Brian Russo

Brian Russo asked for clarification on the significant increase in T&D backlog, specifically if recent agreements like the Kentucky MSA and the Xcel Energy MSA were included. He also questioned MYR Group's positioning in the Texas market given a large wires company's robust capital plan and asked about the C&I segment's strong Q4 margins in relation to the new 5%-7.5% operating margin target.

Answer

Rick Swartz, President and CEO, clarified that very little of the Xcel Energy MSA and Kentucky work was in the December backlog due to the 90-day MSA counting rule, emphasizing selective bidding and long-term client relationships. He noted Texas has been a strong market for a decade with good activity across various kV projects. Regarding C&I margins, Rick Swartz stated the forecast is for operating within the mid-part of the new margin profile, targeting 10% growth, and focusing on efficiency to enhance margins.

Brian Russo asked about the significant increase in the T&D backlog to $1 billion, inquiring if new agreements like the Kentucky MSA and Xcel Energy MSA were included. He also questioned MYR Group's positioning in Texas given recent capital plan updates and sought clarification on how Q4 C&I margins align with the new 5%-7.5% operating margin target.

Answer

President and CEO Rick Swartz clarified that very little of the Xcel Energy work and not much of the Kentucky MSA work was included in the December backlog, as only 90 days of MSA work are counted. He affirmed Texas as a strong market for the past decade with continued growth opportunities in high-voltage transmission. Regarding C&I margins, Mr. Swartz stated the company forecasts operating within the mid-part of both T&D and C&I margin profiles, aiming for 10% growth across segments, and continuously seeking efficiency improvements.

Brian Russo of Jefferies followed up on the financing plan for the potential $350 million upside CapEx, asking about a 50/50 debt and equity split and the consideration of hybrids. He also inquired about monetizing non-regulated businesses given the utility focus, and sought clarification on the correlation between EPS CAGR and rate base CAGR, and if a 12% hypothetical rate base CAGR would be accretive. Finally, he asked about the regulatory filing approach for large customers.

Answer

Kevin Christie, SVP, CFO, Treasurer, and Regulatory Affairs Officer, confirmed a 50/50 funding approach for incremental capital starting mainly in 2027-2029, and that hybrids would be considered. He stated the intent to monetize non-regulated investments for material gain to reduce future equity issuance. Mr. Christie clarified that the 5% capital CAGR is conservative, and a 12% rate base CAGR from large load and other investments would help achieve the top end of the 4%-6% EPS range. He also indicated that a 'special contract' would be filed with commissions for large customers, expected to be viewed favorably due to affordability benefits.

Brian Russo from Jefferies asked about the financing structure for the potential $350 million upside CapEx, specifically if a 50/50 debt and equity split or hybrids would be considered. He also questioned the potential monetization of non-regulated businesses and the correlation between the 4%-6% long-term EPS CAGR and the 5% rate base CAGR, including the impact of a hypothetical 12% rate base CAGR. Finally, he inquired about the filing mechanism for large customer agreements.

Answer

Kevin Christie, SVP, CFO, Treasurer, and Regulatory Affairs Officer, clarified that the $350 million upside CapEx would likely be funded with a 50/50 capital structure, potentially including hybrids, starting in 2027-2029. He confirmed that Avista would look to monetize non-regulated investments for material gains to reduce future equity issuance. He explained that the 5% capital investment CAGR is conservative, with the 12% rate base CAGR from large load and other opportunities potentially pushing EPS growth to the top end of the 4%-6% range. He stated that large customer agreements would be filed as special contracts with the commission.

Brian Russo of Jefferies inquired about the composition of the 3,000 MW large load customer pipeline, its connection to the current RFP, the long-term strategy for the volatile non-regulated clean technology investments, and the potential for the utility's earned ROE to exceed the guided 8.8%.

Answer

President & CEO Heather Rosentrater explained the 3,000 MW of potential demand is from a wide variety of load types and that the recent RFP responses will provide crucial cost and timing data to advance those customer conversations. SVP & CFO Kevin Christie addressed the non-regulated investments, stating that while they are reviewing strategies and moderating budgets, the investments provide strategic learning benefits. He affirmed the 8.8% utility ROE is an achievable target, with future EPS growth more likely to be driven by new investments and load growth.

Brian Russo of Jefferies inquired about the composition of the 3,000 MW large load demand pipeline, its connection to the current RFP, the long-term strategy for the volatile non-regulated clean technology investments, and the potential for the utility's earned ROE to exceed the guided 8.8%.

Answer

President & CEO Heather Rosentrater clarified the 3,000 MW load is from a wide variety of sources and that the RFP responses will inform conversations with these potential customers. SVP & CFO Kevin Christie addressed the non-regulated business, stating that while they provide strategic value, Avista is reviewing its strategy and moderating budgets amid market volatility, noting an IPO market recovery is needed for exits. Christie affirmed the 8.8% earned ROE for the utility is an achievable target for now, with future growth potentially driving EPS.

Brian Russo of Jefferies inquired about the composition of the 3,000 MW large load demand pipeline, its connection to the ongoing RFP, the long-term strategy for the volatile clean technology investments, and the potential for upside to the utility's 8.8% earned ROE target.

Answer

President & CEO Heather Rosentrater clarified that the 3,000 MW demand pipeline is diverse and not concentrated in a single sector. She stated that the RFP responses will provide crucial cost data to advance discussions with these potential customers. SVP & CFO Kevin Christie explained that while the clean tech investments have faced headwinds, they provide strategic value and the company is reviewing its strategy, noting that an IPO market recovery is needed for exits. Christie affirmed the 8.8% ROE for the utility is an achievable target, with future EPS growth driven by new investments and load growth.

Brian Russo of Jefferies inquired about the composition of the 3,000 MW large load pipeline, its connection to the ongoing RFP, the long-term strategy for the volatile clean technology investments, and the potential for upside to the 8.8% earned ROE target for Avista Utilities.

Answer

President & CEO Heather Rosentrater explained the 3,000 MW load is diverse and that the RFP results will inform conversations with these potential customers. SVP & CFO Kevin Christie addressed the investment portfolio, stating they will moderate budgets while retaining strategic benefits and are reviewing long-term strategies. He affirmed the 8.8% earned ROE for the utility is an achievable target they are maintaining for now.

Brian Russo of Jefferies inquired about the composition of the 3,000 MW large load customer pipeline, its connection to the ongoing 100-425 MW RFP, the long-term strategy for the volatile clean-tech investments, and the potential for upside to the 8.8% earned ROE target at Avista Utilities.

Answer

President & CEO Heather Rosentrater explained that the 3,000 MW pipeline includes a wide variety of load types and that the RFP results will provide crucial cost and timing data to advance those customer discussions. CFO Kevin Christie addressed the investment portfolio, stating they will moderate budgets and are reviewing strategies, noting that an open IPO market is needed for exits. He affirmed the 8.8% ROE for the utility is an achievable target for now, with potential for future EPS growth from new investments.

Brian Russo of Jefferies inquired about the composition of the 3,000 MW large load customer pipeline, the long-term strategy for the volatile non-regulated clean technology investments, and the potential for the utility's earned ROE to exceed the stated 8.8% target.

Answer

President & CEO Heather Rosentrater explained the 3,000 MW load is from a wide variety of sources and that the recent RFP results will help inform conversations with these potential customers. SVP & CFO Kevin Christie addressed the other businesses, stating they are reviewing strategies and moderating budgets for the venture funds, noting the need for the IPO market to recover for exits. He also affirmed the 8.8% earned ROE for the utility is an achievable target they are sticking with for now, with potential EPS upside coming from new investments and growth.

Brian Russo of Jefferies asked for an update on the expected under-recovery in the Energy Recovery Mechanism (ERM) for 2026, questioning if market shifts have changed the outlook. He also inquired about the strategy to modify the ERM, including whether it could happen outside a GRC, and how Avista balances affordability with growth investments from the new RFP.

Answer

CFO Kevin Christie confirmed that a material change in the ERM outcome is not expected for 2025 or 2026 until the mechanism itself is reset, which is a multi-year strategy. He mentioned a multi-pronged approach to modify the ERM, including future rate cases and workshops with parties. President and CEO Heather Rosentrater added that new large load customers are viewed as an opportunity to enhance affordability for existing customers, helping to offset other cost pressures.

Brian Russo questioned the potential upside to IDACORP's CapEx forecast, particularly in the outer years, asking if any 2028/2029 RFP projects or future RFPs for the post-2030 timeframe could be additive. He also inquired about the less than $30 million ADITC usage in 2026, asking if it signals an inflection point for post-2026 earnings support. Additionally, he sought insights into current hydropower conditions, drought status, and the probability of a dry and hot irrigation season.

Answer

Adam Richins, SVP and COO, confirmed an RFP for the post-2031-32 timeframe is being considered and noted that the Bennett Two natural gas project is moving to 2028, requiring new options for 2029/2030. He also highlighted that Micron Fab Two and Diode generation resources are not yet in the CapEx forecast. Lisa Grow, President and CEO, and Adam Richins, SVP and COO, indicated that while 2026 ADITC usage is lower, it's not necessarily an inflection point, as large load revenues will help, but future rate base growth may still require ADITCs. On hydropower, Lisa Grow and Adam Richins reported normal levels on the east side of the system and recent wet conditions, expressing optimism despite lower snowpack in some areas, with the forecast range reflecting this.

Brian Russo inquired about potential upside to IDACORP's CapEx forecast, specifically regarding any remaining projects from the 2028 and 2029 RFPs or needs for the post-2030 timeframe. He also asked if the less than $30 million ADITC usage in 2026 signifies an inflection point for post-2026 earnings support, given the likely rate case stay-out. Additionally, he sought insights into current hydro and drought conditions and the probability of a dry and hot irrigation season.

Answer

Adam Richins (SVP and COO) confirmed they are evaluating an RFP for the post-2031-2032 timeframe, noting that the 2029 RFP yielded only one natural gas project (Bennett 2, now for 2028), requiring new options for 2029 and 2030, with updates forthcoming. He mentioned brownfield development (Peregrine facility) as an option and reiterated that Micron Fab 2 and Diode generation resources are not yet in the load resource balance. Lisa Grow (President and CEO) stated that while large loads coming online should reduce ADITC usage and rate case needs, she wouldn't call 2026 an inflection point, as future rate base growth will also drive earnings. Regarding hydro conditions, Lisa Grow noted normal snowpack on the east side (key for generation) and recent wet weather aiding runoff, expressing optimism despite lower elevation snow. Adam Richins added that the hydropower generation range reflects this optimism, as past years have seen lower figures.

Brian Russo, on for Julien Dumoulin-Smith, sought clarification on whether rate base is now calculated on an average basis, if current RFPs are sufficient for the new load forecast, the nature of proposed generation in the 2029 RFP, and details on the SWIP North and Boardman to Hemingway transmission projects.

Answer

CFO Brian Buckham confirmed the forward-looking rate base forecast now uses an averaging methodology. Executive Adam Richins stated that while they are evaluating the need for a 2030 RFP, they were pleased with the results of the '28 and '29 RFPs, which include peaker-type reciprocating engines. He noted the SWIP North project is included in the CapEx forecast, with payment due upon its in-service date. Regarding Boardman to Hemingway, both he and CEO Lisa Grow expressed confidence in the current timeline, citing progress on permitting and material staging, but noted another RFP would be the likely mitigation for any future delays.

Brian Russo inquired about the moderating weather-normalized load growth projected for 2026 (4-6%) compared to 2025 (7.2%), asking for a breakdown of key customer class drivers. He also asked if the termination of the Black Kettle Energy Storage capacity agreement supports utility generation ownership and about potential capital prioritization shifts to accommodate generation capacity.

Answer

CFO Charles Walworth clarified that load growth exhibits ebb and flow, aligning with a 5% average since 2021, and 'Customer X' is not driving the 2026 load growth. CEO Sean Trauschke affirmed that the Black Kettle termination validates the utility ownership thesis. Sean also noted the company's flexibility in capital allocation, prioritizing affordability, and that new generation and transmission projects will be layered in once finalized.

Brian Russo inquired about the moderating weather-normalized load growth forecast for 2026 (4-6%) compared to 2025 (7.2%), asking for a breakdown of key customer class drivers and if anything structural has changed, excluding large data center customers. He also asked about the terminated Black Kettle Energy Storage agreement and its implications for utility generation ownership, and for more details on potential capital prioritization shifts to accommodate generation capacity while managing rates.

Answer

CFO Charles Walworth stated that the moderating load growth reflects the natural ebb and flow, aligning with the 5% average since 2021, and that Customer X is not driving the 2026 forecast. CEO Sean Trauschke confirmed that the Black Kettle termination supports the thesis of utility ownership and operation of assets. Sean Trauschke also mentioned tremendous flexibility in capital allocation, with future updates on transmission and generation projects to be layered in once finalized.

Brian Russo, on behalf of Julien Dumoulin-Smith, asked about the newly added SPP project to CapEx, the potential doubling of the 2025 SPP ITP plan, and OGE Energy's competitive position for future SPP projects. He also questioned the timing of the large load tariff filing related to the Google Stillwater project and the drivers behind the 7.5% load growth outlook for 2025.

Answer

Chuck Walworth, CFO, confirmed close involvement with SPP and a robust plan, but noted milestones remain before firm details are available. Sean Trauschke, Chairman, President, and CEO, stated the large load tariff filing is a settlement requirement, to be filed sooner if an agreement is finalized. Chuck Walworth attributed the 7.5% load growth outlook to timing issues, with one customer's load coming online a quarter later than anticipated.

Brian Russo asked for details on upcoming capacity procurement and how it aligns with the 2025 draft Integrated Resource Plan (IRP), sought an update on potential large data center loads, and clarified if the updated guidance includes a one-time gain.

Answer

Chairman, President & CEO Sean Trauschke explained that future generation additions are dependent on the timing of large new loads, such as data centers, and that negotiations with these potential customers are progressing well. CFO & Treasurer Charles Walworth confirmed that the company's expectation to finish in the top half of its guidance range does include the one-time benefit from legacy midstream operations.

Brian Russo questioned if accelerating load growth could pressure the current Integrated Resource Plan (IRP) projections, potentially requiring more capacity than planned in the RFP. He also sought confirmation that SPP transmission projects could be incremental CapEx without significant retail rate impact due to regional cost sharing.

Answer

R. Trauschke, Chairman, President and CEO, acknowledged that the company is evaluating whether to file a new IRP to reflect updated growth and other factors. He also confirmed that the cost of SPP transmission projects is largely allocated across the region, which helps manage the impact on OGE's retail customers, and that these projects will be added to the plan after receiving a Notice to Construct.

Brian Russo followed up on the Illinois Clean Grid Reliability, Grid Affordability Act, asking about potential incremental investments for Ameren utilities. He also sought clarification on whether the 1.7 gigawatts of existing data center customer expansion mentioned previously was incremental to the new 3 gigawatts of construction agreements.

Answer

Marty Lyons, Chairman, President, and CEO, stated that the biggest investment opportunity from the Illinois bill is in energy efficiency, with expected investments doubling to $250 million annually. He confirmed that the 1.7 gigawatts of existing customer expansion is indeed incremental to the 3 gigawatts of new construction agreements, with an additional 2 gigawatts in advanced discussions in Missouri.

Brian Russo followed up on the Illinois Clean Grid Reliability, Grid Affordability Act, asking about potential incremental investments for Ameren utilities. He also clarified if the 1.7 GW of existing customer expansion opportunities were incremental to the three gigawatts of new data center construction agreements.

Answer

Chairman, President, and CEO Marty Lyons identified energy efficiency as the primary investment opportunity from the Illinois bill, with expected annual investments doubling to $250 million. He confirmed that the 1.7 GW of existing customer expansion opportunities are indeed incremental to the three gigawatts of new construction agreements.

Brian Russo, on behalf of Julien Dumoulin-Smith of Jefferies, asked for more detail on the significance and potential timeline for existing large load customers requesting studies for site expansions.

Answer

President, CEO, & Chairman Martin Lyons described the expansion interest as meaningful for long-term economic growth in the region, bringing jobs and an expanded tax base. While a specific timeline is not yet defined, he views it as extending the growth pipeline, likely beyond the 2032 timeframe. Lyons emphasized that forthcoming Energy Service Agreements (ESAs) will be crucial for firming up the load ramp schedules for the existing 2.3 gigawatts of projects.

Brian Russo inquired how Ameren would technically offset the potential loss of $300 million per year in tax credit monetization without issuing more equity, questioned the confidence in the timeline and cost of the resource plan given macro uncertainties, and asked about the future cadence of Missouri rate case filings.

Answer

Michael Moehn, Senior Executive VP and CFO, asserted that the potential loss of tax credits is manageable without additional equity, citing the company's strong position relative to rating agency downgrade thresholds. He expressed high confidence in the resource plan's execution, noting that long-lead-time materials for gas and solar projects have been secured. Regarding regulatory strategy, he anticipates a rate case filing cadence in Missouri of between two and four years, depending on the ramp-up of capital spending and load growth.

Brian Russo from Jefferies asked about the drivers of accelerating rate base growth at Ameren Transmission and the potential to pull forward MISO Tranche 2 projects. He also inquired about Ameren's legislative priorities for the 2025 Missouri session.

Answer

Martin Lyons, Chairman, President and CEO, clarified that MISO Tranche 1 projects are slated for 2026-2030 and Tranche 2.1 for 2032-2034, but the company will seek to accelerate them where possible. For the 2025 legislative session, Lyons confirmed Ameren will continue to advocate for expanding PISA to cover generation, extending the PISA sunset date, and securing a right of first refusal (ROFR) for transmission to support regional reliability and economic development.

Brian Russo from Jefferies asked for expectations regarding the upcoming North Dakota Industrial Commission meeting on the Bakken East project, requested a quantification of the drivers for the guidance revision, and inquired about the capacity for additional data center load under the current capital-light strategy.

Answer

CEO Nicole Kivisto indicated a state decision on the Bakken East project could come at the August meeting, which would enhance the project, but the primary focus remains on securing customer commitments for a binding open season. CFO Jason Vollmer quantified the weather impact at roughly $1 million for the quarter and noted other cost pressures from payroll and a planned outage. Kivisto added that while there is some capacity for more capital-light data center projects, significant new load would likely require investment in new generation and transmission assets.

Brian Russo from Jefferies asked for expectations from the North Dakota Industrial Commission's upcoming meeting on the Bakken East project, sought quantification of the drivers behind the revised EPS guidance, and questioned how much more data center load could be absorbed before requiring new generation investments.

Answer

CEO Nicole Kivisto stated that while a state decision on the Bakken East project would be helpful, the company's primary focus is on securing customer commitments, with a binding open season as the next step. She also explained that while there are pockets for more capital-light data center expansion, the company is actively exploring investing in new generation and transmission to serve larger incremental loads. CFO Jason Vollmer reiterated that weather impact was about $1 million in the quarter and that while some costs like payroll have increased, the run rate from the first half is not expected to persist for the full year.

Brian Russo from Jefferies asked for an update on the Bakken East project ahead of the North Dakota Industrial Commission meeting, requested a quantification of the drivers for the revised guidance, and questioned how much more data center load could be absorbed before requiring new generation investment.

Answer

CEO & President Nicole Kivisto stated that while state support for the Bakken East project would be helpful, the focus remains on securing customer commitments, with a binding open season as the next step. CFO Jason Vollmer quantified the quarterly weather impact at roughly $1 million and noted that first-half operating expense run rates are not expected to continue. Nicole Kivisto added that while there is some capacity for more capital-light data center load, MDU is also exploring investing in new generation and transmission for larger opportunities.

Brian Russo from Jefferies asked for an update on the Bakken East project ahead of the North Dakota Industrial Commission meeting, sought quantification of the drivers behind the narrowed EPS guidance, and inquired about the remaining capacity for data center growth under the capital-light model.

Answer

CEO Nicole Kivisto stated that while state support would enhance the Bakken East project, the primary focus remains on securing customer commitments, with a binding open season as the next step. She also noted MDU is exploring capital investments for larger data center loads beyond existing capacity. CFO Jason Vollmer detailed the guidance drivers, citing a ~$1M weather impact and higher payroll costs, but expects the H1 expense run-rate to moderate.

Brian J. Russo, on behalf of Julien Dumoulin-Smith, asked for details on the electric segment's year-over-year earnings decline despite strong volume growth, questioned if North Dakota was in its ROE sharing band, and requested an update on the Bakken East pipeline project's progress and milestones.

Answer

Executive Jason Vollmer attributed the electric segment's lower earnings to higher O&M expenses from generating station outages, increased payroll costs, and lower returns on nonqualified benefit plans, noting a lack of new rate relief in Q1. He clarified that the volume increase was mainly from a data center being fully online this year. He also stated it was too early to determine if the company would be in the North Dakota ROE sharing band for 2025. President and CEO Nicole Kivisto added that for the Bakken East project, they are encouraged by customer feedback but are still in discussions to finalize the route and timing.

Brian Russo from Jefferies questioned whether the updated 10-12% gross margin target for the Utility segment represents a sustainable, structural shift and sought clarification on the 2025 solar revenue forecast, including any project pull-forwards.

Answer

EVP & CFO Ken Dodgen affirmed that the new 10-12% Utility margin guidance is a sustainable, forward-looking range, accelerated by the success of strategic initiatives. He noted that about $1 billion of the updated $2.5 billion renewables revenue target was realized in H1. Dodgen clarified that revenue pull-forward was due to strong execution and timing, not tariffs, and updated the expected annual growth to $300-400 million.

Brian Russo from Jefferies asked about the company's confidence in its 2024-2026 financial targets, the outlook for renewables revenue post-2025, and the timeline for the permanent CEO search.

Answer

CFO Ken Dodgen affirmed that Primoris is on track or ahead of its long-term targets, with accelerated margin improvement in Utilities. He expects a return to a $300-$400 million annual growth cadence in renewables post-2025. Chairman and Interim CEO David King stated the CEO search prioritizes the right candidate over a fixed timeline and seeks public company and M&A experience.

Brian Russo, on behalf of Julien Dumoulin Smith, asked for more detail on the Vantage data center's demand ramp-up, other capital expenditure opportunities like the Peoples Gas pipe program and ATC transmission projects, and whether the upcoming Point Beach PPA expiration would be addressed in the next capital plan.

Answer

President and CEO Scott Lauber indicated it's too early to detail the full 3.5-gigawatt ramp for Vantage but confirmed it will be in the next five-year plan. He highlighted significant CapEx increases for the Peoples Gas program, potentially reaching over $500 million annually by 2028, and expected growth in the ATC capital plan. Lauber also confirmed that discussions with NextEra regarding the Point Beach PPA are productive and an update is expected by year-end.

Brian Russo of BofA Securities inquired about the impact of recent MISO capacity auction results on base and data center-related CapEx, the long-term strategy for 'power of the future' assets, and the status of nuclear PPA negotiations.

Answer

Executive Scott Lauber explained that WEC was largely balanced in the MISO auction and is proactively building new gas generation to meet significant customer demand. He detailed plans to convert coal units at Port Washington and Weston to 100% natural gas by 2029, ensuring sufficient capacity through a mix of gas, renewables, and batteries to stay ahead of future capacity needs.

Brian Russo from Jefferies, on behalf of Julien Dumoulin-Smith, questioned how new legislation would affect ROE trends, whether the updated CEPIRP would improve RFP win rates, and how the proposed HoldCo structure might alter future financing plans.

Answer

CFO Joe Trpik responded that the company expects to maintain its current earned ROE band and does not anticipate additional regulatory lag. CEO Maria Pope noted that actual RFP win rates have historically exceeded the baseline forecast. Trpik added that the HoldCo's financing impact will be evaluated after the structure is finalized to maximize flexibility and efficiency.

Brian Russo, on for Julien Dumoulin, asked about the remaining capacity need for the next RFP, milestones for the North Plains Connector project, and specifics on the tax credit strategy for the Constable and Seaside battery projects.

Answer

SVP & CFO Joe Trpik clarified that the original IRP need was 3,200 MW, with the current RFP shortlist covering 1,700 MW, and a future IRP will update the total need. He confirmed the 20% stake in North Plains Connector is proceeding under a non-binding MOU and detailed the timeline for the Warm Springs project. Trpik also estimated the ITC value for the battery projects at approximately $150 million, which will be monetized to reduce equity needs.

Brian Russo of Jefferies inquired about the potential for a capital-light data center strategy in South Dakota, whether transmission constraints enable this strategy, and how insurance costs are recovered in Colorado.

Answer

Marne Jones, SVP and Chief Utility Officer, explained that any new tariff in South Dakota would be customized to customer needs and confirmed strong interest in the region. She clarified that as a vertically integrated utility, their capital-light strategy is enabled by location-specific capacity, not RTO dynamics. She also noted that in Colorado, insurance costs are recovered through rate reviews rather than a deferral mechanism.

On behalf of Julien Dumoulin-Smith, Brian Russo questioned whether the projected data center EPS contribution growth to 10% by 2028 includes projects beyond the existing anchor tenant and Meta. He also asked if Black Hills plans to replicate its successful Wyoming tariff structures for potential data center customers in other states like Colorado and the Dakotas.

Answer

Kimberly Nooney, SVP and CFO, confirmed the 5% to 10% EPS growth forecast is primarily driven by Microsoft and Meta but noted they are receiving new inbounds for projects in Colorado and South Dakota. Linn Evans, President and CEO, responded that while they might replicate tariff structures, their approach remains flexible, aiming to create agile, customized solutions that benefit both the customer and shareholders.

Brian Russo of Stifel asked about the demand drivers for the strong healthcare RPO growth, whether the company is seeing 'green shoots' in the warehousing market, and the potential impact of tariffs.

Answer

Tony Guzzi, Chairman, President and CEO, attributed the healthcare strength to new hospital construction, demographic growth, and complex retrofits, which are mechanically-heavy projects that suit EMCOR's capabilities. He confirmed seeing some 'green shoots' in warehousing, particularly in cold storage and automated facility retrofits requiring more fire protection. Regarding tariffs, Guzzi detailed a mitigation strategy: small projects reprice quickly, and for large projects, owners now typically procure the most expensive equipment, limiting EMCOR's direct material cost exposure primarily to pipe, wire, and conduit, which is managed via contractual terms.

Brian Russo, on behalf of Julien Mulani, asked about the specific factors attracting data centers to Montana, why South Dakota requires new generation for large loads, and the near-term milestones for the Northland Connector project.

Answer

CEO Brian Bird cited Montana's available capacity, 60% carbon-free portfolio, and cooler climate as key attractions for data centers. CFO Crystal Lail explained that South Dakota's position in the SPP market necessitates new generation for capacity adequacy, but the state offers favorable regulatory mechanisms for such projects. Regarding the Northland Connector, Brian Bird stated the main goal for 2025 is to convert the current letter of intent into formal commercial agreements by mid-year.

Brian Russo, on behalf of Julian, requested an update on the Colstrip facility in light of EPA GHG and MATS regulations, asking about the potential for retrofitting versus retirement. He also asked about the impact on the company's energy position and CapEx if the plant were retired.

Answer

CEO Brian Bird stated that the company is involved in litigation against the MATS rules and that political changes could affect them. He affirmed that if required, an investment in a baghouse would be necessary to continue operations and serve Montana's energy needs. He also noted they are closely following litigation around the GHG rules.

Asked about self-build options and competitive advantages in the upcoming RFPs, rider eligibility for these projects, the outlook for taconite demand, asset optimization opportunities at ALLETE Clean Energy, and the current operating environment for the New Energy distributed solar business.

Answer

Executives confirmed Minnesota Power will bid self-build options in the RFPs, which will be rider-eligible. They are using an average taconite demand forecast for 2024. At ALLETE Clean Energy, they are pursuing development projects like Whitetail and repowering legacy assets. The New Energy business is performing well despite market headwinds, supported by tailwinds like the IRA, and is on track to meet its targets.