Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you compare the growth forecast you provided with what ERCOT used last year, and how does this growth fit into your capital plan? A: Last year's ERCOT submission focused on West Texas, particularly the Permian Basin, with less than a gigawatt of interconnection demand from us. This year, we're adding a 10 gigawatt increase for the Houston area. The growth is a significant tailwind for us, potentially adding at least $3 billion in electric transmission CapEx, pending the decision on voltage standards.
Q: Any updates on rating agency views, particularly regarding the recovery from Hurricane Beryl? A: Rating agencies are focused on three factors: the constructive Texas regulatory environment, the Houston Electric rate case, and the securitizations of prior storm costs. We're ahead of plan on the $500 million May storm impacts and are progressing on the Hurricane Beryl-related costs prudency review.
Q: Have you committed to an Analyst Day, and will you include the 50% load growth upside for Houston in the capital plan? A: Yes, we plan to update and roll forward a new 10-year capital investment plan this year, incorporating the Texas voltage standard decision expected by May. We'll provide an update later this year, including electric transmission opportunities in Texas and other CapEx tailwinds.
Q: Can you elaborate on the range of options and timing for equity funding, and is asset optimization still an avenue? A: We've covered equity needs for 2025 and will use the ATM for modest equity needs going forward, funding the enterprise at 50% debt and 50% equity. We consistently evaluate efficient financing options, including asset optimization, as demonstrated by the Louisiana and Mississippi Gas LDC sales.
Q: How will you deliver on the O&M reduction program given the increase in resiliency spending? A: Despite increased vegetation management spending, we aim for 1% to 2% O&M reductions annually. We'll achieve this through fewer truck rolls due to automated devices, standardizing IT systems, and empowering employees to improve processes and reduce costs.
Q: Can you provide an update on the mobile generation units and their financial impact? A: The units will be donated to ERCOT for up to two years, with no regulated return during this period. We'll exclude the financial impacts from non-GAAP earnings. Afterward, we'll market the units at higher market rates, expecting revenues to exceed foregone costs.
Q: Can you frame the status of projects and customer requests in the 61 gigawatt load growth level? A: We've received requests totaling 40 gigawatts, with some exploratory and others early-stage. We anticipate 10 gigawatts of realistic growth by 2031, with potential for more as new projects emerge.
Q: Any update on the data center pipeline within the load growth outlook? A: Data center demand in Houston is now over 11 gigawatts, part of the 40 gigawatts of requests. Not all will materialize, but activity is accelerating. We also see data center demand in Indiana, with potential opportunities for significant hyperscaler projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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