David Arcaro

David Arcaro asked about the Reliability Backstop Procurement (RBP), formerly RBA, and its implications for policy uncertainty in PJM, specifically how it might affect Talen Energy's contract negotiations and discussions. He also inquired about potential uprates or new builds Talen Energy might bid into the procurement.

Answer

Mac McFarland, President and CEO, explained that the RBP acts as a relief valve for resource adequacy, allowing existing contracts to continue and potentially increasing future discussions. He emphasized that data center demand is not slowing down despite regulatory uncertainty. Regarding new builds, Mr. McFarland stated Talen Energy is working on opportunities across various generation forms (batteries, CTs, CCGTs) and believes uprates should count, though most of Susquehanna's uprates were a decade ago. He noted that a 15-year contract at the right price makes new build economics viable, and Talen Energy will participate once rules are defined.

David Arcaro asked for more color on Talen Energy's perspective regarding the PJM backstop auction and how policy uncertainty might affect ongoing contract negotiations for data centers.

Answer

Mac McFarland, President and CEO, explained that the Reliability Backstop Procurement (RBP) acts as a relief valve for market tightness, supporting existing contracts, and noted that data center demand is not slowing down. He also confirmed Talen is working on new build opportunities and that uprates should count for the procurement, considering various generation forms like batteries, CTs, or CCGTs for 15-year contracts.

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 inquired about any slippages or challenges in the physical construction and online deployment of data centers and other large load customers in Texas, particularly concerning supply chain issues. He also asked about the trend of Sempra's credit metrics through the 2030 plan period, including any anticipated peaks or troughs.

Answer

Jeff Martin (Chairman and CEO, Sempra) noted that Oncor's 70% transmission-focused capital plan enables large load growth, with data centers representing upside. Allen Nye (CEO, Oncor Electric Delivery) confirmed a growing queue of 273 GW (255 GW data centers), detailing efforts through Batch Zero and independent projects, and highlighting $3.5 billion in customer collateral. Karen Sedgwick (EVP and CFO, Sempra Infrastructure) stated that the SI Partners transaction and increased cash flows support a strong balance sheet, targeting 50-150 basis points cushion above FFO-to-debt thresholds with stable metrics post-transaction.

David Arcaro asked about the expected trend of Sempra's credit metrics through the 2030 plan period, specifically if there are any peaks and troughs that need to be managed.

Answer

Jeff Martin, Chairman and Chief Executive Officer of Sempra, and Karen Sedgwick, Executive Vice President and Chief Financial Officer of Sempra Infrastructure, emphasized that maintaining a strong balance sheet and investment-grade credit ratings is a priority. The SI Partners transaction is key, with proceeds supporting the balance sheet and eliminating the need for common equity in the base plan. They expect regulated earnings to comprise 95% of the business post-closing and the ability to deconsolidate SI debt. They are targeting 50-150 basis points of cushion above FFO-to-debt thresholds, with improved cash flows contributing to stable metrics throughout the period.

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 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 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 sought color on the expected timing for Vistra's next data center contracting activity, particularly whether it would await clarity from PJM's backstop auction. He also inquired about the timing and milestones for the Comanche Peak uprate opportunity and Vistra's potential involvement in other on-site power or backup generation at the site.

Answer

Stacey Doré, Chief Strategy and Sustainability Officer and Executive Vice President of Public Affairs, Vistra, stated that while she couldn't comment on specific timing, numerous conversations are underway with motivated customers, and Vistra will announce contracts when agreements are finalized. For Comanche Peak, Ms. Doré noted that the primary focus is on executing the Amazon data center's on-site energization. She confirmed that the team continues to study the 200 MW uprate opportunity and that the site has ample land and gas access for potential new generation or backup generation, including past considerations for units three and four.

David Arcaro from Morgan Stanley asked for color on the expected timing for the next iteration of data center contracting activity, specifically whether it would await clarity from PJM's backstop auction. He also inquired about the timing and milestones for the Comanche Peak uprate opportunity and Vistra's potential involvement in other on-site power solutions, such as new generation or backup generation.

Answer

Stacey Doré, Chief Strategy and Sustainability Officer and Executive Vice President of Public Affairs, Vistra, stated that while she couldn't provide specific timing, numerous conversations are underway with motivated customers, and Vistra will announce contracts when agreements are reached. Regarding Comanche Peak, Doré noted that the primary focus is on executing the Amazon data center's timely online operation, with the 200 MW uprate still being studied. She also highlighted the site's ample land and access to gas, making it suitable for exploring new generation, including potential units three and four, and other energy solutions.

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 asked about the status of negotiations with additional customers for Solaris's remaining capacity and the potential timing for new announcements. He also inquired about the value uplift from increasing the scope of services, such as balance of plant and emissions control, and if these upsale opportunities apply to the current contracted fleet.

Answer

William A. Zartler (Chairman & Co-CEO, Solaris Energy Infrastructure) stated that dialogue is very active, with confidence in demand exceeding supply, and deals will unfold in due time. Amanda Brock (Co-CEO, Solaris Energy Infrastructure) clarified these are active negotiations with expected good news in the near future. Regarding scope uplift, Mr. Zartler explained that adding distribution equipment and battery systems could provide a 20%-50% uplift per megawatt, depending on the scope from gas handling to power distribution.

David Arcaro inquired about the status of negotiations with additional customers for Solaris Energy Infrastructure's remaining power capacity and the potential timeline for new contract announcements. He also asked about the value uplift from expanding the scope of services, such as balance of plant and emissions control, and if these 'upsale' opportunities apply to the current contracted fleet.

Answer

Bill Zartler, Founder, Chairman, and Co-Chief Executive Officer, confirmed active dialogue and negotiations with multiple customers, expressing confidence in demand exceeding supply. Amanda Brock, Co-Chief Executive Officer and Director, emphasized that these are 'active negotiations' with expected 'good news in the near future.' Regarding expanded scope, Mr. Zartler indicated that adding distribution equipment and battery systems is a real opportunity, with incremental capital returns ranging from 20% to 50% per megawatt depending on the scope.

David Arcaro inquired about the impact of the backstop auction process and general policy uncertainty in the PJM market on the pace of conversations with data centers and contracting opportunities.

Answer

CEO Larry Coben acknowledged numerous conversations but noted that PJM market activity remains slower than in Texas. He stated that while progress is being made, the pace of development for 20-year investments is currently faster outside of PJM due to the ongoing policy flux.

David Arcaro inquired about the PJM market, asking how the backstop auction process and general policy uncertainty over recent months have affected the pace of conversations with data centers and overall contracting opportunities in that region.

Answer

CEO Larry Coben acknowledged that while there are many conversations, the PJM market has historically been, and continues to be, slower than Texas. He noted that progress is being made, but for a 20-year investment, many factors need to be in place, and the pace of development remains faster outside of PJM at this moment.

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 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 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 for comments on the broader competitive environment, including any increased pricing pressure, new market entrants, or emerging competing products.

Answer

CFO Dominic Bardos noted that pricing incentives offered to win new customers in 2025 are largely behind them. He mentioned competition for BLA from Voltage and in the IPC market, where developers are increasingly avoiding IPCs. He emphasized that every job involves negotiation, focusing on product quality and delivery, and that flexibility in margins is crucial for driving operating profit and cash flow. CEO Brandon Moss reiterated a strong preference for Shoals' solutions and quality, evidenced by increased book of business and growth relative to the overall solar market, expressing confidence in the commercial team and new product adoption.

David Arcaro inquired about the broader competitive environment, including any increased pressure from a pricing perspective, the emergence of new entrants, or new competing products in the market.

Answer

CFO Dominic Bardos stated that pricing incentives offered to new customers in 2025 are largely behind them. He acknowledged competition for Big Lead Assembly from Voltage and for IPCs, but believes developers are increasingly avoiding IPCs. He emphasized that every job involves negotiation, and Shoals focuses on product quality and delivery. He also highlighted the flexibility in margins to drive operating profit and cash flow, taking jobs with 30% margins if capacity allows. CEO Brandon Moss reiterated a strong preference for Shoals' solutions and quality, evidenced by increased book of business and outgrowing the solar market.

David Arcaro asked if the increasing data center activity and interconnection requests were crowding out other large industrial or commercial customer activity, and if there was still room on the system for other large customers. He also inquired about the next iteration of Virginia's generation outlook, specifically the next Integrated Resource Plan (IRP) slice and when generation needs might be reassessed.

Answer

CEO Bob Blue affirmed that there is 'absolutely room' for other large customers, citing the Eli Lilly facility as an example, and that they are not being crowded out, highlighting the company's strong economic development team. Regarding the generation outlook, he stated that IRPs are conducted every two years with an update in between, and the company will continue to update the IRP annually.

David Arcaro asked if the high volume of data center interconnection requests was crowding out other large industrial or commercial customer activity on the system. He also inquired about the timing of the next iteration of the generation outlook in Virginia, specifically the next Integrated Resource Plan (IRP) slice and when generation needs might be reassessed.

Answer

Robert M. Blue confirmed that there is absolutely room for other large customers, and they are not being crowded out, citing the Eli Lilly facility as an example. He stated that the company's economic development team continues to see exciting possibilities outside of data centers. Regarding the generation outlook, he mentioned that IRPs are conducted every two years with an update in between, and the IRP will continue to be updated annually.

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 (Morgan Stanley) asked for clarification on PPL's EPS growth trajectory, specifically if it would exceed the top end of the 6%-8% annual growth rate beyond 2026, and how that shaping would look. He also inquired about the levers PPL plans to use to manage O&M growth at approximately 1% annually and identify further cost-cutting opportunities.

Answer

PPL CFO, Joe Bergstein, confirmed that EPS growth is expected to accelerate starting in 2027 and remain "pretty linear" between 2027 and 2029, near the top end of the 6%-8% range. Regarding O&M, Bergstein stated that continued deployment of smart grid technology, IT system upgrades, and the application of AI across various functions are key levers to manage costs and identify further efficiencies, contributing to the projected 1% annual O&M growth.

David Arcaro inquired about the EPS growth trajectory, specifically if it accelerates beyond 2026 and potentially exceeds the top end of the annual growth rate. He also asked about the levers for O&M management and future cost-cutting opportunities within the plan.

Answer

Joe Bergstein, PPL EVP and CFO, confirmed that EPS growth accelerates starting in 2027 and is expected to be fairly linear between 2027 and 2029. He highlighted continued deployment of smart grid technology, IT system upgrades, and the application of AI as key levers for managing O&M and identifying further cost-cutting opportunities beyond the projected 1% annual growth.

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.

David Arcaro inquired about IDACORP's customer and load pipeline, including discussions on existing large customer expansions and the outlook for new companies entering the service territory. He also asked about the funding split for incremental CapEx, external equity needs, and any repatriation tax impact on guidance.

Answer

Lisa Grow, President and CEO, and Adam Richins, SVP and COO, noted strong, diverse inquiries from various industries, with many progressing beyond initial interest. Brian Buckham, SVP, CFO, and Treasurer, added that a formal load growth update is expected later in the year. Regarding equity needs, Brian Buckham stated that incremental CapEx would likely be financed 50/50 debt/equity, but large load cash flows could impact this, and confirmed no major update to repatriation tax assumptions.

David Arcaro asked for an update on IDACORP's customer and load pipeline, including discussions on expansions of current large load customers and the shaping of the pipeline for new companies entering the service territory. He also inquired about equity needs, the funding split for incremental CapEx, and any repatriation tax impact on guidance.

Answer

Lisa Grow (President and CEO) and Adam Richins (SVP and COO) noted continued strong and diverse inquiries from various industries, including data centers and manufacturing, with many under confidentiality agreements. Brian Buckham (SVP, CFO, and Treasurer) added that a formal load growth update, last seen in the 2025 IRP, is planned for later in the year. Adam Richins emphasized that many inquiries are progressing beyond initial interest to construction and generation studies. Regarding equity needs, Brian Buckham clarified no major update on repairs tax deduction, stating incremental CapEx is likely financed 50/50 debt/equity, but large load cash flows and the potential Oregon asset sale could impact actual needs, making current equity estimates conservative.

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 if the adjusted EPS guidance incorporates the latest Texas rate case outcome, whether the non-GAAP adjustment has a cash component, and how current treasury rates align with the company's guidance expectations.

Answer

Chris Sighinolfi, Chief Financial Officer, confirmed that the adjusted EPS guidance does assume the latest Texas rate case outcome, as the original guidance embedded a close estimate. He clarified that while the accrual and deferral of the non-GAAP adjustment is not initially cash, it becomes a larger cash flow item when rolled into GRIP filings. Regarding treasuries, he noted that current market performance is slightly favorable to embedded refinancing expectations, but cautioned that conditions could change before the term loan matures in September.

David Arcaro inquired whether the adjusted EPS guidance incorporates the latest Texas rate case outcome, if there is a cash component to the non-GAAP adjustments, and how current treasury rates align with ONE Gas's guidance expectations.

Answer

Chris Sighinolfi, Chief Financial Officer, confirmed that the adjusted EPS guidance does embed the latest Texas rate case outcome, which was close to their initial estimates. He clarified that while the accrual and deferral of the non-GAAP adjustment itself is not a direct cash component, it will lead to a larger cash flow item when rolled into GRIP filings. Regarding treasuries, he noted that current market conditions are slightly favorable to what was embedded in their refinancing plan, but cautioned that conditions could change before they access capital markets in September.

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 asked about the timing and potential upside of the updated transmission planning study, specifically differentiating the recently added 765 kV line from future incremental transmission needs. He also inquired about the impact of the repairs adjustment in the Corporate Alternative Minimum Tax (CAMT) on the company's equity needs and balance sheet flexibility.

Answer

Jason P. Wells, Chair, President, and CEO, clarified that the $500 million for the 765 kV line is distinct from future transmission projects driven by accelerated large loads, with an update on CapEx for these new projects expected in the second half of the year. Christopher Foster, EVP and CFO, explained that the CAMT repairs adjustment would provide a near-term balance sheet benefit of 60-70 basis points and enable approximately $1 billion of incremental CapEx without additional equity.

David Arcaro asked about the updated transmission planning study, specifically if it already included the new 765 kV line or if further updates are expected, and the potential upside from future transmission projects.

Answer

Jason P. Wells, Chair, President, and CEO, clarified that the $500 million additional capital for the 765 kV line is separate from incremental transmission work needed for accelerated large loads. He expects an update on these new transmission projects in the second half of the year. Christopher Foster, EVP and CFO, added that the repairs adjustment in the AMT could provide 60-70 basis points of near-term balance sheet benefit and unlock approximately $1 billion of incremental CapEx without additional equity.

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 inquired about the regulatory environment in New Jersey, including the expected timing of the next rate case and the impact of recent executive orders. He also asked for confirmation on the company's outlook for earned ROEs, targeting 9.5%-10%, and the key factors influencing this projection.

Answer

Brian Tierney (CEO and President) discussed New Jersey's focus on affordability and reliability, noting that FirstEnergy's rates are significantly below in-state peers. He stated the company would work constructively with the governor and BPU to determine the timing of the next rate case. He confirmed the target ROE range of 9.5%-10%, aiming to be as close to authorized returns as possible through regular rate cases and ongoing investment.

David Arcaro inquired about the regulatory environment in New Jersey, including expectations for the timing of the next rate case and FirstEnergy's perspective on recent executive orders and potential regulatory changes. He also asked about the outlook for earned returns on equity (ROEs) embedded in the company's plan, specifically if they are expected to remain flat between 9.5-10%, and the key factors influencing these ROE projections.

Answer

Brian Tierney, CEO and President, addressed New Jersey, stating the company is working with Governor Cheryl's office on affordability and continuing investments to improve reliability, which has shown positive results. He noted that FirstEnergy's rates are significantly below in-state peers and that a future rate case would be necessary. Regarding ROEs, Mr. Tierney confirmed the target range of 9.5-10%, aiming to be as close to authorized returns as possible, and expressed confidence in maintaining this range through regular rate cases and ongoing investments.

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 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 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 requested an update on current channel inventory levels in both the U.S. and Europe, assessing their health. He also asked about the market backdrop and demand trends for battery storage, including seasonal expectations for Q1 and Q2.

Answer

Shuki Nir, CEO, reported that European distributors have returned to normal inventory levels, leading to increased exports of U.S.-produced products to Europe. He stated that the U.S. channel also maintains normal inventory levels. Regarding battery storage, Nir noted increasing global demand in both residential and CNI segments, expecting storage to become a larger part of sales, especially with the enhanced Nexis platform. He also highlighted CNI opportunities in Europe and international markets and future plans to leverage the installed base.

David Arcaro asked for an update on current channel inventory levels in both the U.S. and Europe, and their healthiness.

Answer

CEO Shuki Nir reported that most European distributors have resumed normal inventory levels and are now purchasing newly produced products from the U.S. In the U.S. channel, overall inventory levels are normal. David Arcaro also inquired about the strong battery storage megawatts this quarter, asking about the market backdrop, demand trends, and seasonal expectations for battery storage volumes into Q1 and Q2. CEO Shuki Nir stated that the need for storage is increasing globally across residential and C&I segments, leading to rising attach rates. He expects storage to become a larger part of sales, with the Nexus platform significantly enhancing this competitive advantage. He also noted increasing C&I customers in Europe and international markets recognizing the ROI from storage, with plans to address the installed base later in the year.

David Arcaro sought more details on DTE Vantage's potential data center project, including its size, profile (e.g., behind-the-meter), and the timing for CapEx quantification. He also asked for DTE Energy's perspective on recent ALJ recommendations for ROEs in Michigan, specifically the 8.2% figure, and expectations for the commission's direction.

Answer

Joi Harris, President and CEO, DTE Energy Company, described Vantage's data center opportunity as a behind-the-meter, primary power project of several hundred megawatts, with CapEx updates expected mid-year. Regarding ROEs, Harris noted the commission chair's prior statements on appropriate ROE levels given macroeconomics, anticipated a flat ROE for DTE, and highlighted the ALJ's recommendation of 9.9% in DTE's specific case, deeming 8.2% unreasonable given current borrowing costs.

David Arcaro sought more details on the data center opportunity for DTE Vantage, including its potential size, profile (e.g., on-site, behind-the-meter), and whether its CapEx investment would be quantified mid-year. He also asked for DTE Energy's latest perspective on ALJ recommendations for ROEs in Michigan, specifically the 8.2% ROE, and expectations from the commission regarding regulation and ROEs in the state.

Answer

Joi Harris, President and CEO, described the Vantage data center opportunity as a behind-the-meter, primary power project of several hundred megawatts, with potential for broader application. She indicated that CapEx details would be provided mid-year. Regarding ROEs, Ms. Harris noted the commission chair's prior statements on appropriate ROEs given macroeconomics and the ALJ's recommendation of 9.9% in DTE's case, suggesting confidence in a flat ROE outcome and deeming an 8.2% ROE unreasonable given current borrowing costs.

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 of Morgan Stanley asked about the expected updates at the upcoming Investor Day in June, specifically if it would be a natural time for more data center contracting clarity or capital project approvals. He also inquired about the latest political and regulatory feedback regarding data center activity, asking if support continues or if increased pushback or local challenges are emerging.

Answer

Drew Marsh, Chairman and CEO, stated that while the exact timing of data center contracts is uncertain, the Investor Day will provide more color on data centers, positioning, and a longer outlook (typically five years). He also mentioned bringing more leaders to speak about various jurisdictions. Marsh confirmed continued strong political and regulatory support for data centers in Entergy's jurisdictions, citing the Louisiana Lightning Initiative as an example. He acknowledged ongoing concerns about affordability and rates, highlighting Entergy's efforts to demonstrate customer benefits from data centers to maintain positive momentum.

David Arcaro asked what specific updates to expect at the upcoming Investor Day in June, particularly regarding data center contracting clarity or capital project approvals. He also sought insight into the latest political and regulatory feedback concerning data center activity, inquiring if support continues or if increased pushback is being observed.

Answer

Drew Marsh, Chairman and CEO, stated that the Investor Day will provide more color on data centers, a longer five-year outlook, and opportunities to engage with more of the leadership team. He noted that the timing of large customer contracts is unpredictable. Mr. Marsh confirmed strong, continued political and regulatory support for data centers in their jurisdictions, citing Louisiana's lightning initiative as an example, which has strengthened expectations. He acknowledged ongoing concerns about affordability but emphasized the benefits to existing customers to maintain positive momentum.

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 questioned whether there are physical or labor constraints in the ERCOT grid to accommodate the 36 GW of load by 2030, and what transmission investments are needed. He also asked about the geographical split of the overall 180 GW load queue and where incremental progress is being made.

Answer

Bill Fehrman (Chairman, President, and CEO) stated that AEP is proactively addressing equipment and contracting needs to deliver projects, acknowledging that timing depends on SB 6 implementation but expressing confidence in the team's execution. Trevor Mihalik (EVP and CFO) provided a breakdown of the 180 GW queue: approximately 70 GW in ERCOT, 25 GW in AEP Ohio, 30 GW in PSO, 30 GW in APCO, and 16 GW in I&M, showing a good spread across key growth states (Texas, Oklahoma, Ohio, Indiana).

David Arcaro with Morgan Stanley asked about potential physical constraints in the ERCOT grid and labor availability to accommodate the 36 GW load by 2030, and the necessary transmission investments. He also inquired about the geographical distribution of the 180 GW overall load queue and where AEP is seeing the most incremental progress across its service territories.

Answer

Bill Fehrman, Chairman, President, and CEO, assured that AEP is proactively addressing equipment and contracting needs, emphasizing execution despite potential timing shifts due to SB 6 implementation. Trevor Mihalik, EVP and CFO, detailed the 180 GW queue distribution: approximately 70 GW in ERCOT, 25 GW in AEP Ohio, 30 GW in PSO, 30 GW in APCO, and 16 GW in I&M, highlighting growth in Texas, Oklahoma, Ohio, and Indiana.

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 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 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 inquired whether Duke Energy is evaluating interruptibility or flexibility as a characteristic for data centers to speed up interconnection, and if data centers are willing to consider such provisions.

Answer

President and CEO Harry Sideris confirmed that interruptibility provisions are included in signed contracts, as data centers are open to it for speed to power. He added that this also benefits existing customers by maintaining reliability, allowing for curtailment or use of backup generation for approximately 50 hours per year.

David Arcaro asked if Duke Energy is evaluating interruptibility or flexibility as a characteristic for data center interconnections to accelerate their online timing, and if data centers are receptive to such provisions in their Electric Service Agreements (ESAs).

Answer

President and CEO Harry Sideris confirmed that Duke Energy has incorporated interruptibility and flexibility provisions into signed data center contracts. He noted that data centers are receptive to these terms as they facilitate faster interconnection, and these provisions also benefit existing customers by enhancing system reliability through load curtailment or backup generation for approximately 50 hours annually.

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 with Morgan Stanley inquired about follow-on opportunities with existing customers, the success of initial projects, and the company's strategy and triggers for future manufacturing capacity expansions.

Answer

K.R. Sridhar, Founder, Chairman, and CEO of Bloom Energy, emphasized that over two-thirds of their traditional CNI business comes from repeat customers. He noted that newer sectors, including utility partners and hyperscale customers like Oracle, are also showing strong repeat engagement. Regarding capacity expansion, Sridhar stated it's a continuous, capital-light decision driven by large time-to-power opportunities, with a rapid ROI of a few months, allowing Bloom to scale without long-term market predictions.

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 Arcaro asked about the Large Load Tariff for data centers, specifically how it ensures these customers pay their full share of all costs, including generation and transmission. He also inquired about strategies beyond the tariff to attract large loads and whether data centers have shown support for the new tariff, indicating continued interest in Michigan.

Answer

Garrick Rochow, President and CEO, confirmed that the Large Load Tariff is designed to protect existing customers and offers benefits. He stated that the near-final rate construct explicitly outlines how data centers will pay for capacity, energy, transmission, and distribution, ensuring all costs are on their nickel, aligning with initiatives from companies like Microsoft. He also confirmed that the data center pipeline has advanced and grown in size, indicating positive support and continued interest in Michigan due to the tariff.

David Arcaro inquired about the effectiveness of CMS Energy's Large Load Tariff in ensuring data centers pay their full share of costs and whether data centers have shown continued interest in Michigan under these new provisions. He also asked about strategies beyond the tariff to attract large loads.

Answer

Garrick Rochow (CEO, CMS Energy) affirmed that the Large Load Tariff is designed to protect existing customers and provides benefits, ensuring data centers cover all associated costs (capacity, energy, transmission, distribution). He noted that companies like Microsoft align with this principle. Mr. Rochow confirmed that the data center pipeline has advanced and grown in size, indicating strong support and continued interest from data centers in Michigan under the new tariff.

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 inquired about current affordability pressures in the gas LDC space and any new opportunities or projects related to gas power, such as data centers or major power plants.

Answer

Kevin Akers, President and Chief Executive Officer, confirmed that affordability is a constant discussion with commissions, who understand the need for investment in reliability and safety. He noted ongoing inquiries for large loads like data centers and power generation, promising to report on signed contracts when available.

David Arcaro asked about any affordability pressures migrating into the gas LDC space and its political implications, and also inquired about new opportunities or significant projects related to gas power, such as major power plants or on-site power for data centers.

Answer

Kevin Akers (CEO) stated that affordability is always a topic with commissions, but there is no negative feedback as regulators understand the need for investment in reliability and safety. He also confirmed ongoing inquiries for large loads, including data centers and additional power generation, but stated details would only be shared upon signed contracts, noting that APT already serves some power generation facilities.

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 sought an update on the storage asset sales process, including market interest, valuation expectations, and the timeline for a transaction relative to the Tennessee acquisition close. He also asked about economic development efforts and opportunities for large new loads.

Answer

President and CEO Scott Doyle explained the evaluation process extended due to focusing on optimal value for each asset, which performed well in January. Executive Vice President and CFO Adam Woodard confirmed an announcement is expected later this quarter, prior to the Tennessee close, with a bridge loan in place if needed. Scott Doyle added there's good interest in the assets, which can be sold individually or combined. Regarding economic development, Scott Doyle mentioned active discussions for serving generation needs but no announcements yet.

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 asked about the nuclear space, specifically the momentum in Small Modular Reactor (SMR) policy and deals, and whether project opportunities have accelerated.

Answer

CEO Scott Strazik described the SMR opportunity as 'great' with progressing, sequential discussions, noting the effort to restart the industry in the Western world. He highlighted close collaboration with the U.S. administration and productive conversations in Sweden and Poland, expressing optimism for future announcements, though timing may differ from gas and grid projects.

David Arcaro asked about the nuclear space, specifically the momentum in Small Modular Reactors (SMRs), project opportunities, and whether deals have accelerated.

Answer

CEO Scott Strazik acknowledged great opportunities and progressing discussions, but noted the sequential nature of restarting the industry in the Western world. He mentioned active conversations in the U.S., Sweden, and Poland, expecting longer timelines for announcements compared to gas and grid, despite a growing opportunity pipeline.

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.

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 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 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 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 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 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 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 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 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 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, 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 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 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 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.

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 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 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 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 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 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.

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.