Angie Storozynski

Angie Storozynski inquired about the connection between PPL and AEP's reported load growth, specifically PPL's 10 GW under ESAs, and Talen Energy's generation contracting efforts in the PPL zone.

Answer

Mac McFarland, President and CEO, stated that while Talen doesn't have PPL's specific list, ESAs are a positive indicator of sustained demand. Cole Muller, CFO, added that ESAs are a leading indicator for PPAs, noting Talen has already announced approximately 2 GW in that zone. Mac McFarland further clarified that a new 1 GW data center PPA, as illustrated on Slide 11, is likely a post-2028 delivery due to ramp rates, making the signing date less critical for immediate megawatt flow, and that such contracts don't necessarily need to be tied to a specific site like Montour.

Angie Storozynski sought to understand the connection between PPL and AEP's reported load growth, particularly PPL's expectation of 10 gigawatts of load under Electric Service Agreements (ESAs) by Q1 2026, and Talen Energy's generation contracting efforts. She also questioned the upside potential to free cash flow per share on Slide 11, asking if there's no upside for 2027 and if the 480 MW and 1 GW figures are caps or illustrative. Finally, she asked if the 1 GW PPA is necessarily linked to the Montour site or could serve other AWS sites in the PPL zone.

Answer

Mac McFarland, President and CEO, and Cole Muller, CFO, clarified that PPL's ESAs are a positive indicator of demand, with ESAs being a necessary first step before PPAs. They noted Talen Energy has already announced approximately 2 gigawatts of PPA in that zone. Regarding Slide 11, Mr. McFarland explained that the 2028 outlook was used as a terminal year for illustrating levers, and figures like 480 MW (for AWS acceleration) and 1 GW (for new data center PPA) are illustrative, not caps. He added that new data center PPAs are likely post-2028 due to ramp rates, making the Montour decision a short-term hurdle that doesn't alter the long-term arc. Mr. McFarland further clarified that new PPAs don't necessarily need to be linked to a specific site like Montour, as Talen Energy's Susquehanna 2.0 PPA allows delivery anywhere in Pennsylvania, and data center developers need sites with line of sight for construction.

Inquired about the specifics of the net debt calculation and the bridge to the 2024 forecast, particularly how proceeds and buybacks are accounted for. She also asked about the company's forward-looking strategy, earnings concentration risk, and potential tax leakage from future asset sales.

Answer

The net debt calculation includes secured debt offset by cash, and the 2024 guidance does not forecast buybacks. The strategy is to maximize shareholder value through initiatives like the uplisting and ERCOT sale, leveraging a portfolio with downside protection (PTC) and growth (data center deal). The company has a significant NOL balance of approximately $1.26 billion to shield against taxes from potential sales, though limitations exist.

Angie Storozynski from Seaport Research Partners asked about the balance between contracting existing assets versus new build requirements for hyperscalers. She also questioned the demand for long-term contracts for gas-fired new build in PJM, especially ahead of the Reliability Backstop Auction (RBA).

Answer

Stacey Doré, Chief Strategy and Sustainability Officer and Executive Vice President of Public Affairs, Vistra, highlighted that recent deals with Amazon and Meta demonstrate strong hyperscaler interest in contracting existing nuclear assets, offering speed-to-market advantages. She noted that interconnection processes remain a factor for co-location. Regarding PJM new build, Doré explained that the upcoming RBA will influence customer decisions on bilateral contracts versus RBA participation, but commercial conversations for new build options continue in parallel.

Angie Storozynski asked about the balance between contracting existing assets versus 'bring your own generation' requirements for hyperscalers. She also questioned the demand for long-term contracts for gas-fired new build in PJM, particularly ahead of the Reliability Backstop Auction (RBA).

Answer

Stacey Doré, Chief Strategy and Sustainability Officer and Executive Vice President of Public Affairs, Vistra, highlighted that recent deals with Amazon and Meta demonstrate strong hyperscaler interest in contracting existing nuclear assets, offering speed-to-market advantages. She noted ongoing conversations for other existing assets, including gas plants, despite interconnection process constraints. For PJM new build, Ms. Doré stated that the upcoming RBA rules would influence contracting decisions, but commercial discussions for new build options continue in parallel.

Angie Storozynski, Managing Director and Senior Equity Research Analyst at Seaport Research Partners, expressed awe at H2O America's 13% rate-based growth and $2.7 billion CapEx budget. She questioned whether the majority of the CapEx increase stemmed from the Quadvest acquisition or other projects, and sought clarification on the earnings trajectory, particularly the step-up between 2029 and 2030, and if it implies a need for further equity injection.

Answer

Anne P. Kelly, CFO, stated that the CapEx increase is a combination of additional Quadvest-related CapEx, more granular project forecasting, increased costs from bids (e.g., $100 million for PFAS), and other projects. Andrew Walters, CEO, added that it includes opportunities in 1% main replacement and water supply investments. Anne P. Kelly further explained that the earnings trajectory considers rate case cadences, with Maine and Connecticut filings expected to impact 2027, Texas in 2028, and California's step increases, with new rates potentially in 2030 for Connecticut and Maine. She also mentioned the anticipated paydown of parent company debt in 2029.

Angie Storozynski expressed surprise at the 13% rate-based growth and $2.7 billion CapEx, asking if the majority of this increase came from the Quadvest acquisition. She also questioned the earnings trajectory, specifically if there's an even bigger earnings step-up between 2029 and 2030 due to accelerating growth from Quadvest and other jurisdictions, and if another equity injection might be needed to fund this growth.

Answer

Ann Kelly, Chief Financial Officer, and Andrew Walters, CEO, clarified that the CapEx increase is a combination of factors, including additional CapEx related to Quadvest, new projects, increased costs (e.g., PFAS treatment up by $100 million), opportunities in 1% main replacement, and water supply investments, indicating it's not solely due to the acquisition. Regarding earnings, Ann Kelly noted that Maine has filed an intent for a rate case, Connecticut's 3-year cycle will see a filing this year (implemented next year), and the Texas rate case is effective in 2028. California has annual step increases. She mentioned that Connecticut and Maine could have new rates in 2030. For equity, she stated that on average, $125 million is a reasonable annual expectation, which may vary and increase as CapEx grows. The 2029 parent company debt maturity is expected to be paid down.

Angie Storozynski of Seaport Research Partners inquired about the QuadVest acquisition, asking for details on the fair market value appraisal process in Texas, the connection growth rate, the definition of 'meaningfully accretive' to long-term growth, and the company's potential interest in the Aquarian transaction in Connecticut.

Answer

President & COO Bruce Hauk detailed the Texas regulatory timeline, explaining the 30-day window for appointing appraisers followed by a 120-day valuation period. CFO & Treasurer Ann Kelly attributed the slowing percentage growth in connections to the law of large numbers on an expanding base. CEO Andrew Walters suggested that a 100 basis point increase would be considered meaningful and confirmed that the Aquarian asset would be strategic for customer rates, though the company is currently focused on the Texas acquisition.

Angie Storozynski of Seaport Research Partners inquired about the procedural next steps for the fair market value (FMV) appraisal of the QuadVest acquisition in Texas, the recent connection growth rate at QuadVest, the specific definition of "meaningfully accretive" to the long-term growth rate, and H2O America's potential interest in the Aquarian transaction in Connecticut.

Answer

Bruce Hauk, President & COO, detailed the Texas FMV process, explaining that after filing the notice of intent, the PUCT has 30 days to appoint three appraisers who then have 120 days to determine the value. CFO & Treasurer Ann Kelly clarified that the slowing percentage growth in QuadVest connections is due to the law of large numbers on an expanding base. CEO Andrew Walters stated that while a 100 basis point increase would be considered meaningful, the company is not providing a specific number yet. He also confirmed the Aquarian asset would be strategic but emphasized H2O America's current focus is on the Texas acquisition.

Angie Storozynski of Seaport Research Partners inquired about the procedural next steps for the fair market value appraisal of the QuadVest acquisition in Texas, the recent connection growth rate for QuadVest, the definition of 'meaningfully accretive' to the long-term growth rate, and the company's potential interest in the Aquarian transaction in Connecticut.

Answer

President & COO Bruce Hauk detailed the Texas regulatory timeline, which involves a 30-day period for appointing three appraisers followed by a 120-day appraisal process. CFO & Treasurer Ann Kelly explained that the percentage slowdown in connection growth is due to the law of large numbers as the asset base expands. CEO & Director Andrew Walters clarified that while 'meaningfully accretive' is subjective, a 100 basis point increase would be an example. He also noted that while the Aquarian asset would be strategic, H2O America is currently focused on its Texas acquisition.

Angie Storozynski of Seaport Research Partners inquired about the procedural next steps for the fair market value (FMV) appraisal of the QuadVest acquisition in Texas, the recent connection growth rate for QuadVest, the definition of 'meaningfully accretive' regarding the deal's impact on long-term growth, and H2O America's potential interest in the Aquarian transaction in Connecticut.

Answer

President & COO Bruce Hauk detailed the Texas regulatory timeline, explaining that the PUCT has 30 days to appoint three appraisers, who then have 120 days to determine the FMV. CFO & Treasurer Ann Kelly attributed the moderating percentage growth in QuadVest connections to the law of large numbers on an expanding base. CEO & Director Andrew Walters stated that a 100 basis point increase would be considered meaningful but declined to give a specific number, and confirmed that while the Aquarian asset would be strategic, the company's current focus is on the Texas acquisition.

The analyst inquired about the procedural next steps for the QuadVest acquisition's fair market value assessment in Texas, the reason for the decelerating percentage growth in QuadVest connections, the definition of 'meaningfully accretive' regarding the acquisition's impact on the long-term growth rate, and the company's potential interest in the Aquarian asset in Connecticut if its current sale were to fail.

Answer

The company confirmed that the next step for the QuadVest acquisition is waiting for the PUCT to appoint three appraisers, whose average valuation will determine the fair market value. They agreed that the slowing percentage growth in connections is due to the law of large numbers on a growing base. They defined 'meaningful' accretion as potentially 100 basis points but declined to give a specific number yet. Regarding the Aquarian asset, they stated it would be strategic for the company and beneficial for customers due to potential rate savings, but their current focus is on the Texas acquisition.

Angie Storozynski raised concerns about the risk associated with gas-fired new builds, specifically the mismatch between 10-15 year contracts and a 40-year asset life, questioning the feasibility of double-digit returns over the asset's full life. She also asked if the quoted future contract prices, such as the $95+ figure, incorporate site payments like land leases, and if the $2.5 billion EBITDA upside directly corresponds to the 5.4 GW gas-fired new build plus 1 GW of uprates.

Answer

CEO Larry Coben assured that NRG will not undertake any project that doesn't meet its unlevered hurdle rate, emphasizing zero interest in speculative new capacity build. President Robert Gaudette clarified that the $95+ figure represents the total value from capacity and variable components, with a very heavy capacity focus, and that land transactions are separate. He confirmed that NRG structures contracts to recover capital and achieve returns within the 20-year contract period. Larry Coben confirmed that the $2.5 billion EBITDA upside corresponds directly to the roughly 6 GW of new capacity (5.4 GW new build + 1 GW uprates).

Angie Storozynski expressed concerns about the risks associated with new gas-fired generation builds, given the shorter contract durations (10-15 years) versus asset life (40 years), and how NRG ensures double-digit returns. She also inquired if the quoted future contract prices ($95+) include site payments and if the $2.5 billion EBITDA upside directly corresponds to the 6 GW of new capacity.

Answer

CEO Larry Coben emphasized longer contract lengths, strict adherence to the 12-15% unlevered hurdle rate, and a commitment against speculative new capacity. President Robert Gaudette clarified that the $95+ figure represents the total value (heavy capacity) and does not include separate land transactions, with capital return structured within the 20-year contract. Larry Coben confirmed the $2.5 billion EBITDA upside directly relates to the 6 GW (5.4 GW new build + 1 GW uprates).

Angie Storozynski asked why the gross margin sensitivity slide was removed, if PJM price movements are impacting pro forma EBITDA, NRG's competitive position against new power companies, interest in single asset transactions, and whether the LS Power acquisition will provide a tax shield to improve free cash flow.

Answer

Larry Coben, Chair, President, and CEO of NRG Energy, explained the gross margin sensitivity slide will be updated post-LS Power close, and PJM price impact details will follow. He expressed confidence in NRG's expertise over new entrants and openness to opportunistic single asset transactions. Bruce Chung, CFO, confirmed LS Power will generally bring a tax shield, clarifying that the 2026 standalone cash tax increase is due to expiring tax credits, not disappearing NOLs.

Angie Storozynski from Seaport Research Partners asked about the free cash flow impact from the tax shield associated with recent acquisitions, whether the pending LS Power deal precludes other PJM bids, if Texas Energy Fund (TEF) assets could serve data centers, and what differentiates the new data center contract from other C&I deals beyond margin.

Answer

EVP & CFO Bruce Chung estimated the tax shield benefit could be around $1 billion, realized primarily from 2027-2030. Chairman, CEO and President Larry Coben added that they are not precluded from other PJM bids, TEF assets must supply the grid directly, and the data center contract premium is for the long-term (10-20 year) price certainty it provides customers.

Angie Storozynski questioned whether future drop-downs from Clearway's sponsor would maintain the 10.5%+ CAFD yield, given the strong stock performance and reduced cost of funding, or if the stock performance might weigh on future CAFD yields.

Answer

CEO Craig Cornelius affirmed that Clearway plans its business around an average of 10.5% CAFD yields on new capital allocation, with some projects potentially above or below. He noted that recent offerings (Royal Slope, Swan) were within the 10-11% range, an increase from 18-36 months ago, demonstrating CWEN's participation in the rising return environment.

Angie Storozynski asked if future drop-downs from Clearway's sponsor would maintain the 10.5%+ CAFD yield, or if the company's strong stock performance and reduced cost of funding might impact these yields. She also questioned whether Clearway Energy, Inc. would share in the improved margins from the digital infrastructure pipeline or primarily function as a financing arm.

Answer

Craig Cornelius, President and CEO, reiterated that Clearway plans its business around an average of 10.5% CAFD yields for new capital allocation, with some projects potentially above or below this. He highlighted that recent offerings (Royal Slope, Swan) were within the 10-11% range, an increase from 18-36 months prior, demonstrating the sponsor's commitment to providing CWEN with opportunities in a rising return environment. For digital infrastructure campuses, he advised assuming similar return and contract propositions to traditional grid-tied projects, emphasizing that CWEN's investment proposition has improved and been sustained despite declining capital costs.

Angie Storozynski inquired about the proposed Pennsylvania legislation for long-term resource adequacy agreements (LCRAA) with independent power producers, specifically if it targets new or existing assets and the potential earnings benefit for PPL Electric Utilities. She also asked how this capacity would integrate with PJM capacity auctions and about the $0.06 drag on 2025 Rhode Island earnings.

Answer

Vince Sorgi, PPL President and CEO, clarified that the LCRAA legislation is designed to promote new generation builds, not existing assets, and would allow utilities to own generation as a backstop. He explained that both load and new generation would participate in PJM auctions, increasing supply. Joe Bergstein, PPL EVP and CFO, stated that the $0.06 drag on Rhode Island earnings was due to a combination of true-ups and one-time issues, some of which will be remediated in the pending rate case, and are not expected to reoccur.

Angie Storozynski asked for more information on why the rule of thumb for transmission spending per gigawatt of load added no longer holds as the data center pipeline grows. She also inquired whether acquiring existing gas plants and expanding them is part of the Blackstone joint venture's plan, or if it focuses solely on new builds once long-term contracts are secured.

Answer

President and CEO Vince Sorgi clarified that while the $50-150 million per gigawatt rule of thumb is generally good, some upgrades already planned in PPL's 5-year CapEx for transmission are overlapping with data center project requirements, meaning the data center-related spend might not be entirely incremental. Regarding the Blackstone JV, Mr. Sorgi explained that its core strategy is to provide competitive new generation solutions for resource adequacy, particularly leveraging Marcellus Shale. While acquiring existing assets isn't the primary focus, it could be considered for short-term bridging if an asset-backed deal is desired, but it doesn't inherently support *additional* resource adequacy unless expanded.

Angie Storozynski asked for clarification on why the rule of thumb for transmission spending per gigawatt of load no longer holds true for data centers. She also inquired if the Blackstone joint venture's strategy includes acquiring existing gas plants, especially given recent secondary market activity.

Answer

President and CEO Vince Sorgi clarified that the 50-150 million per gigawatt rule of thumb still generally holds, but some data center-related upgrades are now overlapping with existing transmission capital plans, meaning they might not be *incremental* to the plan. Regarding the Blackstone JV, Mr. Sorgi stated its core strategy is new generation to address resource adequacy, but he would not preclude acquiring existing assets if they serve a specific purpose, such as temporary support or expansion, though it's not the primary focus.

Angie Storozynski asked about the drivers behind weak industrial sales in Pennsylvania and Kentucky, the rationale for the timing of upcoming rate cases, and whether PPL's regulated utility in Pennsylvania could potentially be an offtaker for generation developed by the new JV.

Answer

EVP & CFO Joseph Bergstein attributed the industrial sales weakness to isolated factors: a single steel customer in Pennsylvania and smaller industrial customers combined with cooler weather in Kentucky. He justified the rate case timing by noting the long period since the last increases. President & CEO Vincent Sorgi added that a more regular rate case cadence is expected going forward. Sorgi also confirmed that the PA utility could be an offtaker from the JV, but it would require a competitive, open RFP process due to affiliate rules.

Angie Storozynski asked about the drivers behind weak industrial sales in Pennsylvania and Kentucky, the rationale for filing rate cases sooner than expected, and whether PPL's Pennsylvania utility could potentially be an offtaker for generation from the Blackstone JV.

Answer

EVP & CFO Joseph Bergstein attributed the weak industrial sales to isolated issues with a single steel customer in Pennsylvania and smaller industrial customers in Kentucky, not a broader economic trend. He explained the rate cases are timely given the long period since the last filings and are part of a return to a normal cadence to fund significant capital investments. President & CEO Vincent Sorgi added that it is possible for the PA utility to be an offtaker from the JV, but it would be subject to affiliate rules and require an open and competitive RFP process.

Angie Storozynski expressed concern about the growing 'bring your own generation' (BYOG) chatter and Constellation's ability to sign long-term PPAs for its large generation portfolio, emphasizing the need for earnings visibility. She also questioned the comparability and quality of power plant announcements from other companies to Constellation's firm power contracts.

Answer

President and CEO Joe Dominguez acknowledged the policy and regulatory context, stating confidence in executing transactions. He highlighted Constellation's demand response offering, turbine redeployment, and uprates as ways to address BYOG concerns, noting that policymakers understand the value of relicensing. Mr. Dominguez mentioned PJM's pullback from BYOG requirements, suggesting voluntary BYOG is not a current concern. Regarding other companies' announcements, he believes there's room for various contracting types but feels Constellation's offerings, based on customer interest, outcompete most other opportunities in the space.

Angie Storozynski expressed concern about Constellation's ability to sign a significant portion of its generation assets, particularly from the former Calpine portfolio, into long-term PPAs given the growing discussion around 'bring your own generation' (BYOG) and the need for earnings visibility. She also questioned the comparability of other companies' power plant announcements (e.g., LOIs) to Constellation's firm power contracts.

Answer

President and CEO Joe Dominguez stated that he is not concerned about the BYOG chatter, noting that Constellation's demand response offerings, available turbines, uprates, and relicensing efforts address demand. He highlighted that policymakers understand the value of the existing fleet, and PJM had previously pulled back from BYOG requirements. Mr. Dominguez believes that while some voluntary BYOG might occur, it is not a current issue for Constellation. Regarding the comparability of deals, he acknowledged room for various contracting approaches but asserted that Constellation's offerings, based on customer interest, outcompete most other opportunities in the market.

Angie Storozynski inquired about the 'Manhattan-sized data center' project by META in Louisiana, specifically how much of its capacity is currently covered by existing Electric Service Agreements (ESAs) and reflected in Entergy's pipeline.

Answer

Drew Marsh, Chair and CEO, clarified that only the previously announced signed ESA, which META publicly stated as 2 GW of compute, is included in Entergy's outlooks. He emphasized that anything beyond this is not reflected, consistent with Entergy's policy of including large data center projects only after a signed ESA, rather than through probability weighting, due to their significant impact.

Angie Storozynski questioned the weakness in weather-normalized residential sales as a potential economic indicator and asked how Entergy is managing cost inflation for its new gas plant construction.

Answer

CFO Kimberly Fontan clarified that the Q2 residential sales softness was quarterly volatility, not an economic trend, noting that sales were strong in Q1 and are expected to be flat for the full year. She added that the company manages construction cost inflation through continuous improvement initiatives and contractual clauses, ensuring its new-build costs remain competitive.

Angie Storozynski of Seaport Research Partners asked if equity needs would likely hold steady rather than decrease, given potential capex increases. She also inquired about the Yankee Gas rate case as a test for SB4 and the backup plan if the Aquarion sale is not approved.

Answer

EVP, CFO & Treasurer John Moreira confirmed her thinking on equity needs was correct, pending a full refresh in February. CEO Joseph Nolan expressed high confidence the Aquarion sale will be approved, citing supportive legislation, and stated they have a good working relationship with the Connecticut Attorney General regarding the Yankee Gas case.

Angie Storozynski explored the relationship between equity needs, storm cost recovery, and potential capex additions. She also asked if the Yankee Gas rate case is a test for future regulation in Connecticut and about contingency plans if the Aquarion sale is not approved.

Answer

John Moreira, CFO, confirmed that any benefit from securitization could be offset by new capex, with a full update on equity needs coming in February. Joseph Nolan, CEO, expressed confidence in the Yankee Gas case process and was highly optimistic the Aquarion sale will close this year, noting the state legislature passed a law enabling the transaction, making a rejection unlikely.

Angie Storozynski questioned the investment incentive for California utilities, citing a challenging regulatory backdrop, legislative fixes that seem like temporary 'patches,' and a lack of higher ROE to compensate for increased risk. She also asked if SCE might face a disproportionately large contribution to any wildfire fund replenishment.

Answer

President and CEO Pedro Pizarro acknowledged the environment feels 'bumpy' but expressed confidence that California policymakers ultimately make sound decisions, given the state's need for utility infrastructure to meet its clean energy goals. Executive VP & CFO Maria Riccardi added that current legislative efforts are a foundational step, with broader issues like insurance and liability reform to be addressed later. On fund contributions, Mr. Pizarro stated they would advocate for a fair allocation and will assess the final legislative package in its entirety.

Angie Storozynski voiced concerns about the investment thesis for California utilities, questioning the investor incentive given a challenging environment, seemingly temporary legislative fixes, and a lack of higher ROE to compensate for risk.

Answer

President and CEO Pedro Pizarro acknowledged the current environment feels 'bumpy' but expressed long-term confidence, stating that California policymakers have historically made pragmatic decisions to support needed infrastructure. EVP & CFO Maria Riccardi added that current legislative efforts are a foundational step, with broader, societal wildfire issues like insurance and liability reform to be addressed in future sessions.

Angie Storozynski from Seaport Research Partners questioned why Southern Company, with its cost of capital advantage, isn't pursuing more aggressive growth through acquisitions or greenfield development. She also asked why its data center announcements seem less prominent compared to peers who link them to specific projects.

Answer

CFO Dan Tucker explained that the company's disciplined, conservative nature means it does not include speculative placeholders for non-regulated projects in its outlook, even with its development skills. CEO Chris Womack added that the company is not promotional and waits until deals are finalized before making announcements. David Poroch, SVP & incoming CFO, emphasized that their focus is on structuring complex contracts that protect and benefit all existing customers, which takes time.

Angie Storozynski of Seaport Research Partners questioned the Nexus Water Group acquisition, asking about its earnings power compared to typical municipal M&A, whether it signals a shift away from larger municipal targets, and if there's a risk of diminished profitability due to goodwill.

Answer

EVP & COO Cheryl Norton positioned the Nexus deal as a strategic opportunity to expand the company's footprint in eight existing states. She emphasized that the integration process will be standard, the deal does not detract from their focus on municipal acquisitions, and she does not anticipate any negative impact on profitability.

Angie Storozynski of Seaport Research Partners asked about the Nexus acquisition, seeking details on its expected earnings power compared to typical municipal M&A and questioning if the deal signals a shift away from larger municipal targets.

Answer

EVP & COO Cheryl Norton described the Nexus deal as a 'great opportunity' to expand the company's footprint in existing states. She clarified that the integration process will be typical of other acquisitions, it will not have a negative impact on profitability, and it does not indicate any diminished focus on the robust pipeline of municipal deals.

Angie Storozynski asked about CMS Energy's current supply stack and its immediate capacity to serve a new large industrial or hyperscaler customer, focusing on the importance of 'speed to power'. She also questioned how the company ensures that a large announced load will actually materialize before investments are made.

Answer

President and CEO Garrick Rochow stated that the company is currently long on capacity following the 2021 IRP, the acquisition of the Covert facility, and new renewable builds. He affirmed they have the spare capacity to serve new users within the next 24 months, citing the 230 MW expansion for Switch as a real-world example. Rochow explained that CMS works closely with customers on their ramp-up schedules to match supply and demand. To ensure load materializes, he mentioned contractual obligations and a cost-of-service rate design that prevents other customers from subsidizing the new load, with further work being done with the commission on specific rate constructs for data centers.

Inquired about the drivers for the wind repowering plan, asking if it was to offset declining profitability or for true value creation. Also asked about the impact of recent offshore wind transactions on the potential sale of the Kitty Hawk lease and requested an update on NECEC construction progress and spending confidence.

Answer

Wind repowering is driven by both financial and industrial logic; it addresses P&L issues of aging assets while creating new, more efficient assets with extended PPAs and new PTCs. Recent offshore wind deals are not directly comparable to the Kitty Hawk lease sale but show continued market interest. NECEC construction is progressing well with 25% of foundations set, and the company is confident in moving forward while working through related issues.