It costs money to do that which is one of the reasons why we did the voluntary severance, so we can free up some of those resources going forward to make those critical investments in our communities. Peggy, I don’t know if you want to add anything.
Peggy Simmons: Yes, Ben, I think you pretty much covered. We have worked with the team and looking at how we can get some more of those — enhance the resources from a regulatory and legislative perspective, having more boots on the ground.
As I mentioned in the opening statement, there’s a lot of change in our industry and having folks out there having these ongoing conversations is really important. So we’re working through that process and more to come on that topic.
Operator: And we will take our next question from Steve Fleishman with Wolfe Research.
Steven Fleishman: So just in Ohio and Texas, your wires company, but in Indiana, where these last 2 announcements, I think you’ve got generation too. And are you — so in some of these recent deals that announced — the past week, are you supplying the generation as well? And is there going to be a generation need in Indiana related to those?
Benjamin Gwynn Fowke: Well, we do have RFPs outstanding. Peggy, do you want to take that?
Peggy Simmons: Yes. We do have RFPs outstanding in I&M. But to answer your question, yes, and are vertically integrated like Indiana, we will have to serve the generation component, and we are working with those large loads that are coming to us on what that would look like. And we are also focused on, as Ben mentioned earlier, redefining and looking at our tariffs as well. So that will be part of our strategy.
Steven Fleishman: Okay. And just to kind of clarify back to the initial question. So the transmission grid is built up and has capacity to take on these customers near term. But is there still, even near term, is there more capital needed? Or is it more of this after this 5 years?
Charles Zebula: No, Steve, there’ll be more capital needed, but I don’t think it will be those massive 765 lines, it can take a long time to get built. We believe the team has done a lot of work on how we could accommodate that load within our footprint, working with PJM and others. And so yes, there’ll be more spend, but it will be manageable and doable to the point.
Steven Fleishman: Okay. And then on the FFO to debt, you’re in the target range now. Is there anything about that that’s kind of — are you in there for good, do you think now? Is there any — was there any timing reason? Or is it you’re in that and expect to be in it throughout the year?
Charles Zebula: We were in the range. We expect to be in that range now. Our forecast that we review internally and with the agencies show us being in that range. So that’s the plan, and we plan to defend that.
Operator: We will take our next question from Shar Pourezza with Guggenheim Partners.
Jamieson Ward: It’s actually Jamieson Ward on for Shar. He’s on the road and regrets that he’s not able to join you today, but we have a couple of questions for you here. The first was just on the annual customer bill increase, the pace there, you reduced it to 3% increases per year through 2028, which is great to see. Does that already take into account the anticipated infrastructure investment needed to support any future data center growth? Or could we see that number be revised as well?
Charles Zebula: Well, I mean — the answer is the incremental stuff we’re talking about and the incremental transmission investment, it’s not included in that, but it’s not going to be — it’s not going to drive that from 3 to 4. If anything, it should keep it level and perhaps even drop it a bit.
Obviously, there’s other things that go into that other inflationary factors, supply chain pressures, et cetera. But as I mentioned, this — we’ve done a lot of work, making sure that the incremental investment that we would need to make over the forecast 5-year time frame is actually at a level that is accretive, if you will, to keeping customer rates affordable. And that’s why I’m very confident of moving forward with it.
Jamieson Ward: Got it. Terrific. And then expanding on Jeremy’s earlier question, how are you approaching some of the more unique issues presented by data centers, for example, those who want to be behind the meter but still want to have an emergency tariff with the utility or data centers, which, as you mentioned, want to socialize the cost of interconnection through all rate classes but which may not have a major economic impact. If we can just get a bit more detail there.
Benjamin Gwynn Fowke: I’m going to turn it over to Peggy in a second. But listen, it’s got to be fair to all customers now, okay? I mean this is a big deal. It’s an exciting big deal. But growth needs to be as close to self-funded as possible. And that’s what I think we’ll get with these tariffs and some of the other analysis that we’re looking at.
Peggy Simmons: Yes. So what I would add to Ben’s comment there is that on our tariffs, we are looking at what minimum demands are. Most of the large loads are wanting to be connected to the system. But if they want some form of self-generation, we are asking so that we understand that, and we can include that, as part of our planning.
So we’re trying to get all of that information on the front end. So that we can appropriately serve customers and make sure that it’s fair and balanced for all customers and everyone is paying their fair share, as Ben has mentioned.
Benjamin Gwynn Fowke: Yes. I mean the worst case scenario, and this is what — to Peggy’s point, what we’re preventing is the load doesn’t show up consistent with how we built the infrastructure. And when it does show up, it doesn’t use, especially on a peak basis, the energy that we built for.
So — and — but if you control that, which, by the way, I think, we also have to be very careful, too, that these large, large loads are — don’t jeopardize good reliability. And so these tariffs address that, too. If you do all those things, then growth is good for all. And that’s what we’re pushing for.
Jamieson Ward: That’s very clear. And then on the updated load growth forecast coming later this year, should we assume that at a high level, that means the EEI or are there particular IRPs or other proceedings that we should maybe watch out for? Which could come say, before EEI that would be driving that?
Benjamin Gwynn Fowke: I mean I think the big update will come — well, I understand EEI in the third quarter’s earnings call right on the same, but it would either come on the third quarter or EEI unless there might be drips and drabs that get released before that, but that’s what we’re planning to do right now.
Jamieson Ward: Understood. Got you. Last question from us is just on asset sales. In the deck, you mentioned remaining committed to simplifying the business in the immediate term with a focus on continued execution of the sale processes. So how should we think about the potential for any additional sales announcements, following the conclusion in the second quarter of the current process for the Retail and Distributed Resources businesses?
Benjamin Gwynn Fowke: It would be on an opportunistic basis. We’re going to look at — we’re always open to ideas. Chuck and I and the team have been around a while. We know that sometimes good ideas sound good on paper, but you can’t execute on them. So we do filter that through the regulatory screening process, as you can imagine.
And then we like our assets. So obviously, the price has to be right. But — what you’re not going to see from us is like strategic review, too, and preannounced kind of things that we’re looking at. If the opportunity arises and we can execute on it, then you’ll hear about it.
But — in the meantime, our status quo plan, I think, is a pretty darn good plan. And to the extent that we issue equity to fund additional incremental CapEx, this is going to be smart CapEx, good growth for all and we’ll keep our balance sheet strong, which I think is so important as you enter, I think, an extended era of higher CapEx growth.
Operator: And we will take our next question from Carly Davenport with Goldman Sachs.
Carly Davenport: Maybe just going back to the balance sheet. As you think about your financing needs for the remainder of the year, can you just give us an update there? And if you expect to see any impacts relative to your initial plan with the move that we’ve seen in rates year-to-date?
Benjamin Gwynn Fowke: Yes. Carly, the plan that we laid out at EEI is still intact. Other than I think at EEI, we had the West Virginia securitization in the plan, and that has been replaced by a Kentucky securitization, nearly of equal amounts.
So the plan is still intact. There’s been no significant changes, and we’re proceeding on that plan.
Carly Davenport: Great. And then just going back to the commercial load and data centers. As you think about that and the expectation to raise later this year. Could you just talk a little bit about sort of what surprised the plan to the upside so materially thus far? Is it just sort of more success on the economic development front or more consumption from existing customers? Just any color on that would be helpful.
Charles Zebula: Yes. Carly, it’s just mainly the ramp rates of the customers that have hooked up, have come on more rapidly than we anticipated. And so that’s why you’re seeing those big bumps in commercial load, as we go through the quarters here.
Operator: And we will take our next question from Nicholas Campanella with Barclays.
Nicholas Campanella: I’ll try to keep it to 2. So I guess you talked about this need for growth equity. Can you just elaborate when you anticipate needing that? And what part of this 5-year plan would that be? And then I guess, just — you do have $700 million to $800 million, I think, a year in your financing walk here of equity needs. Just why not do something sooner than later to kind of knock that out if the opportunity presents itself? I know you don’t want to preannounce and go into a strategic review around 2, like you said, but maybe you can kind of give us some additional thoughts on how you’re thinking about that.
Benjamin Gwynn Fowke: I’ll turn it over to my esteemed colleague here, Chuck.
Charles Zebula: No, Nick, it’s a good question. I mean, look, as we said earlier, right? We’re formulating, right, the changes to our plan and how ultimately, right, how financing is going to affect that.
You are right. We have $400 million in equity this year, followed by $800 million in equal amounts in the following 2 years. So I think the point that I tried to make earlier on FFO to debt, look, we’re going to defend our BBB credit.
Right? We’re going to maintain a strong balance sheet. So as we put out additional capital forecast, I think, you could assume, right, that strong balance sheet is going to remain intact. So just kind of wait for that update on CapEx, and you should be able to figure that out pretty clearly.
Nicholas Campanella: Okay. I appreciate that. And then Chuck, I know that weather at VIU is kind of a $0.10 drag versus normal, but you also have some of these tax items in there as well. Just on the tax item benefits, is that normalizing from last year? Or is that one time in nature, as we kind of think about year-over-year into ’25?
Charles Zebula: Yes. So Jeremy, about half of that will normalize throughout the year and the other half is onetime. Things that happened in ’23 that won’t happen again in ’24. So it’s a true increase.
Operator: We will take our next question from Durgesh Chopra with Evercore ISI.
Durgesh Chopra: I wanted to go back on your commentary, Ben, on portfolio optimization, new financing plan. Just to be clear, the financing plan, the CapEx update, the load board updates. Is that sort of — should we think of that as a separate process and the CEO search? I’m just thinking about the 2 and are those 2 independent processes that we should think about? Or are they somehow tied? I’m thinking about the cadence of your updates, your new plan and then the parallel CEO search?
Benjamin Gwynn Fowke: I mean, if I understand your question right, are we holding things back until the new CEO gets in place? Is that what you mean?
Durgesh Chopra: That’s right, Ben. Yes.
Benjamin Gwynn Fowke: No, no. I mean, no. I mean, we typically — as you know, we typically update all our CapEx and financing plans and all those sorts of things at the time of EEI. And if there’s something major in between, obviously, we give you updates. But we’re not — no, I mean I — this company is not in neutral. I mean we really — we’re moving forward.
This team is — they share my belief that this growth is here. We need to accommodate it. We need to talk about it, and we need to make sure it’s fair to all. So we’re really, really focused on that. Focused on, I think, the strategy of putting more control at the local level, more resources at the local level.
So — and we just announced a voluntary severance. So we’re not kind of just putting it in neutral and coast until a permanent CEO gets in there. I honestly think these are all no regret type decisions that the new CEO will ultimately benefit from. But did I answer your question?
Durgesh Chopra: You did. That’s exactly what I wanted to ask you, a very clear response. And then second question then, again, like you mentioned challenging the EPA proposed ruling. Maybe can you share a little bit more color there? Is it the carbon capture technology that you are referring to? And then you mentioned the accelerated plant retirements? Was that directed towards coal? Just any color you can share there.
Benjamin Gwynn Fowke: Yes. Well, it’s a great question. And again, I just — I harken back to Steve Fleishman’s report that came out a couple of months ago, where he talked about our industry, which if you aggregate market cap of somewhere around $0.5 trillion, being responsible for this — we want our onshore data centers, artificial intelligence, reshoring of manufacturing. And it’s our industry that has to do it. And we’re going to build all the transmission we possibly can. That’s not easy to get built either, but we are going to have to plug in to something.
And as you know, in my former role, I’m a big advocate for renewable energy. I think it’s great, particularly when it’s economic. Now some of that changes over time and regionally. But to think that we don’t need dispatchable generation, I mean, it’s — we need it. And I’d love to see things like SMRs and other things develop, but they’re not going to happen overnight. And in the meanwhile, we can’t — we have to be willing to move forward realistically.
And yes, it’s not just the carbon capture rules. I mean there’s — we’re looking at all the other rules, the CCR rules, the ELG rules, which by the way, we just spent a lot of money coming into compliance on that, and that was only a couple of years ago. And now it’s a completely different role, which would require different technologies.
So it’s — our industry has come so far in carbon reduction. And I think we’re willing to do so much more, but it has to be with affordability, reliability and resiliency in mind. And I’m just — I’m really passionate about that. And you never like to have to sue, but we’re going to do what we have to do to defend our grid and our customers that use that grid every single day.
Operator: And we will take our next question from Andrew Weisel with Scotiabank.
Andrew Weisel: Two quick ones here, please. First, to elaborate on the commentary on load growth. Ben, I think, you mentioned that the incremental 10 to 15 gigawatts by the end of the decade. I assume that’s across the entire portfolio. Can you talk a bit about the Vertically Integrated Utilities? You have about 20 gigawatts identified through the current IRPs. My question is, how soon might we see more filings to include the new expected load, which there is no doubt coming quickly.
