Financing Plan & Capital Needs
Q: How will you finance the remaining $400 million capital need?
A: Andrew Cooper stated they have an unidentified external financing need of an incremental $400 million from the parent over the next couple of years. They will continue to explore different markets to meet that need, with the base case being something like an ATM because it matches well with deploying capital and investing proceeds into the utility. They are also considering hybrid securities and are focused on maintaining a balanced capital structure, being judicious about parent company debt, and maintaining their targeted range of 14% to 16% FFO to debt.

Sales Growth from Data Centers
Q: How is data center load affecting sales growth?
A: Andrew Cooper explained that they saw 5.9% sales growth for the quarter, driven by large high-load-factor C&I customers, including data centers and the ramp-up of Taiwan Semiconductor Manufacturing Company (TSMC) and their suppliers. In the near term, growth is more weighted towards data centers, but in the latter part of their forecast, advanced manufacturing growth from companies like TSMC will take over. Over the decade, their Integrated Resource Plan (IRP) expects roughly half of the growth from advanced manufacturing and half from data centers.

Regulatory Lag and Earnings Impact
Q: How is regulatory lag affecting your earnings guidance?
A: Andrew Cooper acknowledged that regulatory lag is increasing due to costs based on a historic test year from the middle of 2021, before significant inflation and interest rate increases. This creates a drift from their ability to earn close to their authorized ROE. They are focusing on initiatives to reduce regulatory lag, such as the rider mechanisms for generation and transmission investments, which cover about 30% to 40% of their capital. For operating costs and distribution capital not covered by sales growth, they are working on regulatory initiatives and cost management to address the lag.

Load Growth Skewed to C&I
Q: Will C&I load growth affect cost of service in rate cases?
A: Jeffrey Guldner noted that high-load-factor C&I customers can make the system operate more efficiently, but it's important to reflect this in the cost of service to allocate incremental costs appropriately. There is increased attention on ensuring that the cost of service balances the benefits and costs of serving these customers.

SRB Capital Deployment & RFPs
Q: What's the status of SRB capital deployment and RFPs?
A: Andrew Cooper mentioned they are working through a competitive RFP process, negotiating projects from a 1,000-megawatt RFP in 2023. They have a healthy pipeline across a diverse set of fuels, including renewable gas, and feel good about projects meeting the criteria for the Supply Resource Balancing (SRB) mechanism. The illustrative projects could represent up to 40%+ of the megawatts they need to procure based on their IRP over the next few years.

Wildfire Discussions with Regulators
Q: What conversations are you having about wildfire issues?
A: Jeffrey Guldner stated that extensive conversations are happening at multiple levels regarding wildfire issues. These include technical work, sharing lessons with other utilities, constructive workshops with regulators, and discussions with customers, particularly around Public Safety Power Shutoff (PSPS) programs. They are also engaged in conversations on the insurance side to find better solutions.

Impact of Rooftop Solar Installations
Q: How are rooftop solar installations affecting sales growth?
A: Andrew Cooper explained that they expect fairly modest residential sales growth, with customer growth of 1.5% being partially offset by energy efficiency and distributed generation adoption. They continue to monitor trends around distributed generation and electric vehicles, but the impact is accounted for in their plan, and they didn't note a significant earnings sensitivity.