James Ward

James Ward asked what factors are critical for Duke Energy to achieve the top half (6-7%) EPS performance starting in 2028, given the 9.6% earnings base growth and 2.5% dilution from financing. He also questioned the key assumptions underpinning the FFO to debt targets (14.8% in 2025, 14.5% in 2026, 15% long-term), including regulatory cash flow mechanisms and funding mix.

Answer

President and CEO Harry Sideris attributed confidence in the top half EPS growth to the load inflection in 2028 as data centers ramp up, a durable plan, strong regulatory track record, and tools like the one utility merger and data centers paying their fair share. EVP and CFO Brian Savoy highlighted improved operating cash flows from regulatory work, stating that achieving the 15% FFO to debt target requires continued execution and equity funding (35% for the CapEx increase). Harry Sideris added that multi-year rate plans and CWIP recovery also support cash positions.

James Ward asked what factors need to align for Duke Energy to achieve the top half of its 5%-7% EPS growth target starting in 2028, given the extended growth rate to 2030 and the 9.6% earnings base growth, alongside an assumed 2.5% dilution from financing. He also inquired about the key assumptions and mechanisms, including regulatory cash flow and funding mix, that will enable Duke Energy to maintain its FFO to debt targets of 14.5% in 2026 and 15% long-term, especially with a larger capital plan.

Answer

President and CEO Harry Sideris expressed high confidence in achieving the top half of the 5%-7% EPS growth from 2028, driven by the inflection point of new load coming online, durable plans, and constructive regulatory outcomes, supported by tools like the utility merger and data centers paying their fair share. Executive Vice President and CFO Brian Savoy highlighted the significant improvement in the 2025 cash flow profile, attributing it to strong operating cash flows and effective regulatory work. He stated that achieving the 15% FFO to debt target relies on continued execution and a balanced funding approach, with the capital plan increase funded 35% by equity. Sideris added that multi-year rate plans and CWIP recovery also bolster cash positions.

James Ward asked about the potential for HEI to provide earnings guidance and EPS projections, specifically whether this could be expected during the upcoming Q4 earnings call.

Answer

Scott DeGhetto, HEI Executive Vice President and CFO, indicated it is too soon to say, as the company aims to reinstitute earnings guidance only after final settlement approval. He noted that providing guidance would be challenging during the rate rebasing process due to unknown outcomes.

James Ward of Jefferies inquired about the Great Basin expansion, asking if the increased capital expenditure forecast was driven by volume or scope changes. He also asked for clarification on the project's return profile and the potential timeline overlap between the next Nevada rate case and the implementation of alternative ratemaking.

Answer

Justin Brown, President of Southwest Gas Corporation, confirmed the increased CapEx for the Great Basin project is purely volume-driven from additional shipper demand. He noted the project would have a FERC-authorized rate of return and include AFUDC. Regarding Nevada, Brown stated that the company sees no advantage in delaying its next rate case, as the new legislation allows for a complementary process where formula rates can be proposed within the case or filed for up to six months after its conclusion.

James Ward inquired about the Great Basin expansion, asking for details on the drivers behind the increased capital expenditure range, the project's return profile, and the potential for AFUDC. He also asked about the timeline for the next Nevada rate case and its interaction with the new alternative ratemaking legislation.

Answer

Justin Brown, President of Southwest Gas Corporation, clarified that the increased capital estimate for the Great Basin project is purely driven by higher volume requests from additional shippers. He stated the return profile would be based on the FERC-authorized rate of return and confirmed AFUDC would be anticipated. Regarding Nevada, Brown explained that the company sees no advantage in delaying its next rate case, as the new formula rate legislation is designed to be complementary and can be incorporated into the next filing.

James Ward inquired about the Great Basin expansion project, asking for the drivers behind the increased capital expenditure estimate, the project's return profile, and how to think about AFUDC. He also asked about the potential timeline for the next Nevada rate case and its interaction with the new alternative ratemaking legislation.

Answer

Justin Brown, President of Southwest Gas Corporation, clarified that the increased capex for the Great Basin project is purely volume-driven due to additional shipper demand. He noted the project would have a FERC-authorized rate of return and would accrue AFUDC. Regarding Nevada, Brown explained that the company sees no advantage in delaying its next rate case, as the new legislation allows that case to serve as the baseline for future formula rates, making the processes complementary.

Jameson Ward requested more detail on the 300 MW high-load customer in Arizona, including industry type, and asked about contingency plans for the company's funding strategy should DRIP participation rates decline.

Answer

President and CEO David Hutchens confirmed the broader demand queue is heavily weighted towards data centers but did not specify the industry for the customer currently in negotiations. EVP and CFO Jocelyn Perry stated that the DRIP remains healthy with 38% participation and that the ATM program is in place as a flexible tool to use if participation were to decrease.

James Ward, on behalf of Julien Dumoulin-Smith, asked about the interest rate assumptions in the 2025 guidance and beyond. He also requested additional color on the company's FFO to debt metric relative to rating agency thresholds, considering upcoming refinancing needs.

Answer

Vice President and Treasurer Adam Woodard stated that Spire's financial plan assumes two to three more short-term rate cuts by the end of the next year, though timing is uncertain, and they are comfortable with current long-term rates. Regarding credit metrics, Woodard noted they are making progress on FFO to debt and expect to sustainably meet targets for S&P following the Missouri rate case.