Xcel Energy Inc.

Hello and welcome to the Xcel Energy second quarter 2024 earnings conference call. My name is George. I'll be a coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your line has been a listen-only mode. However, a question and answer session will follow the prepared remarks and questions will be taken from institutional investors and analysts. Reporters can contact Media Relations with inquiries and individual investors and others can reach out to Investor Relations. To register for a question, please press star one on your default keypad. If you require assistance at any point, please press star zero and you will be connected to an operator. And I'd like to hand the call over to your host, Mr. Paul Johnson, Vice President, Treasurer and Investor Relations, to begin today's conference. Please go ahead, sir.

Thank you. Good morning and welcome to Xcel Energy's 2024 second quarter earnings call. Joining me today are Bob Frenzel, Chairman, President, and Chief Executive Officer, and Brian Van Abel, Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer questions if needed. This morning, we will review our 2024 second quarter results and highlights and share recent business developments. Slides that accompany today's call are available on our website. As a reminder, some comments made during today's call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and SEC filings. Today, we'll also discuss certain metrics that are non-GAAP measures. Information on comparable GAAP measures and reconciliations are included in our earnings release. With that, I'll now turn the call over to Bob. Thank you, Paul, and good morning, everyone.

Thank you for joining us today. I'm pleased to report that the company delivered another quarter of solid operational and financial progress. Our long-term business model remains robust. We continue to deploy capital for the benefit of our customers and communities. We enable a future powered by cleaner fuels and a more resilient and intelligent grid. We partner with stakeholders to encourage economic development. We provide products and services capable of meeting our customers' most important needs. In the most recent quarter, we invested $1.7 billion in resilient and reliable energy infrastructure. We delivered earnings per share of 54 cents for our owners. We provided industry leading storm response and strong customer reliability despite challenging weather conditions for our customers. We accelerated our wildfire risk reduction measures to enable safer and more resilient communities. Xcel Energy's commitment to our communities and investors is anchored by our core investment thesis as an integrated pure play utility and a clean energy leader. For more than two decades, we've been a leading provider of wind energy to our customers, and we were the first U.S. energy company to commit to a carbon-free electric future. We've delivered on earnings guidance for 19 straight years, one of the best records in our industry, and we look to make it 20 this year. We have a long-term and transparent growth plan, making investments in clean generation, new and enhanced energy grids, and economic development programs to support our community's vitality. Since 2020, our continuous improvement programs have saved $400 million in recurring O&M expense while improving operating outcomes and reducing enterprise risk. Our Steel for Fuel strategy has delivered more than $4 billion in customer fuel-related savings since 2017. This discipline, alongside support of state and federal policies, enables us to reduce emissions and keep residential electric and natural gills to Natural gas bills 28% and 14% below the industry average and growth well below the rate of inflation. With our 11,000 plus employees commitment to serving customers for 14 cents ahead of 2023 year to date earnings, and as a result, we are reaffirming our 2024 earnings guidance. During the quarter, we continued our progress on our clean energy transition through multiple resource planning and RFP processes. We issued an RFP for 1600 megawatts of wind, solar, storage, and hybrid resources in the Upper Midwest. Bids are due in September. We expect commission decisions in 2025. We now have active RFPs for over 4000 megawatts of resources in the Upper Midwest. The New Mexico and Texas Commissions approved 418 megawatts of company-owned solar generation that's expected to be in service between 2026 and 2027. And last week we issued an RFP and SPS seeking 3,100 megawatts of accredited capacity, which could ultimately yield more than 5,000 megawatts of renewables and firm dispatchable generation. Bids are due in January of 25, and we expect commission approval in 2026. Last quarter I discussed a number of initiatives that Xcel Energy is taking to reduce wildfire risk. Incredibly proud of what our team has been able to accomplish in a short amount of time. Since March, we've developed the capability to deliver enhanced daily wildfire safety operations across the enterprise, as well as the ability to conduct proactive public safety power shutoffs as evidenced by recent events in Colorado, Texas, and New Mexico during threatening conditions. We've accelerated poll inspections, including replacing priority one and priority two polls across our system. We're expanding visual coverage with our PANO AI-enabled camera system to over 50,000 square miles in Colorado, enabling first responders access to critical information, including precision triangulation and fire location. We've accelerated deployment of TechnoSilva's risk modeling system and expect it to have an operational enterprise-wide by the end of the year. We recently filed an updated Colorado Wildfire Mitigation Plan that integrates industry experience, incorporates evolving risk assessment methodologies, adds new technology, and expands the scope, pace, and scale of our programs to reduce wildfire risk. The plan has four primary programs that include enhanced situational awareness, the improved meteorology, area risk mapping and modeling, artificial intelligence cameras, and continuous monitoring. Operational mitigations that include enhanced power line safety settings and public safety power shutoff capabilities. System resiliency through increased asset assessment and remediation, pole replacements, line rebuilds, targeted undergrounding, and vegetation management, and improved coordination technology, and real-time data sharing with customers and other stakeholders, as well as PSPS resiliency rebates. We expect to follow resiliency plans with SPS that will include wildfire mitigation later this year and are developing formal wildfire mitigation plans for the rest of our states. Finally, we're working with stakeholders at both the state and federal level on legislation to enhance the safety of our communities from evolving weather risks while protecting the financial integrity of companies that provide these essential services. Moving to economic development, we're seeing a material shift in long-term electric demand on our system after several years of relatively flat sales growth. Our current five-year electric sales forecast assumes approximately 3% annual growth. Nearly half of that growth is driven by electrification of oil and natural gas production, electric vehicle adoption, and beneficial electrification economic growth, and increasing customer counts. The remainder of that growth is driven by contracted and high probability data center load, including previously announced deals with Meta and Microsoft in Minnesota and QTS in Colorado, as well as others. We believe this forecast is now conservative, given a pipeline of data center requests totaling 6,700 megawatts by 2030. If all of the data center requests came to fruition, Our data center sales CAGR would be over 9%. We continue working through the requests and plan on updating our sales and capital investment forecasts on the third quarter call. Xcel Energy is strategically positioned to secure economic data center load with high quality partners due to our access to low cost renewable generation, the availability of water and fiber infrastructure, unencumbered land, and our speed to market. At the same time, we'll continue to focus on the impacts to all customers, ensuring we have both economic contracts and system resources to provide safe, clean, and reliable power to our communities. During the quarter, there were two regulatory outcomes that provide for cleaner and more resilient electric and natural gas distribution systems. First, Colorado passed a bill that enables qualified electric utilities to make necessary distribution investments with timely recovery to achieve state policy goals, including transportation and building electrification, and enabling distributed energy resources. This was the result of extensive stakeholder process supported by the Colorado Energy Office, our IBEW labor partners, environmental advocates NRDC and WRA, as well as the Colorado Solar and Storage Association and others. Second, the Colorado Commission approved the modified clean heat plant, which establishes a starting point for reducing greenhouse gas emissions from our natural gas distribution system. Four-year budget of up to $441 million was approved, which sets funding primarily for beneficial electrification and natural gas efficiency. We look forward to working with stakeholders and regulators to implement these initiatives to meet our long-term sustainability goals in Colorado. Finally, We recently released our 19th sustainability report. We're proud of our history at Xcel Energy, and as we look forward, we're committed to delivering the essential energy services our customers value and need while driving positive change that supports the environment and communities. I'm deeply appreciative and thankful for the commitment and hard work of our employees and partners to deliver a clean energy future. We remain relentless in our pursuit of our vision and will continue to deliver long-term value to our shareholders in affordable, reliable, and sustainable energy for the communities in which we live and work. With that, I'll turn it over to Brian.

Thanks, Bob, and good morning, everyone. Starting with our financial results, Xcel Energy had earnings of $0.54 per share for the second quarter of 2024 compared to $0.52 per share in 2023. most significant earnings drivers for the quarter included the following revenues from electric rate cases and riders to recover capital investments combined to increase earnings by 26 cents per share higher afvc increased earnings by four cents per share and revenues from natural gas rate cases increased earnings by two cents per share offsetting these positive drivers for higher depreciation and amortization decreased earnings by 18 cents per share reflecting our capital investment programs Higher interest charges decreased earnings by $0.07 per share. Higher O&M expenses decreased earnings by $0.04 per share. And other factors combined to reduce earnings by $0.01 per share. According to our sales discussion, year-to-date weather and leap year adjusted electric sales decreased by 0.4%, and natural gas sales increased by 0.4%. We're updating our 2024 forecast to reflect a 1% increase for electric sales, with expected increases in CNI load in the second half of the year. Longer term, we continue to see robust demand in our CNI sector driven by data center loads in Minnesota and Colorado, along with oil and natural gas electrification and SPS. During the quarter, we continue to make progress on a relatively light rate case calendar. In June, we reached an uncontested settlement in our Minnesota natural gas case, providing a $46 million rate increase based on a 9.6% ROE and a 52.5% equity ratio. The final commission decision is expected by year end. In our Colorado natural gas rate case, we received interviewer testimony in July. There's a settlement deadline at the end of August with hearings scheduled for September. We expect a commission decision in the fourth quarter. And in July, the Texas Commission approved our $13 million distribution rider request. This represents our first distribution rider request in Texas, and we expect it will allow us to reduce the frequency of future rate cases. We also continue to make progress on the claims process for the Smokehouse Creek wildfire. We've received 141 claims, of which 43 have been settled, which we view as a positive and constructive outcome. 21 lawsuits have also been filed. In addition, there is no change to our estimate of our accrued liability of $215 million. As a reminder, we have approximately $500 million of excess liability insurance coverage for the fire. Finally, we are reaffirming our 2024 earnings guidance range of $3.50 to $3.60 per share, which is consistent with our long-term EPS growth objective of 5% to 7%. In addition, we've updated key assumptions to reflect the latest information, which are detailed in our earnings release. With that, I'll wrap up with a quick summary. We continue to expect to deliver 2024 earnings within our guidance range, as we have for the past 19 years. We're executing our capital investment plan, including clean generation, transmission and distribution to support reliability and resiliency, and economic development to support our communities. We're proactively enhancing our wildfire mitigation actions to manage the risks to our systems and to protect our customers from extreme weather. We remain confident we can deliver long-term earnings growth at or above the top end of our 5% to 7% range starting in 2025. This concludes our prepared remarks. Operator, we'll now take questions.

Thank you very much, sir. Once again, for analysts to register for a question, please press star 1 on your top one keypad. Our first question is coming from Jeremy Tunnett of JP Morgan. Please go ahead.

Hi, good morning.

Hey, good morning, Jeremy.

I just wanted to start off with the wildfires, if I could, and risk mitigation there. How do you think system risk stands now? How do you expect it to, I guess, improve over time with the wildfire mitigation plan? Is work kind of even across the system? Are there certain parts in focus? And then finally, it seems like there's some fires in Colorado right now. Just wondering if any of your equipment was involved in any way.

Yeah, I appreciate the question. Look, as I said in my prepared remarks, I'm really proud of what we're going to accomplish on the operational side to provide the real-time risk reduction that we need today to give us the time to make the necessary enhancements in system resiliency and hardening for our system over time. Clearly, we're further ahead in Colorado. We just filed our second wildfire mitigation plan, and we've been working on the first one for over four years. But that shouldn't be taken as anything other than a huge focus that we also have in Texas and in New Mexico. around our plans there. Our capability to do wildfire safety operations and PSPS exists on a daily basis across the entire enterprise, which drives real-time risk reduction. You know, we're benefited as a company by all the hard work of the people that have come in front of us in California. We expect to dramatically reduce our wildfire risk based on their experiences and doing some of the lessons learned from all of those organizations. They've been more than accommodating and helping us and others across the country. Clearly, the need is there and evident, and we think there's a real supportive backdrop in our states to help us pursue these necessary investments to continue to risk reduce our business.

Yeah, and Jeremy, hey, this is Brian. Good morning. Just on the second part of your question about the current fires in Colorado, you know, there's our assets were more than a mile away from any of those bleeped ignition points.

Got it. That's all very helpful. Thank you for that. And then just wanted to pivot here a little bit to the data center opportunity as you outlined there. It seems like the opportunities are accelerating from when you last discussed it with the market. Just wondering if you could frame that a bit more what you've seen and where across your footprint that's happening, and just any more color would be helpful.

Yeah, Jeremy, Bob again. Look, we're really excited about what we're seeing. Obviously, we believe we have a very attractive service territory across all eight of our states for different reasons than all of them, but when we speak with hyperscalers and other data center developers, we have what they're looking for, you know, low cost, clean energy, access to fiber, access to water and other infrastructure, human capital, land that makes us attractive. Right now, we're seeing most of opportunities materialize in the Minnesota and Colorado footprint, but our deeper backlog, I would say it's across all of our service territories and all of our states. I don't think all your questions.

Yeah. And Jeremy, I can just expand on that a little bit. If you caught the slide that we put in our earnings release today, which is updated from the data center slide that we had a couple months ago, um, you can see it's a significant increase in the customer requests. Uh, as Bob said, you know, the biggest opportunity was in Minnesota. Now it's growing. We're seeing significant opportunity in Colorado now, and even expanding outside of Minnesota into Wisconsin and South Dakota. And so, you know, we're working closely internally with our economic development team. You know, we think about it as we're updating our long-term sales forecast right now, which will roll out in Q3. Now, our long-term sales forecast right now is in the 2% to 3% range. I would expect that to look more like the 4% to 5% range. And our base long-term sales forecast when we roll that out is we incorporate some of these high probability loads into our five-year guidance. Just another good example about how we look to proactively work with our commissions. The Minnesota Commission here in Minnesota has publicly stated they're going to have planning sessions around how do we accommodate and meet this both economic development opportunity for our communities and also how do we provide benefit to all of our current customers and create more opportunity for investments.

Jeremy, I think this is part of a much broader theme that I've been talking about as it pertains to our company. If you put those criteria that data centers are looking at today, I would suggest that's true for almost any energy intensive industry in our view that they're at some point going to overly co-locate in parts of the country where energy costs are lower and green energy could be cleaner. And that sits right across the footprint that we straddle. And so as you look at stuff like James Rattling Leafs, hydrogen and clean energy production, if we get to direct air capture as a means of carbon mitigation, you could see a lot of that headquarter in itself or locating itself in our backyard. James Rattling Leafs, As well as other manufacturing probably where transportation isn't as critical, I think all of those are our economic development opportunities that are. James Rattling Leafs, Not in our forecast but areas that we think should beneficially accrue to the parts of the country that we serve.

Got it. Great to hear. Big numbers there. Congrats. I'll leave it there. Thanks.

Thank you. That's your question, sir. Thank you. We'll move to Carly Davenport of Goldman Sachs. Please go ahead.

Hey, good morning. Thanks so much for taking my questions.

Good morning, Carly.

Good morning. I wanted to just follow up on a couple of Jeremy's questions there, maybe just first on the wildfire front. Is there any sort of feedback from stakeholders you can share so far on the wildfire mitigation plan you filed in Colorado. And then you had mentioned plans to file additional wildfire mitigation or system resiliency plans in other states. Can you just talk about, you know, what forms that might take and where you're most focused in the near term?

Yeah. Hey Carly, this is Brian. Um, it's now early in the process in the wildfire mitigation plan filing in Colorado. We're just starting to see some, some discovery requests, but overall we think about the work and the support we're getting from call the first responders and the community has been positive. No, our investment in the panel AI cameras is already, you know, there's been some recent articles where it's helped identify fires, not started by the utility, but helped, um, work very proactively with the first responders, give them out and mitigate fire risks and protect our, our communities in, in our customers. So, um, I think overall it is, it has been supportive. Um, but again, like I said, early in the process. Um, kind of the next kind of pivoting to your second part of the question is we're focusing on right now is developing our system resiliency plan in Texas, which is, which is what will incorporate our wildfire mitigation plan. So that'll be later this year. Um, and look for a similar filing in New Mexico later this year too. And then, uh, working through what it will look like in Minnesota and in the Midwest for wildfire mitigation plans. we can incorporate a lot of wildflower mitigation planning into our multi-year rate case in Minnesota as we think about what will fall in November of this year.

Great. That's really helpful. Thank you for that. And then the second one was just on the load growth and the data center piece. Could you just talk a little bit about your process for working down the requests into the pipeline? Or I guess said another way, what is sort of your bar for including load in that near-term pipeline estimate, which goes into your broader load growth estimate?

Yeah, so I'll give a little bit of color. We kind of highlighted on that slide in the earnings deck is one, we have a contract with them, for example, QTS and Meta that's included in their five-year forecast. And then we have something called near-term pipeline, which, for example, maybe we've sold a parcel of land to them. And what we consider is 80% probability. So very high probability that it's going to come into our sales forecast within the next five years. And this is working very closely with our operating companies and our economic development team with these customers. And then everything above that, we do not have in our sales forecast. So there's a huge opportunity above what we call 80% high probability load there. And so that's a little bit of color. So as we continue to kind of march through time, you know, you think some of the stuff that we don't use 80% probability today becomes more of an opportunity and drop into that what we include in our base forecast.

Got it. Okay. Thank you so much for the time.

Thank you for your questions, Cardi. Our next question today will be coming from Julian Dumoulin-Smith of Jefferies. Please go ahead.

Hey, good morning, team. Thank you guys very much. Good to chat again.

Hey, Julian, congratulations. I hear you're a proud papa these days.

Thank you. I appreciate that. Absolutely. Guys, nicely done here. I got to say, lots on that pipeline. Maybe to pick up where Carly left it off here on just kind of probability waiting here. How do you think about that filtering through your processes? For instance, I know you didn't emphasize as much the relative load growth of the SPS, for instance, in the context of data centers, but How do you think about even, you know, the numbers that you guys were throwing out there of the five gigawatt number getting updated here, sort of pro forma for that process that you're working through right now? Effectively, you know, as you probability weight and update with 4Q, how does that filter into the processes you already have in flight for procurement, given what seems like a perhaps more pressing need to address the RFPs that would be necessary?

Yeah, Julian, so I'll start, and then Brian can add on. I think you know the company pretty well. We've generally taken a pretty conservative approach to forecasting, whether it was capital investment opportunities, in this case sales opportunities. Our process is alive and well right now, and it's geared towards a comprehensive update in the third quarter earnings call. And so we'd expect for, as Brian walked through the sales funnel on Carly's question, and then the update on our capital forecast, whether that's, you know, the RFP results coming into our forecast, whether that's new sales or whether that's capital needs driven by our wildfire mitigation plans, our needs to serve customers to the extent that we see high probability load growth that needs investments. as well as all of our resiliency and reliability plans as we roll forward in time. So expect something at the end of the third quarter, end of the fourth quarter from us on a fulsome enterprise-wide look at all the parameters.

Julian, just let me add to that a little bit. If we think about all the RFPs we have in flight, for example, Minnesota, we have multiple RFPs in flight while we're looking at this potential new load that's rapidly evolving. So we have that opportunity as we go through these RFPs and we're in a resource plan filing with the Minnesota Commission, which we provided kind of what we call a base view, but also an electrification and high load view. So we have processes in flight that helps us move quickly on this stuff and secure resources and work with our stakeholders. Similar in SPS, we just filed an RFP for over 3,000 megawatts of accredited capacity. No, that was based on our research plan in New Mexico that had a base plan, but also a high electrification plan working with all of our oil and gas customers. And that's why you see us talking about this 5,000 to 10,000 megawatt nameplate capacity range in SPS, because we see that load out there. We're working with our oil and gas customers. So SPS is much more of an electrification of the oil and gas industry. Down there, we're Colorado, Minnesota, and the Midwest is much more of a potential data center opportunity.

excellent guys thank you and then maybe on the other side of this nicely done in colorado on some of this legislative effort here um how do you think about the timeline and implementation of that legislation just given the sub 8 earned are we on a trailing basis how do you think about that improving you know said number of you know 50 basis points or what have you um from the uh from the legislation here over time yeah julian and maybe i'll just take a step back and just say this was a

really good piece of legislation that was supported by a broad coalition of stakeholders. And as we think about it, it's really kind of, you know, how do we help advance state policy around beneficial electrification, whether that's electrification of the transport sector, electrification of home heating. And so worked with a very broad group of stakeholders to get support and passage of this legislation. As I think about it, um, There's a distribution system plan that will file in November in Colorado, which is really kind of the basis of this legislation. And think of it as a resource plan for the distribution system. the capacity investments we need to make and how do we think about the different levels of penetration and how accelerated some of this can be. And so we'll follow that in November, work through that. And so there's a, the full rider will be implemented in 2026 around the investments needed to kind of drive our distribution system forward. And now we think about from an earned RLE perspective, we've earned about 8% approximately in Colorado over the past few years. So this will really help us drive a significant closure of that gap as we think about it as we go through kind of, like I said, 2026 when it's fully implemented. But we also have other investments in Colorado as we think about the renewable investments we're making. and the transmission investments that we're making to help drive state policy and achieve our decarbonization goals with the state that could concurrent recovery too. And so as those investments ramp up, that will help close that gap too.

Awesome. Nicely done, guys.

Speak to you soon. Thank you for your question, sir. We'll now move to Sophie Karp calling from Key Bank. Please go ahead. Now your line is open.

Hi. Good morning. Thank you for taking my question. Another question on the, you know, going back to the data center strand. So, I guess, is there a point at which this incremental load growth and the acceleration of sales trends translates into the earnings growth? And at what point would you be comfortable sort of making that leap?

Yeah, Sophie, as I think about it, right, I mean, I think about this data center opportunity in two ways. One is really getting the contracts right and having the data centers, adding new data centers to provide benefit to all of our customers on the system. And that's really important to demonstrate benefit, going to the commission with a contract that demonstrates benefit to our current customers. Now, longer term, absolutely, there's an investment opportunity or investment need here to support these customers. These are large loads. And so as I think about it, we're moving through the planning process right now, both from, as I talked about, a sales forecast perspective and the high probability loads, and how that translates into our capital forecast. So expect a broader update from us, both on that five-year capital plan and the sales forecast plan in Q3, and that should help address your question.

Got it, got it. Thank you. And then I have a higher-level question. With all this new load coming in, and I'm not sure if this load is going to be interruptible or not interruptible, but do you see the need for, I guess, more gas-fired generation on your grid anytime soon? How receptive do you think the regulators would be to those types of generation additions? Thank you.

Hey, Sophie. Well, look, I think that great questions. We sit in a resource-rich area for wind and solar. We see increasing needs for storage resources. But as evidenced by our most recent RFPs and our resource plans, we do have incremental combustion turbines that serve to back up and serve our customers to make sure that we have reliability when the wind or the sun or the storage is unavailable. So in our most recent ERPs in Colorado, Our recent resource plan up here in the upper Midwest, we have incremental CTs coming back. And I think with increased load, like of the magnitude we're talking about, we would actually see increased numbers of backup generation, almost as an insurance policy for our networks to make sure that we have reliable and affordable energy for all.

But no plans to add CCGTs for now?

I'm sorry, can you say that again?

No plans to add CCGTs, combined cycle?

No. At this point, we don't have any plans today to add any combined cycles to our network. But, I mean, we have to evaluate the probability of real load and what the resource availability is to serve it. So not today, but, you know, I wouldn't say that anything's off the table.

Got it. Thanks so much.

Thank you. I'll make sure you have questions. We'll now take questions from Greg Orell calling from UBS. Please go ahead.

Hi, thanks very much. Just regarding the, you know, you're working your way through the smokehouse fire settlements and just kind of how are you thinking about whether, you know, how those are going in terms of, you know, are there any group that are precedential, how do you think about kind of, you know, um, resolving that and, and moving forward sort of timing and process.

Hey, Greg, I can provide a, some color on that, you know, so the 141, the claims settle in, we're moving expeditiously through those and have already reached settlement on 43 of those claims. And so how I look at it, these claims have spanned, call it a variety of items, everything from homes to agriculture buildings, to fencing, cattle feed, personal property. So it gives us a pretty good data point. Well, so, you know, 43 settled is not all encompassing, but it is a good data point. And I think the important point is we think about it, you know, we Um, we assess our liability of $250 million and the claims so far support, um, and help validate our, our, our accrual, uh, another data point, um, report that received in Q2 was from the Texas A&M AgriLife extension. Um, in that report covered, it was the, an economic estimate of the agricultural losses from the entire complex of fires down there. And that report put a value. of $123 million for agricultural losses. And that report included some very large buckets, cattle, feed, agricultural structures. And so when we look at that report and that number and what we've included for our accrual, it does support our assumptions. And so that's the latest information we have through Q2, and we'll continue to provide updates as we move through time.

So, thanks.

Thank you, sir. Our next question will be coming from Nick Campanella, calling from Barclays. Please go ahead.

Hey, good morning, everyone.

Hey, good morning, Nick.

I hopped on late, so hopefully I'm not repeating others. But just, you know, first, just, you know, as you're progressing through Colorado Gas, what's the ability to settle this in your mind at this point? Is that something that you're open to, or is this taking a fully litigated path? And then I just have one follow-up. Thank you.

Yeah, but hey, Nick, yeah, I know you're sort of We received intervener testimony relatively recently. We are a settlement deadline of August 27th, and we certainly look forward to working with, with our, um, stakeholders, um, with the interveners to, to attempt to reach a settlement. So we had brief settlement in the past few cases in Colorado. Um, so we're, um, hopeful that we can reach this element also ready to, um, go through the full litigated process. If we need to, that'd be hearings in middle of September in this CPC decision by the end of the year.

That's great. I appreciate it. And then I guess if I could just ask on the financing quickly, you know, I know you priced a little bit of ATM in the quarter. Is ATM the primary vehicle to use here for the rest of the year in terms of your equity needs?

Yeah, I mean, the ATM will be our primary vehicle. It doesn't mean we wouldn't be opportunistic if there's a potential block. We'll also look at some of the other equity content products as we go through time. But overall, ATM is our plan. But also, I look at where our CFO to debt is. It's at 17% right now. We have flexibility. We have strong credit metrics, and that's why we maintain strong balance sheets. We have flexibility in terms of when we can look at issuing equity.

Great. Thanks a lot.

Thank you very much, Mr. Caponella. We'll now go to Travis Miller calling for Morningstar. Please go ahead.

Good morning. Thank you. I wonder if there was any update on timing or plans for the Minnesota electric rate case and then tied to that, any lessons learned or takeaways from the settlement in the gas case that could be applied to any timing or request on the electric side?

hey travis yeah we're looking um we plan on november one filing for a multi-year plan on the electric side if you remember we're in year three of our multi-year plan right now um so um we've communicated that as we think about the gas side now we always look to see if we can reach a constructive settlement with the parties uh and we've been able to on the gas side so i think that's a good data point as we we think about it um so you know Early days, given that we haven't made the filing yet, but think November 1 filing, you know, it's a longer process in Minnesota. But once we get through kind of the intervener direct testimony, our rebuttal testimony, we'll soon look to see if there's an opportunity to settle.

Great. Okay. Thanks. And then back to the data center, that 6,700 or however much it ends up being in terms of requests and potential, how sensitive is that number to regulatory proceedings, whether it's the planning process that what you're talking about was going on in Minnesota, whether it's rate cases, RFPs, how much sensitivity is that to just all regulatory proceedings?

Hey, Travis, it's Bob. Look, when I think about the opportunity here that's in front of us, our obligation as a company is to make sure that We're able to serve our current customers as well as our future customers and make sure that everyone is treated economically and fairly. You know, I'll be honest, you know, we don't have, we're a 21, 22 gigawatt peak load system today. We don't have 6,000 megawatts of capacity available today. We have some, but we would need to, as part of our existing RFPs and resource plans, to add more generation to the stack. So that would take a resource planning process and a regulatory process. I think we've proven over the last seven or eight years our ability to do that and do that with efficiency to make sure that we can address the expanding needs of our customers and our states. So we will need generation over time, but I think we have plans and processes that are in place that allow us to speed the market to address the needs that our customers might need, our new customers might need today, as well as the growth that they forecast through the end of the decade.

Okay, great. And then, just real quick, transmission distribution capacity? You talked about generation capacity. Is there enough T&D, or would that also be a constraint?

So, largely, these customers are largely transmission customers, so we'll talk transmission grid needs. We've got, again, some capacity on the grid today to meet their needs today. In all of our jurisdictions, we're expanding our transmission pretty aggressively, whether it's through the MISO LRTP processes up here in the upper Midwest and what's been approved and what's on the come, as well as the power pathway in Colorado and other transmission proceedings in PSCO, and then our work in SPS with the Southwest Power Pool to build more transmission down there. So I think we've got transmission in flight. Again, you know, the capacity today is available, but not the full extent of a 6700. So, you know, our goal is to make sure the transmission generation needs are ramped according to what becomes our high probability customer needs.

Got it. Okay. Thanks so much. Appreciate it.

Thank you. I appreciate your questions, Mr. Miller. I'm sorry, sir. Our next question will be coming from Ryan Levine calling from Citi. Please go ahead.

Good morning. Any color you could share around rate design for the data center opportunity in an earlier answer you mentioned economic development opportunity does that signal a certain rate structure for this customer class and on the similar. vein or role, do you see the pps impacting the ability of excel services data center load in Colorado and more broadly across your service territories.

Hey, Ryan, you broke up on the second part of your question, but your first part of the question seems like it was around the rate design as we think about these data center loads. You know, so far we've approached it on a contract-by-contract basis, and so it can be unique, but the principle is that we need to make sure that the revenue that we receive from these data centers covers more than the incremental cost that comes to our system. So what I mean simply is that our current customers are not harmed by adding these. And whether that means you have a provision in the contract that's a ratchet if they don't deliver on the load they said they were going to deliver or a take or pay type contract. So these are fluid conversations, but the principle is that we need to bring something to our commission that is in the best interest of our current customers. And if you wouldn't, I couldn't catch up. You broke a little bit on the second part of your question. So if you could repeat it, that'd be helpful.

Sure. What role do you see VPPs impacting the ability of Excel to service the status in our load in Colorado and across your service territories?

Well, I mean, I I think VPPs can almost be another demand side management tool as we think about it. So we think there could be a role there. I know that was part of our distribution legislation in Colorado to do some planning and study work around VPPs. So I absolutely think they can play a role in the future. Just like if you think about some of this potential large load, could you have it on an interruptible load I'm certain peak period, so I think there's a lot of opportunity, as you think about the overall umbrella of more demand side management tools to address and serve this significant low growth that we see in our future.

And Brian, today we have almost 10% of our peak load in Colorado is available for demand management tools already. We'll continue to work with commission and providers, as Brian said, with the distribution bill that was just passed in Colorado. So there's an opportunity here, but we do have a very full demand response program already in existence in Colorado.

Thank you. And then do you have a way of quantifying what percentage of historical wildfire risk has been reduced or will be reduced by the implementation of the current WMP? And how do you see this risk evolving in the coming years?

I don't think we've got a quantitative number for you today, but as I made in my prepared remarks, as I think about the operational mitigations that we put in place, dramatically reduce real-time wildfire risk in our business. We do this on a daily basis, enterprise-wide, and that affords us the time to go in and then do some of the situation awareness and system hardening and enhanced operational things that we want to do in our system. Today, the tools we have are pretty blunt tools, and we'd like to get to more surgical use of those tools over time. And that's a big piece of what our wildfire mitigation plans do is use the operational tools we got today, make them more surgical so they're less customer impactful over time.

Yeah, and Ryan, if you read our wildfire mitigation plan in Colorado, we say that the RWMP investments and plan will reduce our risk similar to that of what we see in the leading utilities in this space.

Thank you for the time.

Thank you, sir. We do not have any further questions at this time. I'll turn the call back to CFO Brian Van Abel for closing remarks. Thank you.

Thank you. All for participating in our earnings call this morning. Please contact our investor relations team with any follow-up questions.

Thank you very much, sir. Ladies and gentlemen, that concludes today's conference. We wish you a very good day, and you may now disconnect.