Bill Appicelli

Bill Appicelli from UBS inquired about the expected return profile and capital structure assumptions for Genco. He also asked about the timing differential between the majority of Genco's capital expenditure (CapEx) being spent by 2030 and the full realization of earnings by 2033, and whether additional upside from ongoing negotiations could be realized within the 2033 timeframe.

Answer

CFO Shawn Anderson stated that Genco's return is expected to exceed NIPSCO's regulated rate of return, with a flexible capital structure designed to support financial commitments and maximize shareholder value. He clarified that while most CapEx is by 2030, additional work extends to 2032 for full energization, with earnings ramping up as construction completes. CEO Lloyd Yates confirmed that additional EPS upside from ongoing negotiations is practical within the 2033 window.

Bill Appicelli from UBS inquired about the return profile and capital structure assumptions for GenCo, the timing differential between capital expenditure and earnings realization, and the practicality of realizing additional upside from ongoing negotiations within the 2033 timeframe.

Answer

Shawn Anderson, EVP and CFO, stated that the exact ROE is confidential but GenCo's return is expected to be greater than NIPSCO's regulated rate of return. He explained that the majority of CapEx occurs between 2025-2030, with full ramp by 2032, and recovery follows investments. Lloyd Yates, CEO and President, confirmed it is practical for additional upside from negotiations to be realized by 2033.

Bill Appicelli asked about NextEra Energy's development capabilities and supply chain capacity to potentially increase GW additions beyond the current average of 3 GW per quarter, especially in light of demand pull-forward. He also inquired about the progress and valuation of FPL's large load growth, including tariff structures and customer conversations.

Answer

John Ketchum, Chairman, President, and CEO of NextEra Energy Inc., highlighted NextEra Energy's strong supply chain position for batteries, transformers, and other equipment, which provides a competitive advantage for 2028-2030. He noted that the ability to integrate renewables and storage into large load solutions represents an incremental opportunity. Armando Pimentel, President and CEO of Florida Power & Light Company, stated that FPL has proposed new tariffs for large load customers, with a decision expected on November 20th. He confirmed ongoing engineering studies for hyperscalers and expressed optimism about Florida's low-cost, reliable system attracting data center operators later in the decade.

Bill Appicelli inquired about NextEra Energy's development capabilities and potential for increasing GW additions per quarter, considering supply chain constraints, and sought an update on FPL's large load growth, tariff structure, and customer engagement.

Answer

John Ketchum, Chairman, President and CEO of NextEra Energy, highlighted the company's strong supply chain position (batteries, transformers, switchgear) as a competitive advantage for 2028-2030, enabling incremental opportunities with large load solutions. Armando Pimentel, President and CEO of Florida Power & Light Company, mentioned tariffs awaiting commission approval, ongoing engineering studies for hyperscalers, and FPL's attractive low-cost system as a potential opportunity later in the decade.

Bill Appicelli asked for PPL's perspective on the PJM capacity auction issues, the company's preferred solution between pending legislation and the new JV, and the expected financial structure of the JV regarding leverage and returns.

Answer

President & CEO Vincent Sorgi explained that the JV was created as a proactive solution to the PJM market's failure to incentivize new generation, which has raised customer costs without improving reliability. He noted the JV and state legislation are PPL's primary strategies to address this. Regarding the JV's structure, Sorgi stated its capitalization will depend on the final Energy Services Agreements (ESAs) but will be designed to maintain PPL's corporate credit metrics, with returns expected to be slightly above regulated levels to reflect the risk profile.

Bill Appicelli asked for PPL's preferred solution to the PJM capacity auction's inability to procure new generation and for details on the Blackstone JV's high-level structure, particularly regarding leverage and expected returns on projects.

Answer

President & CEO Vincent Sorgi stated that the Blackstone JV was created specifically to address the failure of PJM capacity auctions, which have increased customer costs without adding new generation. He noted the JV is not disincentivized by cannibalizing existing assets, unlike some IPPs. Regarding the JV's structure, Sorgi explained its capitalization will depend on the final Energy Services Agreements (ESAs) but will aim to maintain PPL's corporate credit metrics, likely financed similarly to a utility. He expects returns to be slightly above regulated rates to compensate for slightly higher risk.

Bill Appicelli from UBS Group sought to clarify the plan for rebasing the 5-7% EPS growth rate post-2027 and asked for the company's outlook on escalating generation construction costs and how that is factored into financial planning.

Answer

David Poroch, SVP & incoming CFO, reiterated that a rebasing could happen as early as 2027 but is contingent on seeing sustained, long-term momentum in load growth, refusing to commit to a specific date. Regarding costs, he acknowledged that prices are rising but stated the company has placeholders and reservation fees in place to manage this. CEO Chris Womack added that high demand is creating significant upward price pressure in the market.

Bill Appicelli asked about the company's capital expenditure headroom before requiring additional equity, the tariff structure for the new Arkansas customer, and the potential magnitude of nuclear uprate opportunities.

Answer

CFO Kimberly Fontan emphasized a disciplined financing framework with a 10-15% equity run rate rather than a specific CapEx ceiling. She highlighted Arkansas's new infrastructure rider, which allows for timely recovery. Regarding nuclear uprates, Fontan noted the capital for the Waterford project is not significant and is already in the plan, while CEO Drew Marsh added that customer support would be sought for any future, larger uprates.

Bill Appicelli from UBS sought to clarify the equity funding plan, confirming that the base plan plus proceeds from the Ohio asset sale would cover existing needs, and that additional CapEx beyond that would not require new equity. He also asked if this plan contemplated further asset sales.

Answer

EVP & CFO Christopher Foster confirmed the interpretation was correct, noting that a third of the $2.75 billion equity need has already been de-risked. He clarified that the Ohio gas LDC sale is intended to fund the $5.5 billion in CapEx updates from this year and that the ability to fund further increases without equity does not contemplate additional asset sales, but rather relies on improved operating cash flow.

Bill Appicelli from UBS sought to clarify the equity financing plan, confirming if the base plan plus the Ohio asset sale proceeds would fund current plans, with any further CapEx increases not requiring additional equity. He also asked if this contemplated sales beyond Ohio.

Answer

CFO Chris Foster confirmed the understanding was correct: the base equity plan (one-third of which is de-risked) and Ohio sale proceeds cover the current capital plan, and there is capacity for further CapEx without more equity. Foster explicitly stated this capacity does not assume any asset sales beyond the Ohio gas LDC, attributing the flexibility to improved operating cash flow from recent regulatory outcomes.

Bill Appicelli asked for clarification on the Q4 results coming in below lowered expectations, specifically questioning the shortfall in the Gas Marketing segment. He also inquired about the cadence of O&M cost savings and whether further opportunities exist beyond the flat O&M guidance for 2025.

Answer

Executive Vice President and CFO Steven Rasche confirmed the Q4 miss was primarily due to weak market conditions impacting the Gas Marketing segment, along with slightly higher interest costs. On O&M, Executive Vice President and COO Scott Doyle detailed that savings came from labor reductions and optimizing labor strategies, with more efficiency gains expected from technology like advanced meters. Vice President and Treasurer Adam Woodard noted that guiding to flat O&M is a significant achievement given inflationary pressures.