do you plan to insulate customers from large loads?
Speaker #8: How can you how do you plan to inflate customers from large loads? Are there strategies that you take beyond the large load tariff that you've got
A bit of a follow on to that thread and it really.
Really appreciate the comments garik.
I was wondering if you could touch on the data center piece of things on the large load.
Speaker #8: there? It's a great tariff
Speaker #2: to protect customers. We're out in the public talking about this. And clearing up some of the misinformation that's out there that this is not going to raise residential rates at all.
<unk> side, and I guess, one effort that we've seen maybe getting more common data centers paying their full share of all costs and we saw Microsoft.
Speaker #2: And in fact, there's a benefit associated with these data centers. And so as I talked about, we're at near final terms with the rate construct.
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Speaker #2: It has to be very clear about how they're going to pay for those facts, how they're going to pay for the capacity and the energy.
Sent that that initiative on their side, but I was wondering.
Maybe talk about the large load tariff and are there ways. I mean, there are some costs that are more challenging to allocate whether it's the full generation cost worth whether its the full transmission cost how can you.
Speaker #2: And it's how it's transmission and distribution, how it all like Microsoft come out and say, "Hey, we're going to protect the residential customer. It aligns exactly with what this tariff is aligns greatly with the tariff." And so we're going to have to get approval from the Michigan Public Service Commission on these contracts, right?
How do you plan to insulate customers from large load to the strategy that you would take beyond the large low tariff that you've got there.
David Arcaro: Are there strategies that you take beyond the large load tariff that you've got there?
David Arcaro: Are there strategies that you take beyond the large load tariff that you've got there?
Speaker #2: And so it's very clear what the rules of the road are. And I'm pleased to say we're making great progress on that. I won't get into specifics of how much supply and when, but know like I said, it can be online as soon as 2028.
It's a great tariff to protect customers and were out in the public talking about this in clearing out some of the misinformation. That's out there that this is not going to raise residential rates at all and in fact, there is a benefit associated with these data centers and so as I talked about we're at near final terms with the right construct it has to be very clear about how theyre going to pay for those.
Garrick Rochow: It's a great tariff to protect customers. You know, we're out in the public talking about this and clearing up some of the misinformation that's out there, that this is not going to raise residential rates at all. In fact, there's a benefit associated with these data centers. And so, as I talked about, we're in near final terms with the rate construct. It has to be very clear about how they're going to pay for those facts, how they're going to pay for the capacity and the energy, and it's how it's transmission and distribution, how it's all on their nickel. And so it's great when companies like Microsoft come out and say, "Hey, we're going to protect the residential customer." It aligns exactly with what this tariff is, you know, aligns greatly with the tariff.
Garrick Rochow: It's a great tariff to protect customers. You know, we're out in the public talking about this and clearing up some of the misinformation that's out there, that this is not going to raise residential rates at all. In fact, there's a benefit associated with these data centers. And so, as I talked about, we're in near final terms with the rate construct. It has to be very clear about how they're going to pay for those facts, how they're going to pay for the capacity and the energy, and it's how it's transmission and distribution, how it's all on their nickel. And so it's great when companies like Microsoft come out and say, "Hey, we're going to protect the residential customer." It aligns exactly with what this tariff is, you know, aligns greatly with the tariff.
Speaker #2: And again, as that contract gets finalized, as the zoning is finalized, we'll be sure to share that with the investment community and
Speaker #2: others. Okay, great.
Ask how they're going to pay for the capacity and the energy and Thats, how its transmission and distribution how it all on their nickel. So it's great when companies like Microsoft come out and say, Hey, we're going to protect the residential customer and aligns exactly with what this tariff.
Speaker #8: Thanks. That's helpful. And I'm not sure if you specifically mentioned, but has there been support from data centers on the large load tariff just in terms of continued interest in coming to Michigan, able to work under the new provisions under that tariff?
Your line is greatly with the tariff and so and we're going to have to get approval from the Michigan Public Service Commission on these on these contracts and so it's very clear what the rules of the road are and I'm pleased to say, we're making great progress on that I won't get into specifics of how much supply and when but no like I said.
Garrick Rochow: and we're going to have to get approval from the Michigan Public Service Commission on these, on these contracts, right? And so it's very clear what the rules of the road are, and I'm pleased to say we're making great progress on that. I won't get into specifics of how much supply and when, but no, like I said, it can be online as soon as 2028. And again, as that contracts get finalized, as the zoning is finalized, we'll be sure to share that with the investment community and others.
Garrick Rochow: and we're going to have to get approval from the Michigan Public Service Commission on these, on these contracts, right? And so it's very clear what the rules of the road are, and I'm pleased to say we're making great progress on that. I won't get into specifics of how much supply and when, but no, like I said, it can be online as soon as 2028. And again, as that contracts get finalized, as the zoning is finalized, we'll be sure to share that with the investment community and others.
Speaker #2: Yes. Yes. In fact, like I shared on some of my earlier responses, that data center pipeline has advanced. And it's even grown in size.
It can be on it.
Online as soon as 2028 and again as that contracts get finalized as the zoning is finalized we will be sure to share that with the with the investment community and others.
Speaker #2: And so again, both positive indicators and support for this data center tariff in Michigan's growth.
Speaker #8: Great. Okay. Thanks so much.
Okay, great. Thanks, that's helpful.
David Arcaro: Okay, great. Thanks. That's helpful. And, not sure if you specifically mentioned, but has there been support from data centers on the Large Load Tariff just in terms of continued interest in in coming to Michigan, you know, able to work under the new provisions under that tariff?
David Arcaro: Okay, great. Thanks. That's helpful. And, not sure if you specifically mentioned, but has there been support from data centers on the Large Load Tariff just in terms of continued interest in in coming to Michigan, you know, able to work under the new provisions under that tariff?
Speaker #1: The next question comes from Marco Sullivan from Wolf Research. Marco, please go ahead. Your line is
Not sure if you specifically mentioned, but has there been support from data centers on the large load tariff just in terms of continued interest in coming to Michigan.
Speaker #1: open.
Speaker #9: Hey, good morning. Hi,
Speaker #2: Michael.
Speaker #9: Wanted to pick up on the last couple of questions just around data centers coming to your territory. Particularly on the zoning front, there's a lot of articles out there locally and even nationally too.
Are you able to work under the new provisions under that tariff.
Yes, yes in fact.
Garrick Rochow: Yes. Yes. In fact, like, like I shared on some of my earlier responses, that data center pipeline has advanced and it's even grown in size. And so again, both positive indicators in support for this data center tariff in Michigan's growth.
Garrick Rochow: Yes. Yes. In fact, like, like I shared on some of my earlier responses, that data center pipeline has advanced and it's even grown in size. And so again, both positive indicators in support for this data center tariff in Michigan's growth.
Like I shared on some of my earlier responses that data center pipeline has advanced and it's even grown in size and so again both positive indicators.
Speaker #9: Just how much of an impediment has that been if at all? And how much should we think about that as just like a gating factor to get these things over the finish
And support for this data center tariff and Michigan's growth.
Speaker #9: line? I don't see it as an
Yeah.
David Arcaro: Great. Okay, thanks so much.
David Arcaro: Great. Okay, thanks so much.
Great. Okay. Thanks, so much.
Speaker #2: impediment at all. And just to be clear, I know the Wall Street Journal had a Wall Street Journal had an article on this. And it referenced how Michigan was not in our service territory.
The next question comes from Michael Sullivan from Wolfe Research Michael. Please go ahead. Your line is open.
Operator: The next question comes from Michael Sullivan from Wolfe Research. Michael, please go ahead. Your line is open.
Operator: The next question comes from Michael Sullivan from Wolfe Research. Michael, please go ahead. Your line is open.
Speaker #2: But your question is still very important. And very valid. Look, we've been doing business in the state for 140 years. It goes back to the Foot Brothers.
Hey, good morning, Michael.
Michael Sullivan: Hey, good morning.
Michael Sullivan: Hey, good morning.
Garrick Rochow: Hi, Michael.
Garrick Rochow: Hi, Michael.
Michael Sullivan: Hey, Garrick. Wanted to pick up on the last couple of questions just around data centers coming to your territory. Particularly on the zoning front, you know, there's a lot of articles out there locally and even nationally too. Just how much of an impediment has that been, if at all, and how much should we think about that as just like a gating factor to get these things over the finish line?
Michael Sullivan: Hey, Garrick. Wanted to pick up on the last couple of questions just around data centers coming to your territory. Particularly on the zoning front, you know, there's a lot of articles out there locally and even nationally too. Just how much of an impediment has that been, if at all, and how much should we think about that as just like a gating factor to get these things over the finish line?
Wanted to pick up on the last couple of questions just around data centers coming to your territory.
Speaker #2: And we know those communities that are more pro-investment. And we know the ones that are harder. And we know this because we're building out solar.
Particularly on the on the zoning front, there's a lot of articles out there locally and even nationally to just how how much of an impediment has that been.
Speaker #2: We're building out wind. We do pipeline work. And so in part, we help steer these data centers into those areas where it's more accommodating to growth.
If at all.
How much do we think about that is just like a gating factor to get these.
Speaker #2: But also, the Wall Street Journal, I think where they had it wrong was the more moratorium does not mean stop. In fact, it's a short process.
These things over the finish line.
But I don't see it as impediment at all and just to be clear on the Wall Street Journal Real Hurdle Wall Street Journal had an article on this reference how Michigan how is not in our service territory, but your question is still very important and very very outlook.
Garrick Rochow: ... I don't see it as an impediment at all. And just to be clear, I know The Wall Street Journal had an article on this, and it referenced Howell, Michigan. Howell is not in our service territory, but your question is still very important and very valid. Look, we've been doing business in the state for 140 years. It goes back to the Foote brothers, and we know those communities that are more pro-investment, and we know the ones that are harder. And we know this because we're building out solar, we're building out wind, we're, you know, we do pipeline work. And so in part, we help steer these data centers in, into those areas where it's more accommodating to growth.
Garrick Rochow: ... I don't see it as an impediment at all. And just to be clear, I know The Wall Street Journal had an article on this, and it referenced Howell, Michigan. Howell is not in our service territory, but your question is still very important and very valid. Look, we've been doing business in the state for 140 years. It goes back to the Foote brothers, and we know those communities that are more pro-investment, and we know the ones that are harder. And we know this because we're building out solar, we're building out wind, we're, you know, we do pipeline work. And so in part, we help steer these data centers in, into those areas where it's more accommodating to growth.
Speaker #2: These are 30, 60, 90, somewhere 180-day being made. And I would suggest it's good due process because these information from their constituents. They're doing research.
We've been doing business in the state for 140 years. It goes back to the brothers and we know those communities that are more pro investment and we know the ones that are harder and we know this because we're building out solar we're building out wind with we do pipeline work and so in part we help steer these data centers and into those areas, where it's more accommodating to growth but.
Speaker #2: And we just saw this in Mason, Michigan, right? In our service territory, they had a moratorium in place. It was a 90-day. They actually came out sooner than the 90-day period and came out with a new zoning ordinance that allowed for data centers.
Speaker #2: And so again, when I say finalize in zoning, we work through those things alongside with the hyperscalers with the developers to achieve success. And again, I don't see that as a holdup or an impediment in Michigan.
Garrick Rochow: But also, The Wall Street Journal, I think where they had it wrong was a moratorium does not mean stop. In fact, it's a short process. Like, these are 30, 60, 90, some are 180-day moratoriums, but there's still progress being made. And I would suggest it's good due process because these township officials, these community officials, are collecting information from their constituents. They're doing research, and we just saw this in Mason, Michigan, right? In our service territory. They had a moratorium in place. It was a 90-day. They actually came out sooner than the 90-day period and came out with a new zoning ordinance that allowed for data centers. And so again, when I say finalizing zoning, we work through those things alongside with the hyperscalers, with the developers to achieve success.
Garrick Rochow: But also, The Wall Street Journal, I think where they had it wrong was a moratorium does not mean stop. In fact, it's a short process. Like, these are 30, 60, 90, some are 180-day moratoriums, but there's still progress being made. And I would suggest it's good due process because these township officials, these community officials, are collecting information from their constituents. They're doing research, and we just saw this in Mason, Michigan, right? In our service territory. They had a moratorium in place. It was a 90-day. They actually came out sooner than the 90-day period and came out with a new zoning ordinance that allowed for data centers. And so again, when I say finalizing zoning, we work through those things alongside with the hyperscalers, with the developers to achieve success.
Also.
The Wall Street Journal article I think where they had it wrong was the more moratorium does not mean stop in fact, its a short process. Like these are 30, 60, 90 somewhere 180 day moratorium, but theres still progress being made and I would suggest it's good due process because these township officials. These community officials are collecting information from their.
Speaker #9: Okay. That's really helpful. Appreciate the color. And then just shifting back to kind of the pending rate case and regulatory strategy, what are your thoughts on just being able to get back to more frequent settlements to maybe just take volatility out of the process associated with ALJs like the one we just got?
They are doing research and we just saw this in Mason, Michigan right in our service territory. They had a moratorium place was the 90 day. They actually came out sooner than the 90 day period and came out with a new zoning zoning ordinance that allowed for data centers and so again when I say final items zoning, we work through those things along.
Speaker #9: And then to space out also potential cases a little bit more just given, I think there's been commentary from the Commission in the past and now whether or not rate freeze is legal illegal.
Side with the Hyperscale or with the developers to achieve success and again I don't see that as a whole lot of or an impediment in Michigan.
Garrick Rochow: And again, I don't see that as a hold-up or an impediment in Michigan.
Garrick Rochow: And again, I don't see that as a hold-up or an impediment in Michigan.
Speaker #9: Materializes. But anything that can alleviate pressure on frequency and then also just parties putting things forth and being able to settle more preemptively.
Okay. That's really helpful. Appreciate the color and then just shifting back to.
Michael Sullivan: That's really helpful. Appreciate the color. And then just shifting back to kind of the pending rate case and regulatory strategy. What are your thoughts on just being able to get back to more frequent settlements to maybe just take volatility out of the process, associated with ALJs, like the one we just got? And then also, like, potential to space out cases a little bit more, just given I think there's been commentary from the commission in the past and now whether or not rate freeze is legal or illegal materializes, but anything that can, like, alleviate pressure on frequency and then also, yeah, just parties putting things forth and being able to settle more preemptively.
Michael Sullivan: That's really helpful. Appreciate the color. And then just shifting back to kind of the pending rate case and regulatory strategy. What are your thoughts on just being able to get back to more frequent settlements to maybe just take volatility out of the process, associated with ALJs, like the one we just got? And then also, like, potential to space out cases a little bit more, just given I think there's been commentary from the commission in the past and now whether or not rate freeze is legal or illegal materializes, but anything that can, like, alleviate pressure on frequency and then also, yeah, just parties putting things forth and being able to settle more preemptively.
The pending rate case, and regulatory strategy what are your thoughts on just being able to get back to more frequent settlements. So maybe just take volatility out of the process.
Speaker #2: As I've shared before, I continue to be open towards settlement and settlement discussions. And we'll continue to explore those. But again, the merits of the case and just the fact pattern in Michigan, we wouldn't go the full distance as we did last year in 2025 with our cases and get very constructive outcomes.
Associated with the ALJ is like the one we just got.
And then also like potential too.
Space out he says a little bit more just given I think there's been commentary from the commission in the past and now.
Speaker #2: And so I'm happy to go that route. And I don't think it's reflective at all about the environment in Michigan. Again, it's at the end of the day, we're getting successful and constructive outcomes from this commission.
Whether or not rate freezes legal or illegal.
Speaker #2: In terms of spacing out, I think a really important data point that I referenced on the call, and we have this information. And I think actually Wolf's presented this in a different format too, is that Michigan, and particularly CMS and the other large utilities, our rate increases are some of the lowest in the country.
Do you realize this but anything that can alleviate pressure on.
On frequency and then also.
Yes, just parties putting forth.
And being able to settle more preemptively.
As I've shared before I continue to be open towards settlement in settlement discussions and we will continue to explore those.
Garrick Rochow: As I've shared before, I continue to be open towards settlement and settlement discussions, and we'll continue to explore those. But again, the merits of the case and just the fact pattern in Michigan, we can go the full distance as we did last year in 2025 with our cases and get very constructive outcomes. And so, I'm happy to go that route, and I don't think it's reflective at all about the environment in Michigan. Again, because at the end of the day, we're getting successful and constructive outcomes from this commission.
Garrick Rochow: As I've shared before, I continue to be open towards settlement and settlement discussions, and we'll continue to explore those. But again, the merits of the case and just the fact pattern in Michigan, we can go the full distance as we did last year in 2025 with our cases and get very constructive outcomes. And so, I'm happy to go that route, and I don't think it's reflective at all about the environment in Michigan. Again, because at the end of the day, we're getting successful and constructive outcomes from this commission.
Speaker #2: Right? And so can we space them out? Sure. But let's do the math. And what's going on in these other states, frankly? And so we've got a really good story.
The merits of the case and just the fact pattern in Michigan, where we can go the full distance as we did last year in 2025, with our cases and get very constructive outcomes and so.
Speaker #2: And when we go on an annual rate cases, we're able to pass savings back to our customers. We're able to make sure that those increases are more in line with inflation or better than inflation.
I'm happy to go that route and I don't think its reflective at all about the environment in Michigan again, because at the end of the day, we're getting successful and constructive outcomes from this commission.
Speaker #2: And so the smaller little bites at the apple is really a great approach. Now, I'm always open with the right construct if there's a way to expand those out and go longer.
Garrick Rochow: In terms of the spacing out, I think a really important data point that I referenced on the call, and we have this information, and I think actually Wolfe's presented this in a different format too, is that Michigan, and particularly CMS and the other large utility, like, our rate increases are some of the lowest in the country, right? And so can we space them out? Sure. But, like, let's do the math and, like, what's going on in these other states, frankly. And so we've got a really good story, and when we go on annual rate cases, we're able to pass savings back to our customers. We're able to make sure that those increases are more in line with inflation or better than inflation. And so smaller little bites at the apple is really a great approach.
Garrick Rochow: In terms of the spacing out, I think a really important data point that I referenced on the call, and we have this information, and I think actually Wolfe's presented this in a different format too, is that Michigan, and particularly CMS and the other large utility, like, our rate increases are some of the lowest in the country, right? And so can we space them out? Sure. But, like, let's do the math and, like, what's going on in these other states, frankly. And so we've got a really good story, and when we go on annual rate cases, we're able to pass savings back to our customers. We're able to make sure that those increases are more in line with inflation or better than inflation. And so smaller little bites at the apple is really a great approach.
In terms of spacing out I think a really important data point that I referenced on the call and we have this information and I think actually wolfe's presenting this in a different format too is that Michigan, and particularly CMS and the other large utility like our rate increases some of the lowest in the country.
Speaker #2: But we have to have the right construct in Michigan to be able to do that. There's some talks. Early talks in that direction. But nothing that's as serious at this point.
Speaker #2: Michael.
Speaker #9: Okay. Appreciate it. Thank you,
Alright, and so can.
Speaker #9: Garrick. The next question comes from Jeremy Tenne
Can we space them out sure, but like let's do the math and like what's going on in these other states frankly, and so we've got a really good story and when we go on an annual rate cases, we're able to pass savings back to our customers. We're able to make sure that those increases are more in line with inflation or better than inflation and so the smaller a little bites at the Apple as <unk>.
Speaker #1: from JPMorgan. Jeremy, please go ahead. Your line is
Speaker #10: Hi. Good
Speaker #10: morning. Good morning, Good
Speaker #2: Jeremy.
Speaker #2: Thanks for all the morning. good color today. Just was curious, with the upcoming State of the State here, we've seen in other states utilities kind of featured in some of the commentary here.
Really a great approach now I'm always open with the right construct if theres a way to to expand those out and go longer but we have to have the right construct in Michigan to be able to do that there are some talks early talked in that direction.
Garrick Rochow: Now, I'm always open with the right construct if there's a way to expand those out and go longer, but we have to have the right construct in Michigan to be able to do that. There's some talks, early talks in that direction, but nothing that it's, you know, serious at this point, Michael.
Garrick Rochow: Now, I'm always open with the right construct if there's a way to expand those out and go longer, but we have to have the right construct in Michigan to be able to do that. There's some talks, early talks in that direction, but nothing that it's, you know, serious at this point, Michael.
Speaker #2: And wondering if you had any expectations or any thoughts to share here given what we've seen in other states.
Nothing that serious at this point.
Speaker #10: Let me offer this. Again, I'll start with a big headline. 23 years of consistent financial performance. We had that one slide in there. And regardless of the weather, regardless of the CEO, regardless of the governor, again, ours are Ds.
Michael.
Michael Sullivan: Appreciate it. Thank you, Garrick.
Michael Sullivan: Appreciate it. Thank you, Garrick.
I appreciate it thank you guys.
The next question comes from Jeremy Tonet from J P. Morgan Jeremy. Please go ahead. Your line is open.
Operator: The next question comes from Jeremy Tonet, from J.P. Morgan. Jeremy, please go ahead. Your line is open.
Operator: The next question comes from Jeremy Tonet, from JPMorgan. Jeremy, please go ahead. Your line is open.
Speaker #10: Regardless of the legislature, regardless of the commission, we deliver.
Hi, good morning.
Jeremy Tonet: Hi, good morning.
Jeremy Tonet: Hi, good morning.
Hey, good morning, Jeremy.
Garrick Rochow: Good morning, Jeremy.
Garrick Rochow: Good morning, Jeremy.
Rejji Hayes: Morning.
Rejji Hayes: Morning.
Speaker #2: And.
Speaker #10: but not by luck or accident, right? It's energy law. Right? And a lot of that is already set. And it's typically bipartisan when it's done.
Thanks for all the color today.
Jeremy Tonet: Thanks for all the good color today. Just was curious, you know, with the upcoming state of the state here. We've seen in other states utilities kind of featured in some of the commentary here, and wondering if you had any expectations or any thoughts to share here, you know, given what we've seen in other states.
Jeremy Tonet: Thanks for all the good color today. Just was curious, you know, with the upcoming state of the state here. We've seen in other states utilities kind of featured in some of the commentary here, and wondering if you had any expectations or any thoughts to share here, you know, given what we've seen in other states.
Just was curious.
With the upcoming state of the state here, we've seen in other states utilities kind of featured in some of the commentary here and I'm wondering if you had any expectations or any thoughts to share here.
Speaker #10: But that sets a lot of the parameters. And again, when it comes to the commissioners or in staggered terms, there's six-year terms. You can only have two from one party.
Speaker #10: And so that sets a lot of the parameters in Michigan. That's the remember, as one of the largest investors in the state, the gubernatorial candidates know that.
Given what we've seen in other states.
Let me offer this again I'll start with a big headline 23 years of consistent financial performance, we had that one slide on there and.
Garrick Rochow: Let me offer this. Again, I'll start with a big headline, 23 years of consistent financial performance. We had that one slide on there, and regardless of the weather, regardless of the CEO, regardless of the governor, again, R's or D's, regardless of the legislature, regardless of the commission, like, we deliver. And I've overused this term probably, but not by luck or accident, right? It's energy law, right? And a lot of that is already set, and it's typically bipartisan when it's done, but that sets a lot of the parameters. And again, when it comes to the commissioners are on staggered terms, the 6-year terms, you can only have two from one party, and so that sets a lot of the parameters in Michigan. That's the great thing about Michigan. But remember, as one of the largest investors in the state, the gubernatorial candidates know that.
Garrick Rochow: Let me offer this. Again, I'll start with a big headline, 23 years of consistent financial performance. We had that one slide on there, and regardless of the weather, regardless of the CEO, regardless of the governor, again, R's or D's, regardless of the legislature, regardless of the commission, like, we deliver. And I've overused this term probably, but not by luck or accident, right? It's energy law, right? And a lot of that is already set, and it's typically bipartisan when it's done, but that sets a lot of the parameters. And again, when it comes to the commissioners are on staggered terms, the 6-year terms, you can only have two from one party, and so that sets a lot of the parameters in Michigan. That's the great thing about Michigan. But remember, as one of the largest investors in the state, the gubernatorial candidates know that.
Speaker #10: As one of the largest property taxpayers in the state, the gubernatorial candidates know that. As one of the largest job providers, and union job providers, the gubernatorial candidates know that.
And regardless of the weather, regardless of the CEO, regardless of the governor.
Again ours are these regardless of the legislature, regardless of the commission.
Speaker #10: Right? And so we have a way of working with these candidates to find solutions. And it goes back to my earlier comment. When I come in and I can bring a gubernatorial candidate two pages, front and back, of good policy solutions, what happens in that discussion?
We deliver and I've overused term, probably not by luck or accident right. It's energy law.
And a lot of that is already set.
It's typically bipartisan when it's done but that sets a lot of parameters and again when it comes to the commissioners are on staggered terms six year terms you can only have two from one party and so that's sets a lot of the parameters in Michigan. That's the great thing about Michigan, but remember as one of the largest investors in the state the gubernatorial candidates know that.
Speaker #10: Right? All of a sudden, I'm in their boat. Right? All I'm in there helping them be successful. And now when they're out with constituents, they can point to say, "Here's the three things.
Speaker #10: Here's the six things. Here's the 10 things we can do in Michigan to help make bills even more affordable." And remember, we're starting from a really good starting spot.
Speaker #10: And so I mean, that's the dynamic that plays out. And that's how it allows us to be successful. Time and time again. So hopefully that scratches the itch of your question there,
Speaker #10: And so I mean, that's the dynamic that plays out. And that's how it allows us to be successful. Time and time again. So hopefully that scratches the itch of your question there, Jeremy.
Garrick Rochow: As one of the largest property taxpayers in the state, the gubernatorial candidates know that. As one of the largest job providers and union job providers, the gubernatorial candidates know that, right? So we have a way of working with these candidates to find solutions, and it goes back to my earlier comment. When I come in and I can bring a gubernatorial candidate, 2 pages, front and back, of good policy solutions, what happens in that discussion, right? All of a sudden, I'm in their boat, right? I'm in there helping them be successful. And now when they're out with constituents, they can point to say, "Here's the 3 things. Here's the 6 things.
Garrick Rochow: As one of the largest property taxpayers in the state, the gubernatorial candidates know that. As one of the largest job providers and union job providers, the gubernatorial candidates know that, right? So we have a way of working with these candidates to find solutions, and it goes back to my earlier comment. When I come in and I can bring a gubernatorial candidate, 2 pages, front and back, of good policy solutions, what happens in that discussion, right? All of a sudden, I'm in their boat, right? I'm in there helping them be successful. And now when they're out with constituents, they can point to say, "Here's the 3 things. Here's the 6 things.
As one of the largest property taxpayers in the states. The gubernatorial candidates know that is one of the largest job providers and union job providers. The gubernatorial candidates know that right until we have a way of working with these candidates to find solutions and it goes back to my earlier comment when I come in and I can bring a gubernatorial candidate <unk>.
Speaker #1: Got it. That's helpful. I'll leave it there. Thanks.
Speaker #1: The next question comes from Andrew Wiesel from Yeah. Scotiabank. Andrew, please go ahead. Your line is
Two pages front and back of good policy solutions, what happens in that discussion.
Speaker #1: open.
Right Awesome I'm in their boat right all of them in there.
Speaker #11: Hey. Good morning, everybody. Good Good morning,
Speaker #10: morning.
We're helping them be successful and now when they are out with constituents. They can point to say here's the three things here's the six things Here's a 10 things we can do in Michigan to help make bills, even more affordable and remember we're starting from a really a really good starting spot and so I.
Speaker #10: So Andrew. I've just got two sort of more nuanced ones. First, on equity. Obviously, as you kind of previewed, a tick up from 500 million last year to 700 million this year to an average of 750 in the long-term plan.
Garrick Rochow: Here's the 10 things we can do in Michigan to help make bills even more affordable." And remember, we're starting from a really, a really good starting spot, and so, I mean, that's the, that's the dynamic that plays out, and that's how it allows us to be successful, you know, time and time again. So hopefully that scratches your itch of your question there, Jeremy.
Garrick Rochow: Here's the 10 things we can do in Michigan to help make bills even more affordable." And remember, we're starting from a really, a really good starting spot, and so, I mean, that's the, that's the dynamic that plays out, and that's how it allows us to be successful, you know, time and time again. So hopefully that scratches your itch of your question there, Jeremy.
I mean, that's that's a dynamic that plays out and Thats, how it allows us to be successful.
Speaker #10: How should we think about that going forward? Should it be consistent? Should it be ramping up to match the CapEx profile? Or would it be more front-end loaded, giving the lag of cash recovery for generation relative to distribution?
Time and time again, so hopefully that scratches yet the answer to your question there Jeremy.
Got it that's helpful I'll leave it there thanks.
Anthony Crowdell: ... Got it. That's helpful. I'll leave it there. Thanks.
Jeremy Tonet: ... Got it. That's helpful. I'll leave it there. Thanks.
Rejji Hayes: Yeah.
Rejji Hayes: Yeah.
Yes.
Yeah.
Speaker #10: And does that assume additional use of hybrids or JSNs? Or would hybrids potentially reduce the equity needs? Andrew, it's Reggie. Appreciate the question. I'm getting to a point age-wise where when I get multi-part questions, I may have to circle back.
The next question comes from Andrew Weisel from Scotia Bank entry. Please go ahead. Your line is open.
Operator: The next question comes from Andrew Weisel from Scotiabank. Andrew, please go ahead. Your line is open.
Operator: The next question comes from Andrew Weisel from Scotiabank. Andrew, please go ahead. Your line is open.
Hey, good morning, good morning.
Andrew Weisel: Hey, good morning, everybody.
Andrew Weisel: Hey, good morning, everybody.
Rejji Hayes: Andrew, morning!
Rejji Hayes: Andrew, morning!
Good morning, Andrew you covered a lot of the main topics.
David Arcaro: Morning, Andrew.
Garrick Rochow: Morning, Andrew.
Andrew Weisel: You covered a lot of the main topics, so I've just got two, sort of more nuanced ones. First, on equity, obviously, as you kind of previewed, a pick-up from $500 million last year to $700 million this year, to an average of $750 in the long-term plan. How should we think about that going forward? Should it be consistent? Should it be ramping up to match the CapEx profile, or would it be more front-end loaded, given the lag of cash recovery per generation relative to distribution? And does that assume additional use of hybrids or JSNs, or would hybrids potentially reduce the equity needs?
Andrew Weisel: You covered a lot of the main topics, so I've just got two, sort of more nuanced ones. First, on equity, obviously, as you kind of previewed, a pick-up from $500 million last year to $700 million this year, to an average of $750 in the long-term plan. How should we think about that going forward? Should it be consistent? Should it be ramping up to match the CapEx profile, or would it be more front-end loaded, given the lag of cash recovery per generation relative to distribution? And does that assume additional use of hybrids or JSNs, or would hybrids potentially reduce the equity needs?
Two sort of more nuanced ones first on equity, obviously as you've kind of previewed a tick up from $500 million last year to 700 million. This year to an average of $7 50 in the long term plan, how should we think about that going forward should it be consistent should it be ramping up to match, the capex profile or would it be more.
Speaker #10: So if I miss something, just let me know. But with respect to equity, I think you've the premise of your question is right. I mean, they tend to live increase with CapEx needs.
Speaker #10: And so this plan is 4 billion higher with 24 billion of CapEx of the utility than the prior vintage of 20 billion. And so we've said with that historical sort of ratio of 40 cents of equity for every dollar of incremental CapEx, this plan has about a billion and a half or so of greater equity needs than the prior vintage, specifically prior vintage was 2.2 billion in aggregate.
Front end loaded given the lack of cash recovery for generation relative to distribution and does that assume additional use of hybrids or J S earnings or would hybrids potentially reduce the equity needs.
Andrew It's Reggie appreciate the question I'm getting to a point age wise when I get multipart questions I may have to circle back. So if I Miss something just let me know, but with respect to equity I think.
Rejji Hayes: Andrew, it's Rejji. Appreciate the question. I'm getting to a point age-wise, where when I get multi-part questions, I may have to circle back. So if I miss something, just let me know. But with respect to equity, I think you've the premise of your question is right. I mean, they tend to increase with CapEx needs, and so this plan is $4 billion higher, with $24 billion of CapEx of the utility than the prior vintage of $20 billion. And so we've said with that historical sort of ratio of 40 cents of equity for every dollar of incremental CapEx, this plan has about $1.5 billion or so of greater equity needs than the prior vintage. Specifically, prior vintage was $2.2 billion in aggregate, this one's about $3.75 billion.
Rejji Hayes: Andrew, it's Rejji. Appreciate the question. I'm getting to a point age-wise, where when I get multi-part questions, I may have to circle back. So if I miss something, just let me know. But with respect to equity, I think you've the premise of your question is right. I mean, they tend to increase with CapEx needs, and so this plan is $4 billion higher, with $24 billion of CapEx of the utility than the prior vintage of $20 billion. And so we've said with that historical sort of ratio of 40 cents of equity for every dollar of incremental CapEx, this plan has about $1.5 billion or so of greater equity needs than the prior vintage. Specifically, prior vintage was $2.2 billion in aggregate, this one's about $3.75 billion.
Speaker #10: This one's about 3 and three-quarters. So again, that historical relationship still ties and that allows us to maintain that kind of mid-teens credit metric levels on a consolidated basis, which is where we like to be.
The premise of your question is right I mean, they didn't they tend to lift.
Speaker #10: With respect to junior subordinated notes, we do have a little bit of those in the plan over the five-year period. I'd say just over a billion and a half.
Increase with Capex needs and so this plan is 4 billion higher with $24 billion of Capex for the utilities in the prior vintage of $20 billion and so we've said with that historical sort of ratio of 40 of equity for every dollar of incremental Capex. This plan has about 1 billion and a half or so of greater <unk>.
Speaker #10: It's a market that we've just seen quite pleasantly. We've just seen an increase in breadth and depth of liquidity in that market. And we've seen really strong execution, most notably over the last 36 months or so.
Speaker #10: So we have baked in a little bit of that in the plan, not in this year, but later on. I'd say more 27, 28.
<unk> needs than the prior vintage specifically prior vintage was $2 2 billion in aggregate. This one is about three and three quarters. So again that historical relationship still.
Rejji Hayes: So again, that historical relationship still ties, and that allows us to maintain that kind of mid-teens credit metric levels on a consolidated basis, which is where we like to be. With respect to junior subordinated notes, we do have a little bit of those in the plan over a 5-year period. I'd say just over $1.5 billion. It's a market that we've just seen quite pleasantly. We've just seen an increase in breadth and depth of liquidity in that market, and we've seen really strong execution, most notably over the last 36 months or so. So we have baked in a little bit of that in the plan, not this year, but later on, I'd say more 2027, 2028.
Rejji Hayes: So again, that historical relationship still ties, and that allows us to maintain that kind of mid-teens credit metric levels on a consolidated basis, which is where we like to be. With respect to junior subordinated notes, we do have a little bit of those in the plan over a 5-year period. I'd say just over $1.5 billion. It's a market that we've just seen quite pleasantly. We've just seen an increase in breadth and depth of liquidity in that market, and we've seen really strong execution, most notably over the last 36 months or so. So we have baked in a little bit of that in the plan, not this year, but later on, I'd say more 2027, 2028.
Speaker #10: So we do have a, again, a little over a billion and a half of junior subs in the plan, just given the strong execution we've seen historically.
Isn't that allows us to maintain that kind of mid teens credit metric levels on a consolidated basis, which is where we like to be with respect to junior subordinated notes that we do have a little bit of those and the plan over a five year period I would say just over 1 billion and a half it's a market that we've just seen.
Speaker #10: And then with respect to the shaping of the equity needs, I would say it's, again, fairly commensurate with the capital needs and the capital needs are somewhat front-end loaded if you look at the details on the CapEx plan we have in the appendix.
Speaker #10: In the deck for today. And so we anticipate issuing a good portion of that in the first three years of the plan and then it levels out really kind of really drops off in the latter two years.
Quite pleasantly.
Pleasantly, we've just seen an increase in breadth and depth of liquidity in that market and we've seen really strong execution, most notably over the last 36 months or so so we have baked in a little bit of that in the plan not in this year, but later on.
Speaker #10: Now, we will be opportunistic as always and if we see our stock trading at levels that are not offensive, and I would submit they are offensive where they are today, we'll be opportunistic.
Say more 27 28, so we do have a again a little over 1 billion and a half of junior subs in the plan just given the strong execution, we've seen historically and then with respect to the shaping of the equity needs I would say, it's a again fairly commensurate with the capital needs and the capital needs are somewhat front end loaded if you look at the details on the Capex plan, we have in the appendix.
Speaker #10: But the plan for this year is to dribble out that 700 billion and over time, again, if we see the stock trading at levels that we think are more reasonable, we may be a little bit more aggressive than that.
Rejji Hayes: So we do have, again, a little over $1.5 billion of junior subs in the plan, just given the strong execution we've seen historically. And then with respect to the shaping of the equity needs, I would say it's, again, fairly commensurate with the capital needs, and the capital needs are somewhat front-end loaded. If you look at the details on the CapEx plan we have in the appendix, in the deck for today. And so we anticipate issuing, a good portion of that in the first three years of the plan, and then it levels out. Really kind of, really, drops off in the latter two years.
Rejji Hayes: So we do have, again, a little over $1.5 billion of junior subs in the plan, just given the strong execution we've seen historically. And then with respect to the shaping of the equity needs, I would say it's, again, fairly commensurate with the capital needs, and the capital needs are somewhat front-end loaded. If you look at the details on the CapEx plan we have in the appendix, in the deck for today. And so we anticipate issuing, a good portion of that in the first three years of the plan, and then it levels out. Really kind of, really, drops off in the latter two years.
Speaker #10: So let me pause there and see if that's helpful.
Speaker #11: It is. Thank you. And your memory is still intact. You got all of those. Next one, you previously talked about a $20 billion CapEx plan with 25 billion of incremental opportunities.
In the deck for today and so we anticipate issuing a good portion of that in the first three years. The plan and then it levels out really kind of.
Speaker #11: Now you're guiding to 24 billion. Should we think of that as pulling four from the opportunities bucket into the formal plan? Or is this more like an incremental 4 billion that you've identified and you still have a similar opportunities bucket beyond the new outlook?
Really drops off in the latter two years now we will be opportunistic as always and if we see our stock trading at levels.
Rejji Hayes: Now, we will be opportunistic, as always, and if we see, our stock trading at levels that are, not offensive, and I would submit they are offensive where they are today, you know, we'll be opportunistic. But the plan for this year is to dribble out that $700 billion, and over time, again, if we see the stock trading at levels that we think are more reasonable, we may be a little bit more aggressive than that. So let me pause there and see if that's helpful.
Rejji Hayes: Now, we will be opportunistic, as always, and if we see, our stock trading at levels that are, not offensive, and I would submit they are offensive where they are today, you know, we'll be opportunistic. But the plan for this year is to dribble out that $700 billion, and over time, again, if we see the stock trading at levels that we think are more reasonable, we may be a little bit more aggressive than that. So let me pause there and see if that's helpful.
That are not offensive and I would submit they are offensive where they are today, we will be opportunistic but the plan for this year is to dribble out that $700 million in overtime again, if we see the stock trading at levels that we think are more reasonable we may be a little bit more aggressive than that so let me pause there and see if that's helpful.
Speaker #10: Yeah. So great question. And I would say in terms of that 25 billion of backlog we've been talking about, that's outside of the prior plan looking in.
Speaker #10: Yes, we certainly dipped into that with the 4 billion incremental. But I would say it's not a perfectly symmetric equation because the reality is we have additional CapEx needs as we're preparing this new integrated resource plan that will likely drive additional CapEx needs.
It is thank you and your memory is still intact here, you've got all of those.
Andrew Weisel: It is. Thank you, and your memory is still intact. You, you got all of those. Next one. You previously talked about a $20 billion CapEx plan with $25 billion of incremental opportunities. Now you're guiding to $24 billion. Should we think of that as pulling 4 from the opportunities bucket into the formal plan? Or is this more like an incremental $4 billion that you've identified and you still have a similar opportunities bucket beyond the new outlook?
Andrew Weisel: It is. Thank you, and your memory is still intact. You, you got all of those. Next one. You previously talked about a $20 billion CapEx plan with $25 billion of incremental opportunities. Now you're guiding to $24 billion. Should we think of that as pulling 4 from the opportunities bucket into the formal plan? Or is this more like an incremental $4 billion that you've identified and you still have a similar opportunities bucket beyond the new outlook?
Next one you previously talked about a $20 billion Capex plan with $25 billion of incremental opportunity now youre guiding to $24 billion should we think of that as pulling for from the opportunities bucket into the formal plan or is this more of like an incremental 4 billion that you've identified and you still have.
Speaker #10: As Garrick and I noted earlier, our plan does not presuppose us realizing some of these large data center opportunities from a customer investment perspective.
Speaker #10: And so that would add to that backlog as well. And then I would also just note in this plan, obviously, with the growth of financial compensation mechanism-related earnings, we are taking some of that CapEx opportunity and converting it into PPAs.
Opportunity these bucket beyond the new outlook.
Yes sure Great question.
Rejji Hayes: Yeah, so a great question. And I would say, in terms of that $25 billion of backlog we've been talking about, that's outside of the prior plan looking in, yes, we certainly dipped into that with the $4 billion incremental. But I would say it's not a perfectly symmetric equation, because the reality is we have additional CapEx needs as we're preparing this new integrated resource plan that will likely drive additional CapEx needs. As Garrick and I noted earlier, our plan does not presuppose us realizing some of these large data center opportunities from a customer investment perspective, and so that would add to that backlog as well.
Rejji Hayes: Yeah, so a great question. And I would say, in terms of that $25 billion of backlog we've been talking about, that's outside of the prior plan looking in, yes, we certainly dipped into that with the $4 billion incremental. But I would say it's not a perfectly symmetric equation, because the reality is we have additional CapEx needs as we're preparing this new integrated resource plan that will likely drive additional CapEx needs. As Garrick and I noted earlier, our plan does not presuppose us realizing some of these large data center opportunities from a customer investment perspective, and so that would add to that backlog as well.
And I would say in terms of that $25 billion of backlog, we've been talking about that's outside of the prior plan looking at yes, we certainly dipped into that with the 4 billion incremental but I would say it's it's at.
Speaker #10: And so we have dipped into that well, but I would say from where we sit at the well is quite infinite when it comes to CapEx backlog at the utility.
Speaker #10: And it just grows every year because there's a lot to do on both the distribution side and the supply side in electric and gas has quite a bit to do as
It's not a perfectly symmetric equation because the reality is we have additional capex needs as we're preparing this new integrated resource plan that will likely drive additional capex needs as Garik and I noted earlier.
Speaker #10: well. Infinite.
Speaker #11: Wow. That's a good word to use. Okay. Thank you so much. Appreciate it.
Our plan does not presuppose us realizing some of these large data center opportunities from a customer investment perspective, and so that would add to that backlog as well and then I would also just note in this plan obviously with the growth of financial compensation mechanism related earnings we are taking some of that capture.
Speaker #1: The next question comes from Anthony Krodo from Mizuho. Anthony, please go ahead. Your line is
Speaker #1: open. Hey, good morning, team.
Speaker #11: Reggie, really happy that CMS is still serving caffeinated coffee in the employee kitchen. Just one loose end. You're currently asking for a decoupling in your gas case.
Rejji Hayes: And then I would also just note in this plan, obviously with the growth of financial compensation mechanism-related earnings, we are taking some of that CapEx opportunity and converting it into PPAs. And so we have dipped into that well, but I would say from where we sit, the well is quite infinite when it comes to CapEx backlog at the utility, and it just grows every year because there's a lot to do on both the distribution side, the supply side, and electric and gas has quite a bit to do as well.
Rejji Hayes: And then I would also just note in this plan, obviously with the growth of financial compensation mechanism-related earnings, we are taking some of that CapEx opportunity and converting it into PPAs. And so we have dipped into that well, but I would say from where we sit, the well is quite infinite when it comes to CapEx backlog at the utility, and it just grows every year because there's a lot to do on both the distribution side, the supply side, and electric and gas has quite a bit to do as well.
Next opportunity and converting it into ppas and so we have dipped into that well, but I would say from where we sit the wells quite infinite when it comes to Capex backlog at the utility and it just grows every year because there's a lot to do on both the distribution side and the supply side in electric and gas is quite a bit to do as well.
Speaker #11: Just curious if you plan on, I know I'm thinking forward, you're currently in your electric case now, thinking in your next electric case, do you ask for decoupling or given the load that you're showing a big increase in industrial load in 2025 if you're less inclined to ask that given the strong load
Infinite well that's a good word to use okay. Thank you so much I appreciate it.
Andrew Weisel: Infinite. Wow, that's a good word to use. Okay, thank you so much. Appreciate it.
Andrew Weisel: Infinite. Wow, that's a good word to use. Okay, thank you so much. Appreciate it.
Speaker #11: growth? Anthony,
The next question comes from Anthony <unk> from Mizuho. Anthony. Please go ahead. Your line is open.
Operator: The next question comes from Anthony Crowdell from Mizuho. Anthony, please go ahead. Your line is open.
Operator: The next question comes from Anthony Crowdell from Mizuho. Anthony, please go ahead. Your line is open.
Speaker #10: always, we show up for these calls well caffeinated. So glad you noticed. Yeah, our intent is to just focus on revenue decoupling in the gas business.
Hey, good morning team Reggie really happy that CMS is still serving caffeinated coffee.
Anthony Crowdell: Hey, good morning, team Rejji. Really happy that CMS is still serving caffeinated coffee in the employee kitchen. Just one loose end. You're currently asking for a decoupling in your gas case. Just curious if you plan on... You know, I know I'm thinking forward, you're currently in your electric case now. Thinking in your next electric case, do you ask for decoupling or given the load that you're showing a big increase in industrial load in 2025, if you're less inclined to ask that given the strong load growth?
Anthony Crowdell: Hey, good morning, team Rejji. Really happy that CMS is still serving caffeinated coffee in the employee kitchen. Just one loose end. You're currently asking for a decoupling in your gas case. Just curious if you plan on... You know, I know I'm thinking forward, you're currently in your electric case now. Thinking in your next electric case, do you ask for decoupling or given the load that you're showing a big increase in industrial load in 2025, if you're less inclined to ask that given the strong load growth?
Employee kitchen.
Speaker #10: We have looked historically at the trends in terms of sales for electric business and just don't see the need to look to do that for the electric business.
Just one one loose and.
You are currently asking for.
Decoupling in your gas case.
Speaker #10: So the intent right now is the gas just for the gas business. That's what's embedded in this pending case that we filed in mid-December.
Just curious if you plan on I know I'm, taking forward you're currently in Europe and electric case now thinking of your next electric case, you asked for decoupling or given the low that youre showing a big increase in industrial load in 2025, if you're less inclined to ask given the strong load growth.
Speaker #10: And really no appetite at the moment to look at that from an electric perspective.
Speaker #11: Great. That's all I had. Thanks so much.
Speaker #10: Okay. Oh, go ahead, Reggie.
Speaker #11: Anthony, the only other thing I would note is that it is actually not permitted to utilize decoupling in electric business. That is actually a part of the legislation that's been passed.
Anthony I appreciate the question and as always we show up for these calls well caffeinated. So I'm glad you noticed.
Rejji Hayes: Anthony, appreciate the question, and as always, we show up for these calls well-caffeinated, so glad you noticed. Yeah, our intent is to just focus on revenue decoupling in the gas business. We have looked historically at the trends in terms of sales for our electric business and just don't see the need to look to do that for the electric business. So the intent right now is the gas, just for the gas business. That's what's embedded in this pending case that we filed in mid-December, and really no appetite at the moment to look at that from an electric perspective.
Rejji Hayes: Anthony, appreciate the question, and as always, we show up for these calls well-caffeinated, so glad you noticed. Yeah, our intent is to just focus on revenue decoupling in the gas business. We have looked historically at the trends in terms of sales for our electric business and just don't see the need to look to do that for the electric business. So the intent right now is the gas, just for the gas business. That's what's embedded in this pending case that we filed in mid-December, and really no appetite at the moment to look at that from an electric perspective.
Yeah. Our intent is to just focus on revenue decoupling in the gas business. We have looked historically at the trends in terms of sales for our electric business and just don't see the need to look to do that for the electric business. So the intent right now is the gas just for the gas business. That's what's embedded in this pending case that we filed in mid December.
Speaker #11: Okay. Thank you.
Speaker #1: Final question today comes from Bill Apacheli from UBS. Bill, please go ahead. Your line is
Speaker #1: Final question today comes from Bill Apacheli from UBS. Bill, please go ahead. Your line is
Speaker #1: open.
Speaker #11: Morning, Bill. Hey, good morning.
Speaker #12: Just had a question
Speaker #12: the 3% residential bill inflation. Maybe you could just unpack a bit when we think about 10 and a half percent rate-based growth. So how CE way?
Really no appetite at the moment to look at that from an electric perspective.
Speaker #12: much are you managing with the
Great. That's all I had thanks so much.
Andrew Weisel: ... That's all I had. Thanks so much.
Anthony Crowdell: ... That's all I had. Thanks so much.
Speaker #12: And then do you have anything else on the affordability side that can help, right? So I think in the past you've talked about some higher price per contracts that roll off.
Garrick Rochow: Okay. Yeah, oh, go ahead, Rejji.
Garrick Rochow: Okay. Yeah, oh, go ahead, Rejji.
Yeah go ahead Roger.
Rejji Hayes: Anthony, the only other thing I would note is that it is actually not permitted to utilize decoupling in the electric business. That is actually a part of the legislation that's been passed.
Rejji Hayes: Anthony, the only other thing I would note is that it is actually not permitted to utilize decoupling in the electric business. That is actually a part of the legislation that's been passed.
Anthony the only other thing I would note is that it is actually not permitted to utilize decoupling and electric business that is actually a part of the legislation that's been passed.
Speaker #12: Maybe you could just speak manage the affordability.
Speaker #10: Yeah, Bill, thanks for the question. And I think you've hit some of the key items that drive that downward pressure on bills and rates every year.
Okay. Thank you.
Andrew Weisel: Okay, thank you.
Anthony Crowdell: Okay, thank you.
Yeah.
Final question today comes from Dave Charlie from UBS. Please go ahead. Your line is open.
Operator: Final question today comes from Bill Appicelli from UBS. Bill, please go ahead. Your line is open.
Operator: Final question today comes from Bill Appicelli from UBS. Bill, please go ahead. Your line is open.
Speaker #10: And so we've been at this, as Garrick noted earlier, for multiple decades now where we really try to self-fund a lot of that rate-based
Hey, Good morning, just had a question around the <unk>.
Bill Appicelli: Hey, good morning.
Bill Appicelli: Hey, good morning.
Rejji Hayes: Morning, Bill.
Rejji Hayes: Morning, Bill.
Bill Appicelli: Just had a question around the three percent residential bill inflation. You know, can you just unpack a bit when we think about, you know, 10.5% rate base growth. So how much are you managing, you know, with the CE Way? And then do you have anything else on the affordability side that can help, right? So I think in the past, you've talked about some higher priced PURPA contracts that roll off. Maybe you could just speak to other tools that are there to manage the affordability.
Bill Appicelli: Just had a question around the three percent residential bill inflation. You know, can you just unpack a bit when we think about, you know, 10.5% rate base growth. So how much are you managing, you know, with the CE Way? And then do you have anything else on the affordability side that can help, right? So I think in the past, you've talked about some higher priced PURPA contracts that roll off. Maybe you could just speak to other tools that are there to manage the affordability.
Speaker #10: growth. And for, I'd say, two decades, it's been episodic cost reductions through decisions. And we certainly are assuming that we do have high-priced PPAs that will be rolling off over time at some point.
3% residential bill inflation.
Maybe could you just unpack a bit when we think about you know 10, 5% rate base growth. So so how much are you managing.
With the CE way and then do you have anything else on the affordability side that can help right. So you I think in the past you've talked about some higher priced PURPA contracts that roll off.
Speaker #10: We'll be out of coal. And so that will drive cost savings as well. And those are a bit more episodic. But the CE way just continues to offer more and more savings each year.
Maybe you can just speak to the other tools that are there to match the affordability.
Speaker #10: And I'll remind everyone that we instituted it only about a decade ago. So we think we're just scratching the surface. And I remember going back to 2018, 2019, we delivered probably just under $10 million of operating expense reduction from the CE way.
Yes, Bill Thanks for the question and I think you've hit some of the key items that drive that downward pressure on bills and rates every year.
Rejji Hayes: Yeah, Bill, thanks for the question, and I think you've hit some of the key items that drive that downward pressure on bills and rates every year. And so we've been at this, as Garrick noted earlier, for multiple decades now, where we really try to self-fund a lot of that rate-based growth. And for, I'd say two decades, it's been episodic cost reductions through decisions, and we certainly are assuming that, that we do have high priced PPAs that will be rolling off over time. At some point, we'll be out of coal, and so that will drive cost savings as well, and those are a bit more episodic. But the CE Way just continues to offer more and more savings each year.
Rejji Hayes: Yeah, Bill, thanks for the question, and I think you've hit some of the key items that drive that downward pressure on bills and rates every year. And so we've been at this, as Garrick noted earlier, for multiple decades now, where we really try to self-fund a lot of that rate-based growth. And for, I'd say two decades, it's been episodic cost reductions through decisions, and we certainly are assuming that, that we do have high priced PPAs that will be rolling off over time. At some point, we'll be out of coal, and so that will drive cost savings as well, and those are a bit more episodic. But the CE Way just continues to offer more and more savings each year.
Speaker #10: And we were high-fiving because we were in year two one or two of instituting the CE way. And as Garrick noted, just this past year, we did another year of $100 million of savings.
So we've been at this is Garik noted earlier for multiple decades, now, where we really try to self fund a lot of that rate base growth.
Speaker #10: So a lot of opportunity there. But what we're really excited about, again, to in terms of levers or opportunities to just self-fund our growth is just converting on this attractive economic development backlog.
For I'd say two decades, it's been episodic cost reductions group decisions and we certainly are assuming that we do have high priced ppas that will be rolling off over time at some point will be out of coal and so that will drive cost savings as well and those are a bit more episodic, but the CE way just continues to.
Speaker #10: That, to me, is really the third leg of the affordability stool. We know that we're very strong in delivering on the cost performance side.
To offer more and more savings each year and I will remind everyone that we instituted at only about a decade ago. So we think we're just scratching the surface and I remember going back to 2018 2019, we delivered probably just under 10 million Bucks of operating expense reduction from the CE way and we were high Fiving, because we were a year or two one or two of instituting the <unk>.
Rejji Hayes: I'll remind everyone that we instituted it only about a decade ago, so we think we're just scratching the surface. I remember going back to 2018, 2019, we delivered probably just under $10 million of operating expense reduction from the CE Way. We were high-fiving because we were in year two, one or two of instituting the CE Way. As Garrick noted, just this past year, we did another year of $100 million of savings. So a lot of opportunity there. But what we're really excited about, again, in terms of levers or opportunities to just self-fund our growth, is just converting on this attractive economic development backlog. That, to me, is really the third leg of the affordability stool.
Rejji Hayes: I'll remind everyone that we instituted it only about a decade ago, so we think we're just scratching the surface. I remember going back to 2018, 2019, we delivered probably just under $10 million of operating expense reduction from the CE Way. We were high-fiving because we were in year two, one or two of instituting the CE Way. As Garrick noted, just this past year, we did another year of $100 million of savings. So a lot of opportunity there. But what we're really excited about, again, in terms of levers or opportunities to just self-fund our growth, is just converting on this attractive economic development backlog. That, to me, is really the third leg of the affordability stool.
Speaker #10: But if we can also convert not even all, but just a portion of this economic development backlog, pressure on bills and rates and funds a lot of these needed customer investments that we have across our electric business.
Speaker #10: And that's where we provided that sensitivity and one of the slides Garrick spoke to. We're basically have shown that with a gigawatt of conversion on this economic development backlog, associated with the large load tariff, that drives about 2 points of reduction in that bill Cager.
And as Derek noted just this past year, we did another year of $100 million of savings. So a lot of opportunity there, but we're really excited about again too.
In terms of levers or opportunities to self fund our growth is just converting on this attractive economic development backlog backlog that to me is really the third leg of the affordability stool, we know that we're very strong and delivering on the cost performance side, but if we can also convert not even all but just a portion of this.
Speaker #10: So again, a lot of arrows in our quiver. And we look forward to continuing to execute on all of those to create that downward pressure to fund the CapEx
Speaker #10: plan.
Rejji Hayes: We know that we're very strong in delivering on the cost performance side, but if we can also convert, not even all, but just a portion of this economic development backlog, you can see that it just drives great downward pressure on bills and rates, and funds a lot of these needed customer investments that we have across our electric business. That's where we provided that sensitivity. In one of the slides Garrick spoke to, we basically have shown that, you know, with 1 gigawatt of conversion on this economic development backlog associated with the Large Load Tariff, that drives about 2 points of reduction in that bill CAGR. So again, a lot of arrows in our quiver, and we look forward to continuing to executing on all of those to create that downward pressure to fund the CapEx plan.
Rejji Hayes: We know that we're very strong in delivering on the cost performance side, but if we can also convert, not even all, but just a portion of this economic development backlog, you can see that it just drives great downward pressure on bills and rates, and funds a lot of these needed customer investments that we have across our electric business. That's where we provided that sensitivity. In one of the slides Garrick spoke to, we basically have shown that, you know, with 1 gigawatt of conversion on this economic development backlog associated with the Large Load Tariff, that drives about 2 points of reduction in that bill CAGR. So again, a lot of arrows in our quiver, and we look forward to continuing to executing on all of those to create that downward pressure to fund the CapEx plan.
Speaker #11: Great. No, that's very helpful.
Speaker #11: item. It looks like the DNA in 28, 29 is about $100 million lower than the prior guide you had given? Is there anything driving that, or despite the fact that the CapEx is higher?
Economic development backlog, you can see that just drives great downward pressure on bills and rates and funds a lot of these needed customer investments that we have across our electric business and that's why we provided that sensitivity.
Speaker #11: So any color there?
Speaker #10: Yeah. Yeah, my sense is it's mixed. That's usually what it is because you do have different depreciation rates depending on the assets, the lived than the generation assets.
One of the slides Gary spoke to we basically have shown that with.
A gigawatt of conversion on this economic development.
Backlog.
Associated with the large low tariff that drives about two points of reduction in that Bill CAGR. So again lot of a lot of arrows in our quiver and we look forward to continuing to executing on all of those to create that downward pressure to fund the Capex plan.
Speaker #10: And so distribution assets tend to be longer it's got to be mixed. But the IR team will certainly follow up with you after the call to unpack that some more, Bill.
Speaker #11: Great. Thank you very
Speaker #11: much. Thank
Great No. That's very helpful. Thank you and I guess, one housekeeping item it looks like the DNA in 'twenty eight 'twenty nine is about $100 million lower than the prior guide you had given was there anything driving that or despite the fact that the capex is higher so any color there yeah.
Bill Appicelli: Great. No, that's very helpful. Thank you. And I guess one housekeeping item. It looks like the DNA in 2028, 2029 is about $100 million lower than the prior guide you had given. Is there anything driving that, or, you know, despite the fact that the CapEx is higher? So any color there?
Bill Appicelli: Great. No, that's very helpful. Thank you. And I guess one housekeeping item. It looks like the DNA in 2028, 2029 is about $100 million lower than the prior guide you had given. Is there anything driving that, or, you know, despite the fact that the CapEx is higher? So any color there?
Speaker #1: closing comments.
Speaker #11: Thanks, Adam. I'd like to thank you for joining us today. I look forward to seeing you on the conference circuit. Take care. And stay
Speaker #11: safe. This concludes today's call.
Rejji Hayes: Yeah. Yeah, my sense is it's mixed. That's usually what it is, because you do have different depreciation rates depending on the assets. The distribution assets tend to be longer lived than the generation assets, and so it's got to be mixed. But the IR team will certainly follow up with you after the call to unpack that some more, Bill.
Rejji Hayes: Yeah. Yeah, my sense is it's mixed. That's usually what it is, because you do have different depreciation rates depending on the assets. The distribution assets tend to be longer lived than the generation assets, and so it's got to be mixed. But the IR team will certainly follow up with you after the call to unpack that some more, Bill.
Yes, My sense is it's mix that's usually what it is because you do have different.
Depreciation rates, depending on the assets the distribution assets 10 will tend to be longer lives than the generation assets and so it's got to be mixed but the IR team will certainly follow up with you after the call to unpack that some more bill.
Great. Thank you very much.
Bill Appicelli: Great. Thank you very much.
Bill Appicelli: Great. Thank you very much.
Thank you. This concludes today's Q&A session. So I'll hand, the call back to Mr. Eric Bruce Shaw for any closing comments.
Rejji Hayes: Thank you.
Rejji Hayes: Thank you.
Operator: This concludes today's Q&A session, so I'll hand it back to Mr. Garrick Rochow for any closing comments.
Operator: This concludes today's Q&A session, so I'll hand it back to Mr. Garrick Rochow for any closing comments.
Yeah.
Thanks, Adam.
Garrick Rochow: Thanks, Adam. I'd like to thank you for joining us today. I look forward to seeing you on the conference circuit. Take care and stay safe.
Garrick Rochow: Thanks, Adam. I'd like to thank you for joining us today. I look forward to seeing you on the conference circuit. Take care and stay safe.
I'd like to thank you for joining us today and look forward to seeing you on the conference circuit take care and stay safe.
This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
Operator: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.
Operator: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.
