Bill Appicelli

Bill Appicelli from UBS inquired about the nature and scope of potential incremental regulated capital investments beyond the current plan, asking about the types of projects and their placement within the investment spectrum. He also questioned the O&M assumptions, including inflation and labor agreements, embedded in the 6%-8% earnings growth plan.

Answer

Ralph M. LaRossa, President, Chair, and CEO, identified three main areas for incremental investment: PJM transmission projects, distribution system readiness for solar and batteries, and potential generation-side participation. Dan Cregg, EVP and CFO, clarified that the updated capital forecast primarily consists of smaller, shorter-term projects focused on end-of-life replacements, not large, permit-intensive endeavors. He explained that O&M planning involves an inflationary assumption, which businesses then work to reduce through cost management, with labor agreement re-upping already factored in.

Bill Appicelli with UBS inquired about the types and spectrum of incremental regulated capital investments beyond the current plan, and what level of O&M expense growth is embedded in the 6%-8% earnings growth outlook, particularly concerning labor agreements.

Answer

Ralph LaRossa, President, Chair, and CEO, identified potential incremental investments in PJM transmission, distribution system upgrades for solar/batteries, and generation participation, clarifying these are not yet in the base capital forecast. Dan Cregg, EVP and CFO, explained that O&M plans account for inflation, with businesses targeting efficiencies to achieve relatively flat O&M, and confirmed that assumptions for re-upping labor agreements are included.

Bill Appicelli asked about NRG's criteria for evaluating the creditworthiness of data center counterparties, specifically if they exclusively target Tier 1 hyperscalers. He also questioned if there's an incremental 500 MW opportunity in the retail channel beyond the 400+ MW already secured, and how much of the $2.2 billion growth and unallocated capital through 2030 is truly unallocated and available for data center projects versus share repurchases.

Answer

CEO Larry Coben confirmed that NRG is targeting Tier 1 hyperscalers, even within that universe, and closely monitors credit reports. He also stated that the retail channel still presents a great opportunity for smaller transactions (like the 445 MW previously announced) and will continue to be pursued. Larry Coben clarified that a good chunk of the $2.2 billion is devoted to existing organic growth plans and is not considered a significant lever for funding data center projects, as it doesn't represent massive redeployable dollars.

Bill Appicelli questioned NRG's approach to evaluating the creditworthiness of counterparties for data center deals, specifically if they exclusively target Tier 1 hyperscalers. He also asked about the potential for an incremental 500 MW in the retail channel and the allocation of the $2.2 billion growth/unallocated capital through 2030.

Answer

CEO Larry Coben confirmed targeting Tier 1 hyperscalers and monitoring credit reports. He also stated that the retail channel for smaller transactions (like the 445 MW already announced) remains a significant opportunity. Larry Coben clarified that the $2.2 billion growth/unallocated capital is primarily for organic growth plans and not a major source for funding data center projects.

Bill Appicelli sought clarification on Eversource's earnings growth trajectory, specifically confirming that the 'upper half' target by 2028 would be rebased off 2027 earnings. He also inquired about the amount and runway of tax benefits from South Fork Wind reflected in 2026 earnings, and asked for additional color on key drivers for earnings in 2027.

Answer

EVP, CFO, and Treasurer John Moreira confirmed that the growth target implies over 6% off of 2027 earnings. He stated that zero Investment Tax Credits (ITCs) from South Fork Wind's tax equity ownership are reflected in 2026 earnings, with approximately $500 million still available, making Eversource a non-cash taxpayer federally for several years. He referred to slide 17 for 2027 drivers, including the Aquarion transaction, storm case resolution, CL&P rate case, and Revolution Wind completion.

Bill Appicelli of UBS sought clarification on Eversource Energy's long-term EPS growth target, specifically confirming that the 'upper half' by 2028 would be rebased off 2027 earnings, not 2026. Appicelli also inquired about the reflection and runway of tax benefits from South Fork (ITC) in 2026 earnings, and requested additional color on key drivers for 2027 earnings growth beyond the CL&P rate case.

Answer

CFO John Moreira confirmed that the growth target is indeed rebased off 2027 earnings, aiming for over 6% growth. Moreira stated that zero ITC from South Fork is reflected in 2026 earnings, with approximately $500 million remaining to be utilized in coming years, making Eversource a non-cash taxpayer at the federal level for several years. He highlighted slide 17, detailing 2027 drivers including the Aquarion transaction, storm cost securitization (Q3 2027), and the CL&P rate case (mid-2027 adjustment).

Bill Appicelli asked about the expected scale of future GenCo data center contracts following the initial large Amazon deal, the recent pace of these strategic negotiations, and the potential impact of Ohio's Senate Bill 103 on large load customer opportunities and its inclusion in capital expenditure plans.

Answer

President and CEO Lloyd Yates stated that NiSource is in strategic negotiations for 1-3 GW, encompassing a portfolio of customers of various sizes, emphasizing that deal criteria focus on balance sheet maintenance, speed to market, and customer benefit rather than specific counterparty size. He also noted an increased pace in conversations and organizational speed. EVP and CFO Shawn Anderson clarified that no upside from economic development or large load customers in Ohio, including those related to Senate Bill 103, has been incorporated into the Columbia Gas Ohio forecast yet, but such upsides could be integrated into the plan throughout the year.

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 sought clarification on the net EPS impact of the preferred stock redemption, specifically the offset between the corporate other line item and preferred dividend impact. He also asked for the regulatory calendar for Missouri, particularly the timeline for the next rate case filing.

Answer

President and CEO Scott Doyle confirmed that the net EPS impact is unchanged due to the direct offset. Regarding the Missouri rate case, Scott Doyle indicated a filing is anticipated between October and November of this year, following the pattern of the prior case, and noted it would be a 'case of first impression' for a future test year.

Bill Appicello sought clarification on the net EPS impact from the preferred stock redemption, specifically how the $9 million impact on the corporate other line item is offset by preferred dividend changes. He also requested an update on Spire's regulatory strategy and calendar for Missouri, including the anticipated timeline for the next rate case filing under new legislation.

Answer

President and CEO Scott Doyle confirmed that the net EPS impact from the preferred stock redemption would be unchanged due to a direct offset. He further detailed that the next Missouri rate case filing is expected between October and November of the current year, following the pattern of prior cases, and will be a 'case of first impression' as the first future test year filing.

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.

Bill Appicelli asked for Vistra's views on forward curves, noting that they held up reasonably well despite soft weather and 6.5% year-to-date ERCOT growth. He sought updated thoughts on the demand profile, the company's bias on future pricing levels, and the rationale behind the decision to move forward with new peakers. He also inquired about the nuclear upgrades, specifically how the potential 600-700 MW increase would be pursued, and if it would require offtake agreements.

Answer

Jim Burke, President and CEO, Vistra Corp, explained that the 860 MW West Texas peaker decision was driven by a unique opportunity in that hub, which now trades at a premium due to oil/gas electrification and data centers, allowing for construction at a below-market cost of $1,100/kW. He stated that ERCOT forwards show more life but don't fully reflect even Vistra's conservative load growth forecast, making the company bullish on future power prices. PJM energy forwards have shown less life than capacity but are starting to recognize tightening. Regarding nuclear upgrades, Mr. Burke confirmed they are expensive and would likely require support from potential data center parties or other offtake agreements, as current forwards alone would not justify the investment for capacity coming online in the 2030s.

Bill Appicelli of UBS Group AG asked for more detail on the improved free cash flow conversion target, the specific drivers for achieving an investment-grade rating, and management's perspective on the PJM capacity auction clearing at its cap and future price direction.

Answer

EVP & CFO Kris Moldovan explained the higher free cash flow conversion (to 60%+) is driven by the One Big Beautiful Bill Act's depreciation benefits, potentially adding ~$200M annually starting in 2026. He stated the path to investment grade involves both higher EBITDA and debt paydown, expecting leverage to fall materially below 3x. President & CEO Jim Burke added that recent PJM auction clears reflect rising new-build costs and are sending necessary investment signals, noting the market is responding with new supply and conversions like Miami Fort.

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.