EPS Growth vs Rate Base Growth
Q: Why is EPS growth below rate base growth?
A: Management explained that while rate base is expected to grow at 9%, EPS growth is projected at 6% to 8% due to factors like the decline in contributions from Signal Peak and pension impacts. They aim to align earned returns with allowed returns through upcoming rate cases in Ohio and Pennsylvania, minimizing regulatory lag and improving earnings quality.

CapEx Increase and Funding
Q: Can you fund increased CapEx without more equity?
A: Yes, they can fund the incremental CapEx without issuing additional equity. Prior equity transactions totaling $7 billion, including an upcoming $3.5 billion in 2024, provide sufficient financial flexibility. This strong balance sheet enables them to invest in regulated properties without tapping equity markets.

Customer Bill Impacts
Q: How will higher CapEx affect customer bills?
A: Management expects customer bill increases to be in the single digits, with rates remaining affordable. In states like New Jersey, West Virginia, and Maryland, their rates are 22% to 30% below in-state peers. Electricity's share of customer wallet has decreased to 1.3% from 1.6%, indicating room for investment without significant burden on customers.

Load Growth Assumptions
Q: Is the 1% load growth assumption conservative?
A: They believe the 1% load growth assumption is appropriate for now, although there may be upside from factors like data centers and electrification. They prefer to include confirmed growth in the plan rather than forecasted increases.

Signal Peak Impact
Q: What is the future impact of Signal Peak?
A: Signal Peak's contribution to earnings is decreasing, from $0.24 to $0.12 in 2024, and will step down further. While strategic options are limited due to market conditions, its diminishing role reduces earnings volatility and improves earnings quality.

Pension Volatility Management
Q: How are you limiting pension volatility?
A: They plan to execute a lift-out transaction for another $700 million of former generation pension liabilities, potentially this year. They are also exploring regulatory mechanisms to mitigate pension volatility, with authority to file in West Virginia and New Jersey.

Data Center Opportunities
Q: How will data centers impact growth?
A: Data center development presents incremental investment opportunities. For example, they secured over $800 million of investment through PJM Open Window 3 and are seeing significant data center growth in Maryland. This trend is expected to expand into Pennsylvania and Ohio, enhancing load growth and CapEx prospects.

O&M Management
Q: How will O&M costs be managed with higher CapEx?
A: O&M increases are expected to be less than 2% annually. They plan to manage O&M through continuous improvement, focusing on efficiency and cost control despite the increased CapEx.

Balance Sheet Goals
Q: Are you satisfied with your balance sheet?
A: Yes, they are pleased with the strong balance sheet, aiming for 14% to 15% FFO to debt by the end of 2024. The $3.5 billion equity influx in 2024 and prior equity raises have reduced holding company debt to 26%, with a target of 20% or better by 2026.

Regulatory Milestones
Q: What's the status of regulatory filings like Grid Mod II?
A: They are working through regulatory processes like Grid Mod II and ESP V, anticipating constructive outcomes. They plan to file base rate cases in Ohio and Pennsylvania this year to update returns and cost structures, aligning earned returns with allowed returns.

Dividend Policy
Q: How do you view your dividend policy amid sector trends?
A: They believe it's time to reward shareholders with dividend increases, starting with the first in over three years announced in September. They plan to grow the dividend with earnings over time, supported by their healthy balance sheet and lack of significant equity needs.