Pinnacle West Capital Corporation

Thank you, Matthew. I would like to thank everyone for participating in this conference call and webcast to review our third quarter earnings, recent developments, and operating performance. Our speakers today will be our Chairman, President, and CEO, Ted Geisler, and our CFO, Andrew Cooper. Jacob Tetlow, COO, and Jose Esparza, SVP of Public Policy, are also here with us. First, I need to cover a few details. The slides that we will be using are available on our investor relations website, along with our earnings release and related information. Today's comments and our slides contain forward-looking statements based on current expectations and actual results may differ materially from expectations. Our third quarter 2025 form 10Q was filed this morning. Please refer to that document for forward-looking statements, cautionary language, as well as the risk factors and MD&E sections, which identify risks and uncertainties that could cause actual results to differ materially from those contained in our disclosures. A replay of this call will be available shortly on our website for the next 30 days. It will also be available by telephone through November 10, 2025. I will now turn the call over to Ted.

Thank you, Amanda, and thank you all for joining us today. In the third quarter, we delivered strong operational and financial performance, underscoring the discipline and focus that define our strategy. Today, I'll share how we plan to continue to meet rising customer demand and how we successfully navigated a dynamic summer season. I'll also highlight our long-term planning efforts and strategic investments that position us for sustainable growth. Then Andrew will walk through how increased sales and transmission revenue have led us to revise our 2025 earnings guidance, along with our forward-looking financial expectations. Importantly, our long-term planning and resource procurement paid off as we reliably served customers over multiple record peak days this quarter. I'm proud of our entire team for stepping up during the summer season to support our customers and communities with industry-leading reliability, a hallmark of our company. Our crews battled storms, flooding, and extreme heat, yet we were prepared to ensure customers were taken care of with rapid response and operational excellence. Additionally, Palo Verde Generating Station operated at 100% capacity factor the entire summer, delivering a solid performance for our customers in the entire Desert Southwest region. Our peak demand record reflects the strong underlying economic growth in our service territory, with weather normalized sales growth of 5.4% and residential sales growth of 4.3% in the third quarter alone. Arizona's population growth remains robust, fueled by major employers expanding their operations and driving demand for skilled labor. The state's ability to attract and retain high-quality talent is truly a key differentiator. and a powerful signal of the long-term economic fatality we're helping support. Semicon West, recognized as North America's largest microelectronic exhibition and conference, was held outside California for the first time in more than 50 years, with Phoenix being selected as the host city. Our region's economic momentum continues to accelerate. Site Selection Magazine recently named Maricopa County the top county in the nation for economic development in 2025. citing its success in attracting high-growth industries like semiconductors, data centers, and logistics. Taiwan Semiconductor reaffirmed its commitment to Arizona, accelerating production of two-nanometer wafers and advanced technologies. They also announced plans to acquire a second location in Phoenix to support their vision for a standalone gigafab cluster. Meanwhile, Amcor Technology broke ground on a $7 billion advanced semiconductor packaging and testing facility. which is an increased investment of $5 billion over their original plans. The first phase is expected to be completed by mid-2027, with production beginning in early 2028. To support this growth, we're executing our plan for long-term investments in both transmission and baseload generation, which are essential to secure a reliable grid for the long term. In Q2, we announced our role as the anchor shipper on the Desert Southwest expansion project. And just days ago, we announced our plans to develop a new generation site near Gila Bend, just southwest of Phoenix, which could add up to 2,000 megawatts of reliable and affordable natural gas generation to our customers. The Desert Sun Power Plant is a two-phase project designed to serve both existing customers and the rising demand from extra large energy users like data centers and manufacturers. Phase one is expected to begin serving committed customers by late 2030. Phase 2 is expected to support new demand from our queue of high load factor customers. Importantly, we're working with customers now to contract for the Phase 2 capacity using our subscription model, a commercial construct designed to ensure growth pays for growth while protecting affordability for all customers. Investment and generation alone will not be enough to support the growth in customer demand. We're making significant investments in transmission as well, with multiple projects underway and more in development. These projects are expected to enhance reliability, resiliency, and integration of new resources. They also expand our access to out-of-state generation and regional markets. Transmission investment benefits from constructive and timely recovery through our FERC formula rate and creates opportunities for additional wheeling revenues that support affordability for our retail customers. Turning to our pending rate case, we remain actively engaged with intervenors in responding to data requests. and remain on track for a hearing in Q2 of next year. As we approach the end of 2025, our priorities remain clear, executing our mission to deliver reliable and affordable service to our customers, investing in baseload generation and transmission to serve growth, and achieving a constructive regulatory outcome that protects customer affordability while reducing regulatory lag. Thank you for your time today. I'll now turn it over to Andrew.

Thank you, Ted, and thanks again to everyone for joining us today. This morning, we released our third quarter 2025 financial results. I'll walk through the key drivers behind our performance, provide context on our updated 2025 guidance, and share our outlook for 2026 and beyond. We reported earnings of $3.39 per share for the quarter, a modest increase of two cents year over year. This result was primarily attributable to higher transmission revenues and higher sales. driven by robust sales growth across customer classes. These gains were partially offset by lower weather-driven sales compared to last year's Q3, higher interest expense, reduced pension and OPAP benefits, and an increase in our outstanding share count. Based on strong sales growth, along with above-normal weather, an increase in transmission revenues, and contributions from Eldorado, we are raising our 2025 VPS guidance from a range of $4.40 to $4.60 per share up to $4.90 to $5.10 per share. With the ability to de-risk future operating expenses, our updated guidance reflects an increase to our forecast O&M for the year to a range of $1.025 billion to $1.045 billion. Sales growth across all customer classes continues to be strong. We experienced 5.4% weather normalized sales growth for the quarter, including 6.6% CNI growth, supported by the continued ramp up of our large load customers and 4.3% residential growth. Year to date, residential sales growth stands at 2%, exceeding our expectations and fueled by continued customer growth at the top end of our range. We are therefore narrowing our customer growth guidance range to the high end of 2% to 2.5% for the year. As we look ahead to 2026, we anticipate earnings per share of $4.55 to $4.75 per share. The expected year-over-year decrease compared to our revised 2025 earnings guidance is due to the projection of normal weather and higher financing and D&A costs as we work through the rate case process. We continue to expect robust customer and sales growth, increased transmission revenues, focused O&M management, and some positive contributions from our Eldorado subsidiary. Customer growth next year is expected at 1.5% to 2.5%, supported by Arizona's ongoing population and business expansion. Last year, we set a post-recession record with nearly 35,000 new meter sets. We're on track to match that figure again in 2025, and our forecast for 2026 customer additions remains strong. For overall sales growth, we expect weather normalized sales to continue to grow at 4% to 6% in 2026. And with the strong residential sales growth trends and continued ramping acceleration plans by our extra high-low factor customers, including in the advanced manufacturing space, we are increasingly confident in our forecasted long-term sales growth range and are raising it up from 4% to 6% to 5% to 7% and extending it through 2030. Our capital and financing strategy remain focused on enabling growth while maintaining affordability in financial disciplines. We've updated our capital plan through 2028 to include critical strategic investments in transmission and generation that support reliability and the demands of our rapidly growing service territory. As highlighted by Ted, we look forward to developing these new resources for the benefit of our customers. These investments are expected to drive rate-based growth of 7% to 9% through 2028, an increase from our prior guidance of 6% to 8% through 2027. To support this plan, we've updated our financing strategy for 26 through 28, maintaining a balanced mix of debt and equity aligned with our balance sheet targets. For 2026, approximately 85% of our equity need has already been priced, with an additional 1 to 1.2 billion of PIN of the West equity forecasted through 2028. On the O&M front, our 2026 outlook reflects our commitment to cost efficiency. We expect a slight year-over-year decrease despite continued customer growth, and we remain focused on reducing O&M per megawatt hour over the long term. Finally, we are affirming our long-term EPS growth guidance range of 5% to 7% based on the midpoint of our original 2024 guidance range. We recognize that regulatory lag will continue to be a factor in 2026. However, we remain confident in our long-term financial strategy. Our service territory offers unique advantages including strong growth across all customer classes and a diversified economic base that includes advanced manufacturing, data centers, and continued population growth. Working closely with the Arizona Corporation Commission and stakeholders, we're committed to addressing regulatory lag, improving recovery timing, and ensuring affordability as we continue serving new and existing customers. This concludes our prepared remarks. I will now turn the call back over to the operator for questions.

Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Please hold while they poll for questions. Thank you. Your first question.

line is live hey good morning team uh thanks for the time appreciate it and nicely done i gotta say again um look let me if i can kick it off here obviously the gas build is uh front and center here for you guys um good good progress how are you thinking about just eventually giving visibility on 29 and 30 um especially is what you've seen up here can you speak a little bit to the extent possible what that trajectory as you rolled it forward here would potentially look like in that context and Maybe speak a little bit more to the sequencing of getting this pipeline built in time and in service to align with what seems like a fairly tight timeframe altogether to build out this generation.

Yeah, Julian, thanks very much. And it all starts, and then Andrew can talk about the capital plan. You know, the pipeline is expected to be in service in 2029. We're staying very close to that project and remain confident in the milestones between here and there. And so, as you know, that was the first key step. Second step then is starting to announce some of the generation capacity projects that we've been working on. Desert Sun being the first major announcement and project that we would expect. And so, as we've said, we think about this in really two phases. The first phase is going to be necessary to support committed customers. That's a part of the four and a half gigawatts that we've already committed to and are building out to serve. And we'd expect to be able to have that phase in service in 2030. So still a healthy margin passed when the pipeline's in service, but a schedule that we're comfortable with meeting. Importantly, we've got all the key equipment secured, land interconnection is in place. So I think we're in a good spot to be able to deliver on that timeline. And then the second phase of that project, We've identified the opportunity to be able to serve our subscription customers with. We've rolled out an opportunity to subscription customers for 1.2 gigawatts, and we're actively working with those counterparties on their desired timing and ramp rate to be able to take advantage of that second phase. And that's one of the benefits of the subscription model is we can ensure that the delivery timeline of that second phase corresponds with the counterparty's ramp rate, and we make sure that Tad Piper- reliability is protected by keeping those two in sync both will of course take service from the new pipeline but we're comfortable with the timing and how that coincides with. Tad Piper- With the pipelines in service and will continue to monitor pipeline progress along the way and be prepared to adjust if needed, but we're comfortable with the timeline we've laid out. Andrew, you want to speak to the capital plan?

Sure. Julian, as it specifically relates to the Desert Sun project, there is some of the capital related to that project, both on the generation side as well as small amounts on the transmission side in the current plan. You've got long-lead equipment and land and things like that that are in the plan. And certainly, given the in-service space that Ted's talking about for phase one, you would see that CapEx ramp up as we get closer to the end of the decade. Certainly around the broader capital plan, as we work through the rate case and understand the dynamics of the formula rate and continue to develop our subscription model with our customers, that will provide us the opportunity to give more visibility as we certainly want to make sure that that growth pays for growth. But the plan that we put forward through 28 reflects the beginnings of some of those really big longer lead time investments we're making on the generation. and the transmission side. You could see it in the 2028 kind of new run rate for transmission investments and some of the additional information we provided about our ability to start to look at that additional $6 billion backlog of BIRC regulated transmission assets and start to begin to develop those in parallel with a project like Desert Sun. So, you know, that's the plan. We feel good about the plan for 28, and as we are able to certainly provide more information about the timeline through the end of the decade, and we've tried to start to do that with some of the construction work in progress disclosure that we've been providing over the last few quarters.

Got it. And actually, I was just, you kind of teed up the next piece. How is that progress going on the subscription? As far as you talk about this 1.2 gigawatt opportunity, where are you in sort of, quote, unquote, filling that bucket or that opportunity?

Yeah, we've got active dialogue. You know, this was tranche one of our subscription and recognize that the timing of tranche one coincides with developing that phase two of Desert Sun as well as the in-service, the new pipeline. So we'll work with counterparties now to match that up with their desired in-service timing. But conversations are active and we remain optimistic in being able to deploy a subscription model to both continue to serve part of the 20 gigawatt queue that is ready to begin service in our service territory, while also designing it in a way that helps with financing and protects customer portability. So I think the key elements of the model has been well received by the market. We're actively working with counterparties. It's going to be a good way to be able to serve that queue both now and going forward.

Yeah, fair enough. One little detail here. On 26, you've got this $0.55 bump here on transmission. That's a sustainable level, right? That's a pretty big bump.

Yeah, Julian, we'll provide guidance as we go forward, obviously, on that, but I think it's reflective of the trend. We've been very committed to investing in our FERC-regulated transmission business, and that's some of the capital that I was talking about, both because of that need to access resources from further afield and to serve our growth, And given the FERC construct, the formula rate, and the amount of capital that we've stepped into there, this is just the natural reflection of the plan that we've put forward and converting it now into an annual earnings opportunity.

Got it. Excellent. Thank you, guys.

All the best. All right. Good luck.

Thanks, Dylan.

Thank you. Your next question is coming from Nick Campanella from Barclays. Your line is live.

Hi, good morning, team. This is Faye for Nick today. Thanks very much for taking my questions. So quickly, just one clarification on equity dilution, if I could. So since 2026, equity need is 85% taken care of, which is the $550 million already prized, as you put in the slides. What's the true incremental equity needs for 26 through 28, especially when we look at that 1 to 1.2 billion total equity needs for the three-year guidance period? And also, I guess, how should we think about the cadence of issuing through 26 and 27, and how should we think about any equity need mitigation given the strong sales growth backdrop that you just provided in the update?

Thanks. Okay. So, yeah. On the equity, as you pointed out, we have substantially de-risked the need in 26 through all the equity that we've prized. Go through the block issuance we did in 2024 and our use of our ATM over the last two years. So it would feel like we're in a good position. If we look over the incremental need over the three years, that 26 to 28 period, that's what that 1 to 1.2 billion represents. TAB, You know, certainly these projects are lumpy so the cadence of issuance need kind of goes with that that's where an ATM has worked well for us to date, to be able to time. TAB, You know our drawdowns our issuance with the cat backs as we go through some of these larger projects. TAB, But your your last question around mitigation is really the key one when you think about that range and our ability to meet our long term aspirations around balanced capital structure and to minimize the amount of equity dilution. within that balanced capital structure. It really comes back to all the work we're doing both around reducing regulatory lag through the rate case process to improve retained earnings and our ability to fund that capital from internally generated funds. And then to look to our large load customers in this subscription discussion to make sure that to the extent that we can secure cash up front to fund those investments that it reduces the need for us to go out to the market for equity. So while that's the range to try to mitigate that as much as possible.

Got it. That's very helpful. And secondly, just on the transmission capital investment slide you laid out, if I could, appreciate the clarity on the 2.6 billion cumulative transmission capex through 28, and also the 6 billion plus through 2034. Could you just comment on your assumption on annual transmission capex post-2028? And how should we interpret this $6 billion plus, especially on what's contributing and driving the upside? Thanks.

Yeah. So, you know, we haven't laid out the specifics of the plan post-2028 because, you know, these are really the projects that reflect in the 10-year strategic transmission plan that was filed with the commission every other year. There are a host of projects in there, 500 or 600 miles of high-voltage lines that we're developing to meet different needs and there's some fungibility in terms of develop this line or that line. So we're doing a lot of that work today. The way I would think about it overall is that we went from under $200 million a year of run rate CapEx five years ago in transmission for just sort of the local area projects or things that we do that are 69 KB plus. That number is increasing to the three to 400 million range of just the blocking and tackling CapEx we do on the transmission side. And so the increments above that, that you see almost in that, you know, that the potential for that 850 plus million number to be a run rate, there is a baseline three to 400 in there. And then the imprint above that is reflective of the beginning of investing in those strategic transmission projects. But it's a really long runway and the number will vary from year to year. But I think if you look at 2028, that is a reflection of the opportunity on an ongoing basis through the combination of core transmission and that increment from strategic transmission.

Got it. That's super helpful. If I could, just another quick clarification on the robust sales growth guidance you refreshed. I guess seeing a really elevated level at 5% to 7% through 2030, while looking at a 7% to 9% rate-based growth is through 2028, I guess, can you comment on your confidence level to possibly extend the 7% to 9%? rate-based growth further into the horizon? And I guess what could be the key drivers contributing to that? Thanks.

Yeah. So, you know, we've laid out through 2028 on the rate-based side. And, you know, one of the reasons it stepped up is that you're beginning to see some of those long-lead projects come into service in 2028, the best example being Red Hawk, the expansion of our natural gas facility there. As you get into 2029 and 2030 and beyond, more of these larger projects come in. In service of, to your point, the higher sales growth we're seeing, especially from the large load type customers. And so, you know, as we continue to kind of move forward and develop the CapEx plan around Desert Sun, around those strategic, that $6 billion in strategic transmission that we were just talking about, we'll continue to look at that rate-based growth rate. Our confidence is that that runway is quite long. What the level is is, you know, what we'll be able to kind of continue to work through. That CWIP disclosure that I mentioned earlier is also a good way to think about some of the projects that we know are already in the hopper that take us into 29 and 30 and a good way to extrapolate if you do some of that math.

Great. I appreciate the callers.

Thanks for the update.

Okay.

Thank you. Your next question is coming from Char Peruzza from Wells Fargo. Your line is live.

Hey, good morning, everyone. This is actually Alex on for sure. Thanks for taking my question.

Hey, Alex. Good morning.

Hey, good morning. So just on the growth rate outlook, just you guys are still targeting that five to seven off the 24 midpoint. Just in the context of today's new 26 guidance, can you just help frame what you might use as your new base? And will you roll forward the plan as soon as the rate case is concluded?

Sure. Yeah. So, you know, Patrick O' Really the rate of use becomes the precipitant for us to look at all that and Patrick O' if you think about these years, we really try to set as, you know, have a bar for ourselves as we can to make sure that we're, you know, consistently meeting Patrick O' or exceeding expectations and doing so in the right way. And so, you know, we want to get to the point where that 5-7% becomes evergreen. Right now we're in a situation where Earnings are lumpy. We go and we have a rate case and we get a rate increase. And then there's regulatory lag through a lengthy rate case process. The formula rate is really an important element here to be able to convert that earnings growth rate from being kind of a long-term look at 24 and then look at 28 to something that can be more evergreen. And so I think as we work through the rate case process and the structure of the formula rate, we'll be much better positioned to talk about what all that looks like and Ultimately, that's the goal is to be able to deliver year in, year out, produce more modest increases year over year for customers as well. That's a really important part of it. And ultimately, that creates the better stability for us around earnings growth.

Got it. Okay. That's helpful. And then just switching gears here, just to get more of a sense on the megawatt pipeline you have around the hyperscaler side and just sort of how you think about capacity first generation needs. Thank you.

Yeah, sure. So, you know, we continue to see just a robust pipeline of demand. As we've articulated in the slides, we've got four and a half gigawatts of incremental demand that we've already committed to. That's in part what Desert Sun is going to be serving, as well as future generation and transmission investments that are included in our guidance period and will have to be developed even beyond. But in addition to that, we want to start making progress on committing and serving part of the 20 gigawatts of uncommitted load that is in our current queue. And so that's also part of what Desert Sun will begin to be able to allow us to serve. But of course, we anticipate wanting to be able to offer much more than just that initial tranche of 1.2 gigawatts. So the intent is contract that first tranche, and then we'll continue to identify generation and transmission capacity expansion opportunities as we get to a certain point in the pre-development of those projects to where we are confident in the timing and level of capacity available for us to be able to offer then we'll go to the market and offer another tranche of service to that uncommitted queue and that's the model that we anticipate being able to deploy going forward bottom line is we anticipate being able to continuously offer capacity to eat into that 20 gigawatts and we think the 1.2 gigs that we've offered recently is just the first step into that trajectory.

Got it. Super helpful. I'll leave it there. Thank you.

Thank you.

Thank you. Your next question is coming from Travis Miller from Morningstar. Your line is live. Good morning. Thank you.

Morning, Travis. Morning.

I just want to confirm on the guidance for 26. There's no contribution from the rate case. Is that correct? And then if that's correct, any ideas or guidance you could give on what maybe a dollar increase or, you know, so to speak, would be in the back end of the year? Any thoughts there?

Yeah, Travis, you're correct. We have not made any assumptions for rate case conclusion that's informed 2026 guidance. As we said, we do anticipate the case resolving in the last quarter of the year, and given that's such a small quarter force anyhow, and the timing just didn't seem prudent for us to be able to make any assumptions at this point. But certainly once the case concludes, that'll allow us to step back and reevaluate the constructive nature of the outcome and what that means in terms of forward-looking guidance. So we'd look to do that at that time, as well as the details around how the formula rate would work, both timing and level includes on all those aspects.

Okay. Makes sense. And then separately, that 4.5 gigawatts of committed customers, can you kind of elaborate on who those customers are and maybe is any of that going to your system-wide base, whether it's residential or small commercial? How would you break up that 4.5 gigawatts?

Yeah, the four and a half gigawatts is a nice balance and blend between incremental industrial growth, such as chip manufacturing, TSMC, and mCorp being examples of that, as well as their supply basis, as well as, of course, data centers that are already in development or even in service, but we expect a ramp through this period. And then importantly, we continue to see just steady and robust residential and small business growth. I'd say that's one of the hallmarks of our growth story is a very diversified story, not too dependent on one industry or customer base or another. Maricopa County just recently ranked top county for economic development in 2025, and it's the third fastest in the U.S. Phoenix just ranked number one of the top 15 growth markets for manufacturing, and all of that is separate from a data center story. It just shows the true underlying growth. pleased to see that affordability still is a hallmark of our service territory favorable cost of living Phoenix inflation is growing at about 1.4 percent versus national average at 2.9 so I think there's a lot of drivers behind why we're seeing diversified growth and that 4.5 gigawatts represents all sectors which gives us confidence in the growth rate but also means that we've got a lot of infrastructure to deploy to continue to keep up with the various sectors that are demanding it

Okay. Yeah, no, that sounds good. And then, so would most of that 4.5 gigawatts go into rate base? Or is some of that the subscription model you were talking about that might be outside of rate base?

Well, let's be clear. All of our investment goes into rate base. The subscription model still goes into rate base. We are just contracting with those customers. Think about it as more of a special rate agreement rather than out of rate base. And that special rate agreement just ensures that growth pays for growth and that the timing of their ramp coincides with the timing of the ramp of the infrastructure to be built to serve them, as well as potentially getting their help to finance some of that infrastructure so that we maintain a healthy balance sheet as we grow these rate-based investments specifically for data centers. So it's all going in the rate base. It's just a matter of how you recover the dollars is really the difference in the subscription model.

Okay. Okay. Very good.

No, that's helpful. Thank you.

Thank you.

Thank you. Your next question is coming from Steve Danversy from RBC Capital Markets. Your line is live.

Hi, team. Good morning. Thanks very much for taking my questions. Good morning. I just was hoping for a little bit more color on the year-over-year change in sales growth as an EPS driver. I know for 25 guidance, you had embedded 58 cents, and for 20, 26 guidance, it looks like you're embedding 39 cents. I guess I would just step back and say that it doesn't seem like the magnitude or mix is really that different given both years were four to 6% total of which three to 5% was from large CNI. So can you just give a little color there? Is it mix within the CNI classes or what's driving the difference in EPS magnitude uplift from sales growth?

It's David Andrews, sure. Yeah. So, you know, you're right. 26 does have a bit of a smaller contribution there. And that's really the fact that we're talking about a pretty big group of customers that has puts and takes in their ramp rate from year to year. And some of those, you know, as we've spent, you know, been in an early data center market, we've been able to develop more sophisticated forecasting, you know, on a customer by customer basis, who's testing equipment, who's actually ramping. And so you do see some variation there. within the customer class. So, you know, the residential small business number is relatively stable. And as we've seen, you know, this quarter and our guidance for this year, the expectation has continued pretty, you know, large new customer additions and a actual, you know, positive contribution from residential sales, despite the fact that we've continued to have energy efficiency and distributed generation, you know, pressed up against that. So it really is the year to year variability in some of our large load customers. I think where we, you know, really want to focus is the fact that this is a long-term set of customers with a trajectory now that we feel confident about through 2020, including raising that sales growth guidance by 100 basis points over that period, and the fact that that means that the extra high load factor contributions, that steps up by 100 basis points as well. So over the long term, feeling really good. There is some intra-year variability, but once you pair that with

know continued customer growth residential growth and then the continued conversion of our transmission investment into revenue through our formula you know we're feeling pretty confident about the the ultimate outcome and that that's really helpful and i guess like that would be like the put and take versus what kind of we were assuming is just the sales growth versus transmission so i know julian asked about it but can you talk a little bit more about that clearly throughout the rest of the plan transmission growth steps up materially into 28 um and so Does that $0.55 benefit scale linearly with the increase in transmission spending, or is there something that's causing supernormal growth in recoveries?

Over time, it should be proportionate to the investment. We earn pretty quickly when we're putting assets into service. I think the thing that will happen is it'll get a little bit lumpier, because in the near term, that $300 million to $400 million in runway projects, those are smaller projects. that gets done within a given year, maybe over two years at max, and we're moving forward into lines that may take longer to build. Some of the things that we're looking at are can you energize them on a sectionalized basis so that we can reduce the regulatory lag. If we're building a 100-mile line, can you do it in segments? That's the type of thing that we're thinking about to make sure that we continue to translate that opportunity into earnings. The other thing that's been nice about the transmission opportunity is that it's part of the broader wholesale market, and so the opportunity to offset some of the impact to our retail customer base through others wheeling over our system has been a big part of our customer affordability story as well. So there's multiple benefits to doing it. We are doing some larger projects, so the scaling will ultimately get there over the long term, but entry year there could be some lumpiness just given you're talking about That increments above the core 300 to 400 million being longer lead time projects that can take a few years to get into service.

Okay. That's really helpful. Thanks very much for the time. Appreciate it. Thank you.

Thank you. That completes our Q&A session. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.