David Arcaro

David Arcaro inquired about the data center pipeline, asking if these projects are larger than the current backlog, if demand is primarily U.S.-heavy, and what durations are being explored. He also asked about the drivers behind the strong order intake in the past quarter, seeking clarification if it was related to data center growth or other factors.

Answer

President and CEO Julian Nebreda indicated that data center projects are generally in line with current backlog sizes, not inherently larger. He noted that the majority of current data center demand originates from the U.S., with some development in APEC and Europe lagging. Project durations vary from two hours to long-duration storage, depending on the use case. He clarified that the strong Q4 order intake was primarily driven by delayed deals in Australia from fiscal year 2025, with the U.S. expected to be the main driver for fiscal year 2026, potentially including some data center orders late in the year.

David Arcaro inquired if the data center pipeline involves larger project sizes, is U.S.-heavy, and what durations are being explored. He also asked about the common drivers behind the strong order intake in the past quarter.

Answer

President and CEO Julian Nebreda stated that data center project sizes are generally in line with the current backlog, with demand primarily from the U.S., some from APEC, and Europe lagging. Durations vary from two hours to long-duration storage. He identified Australia as the main driver for the strong order intake in the past quarter, due to delayed 2025 deals being signed, with the U.S. expected to drive 2026 orders.

David Arcaro from Morgan Stanley questioned the U.S. demand trajectory following recent legislation and whether solar-related executive order uncertainty was affecting battery bookings. He also requested details on the manufacturing ramp-up issues at the Arizona facility.

Answer

President and CEO Julian Nebreda stated that U.S. market activity is picking up, with all previously halted contracts now reactivated for 2026 revenue. He noted current projects are mature and not impacted by executive order uncertainty. Regarding manufacturing, Nebreda described the issues as "typical ramp-up issues" related to technology transfer, which are now under control but will shift approximately $100 million in revenue to fiscal 2026.

David Arcaro inquired about Constellation's demand response efforts, specifically progress with data center willingness to participate and updates across different markets. He also asked about the competitive landscape and trends in retail margins within PJM.

Answer

President and CEO Joe Dominguez discussed the technical capability for flexibility from data centers (DCFlex), noting its meaningful impact at the margins. He highlighted Constellation's exploration of AI to engage other customers in providing demand response during peak hours. EVP and Chief Commercial Officer Jim McHugh added that Constellation is partnering with Grid Beyond and seeing strong interest from industrial customers for longer-term demand response commitments with floor pricing. He noted the pipeline is robust, targeting 1,000 MW, which, in terms of electric load carrying capacity, is equivalent to a new nuclear plant. Regarding retail margins, Mr. McHugh stated they are at the upper end of the company's historical range. While wholesale load auctions have become more competitive, margins remain stronger than historical averages, with sustainability products offering even better margins than pure commodity sales.

David Arcaro asked for an update on Constellation's demand response efforts, specifically regarding data center willingness to participate and the initiative's progress across different markets. He also inquired about retail margins in PJM and whether Constellation is observing increased competitiveness.

Answer

President and CEO Joe Dominguez discussed the technical capability for data center flexibility (DC Flex) but noted its impact would be at the margins. He then explained the strategy to use AI to attract other customers to provide demand response during peak hours, acting as a middleman. Executive Vice President and Chief Commercial Officer Jim McHugh added that they are partnering with Grid Beyond for execution and seeing strong interest from industrial customers for longer-term demand response commitments with favorable pricing. He highlighted the goal of securing 1,000 megawatts, equivalent to a new nuclear plant's electric load carrying capacity. Regarding retail margins, Mr. McHugh stated they are at the upper end of the historical range, with wholesale load auctions seeing new participants and increased competitiveness, though still above historical averages. He also noted stronger margins from sustainability products.

David Arcaro of Morgan Stanley asked about the direction of pricing in current data center deal discussions and the balance of customer interest between front-of-the-meter virtual deals versus co-located, on-site data centers.

Answer

President & CEO Joseph Dominguez stated that increasing scarcity of power resources should lead to rising prices, advising customers to engage in discussions now. He clarified that while most large deals will be 'approximately located' near power infrastructure, all deals currently being worked on are front-of-the-meter due to regulatory ambiguity at FERC. He also highlighted the post-Calpine advantage of pairing gas plant interconnections with a 24/7 clean nuclear energy product.

David Arcaro of Morgan Stanley asked about the pricing trends in recent data center deal discussions given higher capacity prices and strong demand. He also questioned the level of customer interest in different deal structures, such as front-of-the-meter versus co-located on-site data centers.

Answer

President & CEO Joseph Dominguez indicated that increasing scarcity and rising costs for all generation types suggest that prices for long-term power agreements will continue to rise. He clarified that due to regulatory ambiguity at FERC, current deals are structured as 'front of the meter'. However, he emphasized the immense long-term value of land around their plants for co-location, especially when paired with gas assets from the pending Calpine acquisition to offer a unique firm, clean energy product.

David Arcaro questioned if the behind-the-meter opportunity is diminishing as discussions shift to front-of-the-meter, or if significant interest is merely awaiting FERC clarity. He also asked for a synthesized view on power prices, considering data center demand, supply challenges, and the role of demand response.

Answer

President and CEO Joe Dominguez explained that while customers have pivoted to on-grid deals for speed, the logic for behind-the-meter configurations remains strong for the largest data centers. On power prices, he emphasized that the grid is underutilized most of the time and that tools like demand response and flexible load management can handle peak hours, making the next 5-7 years manageable without significant price pressure from overbuilding generation.

David Arcaro of Morgan Stanley asked for the perspective from hyperscale customers regarding their urgency, concerns about PJM regulations, and commitment to the region. He also questioned the risk of major market changes in PJM, such as reregulation or subsidized generation.

Answer

President and CEO Joe Dominguez responded that hyperscalers have few better options than PJM, as the power challenge is universal ("there's no Nervana out there"). He asserted they will not wait a decade for new plants and transmission, making existing assets in competitive markets like PJM attractive. On broader market changes, Dominguez expressed skepticism, noting that while such talk has occurred for 20 years, the most realistic path forward is to let the recently reformed capacity market work and provide the right price signals.

David Arcaro inquired whether the PJM auction results increased the urgency for data center colocation deals and asked about contracting structures for dual-unit nuclear plants, specifically if one unit would always serve as a backup.

Answer

CEO Joseph Dominguez confirmed the auction results increase urgency for both behind-the-meter and on-grid power deals due to the tightening market. Regarding plant configurations, he explained that while dual-unit sites are a natural starting point for reliability, the structure depends on the data center's specific needs. He noted that various configurations are possible as the industry is still in the early stages of developing all potential use cases.

David Arcara requested an update on other data center contracting opportunities that were previously suggested to materialize by year-end, asking about the timeframe, and whether they lean towards nuclear versus gas or PJM versus ERCOT. He also asked about further opportunities at the Comanche Peak site, including prospects for contracting the second unit and involvement in other site infrastructure.

Answer

Jim Burke, President and CEO, Vistra Corp, stated that the exact timing for data center contracts is hard to predict due to their complexity and approval processes, but possibilities exist, with some contracts closer to execution and others in longer development cycles. He noted the highest activity levels and a sense of urgency from both sides, aiming for execution by year-end or shortly thereafter for 10-20 year deals. Regarding Comanche Peak, Mr. Burke expressed hope for expanding the agreement, noting customer interest in the second unit and potential uprates. He emphasized the importance of successfully executing the first 1,200 MW agreement for Texas stakeholders, viewing it as a relationship that will create multiple future opportunities.

David Arcaro from Morgan Stanley inquired about the progress and potential timing of the Comanche Peak data center deal, asking about any gating factors, particularly regarding Texas policy like SB6 and the regulatory approval process.

Answer

President & CEO Jim Burke stated that while he couldn't pre-announce a deal, he feels 'very good' about where things stand. He emphasized the complexity of such deals and the focus on getting the right terms, not just price. Burke clarified that the project is already in the ERCOT interconnect process and believes it meets existing requirements. He does not view the new SB6 process as a gating item, noting a deal signed before September 1 would not be subject to it, but feels confident the project would meet any new requirements regardless.

David Arcaro asked about the outlook for power prices, considering Vistra's strategy to better utilize its existing fleet and demand response. He also inquired about the time spent in Washington D.C. and the key messages Vistra is delivering to differentiate the IPP business model from regulated utilities.

Answer

President and CEO James Burke stated that in his view, forward power curves do not yet fully reflect the potential data center demand growth. He emphasized that utilizing demand response and backup generation should occur in higher-priced environments, which is a sign of a healthy market. Burke confirmed he spends significant time in D.C. advocating for competitive markets, where shareholder capital is at risk, and highlighting the efficiency of using the existing grid to serve new load growth.

David Arcaro inquired about the level of interest for data center co-location at Vistra's gas plants in ERCOT, whether Vistra is in discussions to build new power plants for data centers, and if the FERC ruling in PJM has increased the urgency or attractiveness of a deal at Comanche Peak.

Answer

Head of Strategy Stacy Dore explained that Vistra is pursuing deals at multiple nuclear and gas sites, including portfolio approaches and new generation builds. She confirmed deep discussions for nuclear sites and early talks for gas sites in both PJM and ERCOT. Dore noted that Comanche Peak was already attractive due to ERCOT's faster interconnection process, and the FERC ruling has only reinforced this advantage, though deal timelines remain long and complex.

David Arcaro asked for an update on the outlook for new generation builds in ERCOT, including the potential impact of the Texas Energy Fund (TEF) and whether current forward power prices are high enough to justify the economics of new projects.

Answer

James Burke, President and CEO, responded that current forward curves make newbuild projects in ERCOT economically challenging. He noted that while the TEF provides helpful low-cost financing, it is insufficient on its own. He stressed that key market reforms, like the Performance Credit Mechanism (PCM), are essential to provide the revenue certainty needed to attract equity capital for new gas generation.

David Arcaro from Morgan Stanley asked about the factors driving NRG Energy's increased pricing expectations for data center power agreements to above $80 per megawatt-hour, including whether the upper end of the prior range would also increase. He also inquired about the retail competitive landscape and the outlook for retail margins, particularly their sustainability.

Answer

Larry Coben, Chair, President, and CEO, attributed the upward pricing to increasing demand from hyperscalers, NRG's unique commercial supply capabilities, and heightened interest from developers, reflecting basic supply and demand principles. Brad Bentley, EVP, noted strong retail margins in Texas due to the competitive market and rising prices, while acknowledging some margin erosion in the East due to "price to compare" dynamics. Mr. Bentley highlighted NRG's strategy to offer integrated value propositions, including energy management and home automation, to differentiate beyond price.

David Arcaro asked about the drivers behind the increased data center power agreement pricing target (above $80/MWh), whether the upper end of the prior range also increased, and the outlook for retail competitive backdrop and margins.

Answer

Larry Coben, Chair, President, and CEO of NRG Energy, attributed the higher pricing to increasing demand, rapid hyperscaler capital expenditure, and NRG's unique commercial capabilities, effectively raising both the floor and ceiling of the target range. Brad Bentley, EVP, noted strong retail margins in Texas but some erosion in the East, where NRG is focusing on integrated value propositions beyond price.

David Arcaro of Morgan Stanley sought clarification on the data center agreement's margin structure, asking if it was fixed or indexed. He also inquired about market interest in 'additionality' (new generation) for data centers and asked for an outlook on Texas power prices.

Answer

Chairman, CEO and President Larry Coben confirmed the contract's margin is well-protected over its term using proprietary methods and that there is strong market appetite for new generation. EVP & President of Business & Wholesale Operations Robert Gaudette added that while off-peak prices are rising, he sees significant further upside in Texas forward power curves as data center load materializes.

David Arcaro of Morgan Stanley asked for a high-level view on the post-acquisition portfolio balance, the potential EBITDA uplift if marked-to-market, the company's sensitivity to PJM capacity prices, and whether free cash flow would revert to the 80/20 allocation framework after deleveraging.

Answer

Chair, President and CEO Lawrence Coben expressed that management is 'really quite pleased' with the new portfolio balance and confirmed the plan is to revert to the 80/20 capital allocation framework after the deleveraging period. CFO Bruce Chung clarified that the acquired portfolio's gross margin is roughly 55% energy and 45% capacity, mitigating some sensitivity to capacity auctions due to efficient CCGTs.

David Arcaro inquired about the readiness of NRG's development sites, specifically whether they have transmission access in place or still face lengthy grid studies. He also asked if a specific project or offtaker was already attached to the 1.2 GW GE Vernova turbine order and whether NRG was detecting any hesitation from data center clients due to market jitters or Texas-specific concerns.

Answer

Robert Gaudette, Head of NRG Business, clarified that while all sites require interconnect studies, the process in Texas is faster than turbine delivery and is further expedited by existing on-site equipment. Lawrence Coben, Chair, President and CEO, stated that while no offtaker is signed for the 1.2 GW yet, they have a 'pretty good line of sight' and are seeing the opposite of hesitation, with more potential partners 'beating down our doors' for power.

David Arcaro of Morgan Stanley asked about the potential for organic growth in the retail energy business, particularly from residential customer growth and new data center load in Texas, which he noted was not explicitly detailed in the EBITDA growth plan. He also inquired if data centers are actively seeking retail contracts.

Answer

CFO Bruce Chung explained that with a nearly 40% residential market share in Texas, the primary growth strategy is expanding share of wallet with existing customers via new bundles, rather than focusing solely on customer count growth. An executive, likely Robert Gaudette, confirmed that data centers are approaching NRG for long-term contracts and that the tightening market is creating a 'flight to quality' among all C&I customers, which benefits NRG's advanced service offerings.

David Arcaro asked about the maximum new load Oncor could connect by 2030, focusing on data center activity and the potential for further load growth, and also questioned Sempra's position for achieving 2025 guidance and opportunities to pull forward expenses or initiatives for 2026 earnings.

Answer

Jeff Martin, Chairman and CEO of Sempra, and Allen Nye, CEO of Oncor, explained that the CapEx increase is driven by transmission acceleration, not solely load growth. Oncor's system peaks at 31 GW, with line of sight to 39 GW, effectively doubling load by decade-end. Allen detailed over 600 active requests, 210 GW of data center load, and 19 GW signed via an interim FEA process, with collateral increasing to $2.7 billion. Jeff Martin affirmed 2025 guidance, expecting to finish in the upper half, and reaffirmed 2026 guidance, with plans to review 2026/2027 guidance in February.

David Arcaro inquired about the maximum new load Oncor could connect by 2030, specifically regarding data center activity and how additional load growth could be integrated. He also asked about Sempra's position for achieving 2025 guidance and opportunities for the 2026 earnings outlook.

Answer

Jeff Martin (Chairman and CEO, Sempra) clarified that the CapEx increase is driven by transmission acceleration, not solely load growth, but confirmed strong load growth. Allen Nye (CEO, Oncor) detailed over 600 active requests, 210 GW of data load, and 19 GW signed under an interim FEA process, with collateral held increasing to $2.7 billion. Jeff Martin affirmed 2025 guidance, expecting to finish in the upper half, and reaffirmed 2026 guidance, with a full review planned for February.

David Arcaro of Morgan Stanley requested an update on the LNG market and contracting for Port Arthur Phase II, and asked for clarification on the growth of Oncor's 'high confidence' data center pipeline.

Answer

Sempra Infrastructure CEO Justin Bird described a very bullish outlook for U.S. LNG, driven by European energy security needs and growing demand in Asia, which supports both Gulf and Pacific coast assets. Regarding Texas, Oncor CEO Allen Nye clarified that the 'high confidence' load figures are only updated annually with ERCOT and do not represent a cap on connection capacity. Chairman, President & CEO Jeffrey Martin added that Oncor's total interconnection queue exceeds 200 GW, against a current peak load of 31 GW, indicating a massive growth runway.

David Arcaro asked if there is a specific crossover point in the plan where EPS growth will catch up to the prior 6-8% trajectory. He also inquired about the potential impacts from the current legislative sessions in both Texas and California, particularly concerning utility financial profiles and wildfire funding mechanisms.

Answer

CEO Jeffery Martin declined to specify a crossover point, focusing instead on the company's raised long-term growth outlook. Oncor CEO Allen Nye detailed unprecedented load growth in Texas and discussed legislative items related to cost allocation and utility balance sheet support. For California, Martin expressed confidence in the existing AB 1054 wildfire fund framework but noted ongoing discussions about potential enhancements, while emphasizing SDG&E's strong operational safety record.

David Arcaro inquired about the probability weighting of the 47 GW large load pipeline presented on slide 13 and the typical 'time to connect' for new data center projects within Exelon's service territories.

Answer

Jeanne Jones, CFO of Exelon, clarified that the 47 GW pipeline is real, with projects moving to 'highly probable' after a cluster study and TSA signing, which provides greater certainty. Calvin Butler, President and CEO of Exelon, added that this process helps eliminate double-counting. Mike Innocenzo, COO of Exelon, explained that connection time varies but efforts are made to shorten it by leveraging existing capacity and infrastructure, citing the North Point One example.

David Arcaro sought clarification on the probability weighting of the 47-gigawatt large load pipeline presented on slide 13, asking if projects were less likely to move forward or simply a matter of timing. He also inquired about the typical 'time to connect' for new data center projects entering the cluster study process.

Answer

Jeanne Jones, CFO of Exelon, clarified that it's primarily a matter of timing, detailing the two-step process of cluster studies and TSA agreements for moving projects to 'highly probable.' Calvin Butler, President and CEO of Exelon, added that this process helps eliminate double counting. Mike Innocenzo, COO of Exelon, and Calvin Butler explained that connection time 'depends' on various factors, highlighting efforts to expedite connections through existing infrastructure and strategic customer engagement.

David Arcaro from Morgan Stanley asked about Exelon's willingness to build regulated or contracted generation and for an update on the progress of data center discussions, including industry reactions to the new large load tariffs being proposed.

Answer

CEO Calvin Butler gave a direct 'yes' to considering regulated generation, stressing that the policy must provide certainty, state control, and customer benefits. CFO Jeanne Jones added that half of PJM states already use a hybrid model. Regarding data centers, COO Michael Innocenzo reported active cluster studies in Illinois and the Mid-Atlantic with results expected in Q3/Q4. Jones also mentioned ComEd's recent tariff filing, which aims to balance new customer needs with protections for the existing customer base.

David Arcaro from Morgan Stanley asked about Exelon's willingness to build regulated or contracted generation, similar to its peers, and sought an update on the progress of data center discussions, including timelines and industry reaction to new large load tariffs.

Answer

CEO Calvin Butler responded with a direct "yes" to considering regulated generation, provided that policy ensures certainty, state control, and customer benefits. CFO Jeanne Jones added that this regulated path offers states a clear advantage. Regarding data centers, COO Michael Innocenzo noted active cluster studies in Illinois and the Mid-Atlantic, with announcements expected in Q3/Q4. CFO Jeanne Jones mentioned ComEd has filed tariff changes to manage this new load while protecting existing customers.

David Arcaro of Morgan Stanley asked for the expected timing of the data center load ramp-up within the forecast period and inquired about any potential infrastructure limitations. He also questioned how Exelon is managing customer affordability challenges, particularly with rising PJM capacity prices.

Answer

CFO Jeanne Jones provided a timeline for the 16 GW data center load, projecting 10% online by 2028, one-third by 2030, and three-quarters by 2034. President and CEO Calvin Butler added that a centralized customer strategy group works with developers to identify suitable sites and meet timelines. On affordability, Butler acknowledged it as a primary concern, detailing proactive measures such as promoting energy efficiency, offering payment assistance, suspending disconnections, and engaging with communities and state governments on solutions.

David Arcaro asked about the timeframe for the recently secured 4.5 GW of power equipment and whether Entergy is actively pursuing additional gas turbine supply. He also sought Entergy's latest perspective on expanding nuclear capacity within its service territory, including any impacts from recent Westinghouse and U.S. government announcements.

Answer

Drew Marsh, Chair and CEO, stated the 4.5 GW of additional units are slated for commercial operations in 2031-2032, currently matching anticipated customer needs, but further procurement is possible if growth continues. He also mentioned exploring new nuclear, solar/battery, and system upgrades. Regarding nuclear, Drew Marsh, Chair and CEO, expressed excitement about industry investments to manage construction risk, applauding recent developments. He confirmed strong stakeholder interest in new nuclear across Entergy's states and ongoing active exploration, though no specific solution has been identified.

David Arcaro inquired about the key drivers behind the increased operating cash flow outlook and asked about expectations for the upcoming Arkansas rate case, specifically regarding potential changes to the formula rate plan.

Answer

CFO Kimberly Fontan identified the main drivers for higher operating cash flow as the new Arkansas infrastructure rider and the monetization of 2024 nuclear production tax credits. Chair and CEO Drew Marsh noted that while it's early to discuss the Arkansas rate case, the existing formula rate plan has been successful and will serve as a starting point for future proposals.

David Arcaro asked about the timeline for connecting new large load customers and sought clarification on whether the recently discussed tariff exposure would impact earnings.

Answer

CEO Drew Marsh explained that new large customers are being accommodated toward the back end of the planning period, around 2028-2029, due to the time required to build out infrastructure. CFO Kimberly Fontan clarified that the tariff exposure is mostly in 2027-2028 and tied to new generation, providing time to mitigate impacts through alternative sourcing, and is considered manageable with no real earnings effect expected.

David Arcaro questioned the time-to-market Entergy can offer new data center customers and the current availability of system capacity. He also sought color on the availability and pricing trends for gas turbine production slots.

Answer

CFO Kimberly Fontan stated that timelines are customer-specific but are supported by strong partnerships for equipment and labor. CEO Andrew Marsh confirmed that critical equipment, including turbines, has been secured for all announced projects with additional capacity lined up. He acknowledged the equipment market is tighter and more expensive than 18 months ago but said it has not materially altered their plans.

David Arcaro inquired about AEP's generation strategy for vertically integrated utilities, specifically how the company balances renewables versus natural gas to serve new load and meet peak demand.

Answer

Bill Fehrman, Chair, President and CEO, stated that AEP focuses on aligning with state energy policies and customer preferences, typically sorted out through integrated resource plans. He noted that major states are currently gas-driven but acknowledged significant customer interest in renewables, with over $7 billion in the capital plan for renewable deployment. Fehrman emphasized AEP's capability to deliver a balanced approach.

David Arcaro asked about the progress of conversations with data centers, system constraints, and AEP's ability to meet transmission capacity needs. He also inquired about wait times for connections and whether the new transmission CapEx opens additional capacity. Additionally, he asked about AEP's generation strategy for vertically integrated utilities, specifically the balance between renewables and gas to serve new load.

Answer

Bill Fehrman, Chair, President and CEO, expressed excitement about AEP's position, noting the 28 GW incremental load (80% data centers, 20% industrials), with 75% tied to T&D and 25% to vertically integrated utilities. He explained that AEP works with customers to site where transmission is available or to implement behind-the-meter solutions, and that building out the transmission system will open more opportunities from the 190 GW of customer interest. Fehrman highlighted AEP's competitive advantage with its 765 kV transmission network. Regarding generation, he stated AEP focuses on aligning with state energy policies and integrated resource plans, noting that major states are currently gas-driven, but AEP has over $7 billion in its capital plan for renewables to support customer interest, aiming for a balanced approach.

David Arcaro of Morgan Stanley questioned if the significant, repeated increases in the CapEx plan represent a new normal and asked for color on the geographic concentration and connection wait times for new data center load.

Answer

EVP & CFO Trevor Mihalik attributed the CapEx growth to the massive load demand, citing 24 GW of signed commitments and 190 GW in the queue. President & CEO William J. Fehrman added that data center wait times can be 5-7 years, but AEP is using innovative solutions like fuel cells to bridge the gap and is directing customers to areas with available capacity.

David Arcaro sought clarification on the Generation & Marketing (G&M) segment's earnings contribution in 2026 and asked for details on the new generation capital expenditures, including the fuel type, location, and timing.

Answer

EVP and CFO Chuck Zebula clarified that the G&M segment will still contribute positively to earnings in 2026 and beyond. President and CEO William Fehrman added that new generation will include significant gas capacity, with RFPs currently underway at I&M, and other opportunities are being explored in states like West Virginia.

David Arcaro sought clarification on the G&M segment's earnings contribution in 2026 and asked for details on the new generation CapEx, including its type, location, and timing.

Answer

CFO Charles Zebula clarified that the G&M segment will continue to contribute to earnings in 2026 and beyond. CEO William Fehrman added that much of the new generation is gas, with RFPs underway at I&M, and that further opportunities are being evaluated in states like West Virginia.

David Arcaro asked about the accelerating pace of Bloom Energy's commercial activity, particularly regarding new agreements and market demand. He also inquired about the competitive landscape for data center power solutions, comparing Bloom's technology to emerging alternatives like small-scale gas turbines and engines.

Answer

K.R. Sridhar, Founder, Chairman, and CEO of Bloom Energy, confirmed that commercial momentum is accelerating across both AI and traditional commercial/industrial segments. He noted that while the supply-demand mismatch creates a market for various solutions, Bloom's fuel cells are purpose-built for data centers, offering advantages such as no air pollution, solid-state power without batteries, faster deployment, and future-proofing for DC power and carbon capture. Sridhar emphasized Bloom's superior price-to-performance ratio, enabling hyperscalers to produce more 'tokens' with the same gas and space.

David Arcaro from Morgan Stanley inquired about the accelerating pace of Bloom Energy's commercial activity, particularly regarding future agreements and overall market demand. He also asked about the competitive landscape, specifically how Bloom's fuel cell technology compares to emerging solutions like small-scale gas turbines and engines in the data center market.

Answer

K.R. Sridhar, Founder, Chairman, and CEO of Bloom Energy, stated that commercial momentum is robust and accelerating across AI and traditional commercial industrial segments. He emphasized that Bloom's technology, purpose-built for data centers, offers significant advantages over competitors, including zero air pollution, solid-state power without battery reliance, faster deployment, future-proofing capabilities (DC power, carbon capture), and superior power output per unit of gas and space, leading to a better price-performance ratio.

David Arcaro of Morgan Stanley inquired about the specifics of recent hyperscaler deals, like the Oracle partnership, and the drivers behind the decision to double production capacity.

Answer

KR Sridhar, Founder, Chairman & CEO, detailed that the Oracle deal involves providing an islanded, primary, load-following power source for an AI data center, with a 90-day deployment timeline. He stated the confidence to double capacity stems from a robust pipeline and the massive, secular power demand from the AI industry, which the existing grid infrastructure cannot service quickly enough.

David Caro asked about the interaction between renewables and data centers, specifically the typical percentage of power needs covered by renewables, colocation opportunities, and the role of battery storage in these designs. He also inquired about the trajectory of project returns and the potential for higher returns moving forward.

Answer

John Ketchum, Chairman, President, and CEO of NextEra Energy Inc., explained that data centers seek immediate load interconnects, often requiring them to bring their own generation. NextEra Energy can facilitate this with renewables, storage, or grid line upgrades for initial phases, with baseload generation following. He noted that combining a comprehensive solution with a trusted partner is key. Mr. Ketchum stated that project returns are higher than ever due to unique competitive advantages and supply/demand dynamics, leading to higher premiums and attractive returns, especially for re-contracting existing generation.

David Arcaro of Morgan Stanley asked if NextEra is currently booking projects for 2029 and including contingencies for tax credit risks, and whether any discussions are occurring for 2030 projects in a potential no-tax-credit environment.

Answer

John Ketchum, President, CEO & Chairman, confirmed they feel good about their 2029 project pipeline and that contracts include limited protections for tax and trade issues. He noted that it is still too early for substantive discussions about 2030, as customers are primarily focused on meeting their immediate power needs through 2029.

David Arcaro asked about NextEra's contingency financing plan if tax credit transferability were restricted and questioned the current demand trends for renewables from technology customers, particularly for data centers.

Answer

John Ketchum, Chairman, President and CEO, explained that if transferability were unavailable, the company would revert to its historical use of tax equity financing, a market where it has seen a 'flight to quality' with a doubling of providers seeking to partner with NextEra. He also confirmed that demand for renewables from tech and data center customers remains strong, as they are low-cost, readily deployable, and can serve as an offset for potential gas generation.

David Arcaro asked about the expected legislative buy-in for the SB 254 Phase 2 policy reform recommendations and the timeline for the undergrounding decision.

Answer

CEO Patti Poppe emphasized the Governor's 'whole-of-government' approach to wildfire, highlighting significant improvements from SB 254 Phase 1. She also stated the final recommendations for the 10-year undergrounding procedure were on the October 30th commission meeting agenda, reiterating PG&E's commitment to undergrounding in high-risk areas and its cost reduction efforts.

David Arcaro inquired about the likelihood of policy reform recommendations in April being pre-screened with the legislature and the status of the undergrounding decision.

Answer

Patti Poppe, CEO, provided extensive context on the benefits of SB 254 Phase 1, the Governor's executive order for Phase 2, and the ongoing process, stating it's too soon to predict specific outcomes or legislative buy-in. Regarding undergrounding, she noted the final recommendations for the 10-year procedure are on the October 30th commission meeting agenda, reiterated PG&E's advocacy for undergrounding in high-risk areas, and mentioned the 2027 GRC bridging strategy.

David Arcaro of Morgan Stanley asked if a recent proposed decision recommending lower wildfire mitigation CapEx for another utility could have a read-across to PG&E's General Rate Case (GRC) and capital priorities.

Answer

CEO Patti Poppe stated that PG&E remains committed to its wildfire mitigation plans and its 10-year undergrounding plan, which it will continue to advocate for. She emphasized that undergrounding is the most effective and affordable permanent solution for the highest-risk areas, ultimately costing customers less than the perpetual cycle of vegetation management and inspections.

David Arcaro of Morgan Stanley asked if a recent proposed decision for another utility recommending lower wildfire mitigation CapEx had any read-across for PG&E's General Rate Case (GRC) and capital priorities.

Answer

CEO Patti Poppe reaffirmed PG&E's commitment to its own wildfire mitigation strategy, including its 10-year undergrounding plan. She strongly advocated for undergrounding as the most effective and affordable permanent solution in high-risk areas, contrasting its one-time cost with the perpetual expense of vegetation management.

David Arcaro inquired about the status of conversations with rating agencies on the path to investment grade and whether shareholder contributions are part of the AB 1054 framework discussions.

Answer

CFO Carolyn Burke stated that rating agencies are awaiting the same policy signals as investors regarding AB 1054 and that favorable action is expected once that uncertainty is resolved, as financial metrics are already IG-aligned. CEO Patti Poppe asserted that PG&E continues to advocate against investor contributions to the fund, arguing it would raise the cost of capital and ultimately harm customer affordability.

David Arcaro followed up on the governor's affordability order, asking if PG&E might consider cost-cutting in specific wildfire safety programs. He also sought confirmation on whether future EPS growth guidance would be rebased off actual annual results.

Answer

CEO Patti Poppe clarified that the focus is on streamlining the regulatory process between safety and financial bodies, rather than cutting specific mitigation programs. CFO Carolyn Burke provided a direct confirmation, stating 'Absolutely' that future EPS guidance will be rebased off actual year-end results.

David Arcaro asked how the increased capital expenditure opportunities, particularly in transmission and West Virginia generation, would impact FirstEnergy's earnings growth outlook and the 6% to 8% range towards the end of the decade. He also sought an updated rule of thumb for increased transmission CapEx per gigawatt, given the strong data center pipeline activity.

Answer

Brian Tierney, Chair, President, and CEO, stated that these investments firm up confidence in achieving the 6% to 8% earnings per share growth range over the planning period, positioning FirstEnergy as a growth investment. Jon Taylor, Senior Vice President and Chief Financial Officer, estimated approximately $1 billion in CapEx associated with current contracted and active large load customers for transmission interconnection requests and network upgrades, noting that deployment varies by location and size.

David Arcaro asked about the impact of FirstEnergy's increased capital expenditure opportunities, particularly in transmission and potential West Virginia generation, on the company's earnings growth outlook and range towards the end of the decade. He also sought an updated rule of thumb for increased transmission CapEx per gigawatt, given the strong data center pipeline activity.

Answer

Brian Tierney, Chair, President, and CEO, stated that the increased CapEx firmly supports FirstEnergy's ability to achieve its 6%-8% earnings per share growth range over the planning period, providing strong confidence in this outlook. Jon Taylor, Senior Vice President and Chief Financial Officer, estimated that there is easily $1 billion of CapEx associated with current contracted and active large load customers for transmission interconnection requests and network upgrades, noting that this figure could vary in the future based on location and size.

David Arcaro questioned if there could be further upside to the transmission CapEx outlook beyond the 20% mentioned, given the rapid growth in data center demand. He also asked about progress on new capacity procurement frameworks in PJM states.

Answer

President, CEO & Chairman Brian Tierney acknowledged that further upside is possible as new customer contracts are signed and competitive windows open, but the company maintains a disciplined approach to its official plan. Regarding PJM, he pointed to an upcoming state-led technical conference as the critical venue for a solution, emphasizing that states, not the current auction construct, must drive the change.

David Arcaro asked for perspective on New Jersey's focus on cost efficiencies and affordability, and how the conversation around resource adequacy in the PJM market is evolving.

Answer

Brian Tierney, Chair, President and CEO, expressed shared concerns with regulators about rising capacity auction prices that don't add new dispatchable capacity. He noted FirstEnergy is working constructively to mitigate customer impacts. On resource adequacy, he suggested that reregulation is unlikely to succeed and that states taking individual action, similar to models in NY or TX, is the most probable path forward, applauding efforts by the governors of Pennsylvania and New Jersey.

David Arcaro requested more detail on the options being discussed to encourage new generation construction in PJM and asked when FirstEnergy might update its long-term load forecast given the recent surge in requests.

Answer

Executive Brian Tierney described potential solutions like state-run auctions for new dispatchable generation to provide more certainty than PJM's price signals. Executive Jon Taylor indicated that an updated long-term financial plan, including a revised load forecast, is planned for the fourth-quarter 2024 earnings call.

David Arcaro asked for GE Vernova's strategic perspective on modular power solutions, including aeroderivatives and smaller gas turbines, and whether they pose a long-term competitive threat to larger frame gas turbines or represent an opportunity for capacity expansion.

Answer

CEO Scott Strazik stated that while smaller modular applications like aeroderivatives serve as 'bridges' for near-term power needs, larger heavy-duty gas turbines will ultimately 'carry the day' long-term due to their superior economic efficiency for 20+ year business cases. He anticipates smaller solutions will eventually shift to providing backup power, replacing traditional diesel gen sets for customers like hyperscalers and data centers.

David Arcaro asked for GE Vernova's strategic thoughts on modular power, including aero-derivatives and smaller-scale solutions, and whether they pose a long-term competitive threat to larger frame gas turbines or represent an expansion opportunity.

Answer

CEO Scott Strazik stated that larger heavy-duty gas turbines will 'carry the day' long-term due to superior economic efficiency for 20+ year business cases. He acknowledged a near-term surge for smaller, less efficient modular applications as 'bridges' for immediate power needs, which will eventually shift to backup power, replacing diesel gen sets for hyperscalers and data centers. He sees these solutions as reliability support rather than a long-term competitive threat to larger frames.

Requested an update on the impact of tariffs on the business, whether it would affect gross margin targets, and the latest plans and partnership timeline for the Texas hydrogen facility.

Answer

Tariff impacts are minimal for the hydrogen and electrolyzer businesses but are over 10% for material handling, which is being offset by pricing. This will not derail the gross margin target. For the Texas facility, construction is planned to start by year-end, and the company is working with the DOE and expects to bring in a partner by mid-fourth quarter.

David Arcaro of Morgan Stanley inquired about the nature of discussions for contracting Talen's gas plants, particularly with upstream producers. He also asked what market signals are needed for strong forward demand forecasts to be reflected in PJM forward energy prices.

Answer

CEO Mac McFarland stated that as the market moves toward long-term contracts sourced from gas plants, the need for structured origination and hedging gas supply will increase, a skill set Talen is developing. CFO Terry Nutt and CCO Chris Morice added that while forward power markets lack liquidity further out, they are seeing a constructive trend with forward curves moving into contango, better reflecting tightening supply-demand fundamentals.

David Arcaro of Morgan Stanley inquired about the nature of discussions for contracting Talen's gas plants and what market catalysts are needed for strong demand forecasts to be reflected in forward PJM energy prices.

Answer

CEO Mac McFarland stated the company's strategy is shifting towards long-term structured origination, requiring sophisticated gas supply hedging for long-term power contracts. CFO Terry Nutt and CCO Chris Morice noted that while forward spark spreads are improving and curves are moving to contango, the long-dated power market lacks liquidity, and it will take time for fundamentals to be fully reflected.

David Arcaro of Morgan Stanley inquired about the intensity of Sunrun's cost-saving efforts, particularly regarding customer acquisition. He also asked for an update on the company's ability to manage fee provisions related to its storage supply chain.

Answer

CEO Mary Powell described a 'laser focus' on efficiency, leveraging AI to drive down costs with more opportunity ahead. CFO Danny Abajian added that post-installation servicing costs are also declining. President & CRO Paul Dickson stated they have a clear path to compliance on fee provisions through strong partner collaboration.

David Arcaro of Morgan Stanley inquired about the financial implications of Texas House Bill 4,384, specifically its effect on reducing regulatory lag, improving earned ROE, and whether the 2025 EPS impact is a full run-rate figure.

Answer

SVP & CFO Christopher Sighinolfi explained that the bill expands the deferral and accrual treatment to all capital expenditures in Texas, an increase from the previous 25% that qualified. He clarified that the impact reflected in the updated 2025 guidance is for the second half of the year, following the bill's enactment in June.

David Arcaro inquired about the financial impact of Texas House Bill 4,384, asking for details on how it reduces regulatory lag, improves earned ROE, and whether the 2025 EPS impact represents a full annual run-rate.

Answer

SVP & CFO Christopher Sighinolfi explained that House Bill 4,384 expands deferrals and accruals, previously limited to safety-related capital, to all capital expenditures in Texas. He noted this is additive to the company's plan and that the updated 2025 guidance reflects the bill's impact from its effective date of June 20th onward.

David Arcaro from Morgan Stanley inquired about the status of discussions on future generation in New Jersey, given the BPU's Resource Adequacy Conference, and asked for an update on the data center pipeline, particularly regarding interest in PSEG's nuclear sites.

Answer

Chair, President & CEO Ralph LaRossa stated that PSEG is advocating for clear state decisions on reliability, affordability, and environmental goals. EVP & CFO Daniel Cregg added that discussions for data centers near their nuclear assets in New Jersey and Pennsylvania are ongoing, but timing for any agreements remains undetermined.

David Arcaro of Morgan Stanley asked for a potential timeframe for announcing a co-location deal for a data center. He also inquired if the backlog of data center interest at the utility level is still growing and when PSEG might update its load growth outlook.

Answer

Ralph LaRossa, Chairman, President and CEO, declined to offer a specific timeline for a deal, emphasizing a thoughtful approach. He confirmed that interest remains robust, with leads and feasibility studies being two to three times the volume of firm requests. He reiterated that any updates to the CapEx plan and outlook would be provided at year-end.

Inquired about on-the-ground data center activity, potential upside to load growth forecasts, related T&D CapEx opportunities, and factors creating rate headroom for future investments.

Answer

PSEG is seeing initial data center interest (50-100 MW) and PJM has updated its load forecast, but the focus is more on the required infrastructure investment rather than sales volume due to the Conservation Incentive Program (CIP). Any new CapEx is expected to be within the existing plan's last-mile investments. Management doesn't view it as "headroom" but as maintaining affordability, noting the ZECs rolling off in 2025 will help offset future costs.

David Arcaro from Morgan Stanley inquired about the geographic trends driving the increase in CapEx offsets to 45% and asked for an update on the DOE loan's availability and recent discussions.

Answer

CEO Badar Khan explained that the higher capital offsets are driven by a diverse mix of state and utility grants from California, Florida, Ohio, and Pennsylvania, underscoring the strength of state-level incentives. Regarding the DOE loan, Khan stated the project is performing well but emphasized that EVgo is no longer reliant on a single financing source, thanks to a new commercial bank facility and 30C tax credit proceeds. He noted the DOE loan offers flexibility with no time limit on drawdowns within the five-year availability period.

David Arcaro inquired about the PPA bookings trajectory in July following recent policy announcements and asked if there has been an inflection point in renewable demand from data center customers.

Answer

COO Ricardo Falú responded that demand remains "extremely strong," with customers trying to lock in PPAs quickly to capture remaining tax credit benefits. He stated there has been no drop in demand from data centers; on the contrary, he emphasized that renewables offer the fastest time to power, price certainty, and a competitive cost per megawatt-hour, which continues to drive strong interest.

David Arcaro followed up on the AGIC insurance sale, asking about the strategic rationale for retaining control, and also questioned current renewable demand trends, specifically if there's any pull-forward from customers ahead of potential IRA changes.

Answer

CEO Andres Ricardo Gluski Weilert confirmed that AES intends to maintain control of its highly successful and strategic captive insurance business. On demand, Mr. Gluski stated that demand from data center customers remains strong, driven by 'time to power' needs which favors renewables, and that the company is not seeing any pull-forward behavior, though new contracts are incorporating provisions for potential legal or tariff changes.

David Arcaro asked for strategic context on the pullback in renewables capital expenditures, questioning if it's a temporary pause, and inquired about the profile of assets included in the updated asset sales target, especially with the decision to retain some coal assets longer.

Answer

CEO Andrés Gluski characterized the renewables strategy as a focus on executing the existing 12 GW backlog and 'harvesting' the developed pipeline, rather than a pause, leading to fewer new gigawatts but stable financial results. CFO Stephen Coughlin added that the asset sale plan still includes some coal exits and technology monetizations but now relies less on these sales, providing more execution flexibility.

David Arcaro of Morgan Stanley asked for details on the $200 million outperformance in tax credits, its origins, and the potential for future upside. He also inquired about how renewable project returns have been trending since the company raised its targets.

Answer

CFO Stephen Coughlin attributed the tax credit success to the company's expert tax and finance teams, who secured bonuses like the energy community adder and effectively monetized credits through transfers. He indicated potential for future upside. CEO Andres Gluski added that returns on newly signed projects have been trending towards the upper end of their increased target range.

David Arcaro asked about Enphase's plans for internal cost reductions, beyond product innovation, to prepare for the anticipated market changes in 2026, inquiring specifically about efforts to lower overhead and operating expenses.

Answer

President & CEO Badri Kothandaraman affirmed that continuously adjusting expenses is an ongoing process, not a one-time event. He explained that the company has consistently managed its cost structure in response to demand shifts over the past two years without compromising R&D or customer service. He noted that this includes scrutinizing both labor and non-labor expenses, such as software tools, and that Enphase will continue to adjust expenses as needed in response to market conditions.

Asked for details on Oncor's large customer interconnection queue, specifically the total gigawatts, the portion from data centers, and how much is considered advanced stage or likely to materialize.

Answer

Oncor's large customer queue contains 178 GW of requests, with 156 GW from data centers. The company has 'high confidence' in 29.5 GW of this load materializing by 2031, based on meeting specific development milestones. This high-confidence load alone would nearly double Oncor's current peak load.

David Arcaro inquired about potential mechanisms or trackers, such as capital trackers, that IDACORP might propose in its upcoming rate case to improve earned ROEs and reduce regulatory lag.

Answer

Tim Tatum, VP of Regulatory Affairs, confirmed that the company is considering various options to request commission help in reducing regulatory lag, though specific details are still being finalized. Brian Buckham, SVP, CFO and Treasurer, added that the recent Hells Canyon AFUDC filing is another measure aimed at improving cash flow and mitigating cash lag outside of the general rate case.

David Arcaro inquired about the possibility of shifting to a period-end rate base or using capital trackers to reduce regulatory lag, and asked for more details on the drivers of incremental load growth, particularly from data centers.

Answer

President and CEO Lisa Grow confirmed that all options to reduce regulatory lag are being explored, noting the commission is open to new mechanisms. CFO Brian Buckham added that a period-end rate base is not off the table for a future general rate case. Regarding load growth, Lisa Grow described it as a broad-based challenge, highlighting the Meta data center and strong interest from agriculture, mining, and healthcare. Executive Adam Richins also mentioned inquiries from the dairy, bio-digester, and general manufacturing sectors.

David Arcaro asked for feedback on how the modified data center rate structure in Georgia is being received by the industry and inquired about any emerging technology preferences in the ongoing competitive RFPs.

Answer

Chief Financial Officer Dan Tucker noted it is 'early days' for feedback as the detailed tariff framework was only finalized in mid-April. Chairman, President and CEO Chris Womack added that the framework provides valuable certainty and order, and that the customer pipeline has continued to grow. Regarding the RFPs, Dan Tucker stated they could not comment on the confidential process but highlighted that its 'all-source' nature provides the commission with a multitude of technology options.

David Arcaro asked about the availability and pricing of gas turbines and the projected trajectory for the company's FFO to debt metric to reach its 17% target.

Answer

CEO Chris Womack stated that the company feels 'pretty good' about its access to gas turbines due to diversified suppliers and its history with OEMs, though it is paying reservation fees. CFO Dan Tucker added that the 17% FFO to debt target is achievable in the 'middle to late part' of the 5-year plan, but noted the metric may be flattish in 2025 due to a lag in storm cost recovery.

David Arcaro questioned the role of tax credit transfers in DTE's financial plan and how the company would manage its outlook if transferability were to be altered or eliminated.

Answer

EVP and CFO David Ruud expressed confidence in the durability of IRA transferability, noting DTE used $230 million in 2024. He outlined mitigation strategies including safe-harbored projects through 2027, a pre-approved tax equity structure, and a strong balance sheet. Chairman and CEO Gerardo Norcia added that investments are driven by state mandates, and the IRA primarily provides an affordability tool.

David Arcaro from Morgan Stanley questioned the context behind the Administrative Law Judge's (ALJ) lower-than-expected ROE recommendation in the gas rate case and whether it signals a shift in the regulatory environment. He also asked about the growth trajectory for the voluntary renewables program.

Answer

President and COO Joi Harris expressed confidence in the gas rate case outcome, noting that the staff's position remains constructive and supportive of the capital plan, and highlighted that it was a new ALJ. Chairman and CEO Gerardo Norcia stated that the voluntary renewables program has already filled its 2,500 MW queue forecasted for the next four years and sees significant continued opportunity, with an update to come on the year-end call.

David Arcaro sought an update on the development of performance-based rates (PBR) in Michigan and asked for more color on the potential demand from the data center pipeline, as well as Michigan's attractiveness to these customers without new tax legislation.

Answer

CEO Gerardo Norcia explained that DTE is collaborating with commission staff on PBR, with alignment on customer-focused metrics, and is now working to establish consensus on targets and symmetry. He noted data center demand is in the 'thousands of megawatts' and that Michigan is already attractive due to its climate, water access, and available capacity, though the tax exemption would accelerate interest from hyperscalers.

David Arcaro asked if data centers are a target customer class for DTE Vantage's custom energy solutions and inquired about the electric rate case, specifically the Attorney General's comments and the potential for a settlement.

Answer

Chairman and CEO Gerardo Norcia confirmed both the utility and Vantage are pursuing data center opportunities, citing Michigan's favorable conditions. He noted significant interest is pending legislative approval of sales tax exemptions. President and CEO Joi Harris addressed the rate case, stating the AG's comments were expected and the case is primarily about capital investment for reliability and clean energy. She detailed the request's components, including a storm tracker. Norcia added that while they will try to settle, they are confident in a supportive outcome even if litigated.

David Arcaro requested more detail on current data center demand trends and asked for an update on potential contracting opportunities for the Millstone nuclear facility.

Answer

Robert Blue, Chair, President and CEO, reported that data center demand remains very high with no signs of a slowdown, as customers plan expansions well into the 2030s. Regarding Millstone, he mentioned legislative interest in Rhode Island but stated there was no new update on contracting, with the current contract running through August 2029.

David Arcaro asked for Dominion's interpretation of a recent executive order on offshore wind and its potential impact on CVOW. He also questioned why PJM's long-term forecast has not increased as dramatically as Dominion's data center pipeline, probing for potential connection constraints.

Answer

Chair, President & CEO Robert Blue expressed high confidence that the executive order would not impact CVOW, citing its advanced state with full permits, alignment with national energy goals, and strong bipartisan support. On data centers, Blue reiterated confidence that the demand will materialize. EVP & CFO Steven Ridge added that PJM's forecast is likely 'backward looking' and does not yet reflect the recent surge in Dominion's queue, which he described as a bullish sign for future regulated investment.

David Arcaro of Morgan Stanley asked for more detail on the proposed solutions for the ineffective weather mechanism in the Missouri rate case and inquired about the company's latest thinking on the likelihood of reaching a settlement.

Answer

CFO Adam Woodard stated that fixing the weather mechanism is a primary focus in the rate case. CEO Scott Doyle added that Spire has proposed several options, including decoupling and updating the weather time horizon. Regarding a settlement, Doyle noted it's early but the company is open to collaborative discussions, observing that the Missouri Public Service Commission appears to favor settlements.

David Arcaro asked for context on the size of the requested customer bill increase in the Missouri rate case and its potential future trend. He also inquired about current inflationary pressures on O&M and the company's confidence in keeping it flat.

Answer

EVP, COO, and acting CEO Scott Doyle noted the proposed $14 monthly bill increase is offset by a prior gas cost decrease, keeping average bills comparable to previous levels. EVP and CFO Adam Woodard acknowledged ongoing cost pressures but reaffirmed confidence in maintaining flat utility O&M for the fiscal year through diligent cost management.

David Arcaro of Morgan Stanley asked about potential balance sheet considerations from regulators or rating agencies when a probable loss is recognized and sought clarification on whether third-party estimates suggest the entire wildfire fund could be depleted.

Answer

CFO Maria Rigatti stated that any recognized loss would be offset by receivables or regulatory assets, grossing up the balance sheet without an earnings impact, which should satisfy regulators and rating agencies. President and CEO Pedro Pizarro clarified that while public damage estimates are significant, he has not seen any that suggest the full $21 billion fund would be exhausted, though a 'good quantum' could be used.

David Arcaro asked what specific legislative solutions Edison is advocating for to restore investor confidence and whether the company might pivot more capital back towards fire risk reduction.

Answer

CEO Pedro Pizarro stated that while it's early, discussions are focused on ensuring the long-term durability of the wildfire fund and its associated liability cap, suggesting levers like allowing the fund to scale or ensuring the cap persists regardless of the fund's status. Regarding capital, CFO Maria Rigatti and executive Steven Powell explained that capital allocation is always based on risk, and they will re-evaluate models post-fire. They noted that rebuilding in affected areas will inherently involve hardening, such as undergrounding, which serves both restoration and risk reduction goals.

David Arcaro asked about the potential timeframe for settlement discussions in the Woolsey proceeding and inquired about the regulatory process length and CapEx timing for the upcoming ERP and AMI filings.

Answer

EVP and CFO Maria Rigatti outlined the near-term Woolsey schedule, noting a scoping memo in early 2025 would define the full schedule, including any settlement conferences, and that the requested timeline is 18 months. She and President and CEO Pedro Pizarro confirmed the ERP and AMI regulatory processes would likely also take around 18 months, with CapEx spend occurring both within and beyond the current 4-year plan.

David Arcaro from Morgan Stanley sought to clarify if the 2-3% tariff impact estimate includes all renewables investments, specifically the recent AD/CVD ruling. He also asked about the cadence for updating the data center pipeline forecast.

Answer

CFO Brian Van Abel confirmed the 2-3% impact is on the base $45 billion capital plan and is considered manageable. He stated they do not expect any impact from the recent AD/CVD ruling, as they took steps with suppliers to mitigate this risk. Regarding the data center pipeline, he said they do not expect to update the 8,900 MW forecast until the Q3 earnings cycle, which is their normal cadence.

David Arcaro inquired about the future strategy for getting a storm recovery tracker approved and whether data center interest increased after Michigan passed new tax exemptions.

Answer

President and CEO Garrick Rochow stated that while past storm tracker proposals in rate cases were unsuccessful, the current strategy is a deferred accounting order for this specific historic storm, aligning with the Liberty audit's recommendations. He confirmed a significant shift in interest after the tax exemption, with the economic development pipeline growing to 9 gigawatts and flipping from 65% manufacturing to 65% data centers.

David Arcaro of Morgan Stanley sought more detail to build confidence in the large Texas load growth forecast, given market skepticism. He also asked if the 765 kV decision would be directly applicable or if a blended approach across the state is possible.

Answer

CEO Jason Wells defended the forecast as conservative, noting their 75% haircut on interconnection requests is much steeper than ERCOT's. He gave an example where 1 GW of assumed data center load is already under construction. Regarding the 765 kV standard, he confirmed the situation is dynamic and that while their system is in the current proposal, a blended approach is possible, which is why their CapEx estimates remain conservative.

David Arcaro inquired about the status and probability of projects within the 40 GW of load interconnection requests and asked for an updated figure on the data center pipeline.

Answer

CEO Jason Wells clarified that the 40 GW of requests includes many exploratory projects, with the 10 GW forecast through 2031 being a more realistic view of what will materialize. He also updated the data center request pipeline to be "north of 11 gigawatts" in the Houston area, up from a previously discussed 8 GW, and noted continued strong data center interest in Indiana as well.

David Arcaro requested an update on the proposal regarding temporary generation recovery and asked about the outlook for transmission investment opportunities in Texas, including the Permian plan and 765 kV projects.

Answer

CEO Jason Wells stated that the proposal to forgo ~$110 million in profit on temporary generation was a positive step, but discussions on the units' use continue. Regarding transmission, he identified direct opportunities to connect to the new 765 kV project, which represents upside to the current capital plan. He sees significant indirect opportunity driven by explosive load growth in the Houston area, which will require more transmission infrastructure.

David Arcaro asked if the top end of the EPS growth range could be achieved as early as 2027 and questioned the scale of data center activity in the pipeline and the potential for further upside to load growth.

Answer

CFO Brian Savoy confirmed that 2027 is when load growth is expected to 'ratchet up,' presenting the opportunity to earn in the top half of the range. President Harry Sideris detailed a near-term advanced-stage pipeline of over 7 GW, with a broader pipeline at least double that. CEO Lynn Good added that data centers now comprise 50% of the pipeline out to 2029.

David Arcaro of Morgan Stanley asked if any of the 11 new industrial customers were power plants and if the company is seeing broader opportunities from the power generation sector. He also questioned if there were any anticipated challenges in the upcoming Mid-Tex and West Texas rate cases.

Answer

John Akers, President and CEO, clarified that the new industrial customers were a diverse mix, including manufacturing and battery plants, but not power facilities. He reiterated that the company does not speculate on potential customers until contracts are signed. Christopher Forsythe, SVP and CFO, described the Texas rate cases as standard filings focused on refreshing the ROE and cap structure, stating they do not contain concepts new to the Texas regulatory framework and should be concluded by late spring.

David Arcaro requested details on the company's data center demand pipeline, asking for the total megawatts in development and whether it includes transformational, gigawatt-scale projects.

Answer

APS President Theodore Geisler revealed a significant pipeline, with over 4,000 megawatts of extra high load factor (EHLF) customers, primarily data centers, already committed and embedded in the current plan. Beyond that, there is an additional 10,000 megawatts of EHLF demand in the planning stages. Geisler noted that the committed demand is relatively distributed, though a few larger single requests exist in the 10,000 MW queue.

David Arcaro asked for specifics on the potential contents of the upcoming Certificate of Public Convenience and Necessity (CPCN) filing in Kentucky and questioned the certainty of the data center load forecast used to justify new generation investments.

Answer

President and CEO Vincent Sorgi stated that the first CPCN filing could occur as early as Q1 2025 and would likely include the next combined-cycle gas plant for 2030 service, among other assets. He expressed high confidence in the data center load forecast, noting that the 1 gigawatt assumed in their plan is well-supported by 400 megawatts already in advanced stages and active discussions to expand further.

Inquired whether the full scale of data center-driven electricity demand is already reflected in their renewables targets and asked for more details on their deals with hyperscalers, such as Google.

Answer

The company acknowledged the massive scale of data center demand, noting it will take years to fully materialize but is already appearing in their backlog for 2026-2028. Regarding hyperscaler deals, they noted a trend toward physically-linked projects to support specific data centers, where reliability and performance are critical. They are focused on creating value-driven structures for these large customers.