Pinnacle West Capital (PNW) 6 Nov 242024 Q3 Earnings call transcript

Good day, everyone, and welcome to the Pinnacle West Capital Corporation 2024 Third Quarter Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Amanda Ho.

Ma'am, the floor is yours.

Thank you, Matt. I would like to thank everyone for participating in this conference call and webcast to review our third quarter 2024 earnings, recent developments and operating performance.

be Andrew and Cooper. will and Jeff today CFO, our speakers our CEO, Chairman Guldner; Our are us. Ted and Vice Policy, Jose APS Esparza, here Geisler, President; Senior President Jacob of Tetlow, COO; also with Public

expectations, The based First, I a website, actual on expectations. we and cover and information. need along available slides on with be are forward-looking Investor release our slides and Today's differ with using related may few will our materially that details to current you. statements Relations our contain results earnings comments from

cause morning. XXXX refer statements, from materially Our XX-Q as MD&A uncertainties third quarter in actual Form contained as those could identify language that was the disclosures. forward-looking results filed for to which this factors and and sections, Please differ document risk our well to risks cautionary that

A our this will through on be website days. available be for November available replay shortly It call XX telephone by XXXX. also next of will XX, the

now over will the call to turn I Jeff.

Amanda. Great. Thank today. joining us Thanks, all for you

on execute management. financial continue to and performance our operational We well

our on update most. customers I'll they expectations. as weather in valley with my XXXX explain our of reliably operations docket, share financial part also I'll the through earnings and also update an the update, and our led in and serving another hot you managing our forward-looking us to record-breaking lag So guidance, will how strong has needed the regulatory provide then Andrew us summer sales and discuss growth he'll success when

on service the an recognize for for exceptional reliable our maintaining So operations record. to summer and doing to through start, our hottest customers teams I job wanted field

wanted Hurricane their help and Arizona, my our here to devastated in and by to to for leave answer restore XX to call who recently rebuild teams Milton. system our the in homes, the keeping assistance Florida power I to members communities addition crew share the for In volunteered appreciation reliable also grid

network for made our assistance a mutual right example our industry's of and promise and it's communities. others great for this Our what's possible, APS delivering doing living by

The triple-digit of The into of eclipse degrees. all-time Valley. XXX-plus degrees XXX temperatures continuing and nighttime long XX new days summer X,XXX we to of summer total temperatures high that and air the or days, record a island of when had days and an of were a meant goodbye the Valley's to around said more demand We XXX last year's season the cool. consecutive often here X. running homes the we peak ended effect with was set XX finally streak of hot the especially in And megawatts mid-October conditioners record we on clock energy days, August heat businesses keep that

our power. available extremely our During when this performed was and generation period, critically well needed the fleet customers

long-term planning adequacy beneficial Our with side for summer. demand careful equipment programs programs prove combined through maintenance resource customer and innovative the

fast and baseload Our assets our performed well. all ramping

helped program. conserve power we've In plant XX,XXX enrolled includes megawatts and work that got called. addition, Cool thermostat thermostats over that nearly used our smart Rewards program, virtual we our together In XXX when that

we a way. historic enrolled in in major partnered unique outage, and program summer, during This our storm with a customers

damage. that sectionalizing in that a of targeted effort that or included in to voluntarily portion experts located storm caused along helped power, thermostats, to specific that with technology successfully strain the the customer grid with of rerouting and that participating by relieve help backups the system electricity Our worked network was homes on conserve customers' operational

to planning innovative service. been This in manner has is a APS that history key providing targeted the time this approach. such program smart thermostat was in a first reliable used Long-term using

to In our contracted Redhawk which expected by Plant Power is be for successfully we expansion, XXXX. that happy fact, I'm in to announce service

quarter, last necessary announced and we of projects the provide energy we to with the generation that clean more reliable, battery will than our add have ensuring APS-owned to resources storage, megawatts XXX along affordable and project, This customers.

the few of tranche our plan in needs, issue we With the to our resource nearly all-source RFP we're XXXX RFP XXXX turning weeks. all-source and attention the next complete, to next

with summer more and past agencies the and most assisted state's extreme local payment each crisis non-profit it we and support customers due its ever assisting weather moratorium programs, bills assistance. for the as community than the to population heat helpful disconnects bill communities to as remains With on important that continue APS experienced connect with arrangements, increased we resources. XXX our vulnerable support our with through Maintain energy summer, relief partnered and

care peers. continue satisfaction, rated experience nationally best I our us utilities Power Satisfaction Finally, our so our customer Power by rated customers first and say in progress our forward year-to-date, I'm year closing customers, as pleased our employees, the in of we proud phone to far, out among customer that center the our as ranked peers, study. extremely XX strong. by J.D. Overall, focus our amongst to our Electric through to on the top and is look J.D. customers places I'm this residential Customer to providing

The grid. of Federal advocates while implementation enabling We progress on utilities. towards on X. Staff Arizona to reliable options. regulatory. on workshop rates held commission regulatory Regulatory focused and provided dedicated from Turning a making October growth electric consumer In consumer Energy that formal they recommendations the remain workshop reducing the continued a heard and to safeguards Commission, lag,

Corporation would corporation Rachel stand, were Commissioner, With and Lea held Lopez. Rene by Commission three Marquez-Peterson, Those current commission reporting, Arizona. held XX% included elections morning Walden seats Obviously, this in about elections be results precincts the seats of yesterday. the if

website, You that's want to at if along, you follow can and the to of both access Secretary State's results.arizona.vote.

focus to we to As affordable look up reliable, customers. and and clean on mission providing service executing remain our XXXX, wrap our and priorities our

for Andrew. and turn I'll today, thank over I you And your it time to

we this Jeff, highlight released and our to results full drivers Earlier third update everyone you, year XXXX key an to I'll and for provide and results. morning, financial today. Thank quarter financial guidance. joining thanks XXXX review those again us

by of will this This share quarter, I financial was provide a our $X.XX to decline higher XXXX and tax driven well year. items financing depreciation Offsetting and earned per and third the We expenses decrease new positive $X.XX these as O&M last Finally, income from implemented impacts this were the several insight compared timing. quarter as into long-term costs year. outlook. factors: rates earlier

of which And Jeff mentioned, to positively another contributed heat, as year. summer last compared record-breaking

strong see across sales classes. We customer continue to growth

the weather For X.X%, sales with was and large customer from C&I residential growth groups. quarter, contributions and both small normalized third

this marks the over expansion growth, continued third at growth This came we growth customers, to of saw quarter quarter. C&I strong in been with customer which sales the for consecutive X.X% C&I also our With our growth retail sector. XX% has continued in the Foundational a the XX.X% quarter. our

XXXX updated Given we to sales our guidance. the adjusted growth expect these trends year's positive X% range $X.XX to for We X% forecast. XXXX in growth of and have now our contribution to have growth $X expectations sales from and long-term financial the with share this our weather, year, earnings strong per consistent

billion our to plan $X.XX of the for growth to expense some capital the the to We've operating the and forecasted to $X.XX range $X.XX Additionally, increased year O&M both $X.XX weather from a capital derisk ability recognizing of to billion. and and for year future billion with billion, expenditure benefit, investment. the increased sustained utilize our

debt per initial an including additional XXXX, $X.XX The with of we lag, in share. to associated regulatory is XXXX financing and we D&A. As $X.XX expect anticipated to towards range XXXX earnings per look costs earnings costs and higher guidance share decrease to compared weather-normalized due equity

service OPEB sales and of management, Canyon positive As of the onetime robust in prior highlighting and amortization O&M are territory. of for business. well offset as and customer strong the partially end continued sale core gain by growth remains XXXX fundamentals period. outlook The for from a growth the our These the Bright our

of expect residents both X.X% customer a range businesses. term, as be and X.X% to growth for for a We destination attractive the long both to Arizona and highly continues XXXX within

sets a highest the number this and customer more XXXX, continue. are number recession since of than record great in the trend new track to We seeing XX,XXX set leader to on expect

and with Where X% range Additionally, we in to factor for contributed ramp growth load by longer anticipate through sales in customers strong and both up. X%, high demand X% of XXXX remains sector. C&I to the term extra weather-normalized to continue X% the growth XXXX existing

Semiconductor the Taiwan recently in fabs to reiterated fact, its decade. build In of out X end commitment by the Arizona

with first The production wafer to in fab earlier entered XXXX. expected early this production start engineered year volume

confident remain we long-term ahead, further our trajectory. in Looking

our X% our to range midpoint the growth reaffirming of $X.XX. to of original XXXX are X% on guidance based $X.XX We guidance EPS

and balancing customer support this growth with strategy continued is cost to financial investment, focus affordability. recovery Our designed on a

the demands from XXXX a Our meeting improving $X.XX on into includes is of reliability to of earlier plan generation plan shared year. infrastructure, into investments, through increase This are this base billion drive focused the service XX% we resources rate X%. of strengthening capital our strategic growth and a to investments plan rapidly transmission plan. new expected These X% investments including growing territory, and

formula plan support of or strategy XXXX. XX% our approved capital have also reliability rate through timeliness our expected the over we cost allowing investments capital in Notably, to recovery. case our last of FERC future updated are rates, To for system this benefit through our in just improved plan, for the both qualify surcharge financing

matched support to of and a Our spending profile. our plan includes and balanced a utility debt mix structure in capital of equity

updated run million in to in QX, approximately to modest million are represent Our increase of From XXXX equity established during annual capital planning $XXX rate. a on period $XXX XX% new we lower than equity February and range million our of annually target this needs $XXX annually. expected a the of the very call

would at-the-market have As capital our investment that believe we previously, with match continue issuance profile. we well equity to program accretive planned an stated

the solid utilize We best-fit while that methods alternative well financing targeting metrics and sheet, to current consistent exploring as ratings. our financing the are believe provides balance us maintaining a all flexibility above with credit options always approach of least-cost

we and operation. customer our As activities capital maintaining our growing we cost-efficient committed serve to a reliably to remain financing base, rapidly execute

And Our broader the efficiency XXXX, Four have into per Unit management in drive Corners at the continued X will long-term future. goal outage operations our and scheduled megawatt spring final remains O&M our to only of hour. facility cost we reduce major in while focus

continuing to and financial ahead As of the long-term we in look lag. address challenges recognizing beyond, continued our while and we financial to strategy remain XXXX confident

Our manufacturing continues growth, semiconductor to creation our of reliable, delivering strong unique and growth our affordable a sales lay position. to strong investments the value service for we focused come, The growth maintaining and foundation compelling financial on future. provides making sustained years the while timely recovery remain with is for coupled This, improving territory. a we robust environment on benefits particularly that in service highlight and the focused customer across classes sector broader regulatory are today and

our This call now for concludes the prepared over I to back operator the questions. turn remarks. will

Instructions] [Operator Pourreza from Your first Partners. is from Guggenheim coming Shar question

prelim, Obviously, regulatory with construct Jeff, start ] guess, the like morning, up making a end it's more lag mean like Republicans proceeding. this, this you are could It's topical X good with looks progress could we [ from the regulatory really but it with guys on the What elections. standpoint, I three commission. to items

better So for worse? see policy direction just curious kind here, but this if we some could imagine about have how it? progress curious shifts can of you're I to thinking in I'm any change or

Yes.

now, you're I think, late report. and that there's think, the of a correct But currently got early most that out and I still had. Republican and is to few -- vote precincts are right some the in, three candidates Shar, generally you've -- earlies,

still that's finalized. obviously, got get So to

a think is you focusing of see you'd Republicans, alignment Thompson amount generally, I Myers with fair that current look I the the comments what like the that made terms the lag Commissioner docket. of on campaigns at had what if and on in regulatory issues think, the were

result that the think the So see likely to continues, you're current that think alignment I -- bench. continued I it's with if that's

there and different I'm the docket. So constructive want throughout of something that Obviously, and Apart dialogue that from things the commissioners questions ends they the to the and to and that drivers to lag continuing bit is be that, little And business. sure on engaging the engage having sure forward issues think this understand ultimately winning understand on that have sides the and commissioners work up making whoever a with more, suggests reg I would both we we needs forward campaign. and going look is to all move

growth. load on lastly just then, And Fantastic. Perfect.

talk for the well of that On about guys the hyperscaler? and assume given X% Jeff, I near change term, stickiness there kind the another just Can from just step well. you guess, could 'XX increase 'XX. with to longer-range you've you And being just, a Are more also we guide that, load your customer in as maybe but there, aligns opportunities to customers. conversations there been wondering a large having see with where X%

and -- join think I me in Let to it's I'll sticky. I mean, this. ask on Cooper

that So focused of quite And not one last decades, on the last doing more the into really kind advanced nice really a to since from of retirement, done the in that the the manufacturing. of recession here was has we've things state focus trying I homebuilding that. decade, over Arizona pivot largely think but job economy

closely the you do of obviously, I Arizona. call just and that the the centers, projects from range with to showing was And Authority so out a they looking a And do the manufacturing. you -- big on are of ones, some see lot there. got data they are were Commerce

these But niche land then into that just looking manufacturing and XX-megawatt sites a X, of is you whatever factories lot to also are available. see

that so really see, be you do think Texas in location the attractive heat, to But a I guess. hurricane-type that's got and have weather. We've for load. And summer, a continues get dry disruptive the I We We're don't transportation. between hot state good but you good California. that

see think now It have deal is you that the little going so out get much Because And figure the plants with you've just that to a power to I bigger. got we're of as serve continue to to to harder kind reality into gets we growth. growth.

how TSMC additions. to figure data it, from a Did with coming welcome lot of -- miss the we We'll anything, closely would Cooper? it's but out both centers. working got we're do pent-up demand we've manufacturing so And and I and

beginning But contribution the the see it's year, in to would that No, this diversification I that the from TSMC 'XX, is that pretty reflective Jeff you're across year. that's into growth diversified this of large territory in classes, kind We're the and also up you X% that range the And to just been ramp small add, a well. the X.X% the on result forecasting about. business have to continuing. midpoint you move Shar, of you growth as customer some C&I service contribution and downstream that to customer contributions of as X% talked outperforming X.X% we've been residential. of those diversification leading of and And seeing that

step congrats Got couple in you guys this change. it. on Perfect. a See days, of another positive

Thanks, Shar.

question coming Nick from next is from Barclays. Your Campanella

would lot could of thinking then, in fit quantify that a percentage CapEx that this and was that acknowledging Would lagging just trapped you a would run you're into be case outlook, thinking partial 'XX full much 'XX just So you that just Just rate improvement year raise the 'XX? capital. current have when ROE? through And on X.XX% there through And helpful. it in on timing be rate ROE, how ACC basis? maybe then

Nick, it's Andrew.

on our mentioned, been intentional up, the tracked that's you CapEx As part. being have we that's amount moved and of

increased through that rate through ramped affordable have these that there. of RFP. are our customer-centric in CapEx transmission we've projects And have some our and the generation putting significantly a Now adjuster with we go up the in confidence All-Source transmission and formula SRB,

the that trackers, will the projects So some projects. get there's those so service until multiyear. and of Admittedly, go over put lag help some those And -- time. And there. there's certainly through are into obviously, -- transmission always generation

that away the about future in takes and the so last being the on CapEx regulatory the lag rate lag the the place. get the fundamental more and on because that we're case, lag, aren't case though, from further costs we rate filing On trackers, reason those a question, the captured prompt is focused operating docket

around as You couple some issues XXXX added guidance, in a of and expense to issues then item. the have invest and we that the see interest infrastructure same of D&A we the OPEB as in structural is that

the can. number as CapEx is while authorized at the items to we close so non-tracked one, solutions in looking ROE And track reason amount, then around we increasing the the focused quantified on, so the we're earn to haven't as order that going and items, to exact

want on the Jeff, you play timing add anything rate will into? case to how

test 'XX-filing, like But or you'd how the filing. 'XX about what what the with you -- because move did working would a Nick, it. could docket rate they you file it, then, obviously, formula think like timing forward could the when working is the a really looking think about you the of mid case And if Yes. a change kind commission on at could that, you structure you is be so the that if go look year, looks earliest if mid-'XX of

haven't the prosecute go you anything and that's that just a probably that year on We take realistically then announced that, case. could it but would earliest to

looking with 'XX in, So you'd the so or back of half middle at be 'XX. rates coming in

that happens structure would the structure, it's or And it's That's Andrew first the would that the That's on of you get case. rate in now structure. OPEB lagging that whether that like no issue terms new really just you was talking things first pension into matter the cliff about. traditional of get what items the of that, into then that put the relief time a some time rate the put normal have formula

helps. mid-'XX, see 'XX time likely is So time the in to that probably you're Hopefully, back the next half that frame.

draws the does. did 'XX. that. Because plan. kind on to you really in available correct? have the million is $XXX just of February you from I you none know That nets were figure, against highlighting then forward million of appreciate one of that I $XXX block just And financing clarification the these But that

haven't make The the in the down utility. that and the that million of you did balanced lot capital for if the 'XX was -- block of have unidentified we a equity that we The to last sure That's $XXX the February, have structure that in to we about $XXX capital And plan, really 'XX. catch-up correct, yet. we Nick. drawn million parent remember for in slated continue last

effectively, modestly would additional needs $XXX million. through So to period. $XXX increases forward the And capital 'XX would an rolls then up both the million 'XX over our expect million that and million by with match $XXX equity we $XXX that

forward like we've We would But the And $XXX ATMs draws place first any million. we equity of and under that made those with then that for have could match the certainly together equity financing for to equity. taken Both original tools go overlay be of allow things sort CapEx future as and as block the original consider not go. the we well. used up on that external the will the us certainly, with

question David Morgan coming next Arcaro Your from is from Stanley.

Let of data see, be in demand in requests? give the load kind would seeing in you center you're pipeline of what your a me megawatts large of able of pipeline, to terms the terms

we're what Yes, ask, seeing. Ted describe maybe I'll can

David, this sure. is Yes, Ted.

demand, well to to continue several We projects coming service see as new for both working as been months significant that demand a or of with we've into couple years in territory. up the even

location, to to serving needs now, when in reliability commit XX,XXX and with high based extra growth. non-data of their we've development load stages data factor their online centers we on their over But still of including we how factor centers capacity the we of demand, megawatts while in are construction committed or addition center either megawatts in a to currently process coming we again, that by largely high load are customers, do planning requirement that, planning. we've extra can all ensure to, got over in serving Right meet of our or X,XXX got identify largely early working that we've represented that that their data demand

typically as but is we're what now, right that's upside and frequently looking that fluid, continues. So demand changes changes the at

in say embedded Excellent. Yes. megawatts Is fair to that are the plan? it current X,XXX kind of

That's correct. Yes.

And a current huge Yes. obviously, system. to pipeline relative your

in I Like like centers big seeing transformational there terms of on would their investment for wondering I'm CapEx that impacts have Just needs? large be of would would you very your just are data data gigawatt system? are own, pretty that scale in centers imagine kind there

still that that well relatively baked request couple phase extra too, development addition that We into I'll in have is to planning queue, committed is Andrew do really that's in is load And which that's stages. But pleased megawatts already from amount the to distributed development relatively The see that echo the our factor XX,XXX-megawatt some form insignificant. early not of that earlier, is amount the demand customers, as is residential, distributed. is as of expectations distributed. just already currently in is in larger single in X,XXX high coming a what we're said the manufacturing

X.X% well alone, impressive. quarter new we're we've the which is over growth level that This and in decade, seen highest at set a meter

And the residential. offering across demand number are business, a so that of across that but industrial even center commercial demand only business, of spread guidance small segments and customers large broader and data the we is not

Your from coming question Anthony is next Crowdell from Mizuho.

on Congrats quarter. great a

the guess, think I mean, X%, regulatory assumption is higher on X% to lag to that the gets I assume on regulatory lag quickly CAGR, X% declined enacted? current if that what it's of I there Just, of that or doesn't X% dock X% end EPS the to the

Anthony, of single of great We're able customers. headroom cost for these what the the and to regulatory more would to that that of fundamentally in the confident affordable lag outcomes X% case Yes, make about The creating smoother more a rate the determinant predictable the as interacts a oriented it to opposed increases. allow smoother effectively with X% rate and reduction in X% version would having of We're the lag, to improving for the Andrew. function confident to think is be we -- do, trend. sort way how step growth. base X% it's be But investments

overall course, a credit from better in confidence perspective received means metrics cash of then plan. of flow better that Now the and

is about the where so how we in range. you smoothing we're that But ultimately, into talking flows and about feel end out up And then range it. what that

us. more and dependent to really focus these events. being for So the on That's year it's transparent and in single out as opposed year predictable

on the a looking rate Great. then going of changing lot to around design kind that Is take-or-pay a into? in on APS take-or-pay XX-year other seen loads states or lastly, of large contract. like contract that the We've something just system. working conversation something is a And maybe

Yes. to customer the focused potential on things Anthony, base. existing impacts those the of the one in protecting talking very we're is to customers

a And and infrastructure lot seeing what then that so large of transmission of cases, show customer, bunch in protection, don't make you're is so you for up. investment put in a they a a if distribution

have to of so that, through to got rest protection You've that doesn't then get base. the customer pushed the

kind And protect understand so work do fair trying is to talking that of amount of base collaboratively. what data a loads to trying that that's in the things being fair going We're to for large say is we And customers. centers I'd it in and do work existing while we there us. on. to focus the the on those But new can really customer mutually and the

Ted? to add want you Anything

right. absolutely is Jeff Yes.

of large territory have of we benefits service centers we service to XXXX. going the our even One some in were the data is in putting back

So been any and growth are, actual other to and to for our classes. quite conservative is and usage experience centers cost being data their the that versus pay to fortunate we ensuring potentially growth to preventing have data serve the shift we've as one, centers need these our that ensure planned forecast to actually in paid infrastructure ramp up learn and well customer able learn history that as by a in usage we being of bit develop accurate and how of their

coming Patterson Glenrock is from question next from Your Associates. Paul

votes the were still apologize, the say question I you I've were one So to election. left following have And many just it And website but that goes talking And thing about. back been left. you on I counted? to how did be this

in think XXX,XXX it's range. the I

what And that's percentage total -- of the of the vote?

had X we million. -- have we think I

Okay. It just like Republicans is are is it a like leading. definitely all -- little tight. like the looks It

just sure to make want on I that. So

Okay. will think be When votes do you finished? the

got then the to But think I need count by have late going of the closer process. you mean, think they they're pretty a earliest get -- and can they through to number. today, you that go to these again, I smaller watch to certification you're end I probably

from question Julien is Jefferies. coming from Your Dumoulin-Smith next

Look, was to was here. I wanted that one to about finger his earned come returns Nick and that on thing putting back

changes Just tracked. thinking the are Can that 'XX, given think uptick there's pieces about got the of about beyond these not updated in pieces just expectations? I dynamic forecast the you how about but in that into as really grade. you've you lag provide some do and excluding CapEx, with potentially? composition, growth any given kind the Or 'XX, and mean, as just I load how obviously, of to moving that number the aren't but from given kind you there, of lag CapEx offsets know, think would a expect accelerate? initial of in the construct here, you you 'XX

by we're the the and we footprint as at making load side, and and is, capital covered when asset sure O&M perspective appropriate on that and that's as is of supportive an other question we're investment spending it's first our get being not transmission this reason that into give growth us classes recovery, so megawatt that hour now that a capital, basis why point O&M but the a on it foremost, at that's only well. Then growth generation. to are into allocating Julien, Andrew. and look an from increasingly that Yes, to definitely been going you to and more the capital it's so expands allocation

that infrastructure some control. judiciously ability distribution potential our those our of done are towards being core look under our to remediate But investments are get as other increasing We that and to investments. mechanisms we lag continue

case. that's as much rate A to the as the statement a income file side. need do in We there not of lag is capital on lot the

preceded rates. interest increase case, the If rate year last about in increase in that had you think inflation, a our it the test

you our if about interest our pension actually realizing what income to and think are our statement. our expense So those O&M, on expense, scale we're relative all

last year the the to some case, those for. going XX the the place We're months so capital. post-test costs relatively mindful rate a now case, that of of ability rate accounted We're -- these up we're certainly, trapped good plan through And service into in perspective. of in a in that, capital next and from plant true we areas had capital more given increased. We're has

some if that construct And our returns. become and to overlaid for of capital have on would be you that, in more rate, we other did top gave earned example, these a confident so you us earn areas of to a then, to more that, formula closer available invest as of

we catch thing have be in allocate another and rate through up of around to income do agile continue how to then on to smart be statement case a we and position #X some capital. the the here So, is costs those

Got it.

the it think you reg X% when resolution? kind that fair the docket over X% the to that's the way without of smoothing Is just to a out or Or from characterize here, So with plan? about course of here? it's

to us that help would smooth out. docket The

on adjuster, cost think, to after true-ups SRB then customer cost But through on I we when year close can can. we and that, have the as having authorized do and as fundamentally transmission have in opposed the cases and earlier, earn recover. those it's case. rate don't. back give for we I increased as rate when our cases frankly, -- a out as between as savings, savings, mechanism And versus opportunity the Year well mentioned we to rate the return large we we single having and dependence difference annual dependence with having

absolutely. Yes,

as And maybe putting lag? net that inflationary you're I mentioned dynamic just deck. in we I seeing? you another tack pertains about 'XX, Or structural bit while inflation finger a a to picking, last at Can say, our so here is on on good rate 'XX comment noticed should tax The queue can it the be the actually little And little that here? expect your a too? the actually, to plan, you decelerating down that slightly uptick some here. I is trends that mean, higher. you if we're rates is O&M from bit. in

Yes.

look We do and look at starting XXXX. We may the year the O&M. the could and we forward. weather So O&M something at O&M forward during multiyear year figure that seeing what in and benefit projects, the pull for with we be this out. summer is increased we horizon bring out And in

deliberately chunk year. O&M Jeff his of hot a year related customer the then, how was into remarks, recognition summer prepared to And the funding bringing increase forward so this And our as in again, we a programs, was. this mentioned that of assistance of projects saw some

been that's down. the items. decline and A in still organic of that. on more see, So We're that of the businesses of of see result coming pockets of is of all of working next. we that some for some some a of the O&M next certainly in O&M this of pursue lean opportunities in guidance on the meaningful management result lot And operating side. of our see both you overall, operating a inflation O&M opportunity That's combination year. year kind with -- derisking the And do capital the 'XX this some a did the We've then, good cost the culture. It's and this that uptick year, you're next seeing 'XX of a frankly, that. is the the the O&M is pretty aggressively that a increase you of then seeing you what year But result year. created closely we profile

basis. the to effective rate pushing year and tax us result tax simply next higher taxable of of is rate, higher the year an up income sort this relative a On on

portfolio robust, managing credit pretax as what just to that's of more tax a result and but we're our tax a can, rate pretty of low income like. looks so Our we is as

Right.

what be you? is it hearing that from rate, in So I'm should stable pretty

given pretty credits. tax the stable we're Yes,

Sophie question KeyBanc. Karp is next coming from Your from

RFP. next I to sort system procured All-Source you were build about you ask rounds -- surcharge actually reliability X,XXX of that in the much RFP? remind XXXX this how wanted you you maybe able to the your do Can you that yourselves win remind mechanism? since to And will, me how megawatts if the you of shape through of expect up rate, us

Yes.

Ted. is this Sophie,

We've contracted pretty been the an the believe year. we've to right clear long-term later more getting that even fact, next mix. got development. be under in this double probably projects between are or and about successful third-party last we've of think, balance SRB, and RFP, projects XXX ownership is RFP that issue we than been PPA megawatts currently I likely the to since the able owned projects ownership We'll from ready

of a see projects batch XXXX. new throughout we'll So go that through process

we'll not And to the, continue to process we've between at more but and RFPs, look ownership ownership We're PPA to to increase as than doubled I'll we continue projects. yet, call share. ownership that it, mix XX% the XX%

just you Washington, it's your inflationary expectations how rate this about Helpful. potential -- up have you call for forward lag. right. what of impacted more maybe you going -- had, inflation question you maybe to your next look the if high-level how is a to I thinking to it's too are -- like on what case, change policy just are And on rates, guess, new now? it inflation any important in going All follow early you of the discussion forward, inflationary scenarios your given the When to, but into because kind Okay. obviously? mitigate in regulatory

Yes, absolutely, Andrew. It's Sophie.

key rate One based July the this the that that this costs as our case crystallized we case fact O&M go in of rate the test on as is of things last -- historical next the back year, far XXXX. in in

really of last charging over you of that couple see so we've any rates customers the inflation And we recognized today, didn't in years. were the the

to this stable, they're our level at And current is cost point, but like the cost that, being a that true recognize able our current very next we're management from looks stable. so O&M current continue cost And to what on rate environment, costs perspective up if environment we're we'll aren't and to the which maybe declining disciplined the in we ability case. achieve today, to at be

at high we're DSM range can't But this early taking if O&M million. and million. in that But rate to pretty just and increase the res simply there's to the out now. case, And XXXX, the I in that's fact from O&M would you relates believe mid-XXXXs that year, our things substantial like in a look in $XXX that we we're need the $XXX guiding next XXXXs, early

substantial there's lag. So

that is we're is that environment recognizing a of reality of territory, the that a but cost Some lot service of growing in the today.

from coming next Your Steve is from Wolfe Fleishman question Research.

to cash apologize. answered other you have the than any this, for is XX% the I that through or fact getting But mentioned fund timely explanation flow more just equity just might recovery more additional You that? less you're that CapEx. I assume,

we to plan. judicious need in in still a is, the lag and summer this did more we one the as also significant what from earnings way fuel metrics deferred see a -- Yes, you therefore, in credit It the around at down look incremental to growth. be balance retained sales us position as as that to little that the that credit continue puts feel some us you while supports top a have with derisking. wasn't from metrics a continue year bit growth just -- was Steve. a more top we sales perspective, we confident incremental it equity that our to of allows supports is. pay credit both our Part line It line, the And benefit see things capital of of some O&M having that metrics our

fact kind on plan balanced in to the at gives million the we structure some that judicious the incremental 'XX flexibility from that stay utility much allows do company us and of upfront on, equity taking about than and where is our that how parent be that perspective. maintain when of 'XX cap XX% we you opportunistic with to metrics, a if $XXX look incremental $XXX is stay that a are within we CapEx and And over it, took need. metrics table off that at million plan less of the number $XXX And up capital increase be the equity we're credit million that to do the a to ability matches our us equity. But to

Could You mentioned give thinking maybe also, there? think, more financings. alternative I you color what you're just

Yes.

open of we're spectrum the to things. full So

things as manage looked some of hybrid at metrics DOE parent. the way place those equities. like debt equity in that we the side, need. as a out structure today program overly securities looking example, always some through And biased we when straightforward we equity On the credit an of the for always parent we're option always date, at at of some as points been just IRA. We've equity the of is the the cap there and We've not went the capital key to structure towards around can to needed the and as of and utility, using balancing levering issued a

think is out forms I there? there key alternative open. always of So Are probably we're for simplest the explanation equity us, but

do ways off. there creative there way versus other ways some of the the these And of are finance that. example Are assets? attractive asset are to a program classes Are good those more is and to that loan to one hide there DOE

million the helps $XX to this DOE year well. that the recognized financing costs of from also We defray as grants

and markets So we'll in the at in capital opportunistic, the markets look opportunities be other as well.

Like might that's finally think then Or as just should about going something detail how when treat like your it that nuclear assume And still I you not we earnings. are get PTC? the Okay. nuclear lastly, in PTC you to we defer?

see the waiting we're what to Yes. I looks mean, like. still guidance

you're we in it important that. the capital the it guidance I today. light to investment And do a capital it's it's at plan correct, and waiting affordable rate be that need cost not have the period a of day, that in is, figure want our we make our of customers. it how the works. end all Ultimately, And We out of to time where any is case to a think There's of to to customers. in to guidance the this But way, of needs see the sure the asset. structurally though, of next the it customer trajectory belongs defer before Yes. customer look, PTC to that will for have way

Company. Your question from Ladenburg Lipner is & coming next Dylan from Thalmann

year? Just O&M. wondering, how the forward was want to XXXX going back of from to I much pulled into know O&M this

Yes.

the of that multiyear we've and projects got. So about we O&M the really plan portfolio think

of we at broken look time. to budget 'XX at the if specifically our out -- 'XX, update O&M because in a same the it so to we're you there's And the 'XX at haven't middle guidance,

So over horizon. really we the about think derisking multiyear opportunities

to created We're is muscle a going beginning than this more kind at what some start eventually There's provides. IT internally. did. planning out that at from But in because of capital that opportunities going look to look we've gets of and stages, O&M. the We summer, perspective we X an to what some is of infrastructure look project projects got that know summer the great weather year, to be of We've a we the that examples project. booked every

saw broader we there's like planning weather come We the let's project as break moving And into out well, long-term examples company. kind lot up, don't versus that a of this next year, year. from great that said, start the really we that across the derisking. from Well, of

have granular of budgeting. 'XX we but that move, in context we projects We also the do it the

that, 'XX what slate So truly of has been a of 'XX gray yes, for versus and it something a between there's sort pulled area little we'll budget. forward bit the

always But for look ultimately, those opportunities. we

we of that needed look and in way benefit leverage of weather knew to we We O&M 'XX also as well. some at as that a itself. for And to capital look

OPEB And how had amortization 'XX. number, that the of Canyon points going for gain we knowing was the us, 'XX key away Bright think could so bring we down one the in I O&M and that

structural about we've for us, thinking in of some those all changes. of do we light been 'XX budget for how So year

one we've is that. benefits benefits of across so the the portfolio. business the knew and item. the great And And context closely We there retirement within overall do examples that been was working employee our very of OPEB to with

And so in we bucket. that actively after opportunities went

primary we bid. out insurer health so put our for And

substantial on in over 'XX, savings expected switching 'XX based health insurer. some for created our We

that's beneficiaries, their in employees X,XXX a well. pretty opportunity substantial as For

a And to could when then, that the the to can lag prior a case policy the ACC going rate docket, you. issue potential you file Got regulatory guys statement?

mean think, I Again, is you through looking we're what at could. yes, that process. I they're working

middle I the something practically you earliest file could of I the 'XX. in is think, call earlier mentioned

delay hard by tell. that. new end And the so next goes all finish watch that if just I they as it's lag year, but coming regulatory commissioners -- probably docket. year the in, some expect into moving on to this I be it of we're there have going they're to so it would -- don't we'll you may mean,

policy a Do is commission. it the like expect change? statement made say you And ACC with that the by follow a rule up could Great.

I state mean, statements statements. good it's as here, possible. just out at There are policy policy

so it think we kind just I And develops. of watch process the as

the well then of the as filing case. is codified Dylan, of rate-making this approach case rate-making And commission -- our and that rates stakeholders that in we'd and would it rate next next the align way that And we're if approach to this is, another adjudicated Ted, looking case. statement, I think then in they include next pretended that our is the preferred the that's formula a at outcome issue preferred policy rate really approach. of be as part rate-making

us would to still that the outcome. same get So

completes gentlemen, Ladies and this event. That today's you. Q&A our session. concludes Thank

may this and Thank a for wonderful you disconnect have You your day. at participation. time,