Carly Davenport

Carly Davenport inquired about the PJM recommendation for the transmission project with Exelon, specifically addressing pushback in Pennsylvania due to cost and shifts in PJM's load forecast, and NextEra Energy's confidence in the project's progression. She also asked about the adjusted EBITDA outlook for 2026 at NEE, noting a year-over-year decline in gas pipes and gas infrastructure, and whether there's potential upside.

Answer

Executive Vice President Mark Hickson affirmed high confidence in the PJM transmission project, citing PJM management's continued recommendation, its importance for reliability, and its status as the lowest-cost solution, while acknowledging stakeholder feedback. Chairman, President, and CEO John Ketchum explained that the decline in natural gas pipelines EBITDA for 2026 was due to the proportionate ownership share in Explorer's divestment of the Meade Pipeline in 2025. He reiterated that pipelines remain a critical piece of growth beyond 2026 and that the reduction in gas infrastructure EBITDA is relatively small, not expected to be a key growth driver.

Carly Davenport asked about the PJM recommendation for the transmission project with Exelon, specifically addressing pushback in Pennsylvania regarding costs and shifts in PJM load forecasts, and NextEra Energy's confidence in the project's progression. She also inquired about the adjusted EBITDA outlook for 2026 at NextEra Energy, noting a year-over-year decline in gas pipes and infrastructure despite recent asset purchases, and asked about potential upside.

Answer

Executive Vice President of NextEra Energy Mark Hickson expressed high confidence in the PJM transmission project, citing PJM management's continued recommendation for reliability and cost-effectiveness, while acknowledging stakeholder feedback. Chairman, President, and Chief Executive Officer of NextEra Energy John Ketchum explained that the year-over-year decline in gas pipelines EBITDA for 2026 was due to the proportionate ownership share in Explorer's divestment of the Meade Pipeline in 2025, but emphasized that pipelines remain a critical growth area for the next decade. He noted the reduction in gas infrastructure EBITDA was relatively small and not a key growth driver.

Carly Davenport asked about the timing of demand pull-forward related to tax credits rolling off, specifically its impact on 2026/2027 versus 2028 and beyond, and the expected year-to-year variability in the $0.16 average EPS accretion from Duane Arnold.

Answer

John Ketchum, Chairman, President and CEO of NextEra Energy, explained that the demand pull-forward escalates closer to 2030, with 2026/2027 being in good shape and significant opportunities expected from 2028-2030 due to FEOC and safe harbor positioning. For Duane Arnold, Mr. Ketchum clarified there would be no significant year-to-year variability in EPS accretion, only slight movements around refueling outages.

Carly Devenport asked about the impact of demand pull-forward related to tax credits on backlog additions, specifically if it's primarily a 2028-plus opportunity or if it could also affect 2026 and 2027. She also inquired about the cadence and variability of the $0.16 average EPS accretion from Duane Arnold over its first 10 years.

Answer

John Ketchum, Chairman, President, and CEO of NextEra Energy Inc., explained that the demand pull-forward escalates closer to 2030, with 2026 and 2027 backlog filling progressing well. He emphasized strong positioning for 2028, 2029, and 2030 due to FEOC compliance and safe harbor. Regarding Duane Arnold's EPS accretion, Mr. Ketchum clarified that there is no significant year-to-year variability, with minor fluctuations primarily due to refueling outages.

Carly Davenport from Goldman Sachs requested details on the 1 GW of new backlog from hyperscalers and asked about potential practical limitations, such as labor or supply chain, that could constrain an acceleration of development.

Answer

Brian Bolster, President & CEO of NextEra Energy Resources, explained that hyperscaler needs are diverse, which suits NextEra's flexible portfolio. John Ketchum, President, CEO & Chairman, reframed potential limitations as competitive advantages, stating that NextEra's scale in supply chain, interconnection, and financing are precisely what position it to capitalize on a demand pull-forward.

Carly Davenport asked about the mix of backlog additions between the 2024-2027 plan and post-2027 delivery, and whether there was a risk of project slippage due to the uncertain macro environment.

Answer

John Ketchum, Chairman, President and CEO, acknowledged that past issues like the anti-circumvention investigation caused some project timing shifts. However, he believes the current environment is different, stating that the immense and immediate demand for power, combined with very long lead times for gas plants, is driving strong near-term demand for renewables. This dynamic makes significant project slippage less likely as customers cannot afford to wait.

Carly Davenport of Goldman Sachs asked if policy uncertainty is affecting customer conversations for renewables and requested a refresh on the company's interest rate hedging program and its sensitivity to rate changes.

Answer

CEO John Ketchum and President & CEO of NextEra Energy Resources Rebecca Kujawa both affirmed that customer conversations have not been negatively impacted. Instead, customers are focused on the urgent need for new projects to be built on time to meet power demand and avoid higher costs. Ketchum detailed the interest rate hedge program, stating they have $32 billion in swaps at an average coupon of around 3.9%, resulting in a minimal EPS sensitivity of just $0.01 to $0.03 for a 50 basis point rate hike in 2025 and 2026.

Carly Davenport asked about Duke Energy's potential role as an operator in future nuclear build-outs, including AP1000s, and whether the share of natural gas in the Carolinas IRP would increase with expanded pipeline capacity into the Southeast.

Answer

Harry Sideris, President and CEO, highlighted Duke Energy's experience operating 11 nuclear reactors and the importance of nuclear for reliable, affordable power. He noted the need to resolve cost overrun protection and balance sheet impacts for new nuclear projects, while exploring both SMRs and large water reactors. He also confirmed that continued economic development growth would necessitate more gas and pipelines.

Carly Davenport asked about Duke Energy's potential role in future nuclear build-out, including AP1000 and Small Modular Reactors (SMRs), particularly as an operator, in light of recent industry announcements. She also questioned if the share of natural gas in the Carolinas Integrated Resource Plan (IRP) would increase with expanded natural gas pipeline capacity into the Southeast, such as the MVP Boost project.

Answer

Harry Sideris, President and CEO, highlighted Duke Energy's experience operating 11 nuclear reactors and its view of nuclear as crucial for future reliability and affordability. He noted that while government and Westinghouse partnerships are encouraging for supply chain, Duke needs to resolve cost overrun and balance sheet protection issues before proceeding with new nuclear projects. Sideris confirmed the IRP includes AP1000s at the North Carolina Commission's request and will continue evaluating both SMRs and large water reactors. Regarding gas, Sideris stated it's part of an 'all-of-the-above' strategy, with gas secured through early 2030, and expects more gas and pipelines will be needed to serve growing economic development, emphasizing dispatchable power as critical.

Carly Davenport from Goldman Sachs inquired about the timing and CapEx impact of the new Amazon data center campus in North Carolina and asked about the conditions surrounding Brookfield's option to accelerate its investment in Duke Energy Florida.

Answer

President & CEO Harry Sideris clarified that the Amazon project will begin ramping up in the 2027-2028 timeframe and will be incorporated into future capital plan updates. Regarding the Brookfield deal, he confirmed the option for early funding is at Brookfield's discretion, though Duke's current plans are based on the announced tranche schedule.

Carly Davenport asked for the latest views on the IRA's future, particularly tax credit transferability, and inquired if there was any change in activity from industrial customers due to economic uncertainty.

Answer

CEO Harry Sideris emphasized that their advocacy focuses on customer affordability, highlighting the importance of nuclear tax credits which have broad support. CFO Brian Savoy noted that while industrial customers have a 'cautionary stance' amid policy uncertainty, their 2025 production schedules have not changed. Sideris added that tariffs could potentially boost production for some customers like steel producers.

John Miller, on behalf of Carly Davenport from Goldman Sachs, requested details on the new elements in the updated Indiana IRP and asked about the expected filing timeline and potential size of the next Carolinas resource plan in 2025.

Answer

CFO Brian Savoy explained the Indiana IRP focuses on transitioning a plant to gas, adding storage and solar, and has broad stakeholder support, with a CPCN filing for the Tioga plant expected in early 2025. Regarding the Carolinas, Savoy stated that while updates to the IRPs will be filed next year, he does not anticipate a "tremendous difference" as the focus is on executing the near-term actions approved in the recent constructive orders.

Carly Davenport asked for details on the increase in data center construction agreements to three gigawatts, including the number of customers involved and any changes to the expected ramp start date. She also sought early views on the implications of Illinois' Omnibus Energy bill for Ameren's business.

Answer

Chairman, President, and CEO Marty Lyons clarified the data center ramp is now expected to begin in 2027 and noted the 3 GW increase was primarily from one additional site. He detailed the Illinois Omnibus Energy bill's positive aspects, including integrated resource planning, energy storage, renewables, and a doubling of energy efficiency investment to $250 million annually.

Carly Davenport asked for details on the 3 gigawatts of data center construction agreements, including the number of customers and the expected ramp-up start date. She also inquired about the early implications of the Illinois omnibus energy bill (Senate Bill 25) for Ameren's business.

Answer

Marty Lyons, Chairman, President, and CEO, clarified that the ramp-up is now expected to begin in 2027, not 2026, and that the 3 gigawatts include one additional site. Regarding the Illinois bill, he highlighted integrated resource planning, energy storage procurement, the Illinois Power Authority's ability for long-term renewable contracts, and a doubling of energy efficiency investment to $250 million annually, treated as a regulatory asset with incentive opportunities.

Carly Davenport of Goldman Sachs asked if Ameren could potentially accelerate incremental projects to maximize tax credit benefits post-OBBBA and inquired about any shifts in data center customer priorities.

Answer

Senior EVP & CFO Michael Moehn confirmed that the team is actively looking to acquire long-lead-time equipment, such as transformers, to position the company to potentially pull forward projects beyond the current five-year plan and secure tax credits. President, CEO, & Chairman Martin Lyons added that data center customer priorities remain consistent, focusing on site quality, transmission access, affordable power, and strong state support.

Carly Davenport asked if Ameren is observing any signs of economic slowdown from its commercial or industrial customers and requested a quantification of the capital plan's exposure to potential trade tariffs.

Answer

Michael Moehn, Senior Executive VP and CFO, stated that there are no signs of a slowdown, highlighting strong trailing 12-month sales growth of 3% and new projects like Boeing's expansion. Marty Lyons, CEO, added that data center interest remains 'rock solid.' Regarding tariffs, Mr. Moehn estimated a manageable potential impact of about 2% on the $26 billion five-year capital plan before mitigation, noting that roughly 65% of the plan is labor and 85% of materials are domestically sourced.

Carly Davenport asked for context on how Ameren developed its 5.5% sales growth CAGR forecast from its total opportunity pipeline and inquired about the company's vision for new nuclear capacity planned for 2040.

Answer

CEO Martin Lyons explained the sales forecast is based on 1.5 gigawatts of new, signed construction agreements and the generation they can realistically accelerate. EVP & CFO Michael Moehn noted this builds on a strong 2024 with 2% sales growth. Regarding nuclear, Lyons stated that while it's a key part of their long-term balanced portfolio, it's too early to commit to a specific technology (e.g., SMRs) and no material financial commitment is expected in the next few years.

Carly Davenport of Goldman Sachs inquired about Ameren's positioning within its 6-8% EPS growth range given new opportunities, and asked for details on O&M reduction programs expected to impact Q4 results.

Answer

Martin Lyons, Chairman, President and CEO, stated that Ameren has a strong track record of delivering at or above the midpoint of its growth range and aims to continue this trend, with potential load growth being a key positive factor. Michael Moehn, Senior Executive VP and CFO, added that the $55 billion investment pipeline and strong Missouri economic data could provide upside. Regarding O&M, Moehn confirmed that savings are back-half loaded and driven by ongoing programs focused on headcount, discretionary spending, process simplification, and benchmarking for efficiency.

Carly Davenport asked for updates on the residential Virtual Power Plant (VPP) program's uptake and any trends in data center customers' desired energization timelines.

Answer

Brad Bentley, EVP, reported strong VPP progress, with 2025 guidance raised from 20 MW to 150 MW, and NRG is on track for 1 GW by 2035, noting positive customer feedback and higher-than-anticipated installations. Larry Coben, Chair, President, and CEO, stated that data center customers desire rapid energization but face bottlenecks, expecting a gradual ramp-up of power through 2031.

Carly Davenport from Goldman Sachs asked for an update on the residential Virtual Power Plant (VPP) program's uptake and whether regular updates would be provided. She also inquired about trends in customer energization timelines for data center agreements, given existing deals with 2026 and 2028 first delivery dates.

Answer

Brad Bentley, EVP, reported strong progress on the VPP, with 2025 guidance raised from 20 MW to 150 MW, and remaining on track for 1 GW by 2035. He noted higher-than-anticipated customer installations and equipment upgrades, along with new home automation pilots. Larry Coben, Chair, President, and CEO, stated that data center customers seek energization as quickly as possible, but timelines are influenced by interconnection and power plant construction bottlenecks, leading to a ramping schedule through 2031.

Carly Davenport from Goldman Sachs asked for more detail on the drivers behind the strong Virtual Power Plant (VPP) adoption and its long-term implications. She also requested an update on the development partnership with GE Vernova and KeyWit for new gas assets and its connection to data center customer discussions.

Answer

Chairman, CEO and President Larry Coben responded that it is still too early to determine if the strong VPP uptake is sustainable momentum but noted the positive trend in adoption of both the core bundle and additional smart home products. He confirmed the GE/KeyWit partnership is closely linked to the data center pipeline, providing the new generation capacity required for certain projects.

Carly Davenport of Goldman Sachs asked for an update on the home Virtual Power Plant (VPP) opportunity, specifically how it is tracking in terms of customer uptake and the ultimate margin potential since its launch.

Answer

In his final remarks before retiring, executive Rasesh Patel stated he is 'incredibly bullish' on the home VPP opportunity. He noted that the company now expects to exit the year with 150 MW of capacity, far exceeding the initial 20 MW target. He highlighted outstanding consumer reception and a positive surprise that nearly half of VPP customers are upgrading to other recurring revenue services.

Carly Davenport asked about Sempra's equipment and supply chain readiness for the Texas transmission expansion, particularly concerning transformers and breakers, and execution on the growing capital plan. She also inquired about Sempra's involvement and vision for potential solutions in California's wildfire phase two process.

Answer

Jeff Martin (Chairman and CEO, Sempra) and Allen Nye (CEO, Oncor) highlighted Oncor's proactive supply chain management, including the Midlothian supply center, and confirmed having commitments for all necessary equipment. Jeff Martin and Caroline Winn (EVP, Sempra) discussed Sempra's engagement in Sacramento, with Caroline detailing abstracts submitted for the wildfire phase two process, focusing on shared risk models, new insurance, and claims processes.

Carly Davenport asked about the equipment and supply chain for the Texas transmission expansion, inquiring about execution confidence for a growing capital plan, and also sought Sempra's perspective on its involvement in California's wildfire risk phase two process and potential solutions.

Answer

Jeff Martin, Chairman and CEO of Sempra, and Allen Nye, CEO of Oncor, highlighted Oncor's long-standing supply chain strategy, including the Midlothian supply center, expanded vendor base, and proactive commitments for 765 kV equipment from Asia and Europe, expressing high confidence in execution. Jeff Martin and Caroline Nguyen, EVP of Sempra (heading SDG&E and SoCalGas), discussed abstracts submitted for problem identification in California, focusing on shared risk models, new insurance/funding, claims process, and affordability, with white papers due in December.

Carly Davenport from Goldman Sachs asked for an update on the feasibility of a Port Arthur LNG Phase II FID by year-end and inquired about the timing and cadence of the ROE improvement expected from the new UTM mechanism in Texas.

Answer

Chairman, President & CEO Jeffrey Martin confirmed that Port Arthur Phase II has significant momentum following progress on permits, marketing, and financing, and the company is tracking workstreams to enable an FID decision this year. Regarding the Texas UTM, Martin reiterated the expected 50-100 basis point ROE uplift over time. Oncor CFO Don Clevenger specified that the first UTM filing is planned for the first half of 2026, following the rate case resolution, with annual filings thereafter.

Carly Davenport asked about Sempra's expectations for the upcoming cost of capital filing in California and what return assumptions are embedded in the current financial plan. She also requested more detail on the potential future cadence of rate case filings at Oncor.

Answer

CEO Jeffery Martin stated that the financial plan assumes a California cost of capital substantially similar to the current authorized level but noted there is an opportunity to achieve a better outcome. Regarding Oncor, he explained that given the unprecedented growth and the lag from the previous rate case, the company believes more frequent, periodic rate cases are the right strategy to ensure financial strength and timely cost recovery going forward.

Carly Davenport asked about the potential impact of administration changes on the LNG business outlook and whether the DOE permit is the final gating item for an FID on Port Arthur Phase 2. She also inquired about any key issues Sempra is watching for in the upcoming Texas legislative session.

Answer

Justin Bird, CEO of Sempra Infrastructure, stated that commercial progress on Port Arthur Phase 2 continues and they expect the DOE non-FTA permit to be resolved in the first half of 2025. On the legislative front, Allen Nye, CEO of Oncor, expressed confidence in Oncor's position heading into the session and readiness to handle any issues that may arise.

Carly Davenport asked about the scale of Oncor's potential participation in the $13-$15 billion of transmission CapEx proposed by ERCOT for the Permian Basin. She also inquired about the potential timing for Oncor's next comprehensive rate case, given the dynamic environment of capital updates and rising costs.

Answer

Oncor CEO Alan Nye stated that given the scope of its existing operations in the Permian region, Oncor expects to be a 'heavy participant' in the transmission build-out. He then detailed significant growth drivers, including data center demand and new ERCOT load forecasts. Chairman and CEO Jeff Martin emphasized that this growth-driven CapEx has a moderating effect on customer rates. Regarding the next rate case, Mr. Nye noted that while the company continually evaluates financial pressures, it is not required to file a new case until summer 2027 and has not made a decision to file sooner.

Carly Davenport asked about the credit agencies' views on Eversource following recent Connecticut regulatory changes and their impact on credit ratings. She also inquired about the timing for filing another rate case at CLNP (Connecticut Light and Power) given the recent shifts in the regulatory landscape.

Answer

Executive Vice President, Chief Financial Officer, and Treasurer John Moreira stated that credit rating agencies are currently in a 'wait-and-see mode,' awaiting constructive regulatory outcomes. Chairman, President, and CEO Joe Nolan clarified that Eversource never intended to file a CLNP rate case prior to 2026 and is currently evaluating a comprehensive filing for at least the second or third quarter of 2026.

Carly Davenport asked about the credit agencies' views on Eversource's credit ratings, given the recent changes in the Connecticut regulatory environment. She also inquired about how these shifts impact the company's views on the timing for filing another rate case at CL&P.

Answer

CFO John Moreira indicated that credit rating agencies are currently in a 'wait-and-see' mode, awaiting constructive regulatory outcomes from the new Connecticut commission. CEO Joe Nolan clarified that Eversource had no intention of filing a CL&P rate case prior to 2026, and any such comprehensive filing would likely occur in the second or third quarter of that year, with the company currently evaluating the timing.

Carly Davenport of Goldman Sachs inquired about Eversource's confidence in achieving its 14% FFO to debt target by year-end and the potential impact of storm cost securitization in Connecticut on long-term metrics and timelines.

Answer

EVP, CFO & Treasurer John Moreira expressed high confidence in reaching the FFO to debt target, citing rate recovery of deferrals as the primary driver, with the Aquarion sale adding approximately 100 basis points. He noted that while storm cost securitization would impact future financing needs, the cash benefit is now expected in 2027 due to the regulatory review schedule.

Carly Davenport inquired about Eversource's confidence in achieving its 14% FFO to debt target by year-end and the potential impact of storm cost securitization on long-term balance sheet health and financing needs.

Answer

John Moreira, Executive VP, CFO & Treasurer, expressed high confidence in improving the FFO to debt ratio, citing the recovery of deferrals in rates as the primary driver. He noted the Aquarion sale would add approximately 100 basis points. Regarding securitization, Mr. Moreira explained that while it could reduce future equity needs, the process, including a prudency review, would likely push cash receipts into 2027.

Carly Davenport of Goldman Sachs inquired about the outlook for the composition of Connecticut's PURA and the status of conversations with Moody's regarding its negative watch.

Answer

An executive stated the company is indifferent to the number of PURA commissioners but desires a stable regulatory environment. EVP and CFO John Moreira addressed the credit rating, stating that Moody's needs to see continued execution of their plan. He highlighted that recovering prior regulatory costs is expected to improve FFO to debt at Moody's by approximately 300 basis points.

Carly Davenport asked about the planned methodology for future equity issuances, questioning whether the company would favor an At-The-Market (ATM) program or block sales. She also inquired about the potential timing for the $1.5 billion to $2 billion of incremental capital investments to be included in the formal plan.

Answer

Executive VP and CFO John Moreira confirmed that Eversource has been pleased with its ATM program and expects to use that vehicle for future equity needs due to the control it provides. He noted the largest incremental investment, Connecticut AMI, awaits regulatory action, with more clarity on other opportunities expected in the next 12 to 18 months.

Carly Davenport asked for details on the future cadence of equity issuances and requested a breakdown of the FFO to debt improvement drivers, specifically separating known enhancements from the pending Aquarion sale.

Answer

EVP, CFO and Treasurer John Moreira indicated that a full update on the financing plan and equity needs would be provided with the Q4 results. He clarified that the majority of the FFO to debt metric improvement comes from known and measurable items like rate adjustments and completed transactions, with the Aquarion sale being the primary remaining variable.

Carly Davenport inquired about the assumptions regarding PJM open window opportunities within the new transmission budget, asking if the most recent window is already baked in or if it represents potential upside.

Answer

Trevor Mihalik, EVP and CFO, stated that all known existing transmission opportunities, including PJM open window opportunities, are already incorporated into the five-year capital plan. He noted that while new transmission lines might not be a primary source of upside, incremental investments in rebuilding infrastructure continue to present opportunities.

Carly Davenport asked if there are Letters of Agreement (LOAs) outside of Texas included in the plan and if there's a defined term or gating factor for the LOAs within the 28 gigawatts of contracted load versus those not yet included. She also inquired about the assumptions regarding PJM open window opportunities within the new transmission budget, asking if they are already baked in or represent potential upside.

Answer

Trevor Mihalik, EVP and CFO, confirmed that there are LOAs outside of Texas, noting that in PJM, 100% of the increase is under LOA with almost 80% under ESA, and in SPP, 100% is under LOA with a portion under ESAs. He emphasized that all LOAs included in the 28 GW have financial commitments, providing confidence in the forecast. Regarding the transmission budget, Mihalik stated that the five-year capital plan incorporates all known existing transmission projects, including PJM opportunities, and that while these are built into the current plan, AEP continues to see opportunities for incremental investments in infrastructure rebuilding.

Carly Davenport of Goldman Sachs asked if the 2025 load growth forecast adjustment was a timing issue and whether AEP might pull forward renewable projects to secure tax credits under the new federal budget bill.

Answer

EVP & CFO Trevor Mihalik clarified that revenue is protected by peak demand billing and contractual minimums, mitigating any earnings volatility from load ramp timing. On renewables, he stated that 100% of the current $10 billion plan qualifies for tax credits under existing law, and a worst-case scenario from new guidance would only require reallocating a few billion dollars at the back end of the plan.

Carly Davenport asked about the dynamics driving negative residential load trends and the outlook for that segment. She also requested more detail on the 765 kV Permian Basin opportunity, including potential CapEx size and timing.

Answer

Trevor Mihalik, EVP and CFO, explained that while residential meter counts are slightly up, this is more than offset by declining throughput due to energy efficiency and cost consciousness, a trend they are monitoring. William Fehrman, President and CEO, expressed excitement about the Permian 765 kV opportunity, noting AEP is the national leader in this technology. He sized the initial project in the $1-2 billion range and stated it bodes well for future investments in Texas as the state plans for significant energy growth.

Carly Davenport of Goldman Sachs asked about the status of AEP's procurement of key equipment, such as turbines, needed to execute on its generation plans and accommodate significant load growth.

Answer

President and CEO William Fehrman expressed high confidence in the company's procurement strategy, stating that AEP has a strong plan for acquiring turbines, transformers, and other critical equipment. He noted that AEP is actively managing RFPs and IRPs and is leading efforts to find innovative solutions like Bloom fuel cells and SMRs to meet growing energy demand.

Carly Davenport asked if the PJM transmission opportunities represented upside to the new capital plan and inquired about the company's dividend growth policy relative to the new 6% to 8% earnings growth rate.

Answer

President and CEO William Fehrman confirmed that the potential $10 billion in additional transmission and generation, including PJM projects, is upside to the current plan. EVP and CFO Chuck Zebula explained that dividend growth will be decoupled from earnings growth to fund capital needs, targeting a lower payout ratio of 55% to 65% over time.

Carly Davenport asked if the PJM transmission opportunities represent upside to the new capital plan and inquired about the company's dividend growth policy relative to the new 6-8% earnings growth rate.

Answer

CEO William Fehrman confirmed the PJM projects are part of a $10 billion potential upside to the current plan. CFO Charles Zebula explained that dividend growth will be decoupled from earnings growth to fund CapEx, targeting a lower payout ratio of 55-65% over time from the previous 60-70% range.

Carly Davenport asked for an update on the cost of capital filing outcome, its alignment with the financial plan, and the context of customer affordability in California. She also inquired about the slight reduction in the FERC capital expenditure piece of the updated plan, its drivers, and potential upside opportunities for FERC investments as a lever.

Answer

President and CEO Pedro Pizarro noted their cost of capital filing proposes a higher range (10.75%-11.75%) based on risk, with a decision expected by year-end. EVP and CFO Maria Rigatti added that a proposed decision is due in November, and they model a range of scenarios around the current ROE. Regarding FERC CapEx, Maria Rigatti attributed the slight reduction to timing. Steven Powell (President and CEO, Southern California Edison) elaborated on CAISO's long-term transmission plans ($45B-$55B over 20 years) driven by load growth, indicating SCE's strategy to secure incumbent projects and compete for new lines.

Carly Davenport asked for the latest outlook on the cost of capital filing outcome, considering customer affordability and California's rhetoric, relative to the financial plan. She also inquired about the updated capital plan, specifically the slight reduction in the FERC piece, and current views on upside opportunities for FERC investment as a lever.

Answer

Pedro Pizarro (President and CEO, Edison International) noted the cost of capital process is ongoing, with a proposed decision due in November, and their filing reflects outside experts' testimony. Maria Rigatti (EVP and CFO, Edison International) added that the financial forecast incorporates a range of scenarios around the current ROE. Maria Rigatti attributed the slight FERC reduction to timing. Steven Powell (President and CEO, Southern California Edison) elaborated on CAISO's 20-year transmission plans ($45-55 billion potential) and 10-year plans, highlighting opportunities for incumbent and competitive projects driven by load growth.

Carly Davenport asked about proposed affordability legislation in California, particularly provisions for securitizing capital. She inquired about more constructive alternatives for affordability and any analysis done on the potential negative financial impacts if the securitization provisions were passed.

Answer

President and CEO Pedro Pizarro outlined several alternatives to improve affordability, including utility operational excellence, shifting public purpose program costs from ratepayers to taxpayers, and net energy metering (NEM) reform. He argued that securitization would deteriorate the utility's credit quality, leading to higher debt costs that would ultimately increase customer bills more than the savings from foregone earnings. He also provided a qualitative comparison showing SCE's core operational costs are competitive with municipal utilities.

Carly Davenport questioned the proposed affordability legislation, particularly securitization provisions, asking about more constructive alternatives and any quantification of potential negative impacts.

Answer

President and CEO Pedro Pizarro highlighted operational excellence, reforming public purpose programs, and NEM reform as superior alternatives to securitization. He argued that securitization would harm credit quality and ultimately increase customer costs by more than any savings from foregone earnings. He also provided a comparison of SCE's bills to municipal utilities to demonstrate the value of the IOU model.

Carly Davenport of Goldman Sachs asked about wildfire mitigation plans for other idled or abandoned power lines and whether the company has quantified its exposure to potential tariff risks within its capital plan.

Answer

President and CEO Pedro Pizarro stated that idled lines are maintained for potential future use and that learnings from recent events are incorporated into a continuous improvement cycle, such as adding more detail to operational manuals. CFO Maria Rigatti addressed tariff risk, noting that foreign materials constitute only about 5% of total purchases (approx. $125M annually), with the customer impact mitigated by recovering these capital costs over the assets' long useful lives.

Carly Davenport asked for color on what assumptions regarding the CPUC's authorized Return on Equity (ROE) are embedded in the company's financial plan as it prepares its next cost of capital filing.

Answer

CFO Maria Rigatti explained that the company's '25-'28 EPS growth range already incorporates sensitivities for a number of different ROE outcomes. She stated that the upcoming filing will include extensive qualitative discussion on the impact of recent events on the cost of capital. However, she stressed that the fundamental solution lies in structural reforms to the AB 1054 framework, not just in adjusting the ROE, a point the company also made in its 2019 filing.

Carly Davenport inquired about conversations with other credit rating agencies following the Fitch upgrade and the potential for raising the O&M cost reduction target.

Answer

Carolyn Burke, EVP and CFO, stated that conversations with Moody's and S&P are ongoing, with both agencies looking for progress on SB 254 Phase 2 as a trigger for upgrades, noting that financial credit metrics already meet investment-grade criteria. Patti Poppe, CEO, expressed confidence in meeting or exceeding the 2% O&M reduction target for the fourth consecutive year and improving the capital-to-expense ratio, but indicated that raising the target is not currently being considered.

Carly Davenport asked about conversations with other credit rating agencies (Moody's, S&P) regarding potential upgrades and the possibility of raising O&M cost reduction targets.

Answer

CEO Patti Poppe confirmed ongoing positive conversations with Moody's and S&P, noting they are looking for progress on SB 254 Phase 2 as a significant trigger for investment-grade ratings, as financial metrics already meet their criteria. She also expressed confidence in continuing to meet or exceed the 2% O&M reduction target, but indicated no immediate plans to raise it.

Carly Davenport of Goldman Sachs inquired about the expected conversion rate of the data center pipeline and asked for specific opportunities driving potential upside to the O&M reduction target.

Answer

CEO Patti Poppe estimated an initial 50% attrition rate for the data center pipeline but noted it was early. On O&M savings, she highlighted the deployment of AI to improve inspections and new technologies for vegetation management as key drivers. She added that a company-wide 'waste elimination' culture is helping them consistently exceed their 2% annual reduction target. EVP & CFO Carolyn Burke noted much of the data center spend is FERC-funded.

Carly Davenport of Goldman Sachs inquired about the expected conversion rate of the data center pipeline and asked for specific opportunities driving potential upside to the O&M reduction target.

Answer

CEO Patti Poppe estimated an early-stage attrition rate of about 50% for the data center pipeline. For O&M savings, she highlighted the deployment of AI to improve inspections, new technology for vegetation management, and a company-wide 'waste elimination' culture as key drivers for exceeding the 2% annual reduction target.

Carly Davenport requested quantification of the tariff exposure mentioned in the prepared remarks and its potential impact on the capital plan.

Answer

CFO Carolyn Burke stated the exposure is manageable, as over 90% of materials spend is domestic. She specified that the main exposure is on items like transformers, with about $100 million of spend subject to a 12% tariff. Burke emphasized that the company's lean operating system and O&M savings are the primary tools to offset such pressures, as they have successfully done with inflation in the past.

Carly Davenport of Goldman Sachs inquired about the strong O&M reductions, asking if the 2% target would be revisited, possibly in the GRC filing. She also asked about the disbursement cadence for the DOE loan and potential impacts from funding pauses.

Answer

CFO Carolyn Burke confirmed the company expects to update its O&M plans after the GRC filing. CEO Patti Poppe added that O&M savings are a signature part of their 'simple affordable model' and expects savings to continue for years to come. Regarding the DOE loan, Burke stated it is not in their base plan, and they expect disbursements to be slow in 2025, picking up in 2026-2030, with no advances received yet.

Carly Davenport asked for an update on conversations with credit rating agencies regarding wildfire risk following the 2024 season and how to frame the potential for rate base and earnings growth from 2026-2028, given the $5 billion of incremental investment opportunities.

Answer

CEO Patti Poppe emphasized that their physical risk mitigations have proven effective during a challenging fire season. CFO Carolyn Burke added that they remain on positive outlook with Moody's and are optimistic about an upgrade. Regarding the $5 billion opportunity, she reiterated that any new capital would be added to the plan only after meeting their four criteria: being authorized, affordable, accretive, and efficiently financed.

Carly Davenport inquired about the confidence behind FirstEnergy's 30% transmission CapEx upside, asking if it represents a floor or if further upside is possible looking towards the Q4 update. She also asked for clarification on the data center pipeline, specifically how much of the contracted load is under an Energy Service Agreement (ESA) versus other types of contractual agreements.

Answer

Brian Tierney, Chair, President, and CEO, confirmed that the 30% increase for the next 5-year plan is what the company feels comfortable with at this point, noting that approximately 60% is for reliability enhancements and 40% is regulatory required. Regarding data centers, he explained that ESAs typically occur very late in the process, but FirstEnergy gains confidence in contracted customers through earlier agreements for facility builds and credit support, even before an ESA is signed.

Carly Davenport asked about the confidence behind the 30% transmission CapEx upside, whether it represents a floor or potential for further increases, and the breakdown of spending between reliability and regulatory requirements. She also inquired about the proportion of contracted data center demand under an Energy Service Agreement (ESA) versus other contractual agreements.

Answer

Brian Tierney, Chair, President, and CEO, indicated that the 30% upside for the next five-year plan is the current comfort level, with the full CapEx plan due in early 2026. He specified that about 60% of transmission CapEx is for reliability enhancements and 40% for regulatory required investments, including interconnections and PJM open windows. Regarding data centers, he explained that ESAs typically occur late in the process, but confidence in contracted customers is high based on earlier agreements for facility construction and credit support.

Carly Davenport asked about the key drivers behind the company's strong quarterly results versus its plan and whether guidance might be revisited. She also sought details on the components of the 20% transmission investment upside.

Answer

SVP & CFO K. Jon Taylor attributed the outperformance to strong financial discipline, with operating expenses running nearly 4% below plan, and suggested guidance could be updated after Q3. President, CEO & Chairman Brian Tierney clarified that the transmission upside is driven by a combination of PJM open window opportunities, investments to connect new data centers, and other incremental reliability projects.

Carly Davenport inquired about potential risks from an economic slowdown on industrial customer demand and asked what drives the company's confidence in targeting the top half of its 2025 earnings guidance.

Answer

Brian Tierney, Chair, President and CEO, acknowledged macro uncertainty but noted no significant impact yet, aside from some slowdowns in steel manufacturing tied to automotive demand. Jon Taylor, SVP and CFO, explained that confidence in the guidance comes from a plan to achieve lower O&M expenses than the base target, creating flexibility, and building a culture of continuous improvement.

Carly Davenport inquired about the company's strategy to return its FFO to debt ratio to the 14% target and whether that level is sustainable. She also asked if the recently announced PJM transmission joint venture projects are included in the current capital plan.

Answer

Executive K. Taylor stated that after excluding one-time items from 2024, the company is on track for a 14% FFO to debt ratio in 2025, which they believe is sustainable going forward, supported by cash flow from the Pennsylvania rate case. Executive Brian Tierney and K. Taylor clarified that while FirstEnergy's direct share of the PJM projects is in the plan, the joint venture itself will be financed off-balance sheet.

Carly Davenport of Goldman Sachs asked for confirmation that the 10-20% conversion rate still applies to the growing 9,400 MW large load inquiry pipeline and whether it's all data centers. She also inquired about confidence in the full-year earnings guidance given strong first-half performance.

Answer

Chair, President & CEO Ralph LaRossa confirmed the 10-20% conversion rate holds and that over 90% of inquiries are data center-related. Both LaRossa and EVP & CFO Daniel Cregg expressed confidence in the full-year guidance range, reminding investors that the fall refueling outage at the 100%-owned Hope Creek unit will temper the strong first-half results.

Carly Davenport from Goldman Sachs asked about potential election-related risks to EV adoption in New Jersey and the associated investments. She also inquired about PSEG's long-term nuclear fuel supply strategy, particularly with Russian import waivers set to expire.

Answer

Ralph LaRossa, Chairman, President and CEO, stated he sees no significant election risk to PSEG's investment plans, as New Jersey's geography supports EV adoption. Daniel Cregg, EVP and CFO, addressed the fuel question, confirming that the company is actively working to extend its supply coverage and may provide an update on the next earnings call.

Carly Davenport inquired about the scope of work being performed during the Hope Creek outage related to the fuel cycle shift and asked for an outlook on full-year O&M, considering early storm activity and the outage.

Answer

Chair, President and CEO Ralph LaRossa clarified that the current work is a small part of a larger project, involving engineering and generator upgrades, with investments spread over future fuel cycles. Executive Vice President and CFO Daniel Cregg added that full-year O&M might trend slightly higher than previously expected due to costs from severe wet weather and the impact of the 100%-owned Hope Creek outage.

Carly Davenport of Goldman Sachs asked for details on the work being done during the Hope Creek nuclear outage to support the fuel cycle extension and inquired about the full-year O&M expense outlook.

Answer

Chair, President and CEO Ralph LaRossa described the current work as a small part of a larger engineering effort, including a generator rewind and cooling tower upgrades to optimize the unit for the future 24-month cycle. EVP and CFO Dan Craig noted that full-year O&M may trend slightly higher due to the 100%-owned Hope Creek outage and costs from severe storm response in Q1.

Questioned the company's hedging strategy for nuclear generation in the interim period before PTC guidance is released, and asked about key drivers for O&M expenses in 2024.

Answer

The company is modeling various potential PTC outcomes to inform its hedging strategy, with the primary goal of minimizing risk, which may lead to a slightly different hedge position. For 2024 O&M, there are no major surprises expected; labor costs are predictable due to a new 4-year union contract, and 2024 nuclear fuel costs are largely locked in as the fuel is already in the reactors.

Carly Davenport asked for the reason behind the PJM delay in providing the network upgrade cost update for the CVOW project and whether there is a firm deadline. She also questioned the Virginia biennial review, asking for views on the commission staff's ROE recommendation and which issues will be the focus of Dominion's rebuttal.

Answer

President, CEO & Chairman Robert Blue addressed both questions. He attributed the PJM delay to their significant workload, stating no major cost changes are expected and there is no statutory deadline for the update. Regarding the biennial review, Blue explained the largest revenue difference with staff is a non-disputed adjustment for capacity expense. He characterized the remaining items, such as ROE and O&M costs, as standard for a regulatory proceeding with 'nothing exotic' expected.

Carly Davenport asked about the proposed special rate structure for high-energy users in the biennial filing and whether broader economic uncertainty is affecting data center customer demand.

Answer

Robert Blue, Chair, President and CEO, explained that the new rate class includes a 14-year contract term and minimum demand charges to mitigate stranded asset risk, noting that discussions with data center customers have been constructive. He also confirmed that they are seeing continued strong appetite for data center capacity with no change in tone or pause due to economic uncertainty.

Carly Davenport asked if the IRP's plan for new gas plants includes the cost of CCS technology and whether the 2034 start date for SMRs reflects the company's view on the timeline for commercialization.

Answer

CEO Robert Blue clarified that the IRP does not include costs for Carbon Capture and Storage (CCS), which the company believes is not yet adequately demonstrated. Instead, the plan accounts for EPA regulations by adjusting plant capacity factors. He confirmed that the IRP's timeline, which includes SMRs beginning in 2034, does reflect the company's current view on when the technology could be feasibly deployed, provided key risk-mitigation principles are met.

Carly Davenport inquired about the impact of the updated capital plan and 8% rate base growth on the 2027 earnings rebasing timeline, and asked about the procurement status for turbines and gas supply for new power plants.

Answer

SVP, Chief Accounting Officer & Comptroller David Poroch confirmed a full financial plan update will come in Q4 and reiterated that the company will reassess its 5-7% growth rate set point as early as 2027, pending sustainable momentum. CEO Chris Womack stated that the company has secured reservations for turbines and has strong relationships with OEMs and EPCs, expressing confidence in their ability to execute.

Carly Davenport inquired about the drivers for the Q2 2025 EPS guidance of $0.85, which is lower than the prior year, and requested an update on the Georgia Power large load pipeline and the tone of conversations with data center customers.

Answer

Chief Financial Officer Dan Tucker attributed the lower Q2 guidance to a significant year-over-year weather differential and the timing of a large, non-recurring transmission asset transaction that occurred in Q2 2024. Chairman, President and CEO Chris Womack confirmed that the tone from data center customers remains robust. Dan Tucker added that the Georgia pipeline is now 52 gigawatts, with 8 gigawatts committed, and noted a shift in interest to the more near-term 2028-2029 timeframe.

Carly Davenport inquired about the cadence of earnings growth within the 5-7% range, potential risks, and the composition of the $10-15 billion in upside capital investment opportunities.

Answer

CFO Dan Tucker explained that strong fundamentals are adding "durability" to the long-term growth outlook, with the potential to trend towards the top of the range. He noted a potential rebasing from a higher starting point could occur as early as 2027. Tucker also clarified that the upside capital is "substantially all Georgia Power" and dependent on ongoing regulatory processes for new generation, with more clarity expected around mid-year.

Carly Davenport inquired about the estimated $1.1 billion in storm costs from Hurricane Helene, asking about the deferral process, recovery timing in Georgia, and the development of the significant load growth pipeline ahead of the next IRP filing.

Answer

CFO Dan Tucker explained that all storm costs are being deferred and that the Georgia PSC has historically been constructive on timely recovery. He noted the company must still determine the split between capital and O&M costs. Regarding load growth, Tucker highlighted that committed load has more than doubled to 8 GW since the last filing, and CEO Chris Womack emphasized the orderly process in place to validate and price this new demand.

Carly Davenport of Goldman Sachs inquired about the expected timelines for projects to move through the large load pipeline and potential gating factors. She also asked about the customer bill impact from the recent PJM capacity auction and any resulting shifts in public discourse.

Answer

CFO Jeanne Jones outlined a confident load ramp timeline, with 10% of the pipeline expected online by 2028 and three-fourths by 2034. CEO Calvin Butler quantified the bill impact from the PJM auction as a $1.50 to $4.00 monthly increase across jurisdictions. Both executives noted a growing recognition that rising supply costs are the primary driver, underscoring the need for state regulators to embrace a portfolio of solutions, including energy efficiency, to ensure affordability.

Carly Davenport from Goldman Sachs requested color on the potential timelines for projects in the large load pipeline to progress and asked about the customer bill impact from the recent PJM capacity auction results, particularly for BGE customers.

Answer

CFO Jeanne Jones outlined the large load timeline, projecting 10% of the load to be online by 2028, one-third by 2030, and three-fourths by 2034. CEO Calvin Butler addressed the PJM auction's impact, estimating a $1.50 to $4 monthly bill increase across jurisdictions, with BGE customers seeing around a $1.50 increase. Both executives noted this underscores the need for states to adopt complementary solutions like energy efficiency and demand response to manage rising supply costs and improve affordability.

Carly Davenport of Goldman Sachs inquired about the conversion of the newly identified $15 billion in CapEx opportunities into the base plan, including potential timing and regulatory risks. She also asked for an update on Xcel's turbine procurement position for the planned gas generation in its SPS resource plan.

Answer

EVP & CFO Brian Van Abel explained that while the regulatory process for the SPS RFP is in its early stages, they will provide a transparent update in Q3. Chairman, President, & CEO Robert Frenzel added that the incremental need is definite and driven by reliability and growth. Regarding turbines, Mr. Frenzel confirmed they have 19 reservation slots, with nine needed for the SPS portfolio, positioning them well. Mr. Van Abel noted this was a result of proactive engagement with OEMs.

Carly Davenport from Goldman Sachs inquired about the timeline for vendor discussions to mitigate the 2-3% tariff exposure on the capital plan. She also asked about potential risks that could cause the Smokehouse Creek fire liability estimate to increase.

Answer

CFO Brian Van Abel stated that discussions with vendors are ongoing and that the company has been proactive, including signing agreements with nine different transformer suppliers to diversify its supply base. Regarding the Smokehouse Creek fire, he noted constructive progress, with 151 of 225 claims resolved. He explained the liability increase to $290 million was due to settling previously excluded categories like railroad and tree damage claims, but emphasized the total remains well below their $500 million insurance coverage.

Carly Davenport inquired whether new data center contracts would be publicly announced and asked about the likelihood of reaching settlements in the Colorado wildfire and Texas resiliency plan proceedings.

Answer

An unnamed executive noted that announcements for new data centers depend on the counterparty and potential state or local economic development interest. CFO Brian Van Abel expressed hope for reaching a settlement in the Texas resiliency proceeding, citing peer precedents, and stated they will engage in settlement discussions in Colorado ahead of the mid-April deadline.

Carly Davenport sought clarification on the relationship between the $6 billion capital plan increase and the 40-basis-point increase in the rate base CAGR. She also asked for more granularity on the timing of the 5% load growth forecast, which was described as back-end loaded.

Answer

EVP and CFO Brian Van Abel clarified that the relationship between CapEx and rate base growth was a straightforward function of rolling the plan forward with a larger base. He detailed the load growth trajectory, starting with 3% guidance for 2025 and ramping to 5-8% in later years, peaking around 2028. He emphasized the growth is diversified, with half from data centers and the remainder from the oil and gas sector and beneficial electrification.

Carly Davenport sought an update on the Microsoft data center's activity and growth potential beyond the current plan. She also questioned the feasibility of meeting the 2027 power delivery timeline for the Vantage project given market tightness and supply chain constraints.

Answer

President and CEO Scott Lauber confirmed significant construction activity at the main Microsoft site and noted their additional land holdings suggest future growth opportunities. Regarding Vantage, Lauber expressed confidence in meeting the 2027 timeline, stating that the company has been planning for this for a while and is actively executing a plan to deliver the required load, with more details to come.

Carly Davenport from Goldman Sachs asked about conversations with large load customers outside the data center industry and for any new insights on the future of gas in Illinois following recent workshops.

Answer

Executive Scott Lauber noted that non-data center customers are currently cautious due to tariff uncertainty, but major projects are still progressing. CFO Xia Liu added that 10 of 16 industrial sectors showed positive growth. On the Illinois gas topic, Scott Lauber stated he has not seen anything from the workshops that would negatively alter the positive momentum for gas infrastructure investment.

Carly Davenport of Goldman Sachs inquired about the company's perspective on transmission opportunities through American Transmission Company (ATC), particularly concerning the increasing size of MISO Tranche 2.

Answer

President and CEO Scott Lauber responded that he expects MISO Tranche 2 to be proportionally larger for ATC than Tranche 1, though spending is not expected until 2030 or later. He emphasized that the more immediate growth drivers for ATC are regional economic development and the integration of renewables in Wisconsin, which were larger factors than Tranche 1 in the last capital plan update.

Inquired about the nature of the macroeconomic uncertainty affecting the Port Arthur Phase 2 LNG project and asked for an estimate of the potential earnings and capital plan exposure from tariffs.

Answer

The company remains on target for a 2025 FID on Port Arthur Phase 2, but managing cost risks and returns will take precedence over timing. Tariff impacts are considered minimal and within guidance, with direct exposure on planned utility capital expenditures at only 2-3% and Sempra Infrastructure projects having limited exposure due to domestic sourcing and use of foreign trade zones.

Asked about the potential implications of the U.S. election on the Inflation Reduction Act (IRA) and whether the recent acceleration in wind project additions signals an inflection in demand for that technology.

Answer

The company expressed strong confidence that the IRA credits will remain in place regardless of the election outcome, citing bipartisan benefits like job creation and investment in Republican-leaning states. On wind demand, they noted that while the recent additions were positive, origination is inherently lumpy, but they remain optimistic about wind's long-term potential.

Asked about the financial implications of the changing technology mix in the backlog (more solar/storage, less wind) and for expectations on overall U.S. power demand growth beyond data centers.

Answer

The company is comfortable with its financial guidance despite the shifting technology mix, as returns remain attractive across all technologies (mid-teens for solar, >20% for wind/storage). The shift is partly due to the IRA. More detailed expectations on overall load growth will be shared at the investor conference, but they see strong, long-term demand drivers.