NiSource Inc

Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2024 NYSource Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. We do request for today's session that you please limit to one question and one follow-up. Thank you. I would now like to turn the conference over to Chris Turnier, Head of Investor Relations. You may begin.

Thank you. Good morning and welcome to the Nice Horse Third Quarter 2024 Investor Call. Joining me today are President and Chief Executive Officer Lloyd Yates, Executive Vice President and Chief Financial Officer Shawn Anderson, Executive Vice President of Strategy and Risk and Chief Commercial Officer, Michael Luers, and Executive Vice President and Group President, NYSource Utilities, Melody Birmingham. The purpose of this presentation is to review NYSource's financial performance for the third quarter of 2024, as well as provide an update on our operations and growth drivers. Following our prepared remarks, we'll open the call to your questions. Slides for today's call are available in the investor relations section of our website. We would like to remind you that some of the statements made during this presentation could be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the risk factors and MD&A sections of our periodic SEC filings. Additionally, some of the statements made on this call Please refer to the supplemental slides, segment information, and full financial schedules for information on the most directly comparable gap measure and a reconciliation of these measures. I'd now like to turn the call over to Lloyd.

Thank you, Chris, and good morning, everyone. I'll begin on slide three. The NISource investment thesis is simple. We serve our customers by delivering safe and reliable energy at an affordable value. Affordable energy requires efficient capital deployment, safe asset operations, and constructive regulatory recovery mechanisms. These fundamentals generate competitive returns while enhancing our balance sheet position. Importantly, these are the foundation to the NYSource business plan, which continues to offer compelling value to stakeholders. Driven by regulated utility operations across six highly constructive jurisdictions, offering diversification across fuel type, and regulatory location. Strong execution from our team and these business fundamentals are what have driven a trailing 12-month 9.9% earned ROE at the NYSource level, demonstrating our focus on shareholder returns despite rapidly growing deployed capital and declining financial leverage. This is a gap number with an adjustment made only to normalize weather. All of this informs our long-term value proposition, which our teams continue to advance each quarter. But before we focus on the long-term plan refresh, let's turn to slide four and touch on the progress our teams have made on our regulatory activity. Being a trusted energy partner and enhancing NYSource's superior regulatory and stakeholder foundation is a priority and we believe differentiates us from peer regulated utilities. We remain active in rate case and tracker filings and build our credibility through our six-state footprint by utilizing a stakeholder-focused mindset as we approach these processes. Last month, an administrative law judge in Pennsylvania recommended the Commission approve our general rate case multi-party settlement as filed. In October, we reached a settlement in our Kentucky general rate case. Approval of both these settlements is subject to final commission approval. In Indiana, we received approvals for both our solar CPCN amendments to add full ownership of solar facilities, as well as a CPCN to construct a gas peaking facility, all of which helped NYSource retire its remaining coal generating stations by the end of 2028. We also received approval to advance our strategy of using technology to more efficiently serve our customers through an upgraded work and asset management system, which utilizes data and analytics through AI to raise productivity and efficiency across the dispatch of our operations team. This includes deferral for a one-time and ongoing expenses and capital returns for the program, which went live in July for our electric operations and will go live next summer for our gas operations. This new technology is also an example of making strategic investments to better inform our culture and enhance risk management across our systems to deliver operational excellence for our customers. Our relentless focus on operational excellence enhances our risk management posture and drives protection for our customers, communities, and shareholders through our capital allocation framework. We face many potential categories of risk, which constantly evolve and risk management is central to our values. The utility industry continues to face potential challenges head on, whether it relates to natural disasters, the interest rate environment, inflationary pressures on cost structures, or other items of uncertainty. Our teams are constantly implementing proactive solutions to add layers of protection into our plans and lead industry partners to understand and utilize best practices to de-risk our execution and deliver our commitments. We have high confidence in our ability to achieve our financial commitments, which we believe are highly executable. We are reaffirming 2024 adjusted EPS guidance of $1.70 to $1.74, and we continue to expect to achieve the upper half of this range. We are initiating 2025 adjusted EPS guidance of $1.84 to $1.88, consistent with maintaining our existing six to eight percent annual growth commitment. Today, we are also announcing a refresh of our outlook across our five-year planning horizon and extend this commitment and our overall financial guidelines to 2029. Key elements of that plan included an updated five-year capital plan, which is $19.3 billion or equivalent to 89% of our total current rate base. This is slightly larger than our prior plan's 87% of year-end 2023 rate base. This drives 8% to 10% rate base growth over the 2025 to 2029 period, which fuels our ability to increase our adjusted earnings per share growth rate by 6% to 8% annually. Our investments in strengthening the balance sheet support our commitment to target FFO to debt 14 to 16% in all years of the plan. Our work does not stop at the base capital plan. We are fortunate to have a robust portfolio of valuable customer investments, which include and extend far beyond our five-year plan horizon, which Sean will detail later. Our teams remain active in developing this portfolio of projects to meet our standards necessary to be included in our base plan. One example of work by our teams is the development of our strategy to serve the robust interest by data center customers for power to be served by NIPSCO. The fundamentals of the Northwest Indiana region are compelling to potential data center customers. Access to critical infrastructure, including a robust transmission system and proximity to critical fiber connections, predictable climate and weather with low natural catastrophe risk, and a constructive business climate, including favorable tax structures, low-cost land, and a supportive state government are all favorable factors in advancing development of data centers in the region. Our teams are working to evaluate this build-out, which could provide benefits to our existing system customers, enhance our communities and local tax space, and provide compelling investment opportunities for our shareholders. Northwest Indiana is the premier location for data centers to locate. Simply put, there's potential for substantial value creation for all stakeholders, and checking all of these boxes is important to NYSource. Now, let's focus on the core execution our teams continue to deliver upon with our regulatory engagement over the last three years, detailed on slide five. During the trailing 12-month period ending last month, our average residential gas bill declined 16% on a total bill basis. Affordability remains a key priority for both NIPSCO and the Columbia family of companies, and we continue to be thoughtful about this as we advance the critical safety, compliance, and reliability work necessary to deliver safe and reliable energy to our customers. In September, NIPSCO filed its first electric general rate case in two years, driven by nearly $2.5 billion of incremental investment for our customers and communities in northern Indiana. The case incorporates the planned 2025 retirement of units 17 and 18 at the Schaefer Generating Station, as well as four new solar and storage projects, now reflecting NIPSCO's full ownership. Major investments such as these are examples of our continued partnership with state policymakers, regulators, and customers. Switching to Pennsylvania, we expect a final commission order and a new rate implementation in December. In Ohio, $285 million of investment was approved in August for our capital expenditure program rider, and we expect to submit for two major capital riders in the state again early next year. In Virginia, intervener testimony was filed in October for our general rate case, and a final order is expected early next year. Before I turn the call over, I want to thank all of our employees and contractors for their dedication to NYSOR's values, doing things safer, better, more efficient, and for less cost. Our customers and shareholders alike rely on you every day. I'll now turn things over to Michael.