Michael Lonegan

Michael Lonegan (Barclays PLC) asked about the potential size and investment opportunity of PPL's identified EPS upside drivers, including competitive transmission, additional T&D in Pennsylvania and Kentucky, more generation in Kentucky, and the Blackstone JV. He also inquired about the portion of investment financed with equity and sought an update on the Blackstone JV's progress in securing turbines and its strategic advantages.

Answer

PPL CFO, Joe Bergstein, declined to quantify the exact EPS or capital impact of the upside drivers but expressed confidence in their potential to strengthen the plan. He noted that the $3 billion capital increase in the updated plan was supported by a $1 billion equity increase, suggesting a general financing ratio. PPL President and CEO, Vince Sorgi, added that many of these upsides would not necessarily increase customer bills, and some could even lower them. Sorgi updated that the JV has secured strategic land parcels in Pennsylvania capable of supporting multiple gigawatts and is actively engaged with turbine manufacturers (GE, Siemens, Mitsubishi), feeling good about securing necessary turbines for 2031-2032, while also exploring quicker-to-market technologies.

Michael Lonegan asked about the potential size and EPS impact of PPL's identified upside opportunities, including competitive transmission, additional T&D in Pennsylvania and Kentucky, more generation in Kentucky, and the Blackstone JV. He also sought an update on the Blackstone JV's progress in securing turbines and its strategic advantages.

Answer

Joe Bergstein, PPL EVP and CFO, stated that PPL is not quantifying the upside opportunities from an EPS or capital perspective yet, but they provide confidence in the plan. He noted that the $3 billion capital increase in the plan included $1 billion in equity. Vince Sorgi, PPL President and CEO, added that these upsides are not expected to drive customer rates higher and could even lower them. Sorgi confirmed that JV land parcels in Pennsylvania can support multiple gigawatts, and while no formal turbine reservation agreements are in place, PPL is actively engaged with major suppliers and feels confident in securing necessary turbines.

Michael Lonegan asked about the potential size of the investment opportunity related to Micron's second semiconductor facility, which is not yet included in the capital plan. He also inquired about IDACORP's FFO to debt ratio at the end of 2025, its anticipated trajectory over the plan period, and the likelihood of Moody's removing the negative watch on the company's rating.

Answer

Lisa Grow, President and CEO, and Adam Richins, SVP and COO, stated that details on Micron's second fab investment size and load ramp are still being worked out and are not yet public. Brian Buckham, SVP, CFO, and Treasurer, reported Idaho Power's FFO to debt at approximately 14.3% for Moody's and just under 14% for S&P at year-end 2025, noting these are near the agencies' thresholds. He expressed optimism about improving metrics with large load revenues and a strong balance sheet, anticipating discussions with rating agencies in March.

Michael Lonegan asked about the size of the investment opportunity for Micron Fab 2, which is not yet included in the current capital plan. He also inquired about IDACORP's FFO to debt at the end of 2025 and anticipated over the plan, and whether there's an opportunity for Moody's to remove the negative watch on their rating.

Answer

Lisa Grow (President and CEO) and Adam Richins (SVP and COO) stated they are working with Micron and do not have details on the size of the second fab's investment opportunity to share publicly yet, as Micron has not released its load ramp. Brian Buckham (SVP, CFO, and Treasurer) reported Idaho Power's FFO to debt was approximately 14.3% (Moody's) and just under 14% (S&P) at year-end 2025, near their respective thresholds. He expressed optimism for Moody's to remove the negative watch, citing a strong balance sheet, rate case outcomes, and expected cash flow increases from large load revenues.

Michael Lonegan asked about the impact of local community moratoriums in Michigan on DTE Energy's data center project pipeline and expressed concerns about the company's confidence in achieving a constructive outcome in the electric rate case amidst political rhetoric on rate freezes.

Answer

Joi Harris, President and CEO, DTE Energy Company, stated that current moratoriums do not impact the pipeline for large load data centers, as affected communities are generally unsuitable, and developers are engaging local communities. Regarding the electric rate case, Harris highlighted DTE's focus on affordability, staff support for investments and IRM expansion, and expressed confidence in a constructive outcome, noting that staff positions were generally as expected.

Michael Lonegan inquired about the impact of data center moratoriums in Michigan on DTE Energy's project pipeline, asking if any potential projects are located in affected areas or face delays. He also questioned DTE's confidence in achieving a constructive outcome in its electric rate case amidst affordability concerns and rhetoric about rate freezes from Michigan election candidates.

Answer

Joi Harris, President and CEO, stated that current moratoriums do not impact DTE's pipeline as affected communities are not suitable for large data centers. She noted that DTE's counterparties have secured land positions and are engaging local communities. Regarding the rate case, Ms. Harris expressed confidence in a constructive outcome, citing staff support for investments and the expansion of the IRM, while reiterating DTE's commitment to affordability and customer support programs.

Michael Lonegan from Barclays questioned whether AEP expects to hit the high end of its reaffirmed 2026 EPS guidance, given the increased contracted load. He also asked about the trajectory of earned ROE improvements, if recent rate case settlements in Ohio, Kentucky, and Arkansas support this, and when to expect further rate case filings in jurisdictions like Oklahoma and Texas.

Answer

Trevor Mihalik, EVP and CFO, stated that while there's opportunity for incremental CapEx, it's too early to commit to the high end of the 2026 EPS range, preferring to "underpromise and overdeliver." He confirmed confidence in reaching a 9.5% earned ROE by the end of the five-year plan, supported by definitive legislative actions like Ohio's forward-facing test year. Bill Fehrman, Chairman, President, and CEO, emphasized a disciplined approach to rate cases, ensuring clear execution plans rather than speculative additions.

Michael Lonegan asked if the increased contracted load (from 4 GW to 7 GW for 2026) would lead AEP to expect to be at the high end of its 2026 EPS guidance range, and also inquired about the drivers behind the projected earned ROE improvements and the timing and expected jurisdictions for future base rate case filings.

Answer

Trevor Mihalik (EVP and CFO) reaffirmed the 2026 EPS guidance range of $6.15-$6.45, stating it's still early in the year and while there's CapEx opportunity, it wouldn't manifest in the immediate months. He reiterated the management's focus on execution and underpromising/overdelivering. Regarding earned ROE, Trevor Mihalik confirmed the 2025 earned ROE of 9.2% and the projection to 9.5% over the five-year plan, attributing it to definitive legislative enhancements like UTM in Texas, SB 998 in Oklahoma, and the forward-facing test year in Ohio. He noted that future rate cases would follow normal regulatory processes, aiming for constructive outcomes. Bill Fehrman (Chairman, President, and CEO) emphasized AEP's philosophy of having clear, detailed, and disciplined plans for all projections, ensuring no speculative additions.

Michael Lonegan of Evercore asked if the authorized securitization would be for earnings-generating investments, about the potential for opportunistic equity financing, and for details on the upcoming rate case filing.

Answer

Executive Vice President and CFO Scott DeGhetto clarified that SB 897 directs the first $500 million of utility CapEx for wildfire mitigation to use securitization. President and CEO Scott W. Seu noted that while they would consider opportunistic pre-funding, there are no near-term plans to finance future settlement payments. Scott DeGhetto and Hawaiian Electric President and CEO Shelee Kimura explained the upcoming filing will rebase target revenues for the PBR framework using a 2026 test year in a "rate case-like" proceeding.

Michael Lonegan inquired about the confidence in the Maui wildfire settlement proceeding without insurer interference, future capital expenditure levels and FFO to debt targets, and potential financing strategies for a proposed shareholder contribution to a state wildfire fund.

Answer

President and CEO Scott W. Seu expressed high confidence in the settlement's finalization following a favorable Hawaii Supreme Court ruling, outlining the next procedural steps. Hawaiian Electric CFO Paul Ito detailed a multi-year CapEx forecast, projecting spending to rise from a $350-$375 million range in 2025, driven by baseline needs, wildfire safety, and other projects. HEI CFO Scott DeGhetto stated the company will target investment-grade credit ratings rather than a specific FFO to debt metric. Regarding legislation, Scott Seu noted it is very early in the process and that the shareholder contribution amount in the proposed bill was currently blank, indicating ongoing debate.

Michael Lonegan of Evercore ISI inquired about the ongoing strategic reviews for Pacific Current and the bank, the potential for a negotiated settlement with insurers, the option to accelerate wildfire settlement payments, and the company's outlook on the 2025 review of the Performance-Based Regulation (PBR) framework.

Answer

President and CEO Scott W. Seu confirmed strategic reviews for both the bank and Pacific Current are ongoing. CFO Scott DeGhetto stated the current plan is to pay the settlement in four installments but noted an option to prepay exists. Regarding the PBR framework, SVP of Regulatory Affairs Joe Viola explained that the comprehensive review is already in progress and will consider the Maui wildfires in designing the next multiyear rate plan, which is scheduled to begin January 1, 2027.

Michael Lonegan of Evercore ISI asked about the expected level of regulatory lag in 2026 while the next rate case is pending and requested an update on the pipeline for high load factor customers.

Answer

CEO Ted Geisler stated that a key goal of the upcoming rate case and the proposed formula rate plan is to minimize regulatory lag. He confirmed the committed high load factor customer pipeline remains at 4 gigawatts, with an additional queue of at least 10 gigawatts being actively assessed for timing and capacity needs.

Michael Lonegan from Evercore questioned if Pinnacle West might raise its 5-7% EPS growth target and asked for an update on legislative support for a proposed wildfire mitigation bill in Arizona.

Answer

CFO Andrew Cooper stated the immediate focus is on achieving a smoother earnings profile within the existing 5-7% EPS growth range by implementing formula rates. President Ted Geisler commented on the wildfire bill, noting the company's support but emphasizing it is too early in the legislative process to predict an outcome.

Michael Lonegan from Evercore ISI inquired about the prospects for new wildfire legislation in California and whether the company's previously stated 88% wildfire risk reduction figure has been re-evaluated with Moody's following the Eaton fire.

Answer

President and CEO Pedro Pizarro expressed confidence that state leaders understand the need to enhance the AB 1054 framework but noted it's too early to guarantee legislative action this session. Executive Steven Powell clarified that the risk reduction model is comprehensive, covering both distribution and transmission systems, and the extensive grid hardening work already completed remains the primary driver of that risk reduction.

Michael Lonegan asked about the specific operational steps being taken to strengthen equipment bonding processes and the basis for the company's confidence in sustaining the presumption of prudency for the Eaton fire. He also questioned if the fire could negatively impact the GRC outcome.

Answer

CEO Pedro Pizarro reiterated confidence that SCE can demonstrate it acted as a reasonable operator, which is the standard for prudency. He and executive Steven Powell explained that the company continuously learns and improves, citing a risk-prioritized approach to hardening the grid and enhancing inspection and vegetation management practices. CFO Maria Rigatti added that the GRC and Woolsey cost recovery proceedings are very far along and are expected to continue on their established paths without being impacted.

Michael Lonegan inquired about the General Rate Case (GRC) in the context of affordability concerns in California and also asked about the company's strategy for managing accelerated load growth through CapEx prioritization or alternative funding.

Answer

President and CEO Pedro Pizarro addressed affordability, noting the rate trajectory is expected to be at or below local inflation through 2028 and that total customer energy bills are projected to decrease long-term. He also stated the company is focused on the GRC outcome before considering other capital avenues. EVP and CFO Maria Rigatti added that even intervenor positions support a 6% rate base growth, reflecting the company's focus on affordability in its filing.

Michael Lonegan asked about PGE's preparedness for a potential slowdown in industrial load growth, options for capital reallocation, expected capital inflation, and the financing plan's reliance on tax credit monetization.

Answer

President and CEO Maria Pope expressed confidence in the industrial growth forecast, citing a diverse customer base and moderating inflation. SVP of Finance and CFO Joe Trpik clarified that the base financing plan does not heavily rely on tax credits, except for the Seaside project. He added that future tax credits are primarily a tool for customer affordability but also ease financing pressure, noting strong market interest for monetization.

Michael Lonegan asked about the company's willingness to commit to a rate case stay-out period in exchange for a tracker for the Seaside project. He also sought clarity on equity needs beyond 2026 and the target FFO to debt metric.

Answer

President and CEO Maria Pope acknowledged the OPUC's request and mentioned they are considering it alongside discussions for multiyear regulatory solutions to find a durable outcome. Senior Vice President of Finance and CFO Joseph Trpik reiterated the plan to maintain a 50-50 capital structure, projecting equity needs in the low-to-mid hundreds of millions beyond 2026, exclusive of RFPs, to maintain balance sheet strength.

Michael Lonegan inquired how the potential for higher ownership in the current RFP positions the company within its 5-7% EPS growth target and whether regulatory mechanisms withdrawn from the current rate case might be proposed again in the future.

Answer

SVP & CFO Joe Trpik stated that a successful RFP outcome, regardless of the final ownership percentage, is consistent with achieving their 5-7% EPS growth guidance. He also indicated that proposals for mechanisms like investment recovery trackers will likely be brought forward again in future proceedings, possibly within a multi-year framework, to help meet clean energy goals.

Michael Lonegan asked what ROE and equity ratio are embedded in the long-term EPS forecast and whether the company sees an opportunity to raise its growth rate. He also asked for a narrower view on the approach to the $2.8 billion of capital in the SB 410 filing.

Answer

CFO Carolyn Burke reiterated that the company plans conservatively but declined to share the specific ROE assumption embedded in their financial plan. CEO Patti Poppe addressed the SB 410 filing by stating the priority is connecting new customers who need electricity in a timely manner and that this growth is reflected in current and future plans.

Michael Lonegan asked why asset sales were not mentioned as a source of efficient financing and if they have been ruled out. He also inquired about the timeline for formally incorporating the 'amplified' simple affordable model elements, like higher O&M savings, into the financial plan.

Answer

CFO Carolyn Burke confirmed that asset sales are not considered a primary source of financing for the company's future plans. CEO Patti Poppe explained that the amplified model is already materializing, with the $1 billion capital addition being a key proof point. She noted that future O&M savings and load growth forecasts will be formally reflected in the next General Rate Case (GRC) filing.

Michael Lonegan inquired about the status of settlement discussions in the Ohio base rate case and asked for an update on the potential upside to capital expenditures from the growing data center pipeline.

Answer

Brian Tierney, Chair, President and CEO, described the Ohio settlement discussions as "productive and constructive," noting they are focused on typical items like ROE and capital structure. He added that while data center interest remains strong, particularly with Meta's new AI-focused facility, the long-term CapEx outlook for this segment has not changed from previous disclosures.

Michael Lonegan asked if the 6-8% core EPS growth forecast assumes the targeted 9.5-10% consolidated ROE and what the projected ROE for Ohio is. He also inquired about the potential size, timing, and funding for the West Virginia generation opportunity and incremental data center capex.

Answer

Executive K. Taylor confirmed the forecast assumes a 9.5-10% consolidated earned ROE and an Ohio ROE in the 9.5-10.5% range. Executive Brian Tierney estimated the West Virginia generation opportunity could be a $4-6 billion investment over 12-15 years, starting in the outer years of the current plan. He added that such incremental capital would be funded with a traditional mix of cash flow, debt, and equity instruments.

Michael Lonegan asked about the potential need for equity to finance incremental investments beyond the current plan and inquired about the expected year-end FFO to debt metric compared to the company's target.

Answer

Executive Jon Taylor stated that the company has cushion in its credit metrics for additional CapEx and that the current financing plan remains comfortable, with no new equity needs anticipated. He projected the year-end FFO to debt ratio would be just under 13%, below the target due to one-time settlement payments and storm costs, but would be near 14% on a normalized basis.

Michael Lonegan inquired about the timing and scope of the Phase 2 resiliency program filings and asked about Entergy's commitment to its 6% annual dividend growth target in light of the expanding capital plan.

Answer

CEO Andrew Marsh indicated that filings for the next phase of resiliency investments are expected around the end of the year to ensure a seamless continuation of work. CFO Kimberly Fontan added that capital for Phase 2 would be added to the plan upon regulatory clarity. Regarding the dividend, she affirmed the 6% growth expectation, noting the payout ratio might decline from its historical 60-65% range due to high earnings growth.

Michael Lonegan asked why 2025 EPS guidance was maintained despite favorable weather and O&M flexibility, and inquired if there is a long-term target for the dividend payout ratio given the higher EPS growth outlook.

Answer

Executive Kimberly Fontan explained that O&M is flexed within a year and that conservative planning principles support maintaining the 2025 outlook, as no major business drivers have changed for that year. She noted the payout ratio will decline to just under 60% but that no specific target has been set, with the focus remaining on 6% dividend growth.