Paul Patterson

Paul Patterson inquired about the potential for a settlement in the ongoing rate case, considering recent discussions in Arizona and the formula rate decision from the UNS case. He also asked for the company's perspective on new nuclear opportunities in Arizona, particularly in the near term, following a recent commission hearing that indicated excitement for this resource.

Answer

Chairman, President, and CEO Ted Geisler stated that the company is currently focused on processing the rate case traditionally but remains open to settlements, noting the unique aspects of aligning formula rate mechanics and rate design for the high load factor tariff. Regarding new nuclear, he affirmed strong community and policymaker support but clarified that new nuclear in Arizona is a medium to long-term opportunity, not near-term, due to significant capital, policy, and supply chain requirements, despite active industry involvement.

Paul Patterson asked if there were any thoughts or discussions about a potential settlement on the rate case, given the upcoming staff and intervener testimony and the recent UNS formula rate decision. He also inquired about the company's thoughts on the excitement for nuclear power, particularly regarding any near-term opportunities for new nuclear in Arizona.

Answer

Chairman, President, and CEO Ted Geisler stated that the company is focused on processing the rate case in the traditional manner, though they remain open to settlements. He emphasized that unique aspects like formula rate mechanics and high load factor tariff rate design are best addressed through the traditional hearing process. Regarding nuclear, Geisler noted strong community support for Palo Verde and interest in new nuclear, but clarified that new nuclear in Arizona is a medium to long-term opportunity, requiring significant capital, constructive policy, and supply chain capacity.

Paul Patterson asked for clarification on a slide showing a decline in solar power plant performance, questioning the reason for the drop from 36% to 26%.

Answer

President, CEO & Chairman Ted Geisler explained that the metric reflects the diminishing capacity value of solar as more is installed on the system, not a decline in the operational performance or curtailment of the solar facilities themselves. He confirmed the plants are performing as expected.

Paul Patterson of Glenrock Associates asked about the specific trigger for the gain recognized from the El Dorado equity investment during the quarter.

Answer

CFO Andrew Cooper explained that El Dorado is a long-standing entity holding non-utility investments. The gain was recognized on a minority stake in an electric switchgear company that has recently shown a higher degree of profitability, prompting a revaluation. He emphasized that the El Dorado business is very small and consists mainly of legacy investments.

Paul Patterson sought clarification on the Arizona Corporation Commission election, asking for the approximate number of outstanding votes and the expected timeline for final results.

Answer

CEO Jeffrey Guldner estimated that around 120,000 votes were still to be counted out of approximately 2 million total votes. He suggested that the count would get much closer to completion by the end of the day as late early ballots are processed ahead of the final certification.

Paul Patterson asked about the nature of FirstEnergy's transmission investments, specifically how much is driven by demand versus aging infrastructure and reliability, and the status of the New Jersey offshore wind (tri-collector) project. He also inquired about the cost allocation for capital expenditures, particularly whether new data center demand growth would absorb a significant portion, and the overall reception and momentum for FirstEnergy's generation proposals with regulators.

Answer

Brian Tierney, CEO and President, stated that FirstEnergy is working with New Jersey and PJM to modify the offshore wind plan to ensure 'no regrets' investments regardless of offshore wind development. For transmission, he noted that $5 billion from PJM open windows since 2022 is demand-driven, while a large portion addresses aging infrastructure. Jon Taylor, Senior Vice President and Chief Financial Officer, added that each gigawatt of data center load could drive $250 million in incremental CapEx. Mr. Tierney explained that direct customer costs are borne by the customer, and regional upgrades follow PJM's 'user pays' principle. He characterized the reception to generation proposals in West Virginia as overwhelmingly positive, leading to the filing for the first unit and interest in further investments, while other states present more challenges due to deregulation.

Paul Patterson asked about the proportion of transmission investment that is demand-driven versus aging infrastructure replacement, and the status of the New Jersey offshore wind Tri-Collector project. He also inquired about the cost allocation for new capital expenditures (data centers vs. regional upgrades) and the overall reception and momentum for FirstEnergy's generation proposals in its service territories.

Answer

Brian Tierney (CEO and President) stated that FirstEnergy is working with New Jersey and PJM to modify the Tri-Collector project to be 'no regrets' regardless of offshore wind. He noted that $5 billion from PJM open windows since 2022 is demand-driven, while a significant portion of other transmission investment addresses aging infrastructure (60-70% of the system reaching end-of-life in 10 years). He clarified that direct customer costs are borne by the customer, while regional upgrades follow PJM's 'user pays' principle. He described the reception to West Virginia's generation proposal as 'overwhelmingly positive' and a clear path for investment, contrasting it with challenges in other deregulated states. Jon Taylor added that each gigawatt of data center load could drive $250 million in incremental transmission CapEx.

Paul Patterson asked for clarification on the ability to build rate-based generation in several states, questioned the appetite for this more direct approach versus the PJM process, and asked if the ESP V withdrawal could face controversy.

Answer

Executive Brian Tierney confirmed that state laws in West Virginia, Ohio, and Maryland allow for utility-owned generation but stressed the company would be very thoughtful before re-entering the generation business and is not interested in competitive generation. He also stated the ESP V withdrawal should not be controversial, as it follows established precedent and is codified in Ohio law.

Paul Patterson of Glenrock Associates sought clarification on the financial impact of the Aquarion sale, specifically the difference in incremental equity or equity hybrids needed if the sale occurs versus if it does not. Patterson also asked about the Eversource gas benefit recognized in the fourth quarter, inquiring why it was reflected in the parent company's financials rather than the gas business, its amount, and the underlying reason.

Answer

CFO John Moreira clarified that the pure equity raise of $800 million-$1.1 billion remains unchanged regardless of the Aquarion sale. The flexibility lies in alternative financing, with the Aquarion sale potentially providing $1.6 billion in equity proceeds, reducing the need for those alternatives. CEO Joe Nolan added that if the sale doesn't close, Eversource would file a rate case for Aquarion to improve earnings. Moreira explained that the gas benefit, related to EGMA integration costs incurred years ago, was recorded at the parent company because the parent was the source of funds, and the benefit reimburses the parent, even though EGMA customers reap the benefits.

Paul Patterson sought clarification on the financial difference, specifically regarding incremental equity or equity hybrids, if the Aquarion sale proceeds are not realized. He also asked for an explanation of a fourth-quarter Eversource Gas benefit recorded in the parent company, including its amount and rationale.

Answer

EVP, CFO, and Treasurer John Moreira clarified that the $800 million to $1.1 billion pure equity raise would not change, but the Aquarion sale would provide $1.6 billion for the equity portion of alternative financing. CEO Joe Nolan added that if the sale doesn't close, Eversource would file a rate case for Aquarion. John Moreira explained that the gas benefit related to EGMA integration costs incurred by the parent company several years ago, with the benefit recorded at the parent to reimburse it, while recovery comes from EGMA customers.

Paul Patterson inquired about Eversource's adjusted tax rate for the quarter and its future trajectory. He also sought clarification on whether the tax benefits offsetting the offshore wind liability were reflected in the non-adjusted earnings or specifically allocated to the write-off.

Answer

Executive Vice President, Chief Financial Officer, and Treasurer John Moreira stated that the tax rate was in the high teens last year, is expected to be in the low 20% range this year, and should normalize in 2026. He clarified that the $210 million tax benefit for offshore wind was directly related to that liability, stemming from a change in estimate from 2024 that recharacterized the loss as ordinary rather than capital, allowing for a longer carryforward period.

Paul Patterson asked about Eversource's adjusted tax rate for the quarter and its outlook going forward. He also sought clarification on whether the tax benefits offsetting the offshore wind liability were reflected in the non-adjusted numbers or specifically allocated to the write-off.

Answer

CFO John Moreira stated that the company's tax rate for recurring results, which was in the high teens in past years, is expected to be in the low 20s this year, moving to a more normal sustainable level in 2026. He clarified that the $210 million tax benefit for offshore wind was directly related to that liability, stemming from a change in estimate from 2024 that allowed more of the loss to be characterized as ordinary rather than capital, which can be carried forward for 15+ years.

Paul Patterson of Jefferies, on behalf of Julian Dumoulin-Smith, sought clarification on the plan for equity needs for the remainder of 2025 and asked for insights into the earnings cadence for the second half of the year, given the corporate drag in the first half.

Answer

EVP, CFO & Treasurer John Moreira clarified that while a large equity issuance is not expected, they will monitor liquidity needs pending the Aquarion closing, and he does not anticipate a large amount, if any, in 2026. He attributed the first-half corporate drag to interest cost headwinds from the offshore wind sale, which he expects to be less significant in the second half.

Paul Patterson of Glenrock Associates asked about the practical timing of PBR impacts in Connecticut and whether to expect broader energy burden-based affordability programs in Massachusetts.

Answer

EVP and CFO John Moreira stated that the timing for PBR implementation in the Yankee Gas case is uncertain, as the final PBR framework decision is expected mid-year, close to the case's October decision date. Chairman, President and CEO Joseph Nolan commented that the Massachusetts administration is highly collaborative on affordability, and while all options are on the table, it's too early to predict specific outcomes.

Paul Patterson sought clarification on the company's O&M-related concerns in the Connecticut AMI proceeding and asked for Eversource's perspective on the regional debate around swapping Millstone nuclear power for offshore wind costs.

Answer

EVP, CFO and Treasurer John Moreira deferred the detailed AMI question to Investor Relations for an offline discussion. Chairman, President and CEO Joseph Nolan reiterated his confidence in the collaborative approach among New England governors to find a regional clean energy solution that benefits all customers, describing it as a 'potluck' where each state brings assets to the table.

Paul Patterson asked about the slight projected decrease in residential electric sales for 2026, inquiring if it's due to energy efficiency or other factors. He also asked for the income statement geography of the $75 million cash credits related to the Illinois impairment.

Answer

CFO Xia Liu explained that the slight reduction in residential sales for 2026 is due to a conservative forecast, with good customer growth offset by a slight decline in use per customer. CEO Scott Lauber stated that the $75 million cash credits related to the Illinois settlement will be recognized through revenues for accounting reasons.

Paul Patterson from Glenrock Associates asked about the projected decline in residential sales for 2026, specifically if it's due to energy efficiency, and inquired about the income statement geography for the $75 million in Illinois cash credits.

Answer

Xia Liu, CFO of WEC Energy Group, explained that the slight reduction in residential sales for 2026 reflects a conservative forecast, with good customer growth partially offset by a decline in use per customer due to energy efficiency. Scott Lauber, CEO, clarified that the $75 million in Illinois cash credits would be recognized through revenues for accounting purposes.

Paul Patterson inquired about the expected impact on customer rates from the new, larger capital expenditure plan and asked for an explanation of the significant increase in Q3 commercial natural gas sales.

Answer

Executive Scott Lauber projected that customer rate increases should remain in line with inflation, possibly 1% above, because a large portion of the capital spending is driven by economic development. Regarding the Q3 gas sales, he advised not to read into it, as Q3 is a very low-volume quarter where small changes can cause large percentage swings, and suggested focusing on year-to-date trends.

Paul Patterson of Glenrock Associates asked about the expected timeframe for a resolution on the company's appeal of the Illinois Commerce Commission's rate order at the Illinois Appellate Court.

Answer

President and CEO Scott Lauber provided a direct estimate, stating that he anticipates the appeal process will take one to two years to reach a resolution.

Paul Patterson asked about the Public Safety Power Shutoffs (PSPSs), the news surrounding them from fire districts and lawmakers, and Xcel Energy's approach to this safety issue. He also inquired if the pushback or coverage on PSPSs indicates a communication issue, suggesting a lack of public understanding.

Answer

Bob Frenzel, Chairman, President, and CEO, affirmed Xcel Energy's commitment to protecting communities from wildfire risks and the necessity of PSPSs in dangerous situations, such as the December Colorado event. He emphasized ongoing investments in system hardening, operational intelligence, and efforts to minimize scope and impact. He acknowledged room for improvement in communication, noting investments in technology for outage maps and real-time information sharing to help customers understand why outages occur and provide better recovery times. He highlighted significant year-over-year improvement in coordination, early warning, and restoration times between 2024 and 2025.

Paul Patterson inquired about the Public Safety Power Shutoffs (PSPSs) in Colorado, specifically addressing the pushback from fire districts and lawmakers, and whether the negative reaction indicates a communication issue.

Answer

Bob Frenzel, Chairman, President, and CEO, affirmed Xcel Energy's 100% commitment to protecting communities from wildfire risk, stating that PSPS decisions are not taken lightly and are supported by significant investment in system hardening and operational intelligence. He stood by the December decision in Colorado as necessary due to dangerous conditions. Brian Van Abel, Executive Vice President and Chief Financial Officer, acknowledged remarkable year-over-year improvement in PSPS coordination and restoration but recognized room for communication improvement, particularly in explaining why some circuits are proactively shut off versus those affected by weather-related outages.

Paul Patterson sought clarification on the customer rate trajectory, asking if the 2.2% figure from a Colorado filing is a good proxy for other territories. He also asked for more detail on the 9,000 MW data center pipeline and the process for converting requests into firm projects.

Answer

EVP and CFO Brian Van Abel clarified the 2.2% was a 20-year projection for Colorado and that a 1-3% annual bill impact is a better estimate across all jurisdictions for the next five years. He explained the 9,000 MW pipeline represents all inbound requests, which are then vetted into a smaller, high-probability forecast based on signed contracts or land acquisitions. Chairman, President and CEO Robert Frenzel added that meeting this national demand will ultimately lower per-unit costs for all customers by increasing system load factor.

Paul Patterson asked for clarification on Ameren's earnings guidance, specifically if there's potential for upside beyond current projections. He also inquired about any potential rate-based changes resulting from a tax gain related to a FERC order on net operating loss carryforwards, and the ROE change from Illinois legislation for energy efficiency.

Answer

Marty Lyons, Chairman, President, and CEO, and Michael Moehn, Senior Executive Vice President and Chief Financial Officer, confirmed potential for upside but stated current guidance reflects known facts, with confidence in delivering near the upper end of the 6-8% range. Michael Moehn noted a small, immaterial rate base change from the tax gain. Marty Lyons viewed the overall ROE effect from Illinois energy efficiency legislation as more neutral, with good investment opportunities and incentives for execution.

Paul Patterson asked if Ameren's current earnings guidance was conservative with potential for upside, inquired about any rate-based changes resulting from the FERC order on tax gains, and sought clarification on whether the ROE change in Illinois legislation represented a potential boost.

Answer

Chairman, President, and CEO Marty Lyons and Senior EVP and CFO Michael Moehn stated that current guidance is accurate with potential upside, pending tariff approvals. Michael Moehn clarified that the tax benefit would result in a small, non-material rate-based change. Marty Lyons viewed the ROE effect from the Illinois legislation as more neutral, with opportunities to earn incentives through energy efficiency programs.

Paul Patterson of Glenrock Associates LLC questioned Ameren's perspective on a recent FERC complaint against MISO's Tranche 2.1 projects and the potential process for dealing with disruptions to renewable tax credits under a new administration.

Answer

President, CEO, & Chairman Martin Lyons expressed disappointment with the FERC filing but reiterated support for MISO's process and the need for the transmission investments. Regarding tax credits, Lyons stated confidence that the legislative intent of the OBBBA was to rely on a decade of Treasury precedent. Senior EVP & CFO Michael Moehn detailed that the company's $1.5 billion in expected credits are well-positioned, with a significant portion from projects already in service or being safe-harbored under the well-established physical work test.

Paul Patterson from Glenrock Associates asked about the significance of upcoming oral arguments in the Illinois grid plan case, sought clarification on how MISO transmission projects lower customer costs, and questioned the drivers behind new load growth being concentrated in Missouri.

Answer

Martin Lyons, Chairman, President and CEO, and Michael Moehn, Senior Executive VP and CFO, characterized the oral arguments as a normal procedural step, expressing confidence based on the constructive ALJ proposed order. Lyons explained that transmission projects have a positive benefit-to-cost ratio as calculated by MISO, leading to lower long-term costs for customers. He also clarified that while currently announced projects are 90% in Missouri, the development pipeline has significant interest in both Missouri (65%) and Illinois (35%), and the initial split is merely a result of which agreements were finalized first.

Paul Patterson questioned the impact of potential cash flow improvements from new large load agreements on the $2.8 billion equity financing plan, the nature of the $0.10 EPS mitigation measures, and the ramp-up timeline and tariff applicability for the Lambda data center project.

Answer

Bryan Buckler, EVP and CFO, Evergy, stated that increased energy usage from pipeline customers could significantly improve cash flows from 2026, potentially reducing equity needs by 'hundreds of millions of dollars.' David Campbell, Chairman and CEO, Evergy, clarified that the $0.10 mitigation was an in-year offset for weather headwinds, not impacting long-term outlook. He also noted the Lambda project starts at 25 MW next year, ramping to 100 MW over 4-5 years, and customers are typically subject to LLPS tariffs based on their ultimate load levels.

Paul Patterson asked about the potential impact of cash flows from new agreements on the $2.8 billion equity funding needs, the nature of the $0.10 EPS mitigation measures (timing vs. ongoing), and the ramp-up timeframe for the Lambda deal (25 MW to 100 MW) and its treatment under the LLPS tariffs.

Answer

Bryan Buckler, EVP and CFO, Evergy, stated that improved cash flows from operations, starting in 2026, could reduce equity needs by 'hundreds of millions of dollars,' though potential CapEx upside might necessitate a balanced approach. David Campbell, Chairman and CEO, Evergy, clarified that the $0.10 mitigation measures were in-year actions to offset weather headwinds and do not impact long-term fundamentals. For Lambda, David Campbell estimated a 4-5 year ramp to 100 MW and explained that customers are typically focused on their ultimate load level, implying it would eventually fall under the LLPS tariff.

Paul Patterson of Glenrock Associates LLC asked about the significance of the large load tariff proceedings on finalizing customer agreements and the potential risk to renewable projects from new federal regulations or permitting requirements.

Answer

CEO David Campbell stated that while the large load tariff proceedings are an important input for customers, they are not a gating item, as evidenced by significant financial commitments already received. He expects announcements by year-end. On renewables, Campbell expressed confidence that the three approved solar projects will qualify under existing OBBA rules, and for future projects, the company has a robust set of flexible options to adapt to any new federal guidance.

Paul Patterson of Glenrock Associates sought several clarifications: whether the 'no common equity in 2025' statement includes equity-linked securities, the potential timing for announcements on new large customers, the expected customer rate impact through 2029, and if the new gas plants involve advanced technologies like CCS.

Answer

EVP and CFO Bryan Buckler confirmed no plans for common equity in 2025 but noted the company will evaluate options like junior subordinated notes. Chairman and CEO David Campbell is targeting a conclusion to new customer negotiations in the next few months. He reiterated the goal is to keep the customer rate trajectory in line with inflation and confirmed the new gas plants use proven, highly efficient modern technology, but do not include CCS in the baseline plan.

Paul Patterson of Glenrock Associates LLC questioned the likelihood of legislative action in New Jersey this year, given the political dynamics of a legislative recess and an upcoming election. He also asked if PSEG might revisit a utility-owned battery solution given current capacity market prices.

Answer

Chair, President & CEO Ralph LaRossa suggested legislative action is possible late in the year, noting consistent desire for more state control from the current administration and gubernatorial candidates. On batteries, he acknowledged the revenue opportunity but noted the state currently views it as a merchant solution, and PSEG's past rate-based proposal has not been acted upon.

Paul Patterson of Glenrock Associates LLC asked for PSEG's perspective on the upcoming FERC transmission policy agenda and the potential impact of grid-enhancing technologies (GETs).

Answer

Chair, President and CEO Ralph LaRossa stated that PSEG is monitoring the FERC agenda closely but expects a balanced outcome without "wild swings." Regarding GETs, he explained that PSEG has piloted some technologies, like advanced conductors, and views them as part of a cost-benefit analysis for consumers. He noted these technologies are another tool for PJM to consider in solving future grid gaps driven by electrification.

Paul Patterson asked for PSEG's perspective on the upcoming FERC transmission policy agenda and the potential impact of grid-enhancing technologies (GETs) on its operations.

Answer

Chair, President and CEO Ralph LaRossa conveyed that PSEG is monitoring the FERC agenda but anticipates a balanced approach with no 'wild swings' in policy. Regarding GETs, he said PSEG has piloted some technologies and views them as another tool for PJM to use, to be evaluated on a cost-benefit basis for consumers rather than proactively deploying them ahead of need.

Paul Patterson asked about the potential impact of a recent executive order on the safe-harboring provisions for renewable tax credits and how the company is managing this uncertainty.

Answer

CFO Kimberly Fontan stated that while Entergy is engaged with industry partners, there is no specific insight yet on the executive order's final outcome. She confirmed the company has been working to safe harbor its renewable projects under the current rules and will adapt if the framework changes, but is proceeding as planned for now.

Paul Patterson asked about the expected trajectory for customer rates during the forecast period, given the focus on affordability, and inquired about the earliest possible timeline for an announcement on a new nuclear project.

Answer

CFO Kimberly Fontan stated that while the forward gas curve adds pressure, the non-fuel rate increase is expected to be around 3.5%, with moderation expected as new customer sales ramp up. CEO Andrew Marsh advised that a new nuclear announcement is not imminent and should not be expected in the current year, although active discussions with customers are ongoing.

Paul Patterson of Glenrock Associates asked about the potential timing and impact of new utility-owned generation on wholesale costs in Pennsylvania and requested an update on the DSIC cap increase decision.

Answer

President and CEO Vince Sorgi explained that while legislation for utility-owned generation could pass this year, the process of rulemaking and construction would take 3-5 years before new assets could impact PJM auction prices. CFO Joe Bergstein confirmed that PPL is still awaiting a decision from the commission on the DSIC waiver and has no specific timeline to share.

Paul Patterson sought to confirm the upside to sales growth and CapEx, asked how the more robust outlook might affect earnings differently than in the past, and inquired about the rate of return applied to deferred storm costs.

Answer

CFO Dan Tucker confirmed the upside to sales and CapEx but reiterated that any impact on the EPS growth outlook would be long-term, as the load materializes in the back half of the forecast period ('28 and beyond). Regarding the deferral, he stated the return has typically been the company's cost of capital, but the commission retains flexibility to adjust it.