Good day everyone and welcome to the Pinnacle West Capital Corporation 2024 Third Quarter Earnings Conference Call. At this time, all participants have been placed on a listen only mode. If you have any questions or comments during the presentation, you may press Star one on your phone to enter the question queue at any time and we will open the floor for your questions and comments after the presentation. 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. Our speakers today will be our Chairman and CEO Jeff Guldner and our CFO Andrew Cooper. Ted Geisler, APS President, Jacob Tetlow, COO, and Jose Esparza, Senior Vice President of Public Policy are also here with us. First, I need to cover a few details with you. The slides that we will be using are available on our Investor Relations website along with our earnings release and 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 2024 Form 10-Q was filed this morning. Please refer to that document for forward-looking statements, cautionary language as well as the risk factors and MD&A section 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 13, 2024. I will now turn the call over to Jeff. Great. Thanks Amanda. Thank you all for joining us today. We continue to execute well on our operational performance and financial management. So as part of my operations update, I'll share with you our success in managing through another record breaking summer in the Valley and reliably serving our customers when they needed us most. I'll also provide an update on the regulatory lag docket and then Andrew will explain how the hot weather and strong sales growth has led us to update our 2024 earnings guidance and he'll also discuss our forward looking financial expectations. So to start, I wanted to recognize our operations and field teams for doing an exceptional job maintaining reliable service for our customers through the hottest summer on record. In addition to our teams keeping our system reliable here in Arizona, I also wanted to share my appreciation for the 30 crew members who recently volunteered to leave their home to answer the call for assistance in Florida and help rebuild the grid and restore power to communities devastated by Hurricane Milton. Our industry's mutual assistance network made this possible and it's a great example of living our APS Promise by doing what's right for others and delivering for our communities. The summer season here was especially long, continuing into mid October when we finally said goodbye to triple digit temperatures in the Valley. We ended the summer with a total of 70 days of 110 degrees Fahrenheit or more and that eclipsed last year's record of 55 days. We had a record streak of 113 consecutive days of 100-plus degrees and we set an all-time new peak energy demand of 8,210 megawatts on August 4. The hot days, the high nighttime temperatures and the Valley's heat island effect meant that air conditioners were often running around the clock to keep homes and businesses cool. During this period, our generation fleet performed extremely well and was available when our customers critically needed the power. Our careful long-term planning for resource adequacy combined with equipment maintenance programs and innovative customer demand-side programs proved beneficial through the summer. Our baseload and our fast-ramping assets all performed well. In addition, we used our virtual power plant that includes our Cool Rewards Smart Thermostat program. In that program we've got over 95,000 enrolled thermostats that work together and help conserve nearly 160 megawatts when called this summer during a major storm outage. We partnered with customers enrolled in our program in a unique and historic way. Our customer technology experts worked with a specific targeted portion of that network of thermostats located in participating customers' homes to help voluntarily conserve power and that effort, along with operational backups that included rerouting electricity or sectionalizing the system, helped to relieve the strain successfully on the grid that was caused by that storm damage. This is the first time in APS history that a smart thermostat program was used in such a targeted manner. Using this innovative approach, long-term planning has been key to providing reliable service. In fact, I'm happy to announce that we've successfully contracted for our Redhawk Power Plant expansion which is expected to be in service by 2028. This project, along with the projects we announced last quarter, will add more than 800 MW of APS owned generation and battery storage, ensuring that we have the resources necessary to provide reliable, affordable and clean energy to our customers. With the 2023 All-Source RFP nearly complete, we're turning our attention to the next tranche of resource needs and we plan to issue our 2024 All-Source RFP in the next few weeks. With the extreme weather that we experience each summer, it remains as important as ever to continue assisting our communities through our heat relief support programs. APS increased its energy support in crisis bill assistance, maintained the summer moratorium on disconnects for past due bills and assisted customers with payment arrangements, and we partnered with more than 100 local nonprofit and community agencies to connect the state's most vulnerable population with helpful resources. Finally, we continue to focus on providing the best experience to our customers, and I'm pleased to say that year to date our Customer Care Phone center is ranked first nationally among our peers as rated by our customers in the residential J.D. Power Electric Customer Satisfaction Study. Overall, our customer satisfaction as rated by customers through J.D. Power places us in the top 10 utilities among our peers. I'm extremely proud of our employees, our progress so far, and I look forward to closing out this year strong. Turning to regulatory, the Commission held a workshop dedicated to formula rates on October 3rd. In that workshop they heard from the Federal Energy Regulatory Commission, consumer advocates, and Arizona Utilities staff provided recommendations on consumer safeguards and implementation options. We remain focused on making progress towards reducing regulatory lag while enabling the continued growth of a reliable electric grid. Obviously elections were held yesterday. Those elections included three Corporation Commission seats in Arizona with, this morning, about 91% of precincts reporting. If the current results stand, the Corporation Commission seats would be held by Commissioner Leah Marquez Peterson, Rachel Walden, and Rene Lopez. You can access votes at the Secretary of State's website if you want to follow along, and that's at Results.Arizona.Vote, as we look to wrap up 2024. Our focus and priorities remain on executing our mission of providing reliable, affordable, and clean service to our customers. I thank you for your time today, and I'll turn it over to Andrew. Thank you Jeff and thanks again to everyone for joining us today. Earlier this morning we released our third quarter 2024 financial results. I'll review those results and highlight key drivers and provide an update to full year 2024 financial guidance. Finally, I will provide insight into our 2025 and long-term financial outlook. We earned $3.37 per share this quarter, a decrease of $0.13 compared to the third quarter last year. This decline was driven by several factors, higher O& M and depreciation expenses as well as financing costs and income tax timing. Offsetting these items were positive impacts from the new rates implemented earlier this year and as Jeff mentioned, another summer of record-breaking heat which contributed positively compared to last year. We continue to see strong sales growth across customer classes. For the third quarter, weather-normalized sales growth was 5.9% with contributions from residential and both small and large C&I customer groups. With the continued expansion of our C&I customers, we saw 10.3% C&I growth this quarter. This marks the third consecutive quarter with over 10% growth in the sector. Foundational to our sales growth has also been our continued strong retail customer growth which came in at 2.3% for the quarter. Given these positive growth trends and this year's strong contribution from weather, we have updated our 2024 financial guidance. We now expect 2024 earnings in the range of $5-$5.20 per share and have adjusted our sales growth expectations to 4%-6% for the year consistent with our long-term sales growth forecast. Additionally, with the sustained growth and recognizing the ability to utilize some of the weather benefit to de-risk both future operating expense and capital investment, we've increased our forecasted O&M for the year to a range of $1.01 billion-$1.03 billion and increased our capital expenditure plan for the year from $1.95 billion to $2.05 billion. As we look toward 2025, we expect an earnings per share range of $4.40-$4.60 per share. The anticipated decrease in 2025 compared to initial weather-normalized 2024 earnings guidance is due to additional costs associated with regulatory lag including debt and equity financing costs and higher D&A as well as the end of a positive OPEB amortization and one-time gain from the sale of Bright Canyon in the prior period. These are partially offset by continued customer and sales growth and O&M management. Highlighting the strong core fundamentals of our business, the growth outlook for 2025 remains robust for our service territory. We expect customer growth within a range of 1.5%-2.5% for both 2025 and the long term. As Arizona continues to be a highly attractive destination for both residents and businesses, we are seeing a record number of new customer meter sets on track to set more than 35,000 in 2024, the highest number since the Great Recession and expect this trend to continue. Additionally, we anticipate weather normalized sales growth for both 2025 and longer term through 2027 in the range of 4%-6% with 3%-5% contributed by growth in the extra high load factor C&I sector where demand remains strong and existing customers continue to ramp up. In fact, Taiwan Semiconductor recently reiterated its commitment to build out three fabs in Arizona by the end of the decade. The first fab entered engineered wafer production earlier this year with volume production expected to start in early 2025. Looking further ahead, we remain confident in our long-term trajectory. We are reaffirming our 5%-7% EPS growth guidance based on the midpoint of our original 2024 guidance range of $4.60-$4.80. Our financial strategy is designed to support this growth with a continued focus on balancing investment, cost recovery and customer affordability. Our capital plan through 2027 includes $9.65 billion of investments, a 24% increase from the plan we shared earlier this year. This plan is focused on strengthening infrastructure, improving reliability and meeting the demands of a rapidly growing service territory including investments into new generation resources and into our Strategic Transmission Plan. These investments are expected to drive rate base growth of 6%-8%. Notably, over 40% of our future capital investments in this plan are expected to qualify for the System Reliability Benefit surcharge just approved in our last rate case or through our FERC formula rates, both allowing for improved timeliness of cost recovery. To support the capital plan, we have also updated our financing strategy through 2027. Our plan includes a mix of debt and equity in support of a balanced utility capital structure and matched to our spending profile. Our updated equity needs during this planning period are lower than the target of 40% of new capital we established on our Q4 2023 call in February and represent a very modest increase in the expected annual equity run rate from $200 million annually to a range of approximately $250-$300 million annually. As we've stated previously, we continue to believe that an at-the-market equity issuance program would match well with our planned accretive capital investment profile. We are always exploring alternative financing options as well and believe this all-of-the-above approach provides us the flexibility to utilize least cost best fit financing methods while maintaining a solid balance sheet targeting metrics consistent with our current credit ratings. As we execute our capital and financing activities to reliably serve our rapidly growing customer base, we remain committed to maintaining a cost efficient operation. Our long term goal remains to reduce O&M per megawatt hour and while we have the final scheduled major outage at our Four Corners Unit 5 facility in spring of 2025, our broader focus only in operations and efficiency will drive continued cost management into the future. As we look ahead to 2025 and beyond, we remain confident in our long-term financial strategy while recognizing and continuing to address the challenges of continued financial lags. Our strong customer growth across classes and robust sales growth, particularly in the semiconductor and broader manufacturing sector, continues to highlight the unique benefits of our service territory. This, coupled with our improving regulatory environment that is focused on timely recovery, provides a compelling future. The investments we are making today lay the foundation for sustained growth and value creation for years to come, and we remain focused on delivering reliable, affordable service while maintaining a strong financial position. 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 one 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 one on your phone. Your first question is coming from Shar Pourreza from Guggenheim Partners. Your line is live. Hey, Jeff. Hey, Andrew. Good morning. Hey, sir. Morning. Morning. Obviously, Jeff, it's topical this morning. You know, just start with the elections. It's prelim, but looks like we could end up with three more Republicans with a 5-0 commission. What could this, I guess, mean from? A regulatory construct standpoint? You guys are making, you know, really good progress on items like, you know, the regulatory lag proceedings. So curious if this progress can change in any direction, for better or worse. I have to imagine we could see some policy shifts here. But I'm just kind of curious how. You're thinking about it. Yeah, I think Shar generally, you know, and so there's still some early, late earlies, I think, out and a few precincts to report, but most of the vote is in, and you're correct that right now you've got the three Republican candidates that are currently ahead, so obviously that's still got to get finalized. I think if you look at what the comments that were made on the campaigns, that generally what you'd see is that the Republicans, I think, had a fair amount of alignment with the current commissioner, Myers and Thompson, in terms of focusing on issues like the regulatory lag docket. I think that. If that's the result that continues, you're likely to see continued alignment with the current bench. So obviously, I think that suggests that there would be constructive work continuing to move forward on the reg lag docket. Apart from that, you know, this is something we engage commissioners on both sides throughout the campaign, and I'm sure that whoever ends up ultimately winning is going to have different issues and questions and want to understand things a little bit more, and we look forward to engaging with all the commissioners and having that dialogue and making sure they understand the drivers and the needs of the business. Perfect. Fantastic. And then just lastly on load growth. On a near term, you guys kind. I assume that $4-$6 for 2024 and 2025 and that, I guess, aligns well with your longer-range guide as well. Can you maybe just, Jeff, talk about the stickiness there, but also more wondering just given the conversations you've been having with customers, are there opportunities there where we could see another step change, increase in load from a large customer to being a hyperscaler? Thanks. Let me, and I'll ask Coop too to join in on this. I mean, I think it's sticky. So one of the things we've really focused on in Arizona over the last decade, not quite decade, but since the last recession, was trying to pivot the economy here from largely home building kind of retirement focus into more advanced manufacturing. And I think that the state has done a really nice job of doing that. And so you do see a lot of manufacturing. I was just on a call with the Arizona Commerce Authority and they were showing some of the projects that are, that are out there and they do range from, you know, you got the big ones, the data centers obviously are looking closely at Arizona. But then you also see a lot of these five, 10 megawatt factories and manufacturing sites that are just looking to niche into whatever land is available. And so I do think that the state continues to be attractive for that load. We're in good location between Texas and California. We've got good transportation. We don't really have the hurricane type disruptive weather that you see. You get a hot summer but you know, that's a dry heat I guess. And so I think we're going to continue to see that kind of growth. It gets a little harder as you get into much bigger because now you've got to deal with just the realities. We have to figure out the power plants to serve that growth. And so we're working closely with TSMC and you know we would welcome the additions. We'll figure out how to do it. But we've got a lot of pent up demand coming from both manufacturing and data centers. Did I miss anything, Cooper? No. I would just add, Shar, that you kind of see in the contribution this year that 4%-6% is pretty diversified. As you move into 2025, you have the TSMC beginning to ramp up and reflective of that diversification in the service territory that Jeff talked about. But it's also been the contribution from small business and residential. We're forecasting 1.5%-2.5% customer growth continuing and we've been outperforming the midpoint of that range this year. And you're seeing those contributions across customer classes and that's a result of the diversification on the large C and I leading to some of that downstream growth as well. Got it. Perfect. See you guys in a couple days. Congrats on this. Another positive step change. Yep. Thanks sir. Thanks sir. Thank you. Your next question is coming from Nick Campanella from Barclays. Your line is live. Hey, good morning. Thanks for taking the questions. Hey Nick. Hey. So, just acknowledging that a lot of this CapEx raise was fit into tracked capital and thinking through that 9.55% ACC ROE, could you quantify maybe just how much you're lagging there in 2025 on a percentage basis and then just on the current rate case outlook, when would you have improvement in that ROE? Would it be partial year 2026 and then full run rate 2027? Just thinking through that timing would be helpful. Thank you. Hey Nick, it's Andrew. As you mentioned, we have moved the amount of CapEx that's being tracked up, and that's been intentional on our part. You know, now that we have the SRB, we have increased confidence in putting some of these customer-centric generation projects through that are affordable and go through our all-source RFP, and we've significantly ramped up our transmission CapEx and have the formula rate and a Transmission Adjuster there. So that will certainly help over time. Admittedly, some of those transmission projects and obviously the generation projects are multi-year, and so there's, you know, until those go into service and get put through the trackers, there's always some lag there. On the fundamental lag question though, the CapEx and the operating costs that aren't captured in those trackers. You know the reason we're so focused on the regulatory lag aspect and on being prompt about filing a future rate case is because the further we get away from the last rate case, the more that lag takes place. You see that in the 2025 guidance we have some of the same issues around interest expense and D&A as we invest in infrastructure. And then added to that is a couple structural issues as OPEB item. And so while we haven't quantified the exact amount, the reason that we're so focused on number one increasing the CapEx going to tracked items and then looking at solutions around the non-tracked items is in order to earn as close to the authorized ROE as we can. Jeff, anything you want to add on how the rate case timing will play into that? Yeah, and then Nick, if you think about it, so obviously the commission is kind of working on what the structure could look like if they move forward with the formula rate docket. That could change what the case looks. Like or how you would file it. But when you think about the timing of that, the earliest you could go is really a mid-2025 filing because if you did a 2024 test year, you'd be looking at a mid-26. We haven't announced anything on that, but that's just the earliest that you could realistically go and then it would probably take a year to prosecute that case. So you'd be looking at rates coming in in the middle of 2026 or so back half of 2026. And that no matter what happens in terms of the structure that whether it's a formula or it's just a normal traditional rate case, that's really the first time that you then get the relief on some of the lagging items that Andrew was talking about. That's the first time you would have now put into the new rate structure. Things like that pension, OPEB cliff issue would get put into that structure. So the next time you're likely to see that is probably in the mid-2026 back half of 2026 timeframe. Hopefully that helps. I do really appreciate that. And then just one clarification on the financing plan because I know you kind of are highlighting you have these four draws available from the block you did in February 2024, but just none of that nets against this $700-$900 million figure, is that correct? That's correct, Nick. The $725 million that we did in the block in last February, we haven't drawn that yet. And you know, that was really a lot of the catch effect ways to make sure that we continue to have the balanced capital structure down at the utility. If you remember in the last plan we had about $400 million slated for unidentified parent capital for 2025 and 2026. So effectively the $700-$900 million both rolls forward and then modestly increases that $400 million by an additional $500 million. And we would expect that equity would match up with our capital needs over the 2025 through 2027 period. We have not made any draws under the original block 725. And that would be sort of the first place we go for that equity. But certainly with things like ATMs and then we've used the forward overlay on the original equity and could certainly consider that for future equity as well. Both of those tools taken together will allow us to match up the CapEx with the external financing as we go. All right, thanks a lot. See you in Florida. Yep. Thank you. Your next question is coming from David Arcaro from Morgan Stanley. Your line is live. Hey, good morning. Thanks so much. Yeah. Hey David. let me see. Would you be able to give kind of what you're seeing in terms of a pipeline, the megawatts in your pipeline of data center demand in terms of the large load requests? Yeah, I'll ask. Maybe Ted can describe what we're seeing. Yeah, sure. David, this is Ted. You know, we continue to see significant demand both in projects that we've been working with for several months or even up to a couple years, as well as new demand coming into the service territory. Right now we've got over 4,000 megawatts of extra high load factor customers, largely including data centers that we've committed to that are either in construction or development, coming online or in the early stages of planning. But in addition to that, we've got over 10,000 megawatts of extra high load factor demand, again largely represented by data centers that we are currently working with in a planning process to identify when we can commit to serving their demand based on their location, their capacity needs and how do we ensure that we meet their reliability requirement while still serving all of our non data center growth. So that's what we're looking at right now. But that is fluid, changes frequently and typically changes to the upside as demand continues. Excellent. Yeah, thanks for that color. Is it fair to say that 4,000 megawatts are kind of embedded in the current plan? That's correct, yes. Yeah. And obviously a huge pipeline relative to your current system. Yeah. I'm wondering like are there, are there very large data centers in there that would be kind of transformational, you know, for your system? Like are you seeing gigawatt scale data centers that I would imagine would have, you know, just on their own, pretty big impacts in terms of CapEx investment needs? You know, the amount that is committed, that is already in some form of development phase is relatively distributed. We do have a couple larger single requests that's in the 10,000 megawatt queue that is still in the early planning stages, but the amount that is currently in development that's already baked into our expectations is relatively distributed. I'll just echo what Andrew said earlier too. In addition to that 4,000 megawatts of extra high load factor customers, you know, we're really pleased to see the distributed demand coming from manufacturing as well as residential, which is not insignificant. This quarter alone, 1.7% growth and we're at the highest new meter set level that we've seen in well over a decade, which is impressive. And so that demand, and the demand guidance that we are offering is spread not only across a number of commercial industrial customers but even across the broader segments of small business, large business, data center and residential. Yeah, gotcha. Okay, great. Thanks so much. That's helpful. Yep, thanks Dave. Thanks. Thank you. Your next question is coming from Anthony Crowdell from Mizuho. Your line is live. Hey, good morning guys. Congrats on a great quarter. Just I guess quickly on the 5%-7% EPS CAGR. I mean if I think of the. Higher end of that, the 7%, what is the assumption there on regulatory lag that it's declined or that 5%-7% doesn't assume the current regulatory lag docket gets enacted? Yeah, Anthony, it's Andrew. Good morning. The way we think about the 5%-7% and how it interacts with improving regulatory lag is more fundamentally creating a smoother and more predictable version of that 5%-7% as opposed to having single rate case oriented outcomes be the determinant of these sort of step function increases. We're confident in the rate base growth, we're confident in effectively the rate headroom to be able to make these investments cost affordable for customers. But what the reduction of lag would do would allow for that smoother trend. Now, of course, that then means, you know, the receipt from a cash flow perspective of better credit metrics and, you know, better confidence in the overall plan. And so that then, you know, flows into, you know, where you end up in the range and how we feel about it. But ultimately what we're talking about is smoothing out that range so it's predictable and transparent year in and year out as opposed to being more dependent on these single events. That's really the focus for us. Great. And then just lastly a lot of conversation around large loads going on the system. We've seen other states working on changing the rate design to maybe something kind of like a take-or-pay contract or a 10-year take-or-pay contract. Is that something that APS is looking into? Yeah, you know, Anthony, one of the things we're very focused on in talking to those customers is protecting the potential impacts to the existing customer base, and so in a lot of cases what you're seeing is protection so that, you know, if you, if you make a large investment and put a bunch of distribution transmission infrastructure in for a customer and then they don't show up, you've got to have protection so that that doesn't then get pushed through to the rest of the customer base, and so there is a fair amount of work that's going on and we do it collaboratively. We're talking to the large loads in the data centers and trying to understand what things we can do that kind of mutually work for us. But I'd say the focus on that is really in trying to protect the existing customer base and while being fair to those new customers. You want to. Yeah, Jeff's absolutely right, and one of the benefits we have in our service territory is we were putting in service some of the large data centers going back to even 2019, so we've actually been fortunate to develop quite a bit of history and experience in being able to learn their ramp up and learn how to ensure that we are one being accurate and conservative in our forecast of their actual usage versus potentially planned usage, as well as ensuring that we have growth, pay for growth and that the infrastructure needed to serve these data centers is paid by the data centers and preventing any cost shift to our other customer classes. Great, thanks for taking my questions. Yep, thanks Anthony. Thank you. Your next question is coming from Paul Patterson from Glenrock Associates. Your line is live. Hey, good morning. Hey Paul. So, I just have one question left, and it goes back to the election. I've been following this thing on the website that you were talking about, and I apologize, but how many votes did you say were still left to be counted? I think it's in the 120,000 range. That's what percentage of the. The total vote? I think we had. We have 2 million. Okay. Yeah, I mean, I mean it looks. Like the Republicans are like definitely like. All, you know, leading. It just is, it is a little tight. So I just wanted to make sure on that. Okay. When do you think the votes will be finished? I think they're. I mean, they have these late earlies that they need to count, and then you got to go through the certification process. But again, I think you can watch pretty probably by the end of today that you're going to get closer to a smaller number. Okay, great, thanks so much. That's it for me. Have a great one. Okay. Thank you. Your next question is coming from Julien Dumoulin-Smith from Jefferies. Your line is live. Hey, good morning team. Thank you guys very much. Nicely done. Hey Julian. So, hey, top of the morning. Look, I wanted to come back to one thing that Nick was putting his finger on and that was about earned returns here. You know, just given the uptick in CapEx and obviously you've got some of these pieces that aren't as tracked. I mean, how are you thinking about that lag dynamic into not just 2025, but really as you think about beyond that in the 2026 and 2027, given the updated forecast period? Can you provide any kind of initial expectations? I know there's a number of moving pieces there, but just given the CapEx composition, excluding kind of changes in the construct from here, would you expect lag to accelerate or how do you think about the offsets of load growth potentially? Hey Julien, it's Andrew. Yeah, so the low growth definitely is supportive. And you know, that's the other reason why we look at O&M on a megawatt hour basis. So that not only on the capital side, but as our footprint expands and we're spending more from an O&M perspective that it's being covered by that growth as well. You know, then when you get to the capital, you know, it is first and foremost the question of capital allocation at this point and making sure that we're allocating to asset classes that are going to give us an appropriate investment recovery. And that's been into transmission and now increasingly into generation. You know, we are increasing our distribution investments and some of our other core infrastructure investments, but those are being done judiciously as we continue to look towards potential mechanisms that remediate our ability to get that lag under control. We do need to file a rate case. A lot of the lag that's in there is not as much the capital as on the income statement side. If you think about our last rate case, you know, it had a test year that preceded the increase in inflation, the increase in interest rates, so if you think about our O& M, our interest expense and our pension expense, those are all stale relative to what we're actually realizing on our income statement, and so certainly the ability to true up those costs through the next rate case. Given that, you know, in the last rate case we had 12 months of post test year plant in service accounted for, we're in a relative and now we're going more into some of these trajectories of capital, we're in a relatively good place from a capital perspective. We're mindful that the capital plan has increased, and so then if you did have a construct overlaid on top of that, for example, gave you a formula rate, some of these other areas of capital would become more available to us to invest in and be more confident that we'd earn closer to our earned return, so the number one thing we have to do is catch up on some of those income statement costs here through another rate case and then be in a position to continue to be smart and agile around how we allocate the capital. Got it. So when you think about the five to seven here, that's with or without the reg docket resolution. Is that a fair way to characterize it from here? It's just kind of smoothing out over the course of the plan. The docket would help us to smooth that out. I think as I mentioned earlier, it's the difference between having, you know, single dependence on rate cases and frankly with the SRB and the Transmission Adjuster, we don't. But having large dependence on rate cases versus having annual true ups that, you know, when we do have increased costs, we can recover. And when we have opportunities for customer cost savings, we give those back through the mechanism as well and fundamentally earn as close then to our authorized return as we can year in and year out as opposed to after a rate case. Yeah, absolutely. And as you say, just if I can nitpick a little bit, the 10-Q mentioned some inflation actually decelerating here. Your O&M in 2024 is slightly higher, I noticed from last day. Can you comment a little bit about? The inflationary trends you're seeing? I mean, is that another dynamic that we should be putting our finger on as it pertains to lag and maybe actually while we're at it on nitpicking the tax rates down in 2025? Is that a good structural rate here or you expect that to uptake here through the plan too? Yeah. So starting with the O& M, you know, we increased O& M in 2024 and this is something we do year in and year out. We look at the weather benefit that we may be seeing during the summer and pull forward projects, look at the multi year horizon for O& M and figure out what we could bring forward. And so a chunk of the O& M increase that we saw this year was related to deliberately bringing projects forward into this year. And then as Jeff mentioned in his prepared remarks, funding some of our customer assistance programs again in recognition of how hot the summer was. So some of the O& M you see in 24 as a result of that, you know, we're certainly still seeing pockets of inflation in some of the, you know, some of the items. A lot more of that's on the capital side, but overall, the O&M increase that you're seeing this year as a result of that, it's created a good opportunity next year, and you do see in the 2025 guidance O&M coming down. That's a combination both of the de-risking that we did this year and then frankly some of the organic cost management opportunities that we pursue aggressively in operating culture. We've been working closely with all of our operating businesses on the O&M profile for next year, and that's kind of the result of what you see, the uptick this year and then, you know, pretty meaningful decline next, on the tax rate. The higher tax rate this year relative to next year is simply a result of higher taxable income and sort of pushing us up on an effective basis. Our tax credit portfolio is pretty robust and we're managing to as low of a tax rate as we can, but that's just, you know, more so a result of what our pre-tax income looks like. Right. So it should be pretty stable in that rate. That's what I'm hearing from you. Yeah, we're pretty stable given the tax credits. Yeah, yeah, exactly. All right, excellent. Thank you guys on all the details. Really appreciate it. Nicely done. Yep, you bet you. Thank you. Your next question is coming from Sophie Karp from KeyBanc. Your line is live. Hey, good morning guys. So I wanted to ask you about the All-Source RFP. Can you remind me, remind us maybe how much of that 8,500 megawatts that you procured since 2020 you were able to actually build yourself through the System Reliability Surcharge mechanism. And how do you expect your sort of win rate, if you will, to shape up in the next rounds of this RFP? Yeah, Sophie, this is Ted. You know, I think we've been pretty. clear that we believe an even balance between ownership and third party owned or PPA projects is probably the right long term mix. We've been able to more than double the successful ownership projects since SRB. In fact, from the last RFP we've got about 800 megawatts of projects that are currently contracted and under development. We'll be getting ready to issue the next RFP likely later this year. So we'll see a new batch of projects go through that process throughout 2025. We're not at the, I'll call it 40%-50% mix between ownership and PPA yet, but we've more than doubled the ownership projects and as we continue to process RFPs, we'll look to continue to increase that ownership share. Okay, right, helpful. Thank you. And maybe just more of a high-level question on inflation to kind of follow up on this discussion you just had, how the inflation impacted your regulatory lag when you look into your next rate case. What are your inflationary expectations now? I guess going forward, if you have any. Maybe it's too early to call it, but like given potential change in policy in Washington, what is, how are you thinking about the inflationary scenarios going forward? Because it's important for you to mitigate the future rates, obviously. Yeah, absolutely. Sophie, it's Andrew. You know, one of the key things in this next rate case is the fact that the O& M costs that we crystallized in our last rate case based on the historical test year go back as far as July of 2021. And so you didn't really see in the rates we were charging customers today any of the inflation that we've recognized over the last couple of years. And so our ability to recognize the current cost environment, which is stable, maybe costs aren't declining at this point, but they're stable. And if we continue on the current cost level that we're at today and we're being very disciplined from a management perspective to achieve that, we'll be able to true up to what our current cost environment looks like in the next rate case. There's a pretty substantial increase that we would need in this rate case. Just simply realize the fact that if you look at our, you know, O& M taking out RES and DSM and things like that from, you know, the early 2000s. I can't believe we're in the mid-2020s now, but in the early 2000s, $850 million. Next year we're guiding to O& M range that's in the high 900. There's substantial lag. Some of that is a growing service. Territory, but a lot of that is recognizing the reality of the cost environment that we're in today. Yep. Okay, thank you. Appreciate the comments. Thank you. Your next question is coming from Steve Fleishman from Wolfe Research. Your line is live. Hi, good morning, everyone. You might have answered this. Apologies, but you mentioned less than 40%. Equity to fund the additional CapEx. I assume is that just the fact that you're getting more cash flow through? More timely recovery or just any other explanation for that? Yeah, Steve, you know, part of it is you look at one of the things we did with the summer benefit this year wasn't just, you know, some of the O&M de-risking. It was having incremental retained earnings. That supports our credit metrics and therefore puts us in a position to feel more confident in our capital plan. And as you see that sales growth, top line, that also, you know, from a. While we still continue to have some significant lag, you know, from a credit metrics perspective, as we pay down our deferred fuel balance, as we continue to see top line sales growth, it supports the credit metrics in a way that allows us to be a little bit more judicious around both the, you know, what that incremental equity need is and the fact that we took $725 million off the table up front gives us some flexibility to be opportunistic on when we do that equity. But if you look at the increase in the CapEx plan and our ability to do it, stay within our credit metrics, maintain a balanced equity capital structure at the utility and be judicious about how much parent company debt we're taking on that, you know, that $700-$900 million of incremental equity over 2025-2027 is a number that matches up with the capital plan and, you know, allows us to kind of stay where we are from a metrics perspective. And that is less than 40% of that incremental need. You also, I think, mentioned alternative financings. Could you just maybe give more color? What you're thinking there? Yeah, so we're open to the full spectrum of things. You know, on the debt side, for example, you know, we're always looking at things like, you know, the DOE program that is in place today through the IRA. You know, we've always looked at hybrid securities as an option at the parent, as a way to manage some of the credit metrics and some of the equity need. We've always to date been biased towards as straightforward of a capital structure as we can. And some of those key points around just balancing the equity capital structure at the utility, not using overly levering the parent, and we went out there and issued equity when we needed equity. So I think the simplest explanation is probably, you know, key for us, but we're always open. Are there alternative forms of equity out there? Are there creative ways to finance some of these assets? Are there asset classes that are, you know, more attractive to do one way versus the other, and there are ways to hide those off. And the DOE loan program is a good, good example of that. We also, you know, recognize $70 million of grants from the DOE this year. That helps to defray the financing costs as well, so we'll be opportunistic, look at the opportunities in the capital markets and in. Other markets as well. Okay. And then lastly, nuclear PTC. When we finally get that detail, I assume that's not in your earnings, like. Are you still going to, you know, treat it as something you might like defer or just how should we think? About the nuclear PTC? Yeah, I mean we're still waiting to see what the guidance looks like. Yeah. And look, at the end of the day, it's a customer asset. We want to make sure that in light of all of the capital needs we have and the need to do it in a customer affordable way, you know, the trajectory of that PTC is, you know, it belongs to customers. There's this time period before our next rate case where we have to figure out structurally how it works. And I think waiting to see the guidance will be important to that. But you're correct, it's not in any of our guidance today. Ultimately though, it is a way to, you know, defray the cost of the capital investment plan for customers. Great, thanks so much. Yep. Thank you. Your next question is coming from Dylan Lipner from Ladenburg Thalmann and Company. Your line is live. Hey, how are you guys? Congrats on a good quarter. Hey Dylan. Thanks Dylan. Just wondering, going back to the O& M, I want to know how much of O& M was pulled forward from 2025 into this year. Yeah. So you know, we really think about the multi-year plan and the portfolio of O& M projects that we've got. And so you know there's a, if you look at the update to our O& M guidance, we haven't broken out specifically at 2025 to 2024. Because we're in the middle of doing. Our 2025 budget at the same time. So we think about really de-risking opportunities over the multi-year horizon. We look out more than one year because you know, we've kind of created this muscle internally where at the beginning of every summer, look at what the summer is going to start to look like from a weather perspective and what opportunities that provides. There's some great examples of projects that we did. You know, we've got an IT infrastructure project that we know is eventually going to be a capital project, but in the planning stages, some of that gets booked to O&M. Well, as we saw the weather come up, we said, well, let's start planning that project this year versus moving into next year. And there's a lot of great examples like that from across the company. We don't really break that out from, you know, the kind of broader long-term de-risking. We, you know, we have the granular projects that we move, but we also do it in the context of 2025 budgeting. So there's a little bit of, you know, a little bit of gray area between what has truly been pulled forward versus something that, yep, we'll slate it for 2024 instead of the 2025 budget. But ultimately, you know, we always look for those opportunities. We always also look for capital as a way to leverage some of that weather benefit as well. And we knew that we needed to look at 2025 O&M in and of itself. One of the key points for us was how could we bring down the20 25 O&M number knowing that we had that OPEB amortization and the Bright Canyon gain going away in20 25. So for us, we've been thinking all year about how do we budget for 2025 in light of some of those structural changes. We've been working very closely across the business to do that. You know, one of the great examples there is with the OPEB item. We knew that was within the context of our overall employee benefits and retiree benefits portfolio. We actively went after opportunities in that bucket. We put our primary health insurer out for bid and created some substantial savings in 2025 expected for 2025 based on switching over our, you know, health insurer for 6,000 employees and their beneficiaries. That's a pretty substantial opportunity as well. Gotcha. Thank you for that. And then going to the regulatory lag. Docket potential that you guys can file. A rate case prior to when the. ACC could issue a policy statement. I mean, yes, you could. Again, I think what we're looking at is they're working through that process. I think I mentioned earlier in the call, the earliest you could file something practically is middle of 2025. And so we're, you know, they're moving on the regulatory lag docket. I would expect that's probably going to, it's hard to tell. I mean, you have new commissioners coming in, so there may be some delay if they don't finish it by the end of this year as it goes into next year. But we'll just watch all that. Great. Say a policy statement is made by the commission. Do you expect that the ACC could? Follow it up with like a rule change? I mean, it's possible. There are policy statements out here that just stayed as policy statements. And so, you know, I think we just kind of watch as the process develops. Dylan, I think this, Ted, another way we're looking at it as well as if they issue the policy statement that's really to align the commission and stakeholders that this is the preferred rate making approach. And we'd include that preferred rate making approach then in the filing of our next rate case. And that rate making approach, pretend it's formula rates, would then be adjudicated as a part of our next rate case and codified in the outcome of that next case. So that would still get us to the same outcome. Gotcha. All right, great. Thank you very much, guys. Yep. Thank you. That completes our Q& A session. Ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.