Garrick Rochow: locations, and I expect further movement after the elections. I continue to be proud with what the CMS Energy team has delivered and know that the benefit of growth flows to our customers as we spread fixed costs across a larger customer base, driving affordability, while these opportunities create jobs and strengthen our communities and our state. As we turn to the regulatory calendar, I will highlight the constructive order from the Commission in our gas rate case, approving $139 million, or approximately 60% of our final ask, a 9.8% ROE, and 50% equity ratio.
Garrick Rochow: The Commission's order delivers another proof point of the constructive regulatory environment in Michigan and supports the important and needed investments in our gas distribution system. In October, we filed our revised or updated electric rate case, requesting a $443 million revenue increase, a 10.25% ROE, and a 51.75% equity ratio. Staff also filed their position in October, recommending a $265 million revenue increase, or 60% of our revised ask, a 9.85% ROE, and 50% equity ratio.
Garrick Rochow: Additionally, Staff supported our storm deferral recovery for the 2025 storms within the electric rate case, and the Commission approved the deferral of 2026 Q1 storms in August, furthering our confidence in recovery and evidence of the constructive regulatory environment in Michigan.
Garrick Rochow: If I pull up from the details and reflect on the entire electric rate case, Staff's position is constructive, a good starting point, and there are opportunities we will pursue in the rebuttal process to ensure we support the important and needed investments to improve reliability, and that the record further reflects our reasonable sales forecast for both residential and commercial growth. We expect the PFD position in late January and a final order by early April of next year.
Garrick Rochow: Now, onto the financials. Year-to-date, we reported adjusted earnings per share of $2.95. We are reaffirming our full year 2026 guidance of $3.83 to $3.90 per share, with continued confidence toward the high end. Our financial performance has positioned us to reinvest in the business, de-risking future years, and further enhancing service for our customers. We are also reaffirming our 2027 guidance of $4.08 to $4.17 per share, which incorporates the NorthStar restructuring.
Garrick Rochow: Longer term, we continue guide toward the high end of our adjusted EPS growth range of 6% to 8%. Finally, as we have done in previous years, we will provide an update on our year-end call regarding the roll forward of our five-year utility capital plan and broader financial plan. With that, I will hand the call over to Sri.
Sri Maddipati: Thank you, Garrick, and good morning, everyone. I am excited to be with you all this morning and to provide an update on our business. Today, my remarks will largely focus on continued execution through 2026, our reinvestment of favorable performance, which will benefit customers, strengthen 2027, and future long-term growth, as well as an update on our financing activities and how we will continue to leverage the benefits of restructuring NorthStar into our annual planning process.
Sri Maddipati: Given the progress Garrick highlighted in our IRP, we see plenty of opportunities between rate base and FCM on PPAs in our supply business. In addition, there is a robust capital backlog in both our electric and gas distribution businesses. We will provide an update of our capital plan in Q4 for our normal practice. Starting on slide 9, we have the standard waterfall chart, which illustrates the key drivers of our financial performance through the first 9 months of 2026 and our year-to-go assumptions for meeting our full year guidance range, where we plan to deliver toward the high end.
Sri Maddipati: Year-to-date, the company delivered adjusted net income of $915 million, or $2.95 per share, which you will note excludes the restructuring activities at NorthStar and is $0.29 favorable to last year. We are trending ahead of last year and are well-positioned relative to plan, reflecting strong execution at the utility, including constructive regulatory outcomes, as well as completion of the Michigan solar projects we are retaining at NorthStar.
Sri Maddipati: Favorable weather in the quarter and benefits from the storm deferral give us greater flexibility as we manage the remainder of the year, including weather and storm risk, while continuing to reinvest in the business to benefit customers and strengthen 2027 and beyond. Compared to last year, you can see that weather results in a $0.05 unfavorable variance. However, from a planning perspective, we assume normal weather. So relative to plan, we have benefited $0.08 year-to-date, primarily driven by Q3 cooling degree days.
Sri Maddipati: New rates, net of investment costs, resulted in a positive variance of $0.34, with the benefits of last year's gas rate order, new electric rates from earlier this year, and continued investments in renewable projects at the utility. We were pleased with the Commission's approval of the storm deferral in Q3, offsetting the full year impact of the ice storm earlier in the year.
Sri Maddipati: Year-to-date, O&M is unfavorable $0.16, primarily due to additional storm activity, as well as a portion of the reinvestments we have already made across the business, including electric reliability, gas operations, customer service, and digital investments that will enhance future productivity. The $0.16 of favorable variance in parent and other has been primarily driven by NorthStar performance, with much of that being reinvested back into the business, which I will touch on in a moment.
Sri Maddipati: Looking at the remainder of the year, we are well-positioned to meet our financial objectives in 2026, as Garrick noted. Our assumptions already reflect an unfavorable variance of $0.09 for normal weather. With our 2026 regulatory outcomes complete, we are confident in the positive variance of $0.08 in Q4 for rates net of investments. From an O&M perspective, we expect to net $0.10 of favorable variance given our conservative planning assumptions for storm activity.
Sri Maddipati: This already accounts for $0.10 of reinvestments to improve safety, reliability, and enhance future productivity, as previously noted. As always, we will remain flexible throughout the quarter and look to take advantage of additional opportunities to reinvest for customer benefits that will strengthen future years. Closing out the glide path for the remainder of the year in the bar on the right-hand side, you will note $0.09 to $0.16 of negative variance, which incorporates the flexibility we have for the rest of the year for contingency or to reinvest back into the business.
Sri Maddipati: We remain well-positioned to deliver toward the high end of our guidance range while maintaining the flexibility to manage the remainder of the year and continue investing for the long term. Moving to slide 10, you will note that our planned financing for the year is nearly complete, given the $900 million utility first mortgage bonds we raised in Q3, all within our planning assumptions. From an equities perspective at the parent, we have completed $495 million at attractive prices relative to plan.
Sri Maddipati: For the remaining equity, we will continue to match the pricing and issuance relative to our needs, given the NorthStar restructuring, where I would be disappointed if we are not above the $500 million funding benefit Garrick noted. We are already optimizing those benefits this year, and we incorporate it into our five-year planning cycle. From a debt maturities perspective, we have approximately $625 million maturing at the parent next year.
Sri Maddipati: Keep in mind, with our conservative approach, our conservative approach already incorporates interest rates consistent with where the market is today. We would look to potentially de-risk next year by pulling some of that refinancing forward. Also, I will remind you that nearly all our debt is fixed rate. I am confident in the strategy we are executing to deliver on our objectives this year and strengthen the plan going forward, and I look forward to sharing more in the future. Now, I will turn the call back to Garrick before we take some questions.
Garrick Rochow: Thanks, Sridhar. At CMS Energy, we deliver every year for 23 years, consistent industry-leading performance regardless of circumstances. You can count on CMS Energy to deliver for all of its stakeholders. With that, Piercy, please open the lines for Q&A.
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 1 on your touch-tone telephone. If you are using a speaker function, please make sure you pick up your handset. We will proceed in the order you signal us, and we will take as many questions as time permits. If you do find that your question has been been answered, you may remove yourself by pressing the star key followed by the digit 1 on your touch-tone telephone.
Operator: We will pause for just a moment. Your first question comes from Shar Pourreza with Wells Fargo. Please go ahead.
Marcella Petiprin: Hey, good morning. This is Marcella on for Shar. Thanks for taking our question.
Garrick Rochow: Hey, Marcella. Good morning.
Marcella Petiprin: Thanks. The MPSC has had some commentary recently on the FCM, specifically as it relates to contracts you are legally obligated to enter, but more broadly, how should we be thinking about durability of the FCM and energy policy in Michigan post-election?
Garrick Rochow: The short answer is we don't see the FCM going away, but let me talk a little bit more about that. I am glad you brought up the FCM because we've been very deliberate in including it in our slide deck, right? It is on the right-hand side of, I don't remember the slide number, I think slide 5 there. But I think it is one of the things that is most underestimated by our investors, that ability to grow FCM over time, and we are showing that in that graph. The ability to grow up to 2031 and beyond to $125 million, and then even to 2040 to $190 million.
Garrick Rochow: Marcella, you won't know this about me, but my mom was a math teacher, and she would always say to me, "Show your work." She drilled that into me in junior high, and that is what we are doing right here in the context of this FCM. You can see in that slide, in slide 5, that it is highlighted, right? This goes from darker blue to light blue. That is to show the progress we have made. In 2031, over 70% of those contracts are already signed or online. That creates the visibility and clarity, and for me, confidence of our ability to deliver on that.
Garrick Rochow: I just want to highlight that in the context of this, because again, I think it is a differentiator in our story, and I want to make sure I bring attention to that. In terms of the MPSC, the Commission, in their words, in their letter to the governor, recognized the value of the FCM, and particularly third-party solutions that come at a lower cost. This is not about the discussion around the entire FCM. This is about refinement, particularly around PURPA contracts and assets that are fully depreciated. I really view this as refinement of the FCM, not eliminated in the context of affordability.
Garrick Rochow: That is why I came out strongly and said, "We don't see the FCM going away." In fact, it is one thing that we want to highlight during this call, just the potential upside there.
Sri Maddipati: The only thing I'd note to Garrick's comments were, the depreciated assets, largely talking about river hydros, we didn't include that into our projection of the FCM. In fact, we asked to use those proceeds to de-risk future safety of those funds. The FCM that we have here contemplated is within the law and really is not reflective of the contracts the Commission highlighted.
Marcella Petiprin: Super helpful. Thanks. Then just because it is pretty topical right now, given the latest gubernatorial debate posturing and kind of a high relative number of moratoriums in Michigan, how should we be thinking about the data center opportunity window relative to manufacturing and other opportunities? Just how should we be thinking?
Garrick Rochow: The short answer is strong. It still is, across both candidates and our current governor. Let me offer some more context around this. Politics, Sri says this, I love it when he says this, "Politics do not equal policy." Some of the spin that you see leading up to elections does not equal reality. What we know, and we showed in that slide, it is the last slide in my prepared remarks, that regardless of CEO, CFO, governor, legislature, MPSC, and weather, we deliver. It is based on the principle we work with everyone.
Garrick Rochow: That is easy to say, harder to do, but that is what we do. We do it year after year by finding common ground. There is common ground on affordability, and there is common ground on data centers, right? We see this with both candidates that are running are supportive of those investments in Michigan and the jobs that come with it and the property tax value. No one said, "No data centers." In fact, they have talked about responsible data centers, and we are for that as well. In fact, our electric tariff for data centers, our large load agreement, does just that.
Garrick Rochow: It is responsible and for, again, who pays, and so our residential customers are not burdened with the data center. We need to do more of that in terms of water and wastewater and noise and land as a state, and that is the important work that is to be done. I expect the data centers will continue to move forward after the elections here. But again, just back to my beginning remarks, I see a strong environment for data center growth across Michigan.
Marcella Petiprin: Appreciate that. Thanks, Garrick.
Garrick Rochow: Thank you, Marcella.
Operator: Your next question comes from Jeremy Tonet with JPMorgan. Please go ahead.
Jeremy Tonet: Hi, good morning.
Garrick Rochow: Good morning, Jeremy. Look forward to seeing you soon at EEI.
Jeremy Tonet: Yeah, see you soon. Looking forward to it. Was just wondering if you could provide maybe a little bit more color on large load expectations there in the cadence you see coming forward. There was the funnel in prior slides, and so just looking to see how you think about that at this point, how far the different initiatives are advanced, and I will leave it there for now.
Garrick Rochow: Well, to be super clear, we heard that feedback this morning. We did not include the slide. Look, we could provide the slide. It is a little bit like watching Michigan play football. You can spend a lot of time looking at the plays, but you got to get it across the end zone. You got to get it across the goal line. So, we provided in this deck really along the lines of economic development. We are showing our work. Again, going back to my mom, "Show your work." 745 megawatts that has been signed, 450 is already energized. A lot of that is in the manufacturing space.
Garrick Rochow: You have heard me talk before about the benefits and value of that. So we are showing that. We are showing that important work and what that means for the state, what that means for jobs, what that means for and confirming our sales growth that is in our financial plan of 2% to 3%. Now, we can talk data centers, and we are happy to talk data centers. Multiple data centers continue in the state. That is the pipeline. We signed one in Q2, and we shared that in the Q2 earnings call. That has continued to progress in multiple locations across the state.
Garrick Rochow: From a zoning perspective, one of the areas where they are located, they just released their draft zoning ordinance. So the company is in fact reviewing that right now and providing feedback. So I see that as a, again, as a positive step. In another data center, actually a couple data centers are acquiring more land within the state. So again, we continue to see positive progress along those lines. Again, I see more progress after we get through the elections here shortly.
Jeremy Tonet: Got it. That is helpful. Thank you for that. I just want to pick up, I guess, in the past you talked about 1 gigawatt could drive $2 billion to $5 billion in CapEx. I am just wondering if we should still think about that relationship and specifically as it relates to the IRP and the $27 billion of long-term CapEx, how you think this could enter the plan over time, forward thoughts there?
Sri Maddipati: Yeah, Jeremy, I think that is still a good way to look at it, $2 billion to $5 billion, and that really just bifurcated between just the capacity needed and then the clean energy that is needed over time. As it relates to the IRP, we will incorporate that into our annual process. You have got to keep in mind, our current plan does not really contemplate having a data center in it. So, our future plans will incorporate the IRP capital, which largely is not data center related, nor is the FCM. So we will incorporate that in as we roll forward.
Jeremy Tonet: Got it. Makes sense. I will leave it there. Thank you.
Operator: Your next question comes from Richard Sunderland with Truist Securities. Please go ahead.
Richard Sunderland: Hey, good morning. Thanks for the time today. Turning back to NorthStar, the 35% of assets that signed agreement or closed and kind of that buyer interest for the remainder, could you speak a little bit to that versus expectations last quarter into this process? Maybe just progress overall and where it's trending versus sort of your internal modeling?
Garrick Rochow: I think Sri and I will tag team this one, but I am very pleased with the progress from where we stand in the 35% of the assets that are either purchase sale agreement or closed. That is trending well. In the context of exclusivity with the buyers, that is well underway. We are not just at the beginning of that, and so closing in on purchase and sales agreement, and that is why we are, again, offer the commentary that restructuring will be complete by year end, and we are on target from that perspective. Sri, please.
Sri Maddipati: Yeah. The only thing I would add is, as Garrick noted, we are on track in the use of funding. We noted in the Q2 call at least $500 million, like I said here. I would be disappointed if we were not above that. That is trending positively relative to that. All of that will help parent funding needs, which will roll into our Q4 financing plan along with our capital programs.
Richard Sunderland: Understood. Thanks for running through all of that. Turning back to some of the broader policy considerations, elections, pre and post considerations, could you speak a little bit more to the utility issue side, particularly regulatory changes and the appetite to address that? Maybe how stakeholder conversations on that front are trending, and if you have any updated thoughts on how that may or may not get picked up after the elections in 2027? Thank you.
Garrick Rochow: Yeah. Just from an investment community, there appears to be a lot of noise on Michigan, and I will tell you right here on the ground, I am confident in our ability to navigate. Frankly, we have built good relationships with all the governor candidates, many of the legislature, and as a result of just doing business here in Michigan for a long time. As I have shared here, we have delivered for 23 years by finding common ground, by this principle, we work with everyone.
Garrick Rochow: When it comes to common ground, particularly around affordability, whether you are Republican, Independent, or Democrat, people can align around that. I have talked about it on a number of these calls and investor meetings, the two-pager I run around with and talk about affordability and look for common ground, and I think there is a lot of ways to do that. One is in the context of multi-year rate plans that provide predictability for customers.
Garrick Rochow: One, two, we have talked about in terms of personal property tax and the hundreds of millions of savings for customers and that pass-through that shows up. We have talked about it in state permitting reform. I know we are talking about federal right now, but also state permitting reform would help from a cost perspective. Chair Scripps with the Commission sent a letter to the governor, and if you go through that letter like I have, you can say, "Yes, yes, we should be doing a number of those things," particularly in terms of low to moderate income.
Garrick Rochow: Right now in the state, there is all kinds of policy improvement that can be done in the context of low to moderate income customers. What I am laying out for you, Rich, is like, here is the place for common ground, and how do we work around affordability? Again, we see that as important steps as we go into 2027 and further and beyond that to be able to continue to find and continue our position as 15th lowest bills from a nation perspective in terms of electric and just continue to position the utility in the right way and make the important investments for all stakeholders.
Garrick Rochow: Hopefully that offers some good context for you.
Richard Sunderland: No, that is great. Appreciate the flavor for all of that. Thanks, Garrick.
Operator: Your next question comes from James Ward with Jefferies. Please go ahead.
James Ward: Hi, guys. I have got another NorthStar question for you here. NorthStar has contributed $0.62 through September. Guidance for the year was $0.25 to $0.30 back in February. How should we think about the NorthStar contribution in your current full year guidance, and then how much of the Q3 benefit reverses in the Q4, and what sort of tail amount, if any, is left for 2027?
Sri Maddipati: Yeah, thanks, James, for the questions. Couple things on NorthStar related to guidance. Obviously, realizing benefits as we brought some of those projects to COD, so that is having NorthStar overperforming our planned guidance for the year. Some of that will reverse, some of that is just timing on taxes. So when we book kind of effective tax rates, you kind of do it evenly, and some of that will reverse in the Q4. In terms of kind of rolling into 2027, we have already incorporated the fact that we are selling some of the assets, so that is already in our 2027 guide.
Sri Maddipati: Some of the tax equity pieces will roll off into 2027. It is all already baked in. We will share kind of segment guidance as we go through the Q4.
James Ward: Got you. Thanks for that. On 2027, your reliability, storms, and productivity bucket is about $0.12 lower for the year than the July plan, but weather is obviously $0.12 better. Is that reinvestment, and is the 2027 range built off the higher 2026 cost base or the July one? How much of the Q4 spend will be 2027 work pulled forward? Just trying to get a sense as we head into next year of a level set as we go much more utility, nearly all utility focused.
Garrick Rochow: Got it. You are kind of mixing 2026 and 2027, so I will see if I can parse that out for a second. Some of what you have on the to-go is just conservative planning, right? We plan conservatively for storms, so make sure we have enough there for that. That number is net of reinvestments that we are going to be making here over the course of the Q4. So, significant flexibility there to kind of reinvest in the business. That all de-risks 2027. Some of that will be pulled forward, and we will continue to have those options as we go through the year.
Garrick Rochow: We got to keep in mind, we are not decoupled, so we are also making sure that we have enough contingency as we look forward to the year for sales as well.
James Ward: Terrific. Thank you very much, and we look forward to kicking off EEI with you guys at lunch on Sunday.
Operator: Your next question comes from Nicholas Campanella with Barclays. Please go ahead.
Nicholas Campanella: Hey, good morning.
Garrick Rochow: Morning, Nick.
Nicholas Campanella: Thanks for taking my questions. Hey, I just wanted to be clear and follow up on the prior question from Jeremy Tonet on just the data center opportunity set. Just the 745 megawatts in the context of you talking about making more progress after the election here, is that something that we can just kind of wrap in to expect in the full year update that you're going to give in Q4? Is that where that is trending? Just wanted to level set there. Thank you.
Garrick Rochow: Let me offer some context, and Sri Maddipati may want to also join in some context on this. What we framed there is 745 megawatts. That does not include the large load agreement data center. That is just, I call it singles and doubles. We are just stacking up semiconductor manufacturing, food processing. There is one medium-sized data center in that mix, but much of that is already online. That is built into the plan, it is built into our IRP. We are showing, again, the 2% to 3% load growth that we have in our current five-year plan.
Garrick Rochow: The capital investments that will come with this new data center are not yet incorporated into our plan. We will see that through from a zoning perspective, and again, I have optimism as I see that playing out in multiple jurisdictions. Sri, please.
Sri Maddipati: Yeah, like Garrick said, the 2% to 3% sales growth already baked into our five-year plan. Adding a data center would push us above that, as well as the capital above that. This is already incorporated into our plan, it is us just executing against it, and we continue to see strong momentum in that space as we sign up customers across a number of industries.
Nicholas Campanella: Yep, I meant the 745. Sorry about that. Just one other follow-up was just the 6% to 8% growth plan towards the high end, which reflects 7% or better compounded annually. I guess, how are you guys kind of framing it? Is it closer to 7% or is it kind of closer to 8%, understanding that you have kind of historically under-promised and over-delivered? Thanks.
Garrick Rochow: Let me start with 2026, I think, because everything builds off of 2026. Just again, framing for everyone here. As we said on the call, 6% to 8%, toward the high end, and again, that is 7% or better. We have offered commentary here that we will reinvest into the benefit of customers, particularly in terms of reliability and our gas biz and digital, which improves productivity. Then overall de-risking 2027, which is beneficial for all stakeholders.
Garrick Rochow: Hear me when I say this, I have a great deal of confidence in our ability to deliver in our guidance range for 2026, as we framed up during this call. I would suggest we are well-positioned for 2027 as well. As we normally do, in Q4, we update our capital plan, we update our financial plan, we update our earnings guidance. That is our consistent from a process perspective, and we will do that.
Garrick Rochow: I would remind everybody on this call, and we have shared it in the materials and in our speaking and our prepared remarks, our long-term guidance continues to be 6% to 8% toward the high end, which we framed up as 7% or better.
Nicholas Campanella: Appreciate it.
Operator: Your next question comes from Michael Sullivan with Wolfe Research.
Garrick Rochow: Thanks, Nick.
Operator: Please go ahead.
Michael Sullivan: Hey, good morning. Wanted to ask a little more on this new FCM customer that you signed up. Is it all one customer, and are you expecting these to be this chunky going forward? Just given the progress already, how do you think about layering in any potential upside if you start tracking ahead of the $125 million target by 2031?
Garrick Rochow: Yeah, Michael, I will take it. So that is not a customer. Keep in mind, these are suppliers we earn with the FCM, so it is people who we are contracting with. That is one individual supplier that we are contracting with. We are making progress as we bring that into our portfolio, starting in 2031. So we feel pretty confident about that. There is some more work we have to do on the ground to move that forward, but I would expect that we incorporate those benefits as we roll forward the plan here in the Q4.
Michael Sullivan: Okay, that makes sense. Then, just on the regulatory front, I think you are going to go right back in for another gas case, and one of your peers in the state, I think, was about to do that and kind of changed their mind. So just curious if that had come up at all. In the electric case, just any thoughts around potentially trying to move the needle on the equity ratio? I know that is something that has been hoped for a little while now.
Garrick Rochow: Yeah, I cannot speak to what DTE's approach is. I will leave that for DTE and their call. Again, one of the benefits we see as an annual rate case filer is bringing back the savings to our customers, whether that shows up in the CE Way and digital, and where we see savings, we bring that back. Whether that is in our Appliance Service Plan and other tax benefits, we bring that savings back. Whether that is in the context of load growth, and we see that both in our gas and electric business, we bring back that savings opportunity for customers and sharing some of those fixed costs across the system.
Garrick Rochow: So, by annual rate cases, we are bringing that back, which creates the important headroom to make the needed investments in the system, right? When customers have an outage, there is a real cost to that. We need to be able to make those investments in our electric system. We want to ensure a safe natural gas system without events. We want to make sure we are on the path to clean energy and compliance. Those are not at odds with one another.
Garrick Rochow: In fact, the Commission has been very supportive, and throughout these annual rate case processes, we have been able to achieve constructive outcomes. We have been pleased with the outcomes, and we continue to work hard to make sure that is going to happen. Again, the current system works for us, and we continue to get the outcomes we need for all stakeholders. Now, I have been on the record since early in 2026 to talk about the potential for multi-year rate plans, which offer predictability for customers.
Garrick Rochow: I think there is a right way to do that, and assuming we can do that in the right way and build it into law, I think provides a much more durable means of providing some benefit for customers and other stakeholders. Rather than just a stay-out provision, which to me does not provide the durability for the long term.
Sri Maddipati: The only thing I am just going to add is, good example that Garrett gave in there was just ASP. That was about $90 million benefit. We could have just passed that on in one year. We did not. We actually smoothed that in over three years. Just gives a more consistency experience both to the customers as well as we execute on our plan.
Michael Sullivan: Great. Thanks very much.
Operator: Your next question comes from Anthony Crowdell with Mizuho. Please go ahead.
Anthony Crowdell: Hey, good morning, Garrick. Good morning, Sri.
Garrick Rochow: Always my favorite meeting, the EEI, right there.
Anthony Crowdell: Thanks. You are having lunch with Jameson. Thanks. Just quickly, you guys, small minor detail. It was a very thorough call. Just the outcome where Consumers, the utility, Moody's has it at negative outlook, you are stable at the parent. Just does that add any additional pressure maybe to your financing or change anything with the financing at the parent company, or thoughts on maybe moving that to stable?
Sri Maddipati: Kind of as you noted, Anthony, the outlook is actually at the utility, so a lot of that is just going to be dependent on actions at the utility. We've noted in our kind of cases, and the first time the Commission's really going to have an opportunity to look at that when it's on the direct record is in the electric case, where we're looking for a 51.75% equity ratio. So, I'd expect that Moody's will look at that as they kind of both on a qualitative and a quantitative perspective, but the quantitative aspect being rate recovery and specifically equity ratio.
Anthony Crowdell: Great. That's all I had. I appreciate the details. See you guys in Phoenix.
Operator: Your next question comes from Andrew Weisel with Scotiabank. Please go ahead.
Garrick Rochow: Morning, Andrew.
Andrew Weisel: Hey, good morning, everyone. First question, you sort of alluded to this a little bit, but the IRP load forecast includes the data center, but your capital plans does not. Help me just understand that disparity. Why do you treat those differently? I know your CapEx update is coming in February. How should we think about whether you will or won't match those two things up, or will there always be some disparity between those?
Garrick Rochow: Well, first of all, let me just answer the short answer, then I'll hand it over to Sri here, is it's required. When we sign a contract, it's required to include it in the integrated resource plan. Again, we model a variety of different scenarios, again, as we've shown throughout this call, real load growth in terms of manufacturing, industrial, mid-sized data centers as part of the mix, then we layer in the signed contracts as well. That's just within the policy, within the work of the integrated resource plan, we need to include that. Sri, talk a little bit more about the capital.
Sri Maddipati: Yeah, just keep in mind, Andrew, when we rolled the five-year plan out, we hadn't actually had a contract signed with or an agreement signed with that large center. So now it is, it's in the IRP. As we roll it forward, we're going to make sure we clear all the conditions precedent, which includes siting, right? So making sure those are in before we include that capital. I'll just remind you, that customer doesn't come online really and energize until the back half of the plan to begin with. So it's a slow ramp, even if it was included, out into that early 2030 timeframe.
Sri Maddipati: So, we'll take a look at that if we make more progress between now and the end of the year to incorporate some of that in. But in terms of actually incorporating into the IRP, it's required. When we roll things into our plan, we're a little bit more conservative than that.
Andrew Weisel: Makes sense. Thank you. Then, I know you certainly wouldn't build speculatively, but should you be successful with maybe more than just one data center, maybe it's a couple, at what point would it justify the need for a CCGT? I know they're very expensive, but at what point in terms of the demand side and in terms of timing, based on your conversations with customers in the funnel that's not in the slides anymore, how should we think about the need for potential baseload capacity?
Garrick Rochow: Well, we don't build speculatively, just to be super clear about that. But one of the things the FCM does and allows us a greater flexibility, because we can leverage developers, we can leverage existing assets to bring energy and capacity. In the context, yeah, we can build ourselves too. Again, that offers a lot of ability to be able to, as we secure additional data centers, to be able to adapt to their needs. Again, they have a ramp-up schedule, which we've talked about in the context we match, we work to match as well.
Sri Maddipati: The only thing I would add is we have in the IRP, there is a combined cycle plan out in 2040. What that would, if we continue to add load there, Andrew, we'd likely have to bring that forward, and pulling it in closer to than 2040.
Andrew Weisel: Okay, sounds good. One last one, if I may, on the regulatory side. You alluded to the PSC letter to the outgoing governor for this summer. How do you think about some of There were a lot of issues in there. Where do you see opportunities that you're maybe optimistic about? Where do you see some potential areas of concern? Garrick, you talked about policy improvement around the low and moderate income customers and affordability. Where were some other ideas that maybe caught your interest?
Garrick Rochow: It's just as important what's not in the letter. I mean, you see some states that are going after ROE and equity thickness. That's not in the letter, right. They acknowledge where we are from a bill perspective, 15th lowest bills in the nation, right. They acknowledge that we've stayed below the rate of inflation. I think in the context of that letter, people want to point to the potential negative of it. I saw it as a lot of positive, just those four things alone. But if you kind of walk through that letter, what's the number one thing on there? Multi-year rate plans and the predictability.
Garrick Rochow: Again, done in the right way. I mean, I think that's the important piece. You talk about the balance of that and both sides of it, Andrew. It is doing the right way. So that all stakeholders benefit from that. So we are working on that, right? We will see how that plays out here in 2027. There are a lot of great things in there in the low to moderate income space. It is difficult for a customer that struggles to be able to get assistance in the state. You have to go from organization to organization.
Garrick Rochow: You have to fill out a lot of paperwork multiple times versus one way, one means, one source of data, that is shared to be able to streamline that process. We make it very difficult for those in need within the state of Michigan to get service. We ought to fix that. In that letter, the bottom half of that letter is just that, the low to moderate income space. We should say yes to all those, right?
Garrick Rochow: Figure out those from a policy perspective. So again, there are always pluses and minuses to everything, but from my perspective, there are a lot of great things in that letter that we can do from an affordability perspective. It gets back to common ground, and I think you can find common ground on affordability. That is how we are approaching things through this election period, up until the election and after the election, which gives me confidence, regardless of who is governor, who is in the legislature, that we will be successful.
Andrew Weisel: Makes a lot of sense. Thank you. I will follow up offline to find out where you and James Ward are having lunch. I am going to crash that lunch. I will see you guys soon. Thank you.
Garrick Rochow: All right. Thanks, Andrew.
Operator: Your next question comes from Sophie Karp with KeyBanc. Please go ahead.
Sophie Karp: Hi. Good morning.
Garrick Rochow: Good morning, Sophie.
Sophie Karp: Thank you for taking my question. I just wanted to ask you, are you still going to be generating 10.5% rate base CAGR long term, or is that number kind of under review at this point? Because I do not see it in the current deck.
Sri Maddipati: You cut off, but I think you said 10.5. I think you said 5, and our rate base CAGR is 10.5. That is still supported by our capital plan.
Sophie Karp: 10.5.
Sri Maddipati: Yeah, yeah, 10.5%. Exactly right. So that is still supported by our capital plan, and we are going to update our capital plan here in Q4. As Garrick noted, we have a lot of opportunity from that. What that does not include, Sophie, just keep in mind, is any of the growth that we get out of the FCM. So that is added into that.
Sophie Karp: Mm-hmm. I am just curious, what drove the decision to trim the disclosure in this deck? You have removed some references to rate base, the large load customer progression. Is it simply change how you are presenting, or should we read something more into it?
Sri Maddipati: I wouldn't read much into it, Sophie, other than you got Q3 and we got a brief call. So we'll continue to update our plans, but I wouldn't read anything into it on that basis. Let me just reiterate that. There should be nothing you should read into this. This is just being efficient with the number of slides. When we get to EEI and we have that rich, full, many-page deck, we'll certainly include the funnel and some other components that people are used to seeing. It's just about it being efficient for the quarter call.
Sophie Karp: Okay. Thank you so much. We look forward to that EEI deck. Thank you.
Operator: We have reached the end of the Q&A session. I will now turn the call back to Mr. Garrick Rochow for closing remarks.
Garrick Rochow: Thanks, Piercy. I'd like to thank you for joining us today, and we look forward to seeing many of you at the EEI conference. Take care and stay safe.
Operator: This concludes today's conference. Thank everyone for your part.
