Benjamin Gwynn Fowke: Yes. So when I look at those incremental loads, I mean, Ohio, within the PJM footprint, Ohio is the biggest driver of it, although Indiana is definitely getting its share. And I suspect we will have to do incremental RFPs to capture that load. I can’t give you the exact timing of when that would be.
Peggy Simmons: We have — so Indiana, we have an IRP that’s coming up that’s going to be later in November. But — so that will be part of the process as we start to look at how we accommodate some of this load as we start to see it to come on as well. We’ll be using those same types of process.
Benjamin Gwynn Fowke: And just maybe outside of data centers, if you look down at SPP, that’s a very constrained region as it is right now. They haven’t seen a tremendous amount of data center growth today. It doesn’t mean they won’t. But in the meantime, we’ve got to make sure we’ve got adequate load to serve the load that we do know we have.
In Ohio, again, we don’t have generation in Ohio, so the incremental investment will be Transmission. There’s lot of talk here in Ohio in the business community, at the state level do Regulated Utilities need to be back in the generation game? I don’t know. I think — honestly, I think that would take legislation, at least from my perspective. So that we’d be assured of good recovery and potentially any kind of stranded cost risk because we’ve seen that play out before. Doesn’t mean we’re not — we wouldn’t be open to it, but it would probably require legislation.
ERCOT. ERCOT, we don’t own generation, but we would obviously, need to be building a lot of transmission and ultimately needing something to plug into.
Andrew Weisel: Okay. Great. That’s very helpful. And one quick one on the voluntary separation program. Would there be any kind of meaningful onetime cash outflow associated with that? And if so, how would you finance it?
Benjamin Gwynn Fowke: Yes. I think the — so it would go into effect midyear, July 1, and so the annual savings that we would see this year would just about offset the severance cost. And then, of course, then on an annualized basis, ’25 and beyond would benefit from that. And again, this is about — yes, okay, I’ll just stop there.
Operator: And we will take our next question from Ryan Levine with Citi.
Ryan Levine: On rate design for data center load what duration commitments and load ramp, are you assuming or looking for to help protect residential customers? Any differences on rate design between jurisdictions to call out? Any color is appreciated.
Peggy Simmons: Yes. So I’ll take that. Thank you for the question. I mean, generally, we need — we’d have to be building long-term assets. So we need some commitments that are longer in nature. So I mean, we would think somewhere around the 10-plus, 15-plus year range, but we’re working through that process now.
Ryan Levine: And then in the prepared remarks, you’re seeing higher load and potential new investments. In terms of funding that potential new investments in the back half or outside of plan. Any — how are you thinking about what tools are most advantageous to execute on that potential opportunity?
Charles Zebula: Well, as Ben mentioned, we would consider everything. Everything is on the table. But I think the underlying tenet is that we will defend our BBB credit.
Operator: And we will take our final question from Paul Patterson with Glenrock Associates.
Paul Patterson: I wanted to circle back on the onetime gain associated with the PLR ruling that you got — or the letters that you got. What’s the ongoing impact of that? And could you just elaborate a little bit more on — I did read the 10-Q and that section of it, but I just wanted to make sure I fully understood it.
Charles Zebula: Yes. So thanks for the question, Paul. So that stand-alone ratemaking for tax purposes has really been on our radar for some time now. Really kind of results from some of our affiliates today generate taxable income and others generate tax losses, which has really kind of created the issue for us.
And really, kind of compounding that is our significant capital program over the last 5 years, as well as bonus depreciation has extended that dynamic. So we were concerned that if we did not address that, we may have a normalization issue. So we asked the IRS for a private letter ruling. Interestingly, some of our jurisdictions support the stand-alone approach, either in legislation or in their own rate making. And other utilities also endorsed and use the stand-alone approach as well.
So we received the PLRs in the first quarter. And the PLR really kind of boil down to 4 key facts. One is the stand-alone NOL must be included in rate base. The second, which addressed the gain in our adjustment from GAAP to operating is that the NOL must be included in the calculation of excess ADIT.
So that reduced the overall regulatory liability for excess ADIT, which, of course, was created due to tax reform. And then any adjustment to offset the NOL would constitute a normalization violation. So we took corrective action. We’re glad that we did to avoid a normalization violation. And our plan now is to work with regulators to make the appropriate adjustments to rates so that we can include that going forward.
Paul Patterson: Okay. So that should be a positive going forward, assuming the regulators agree?
Charles Zebula: Once we’re able to go through our jurisdictions and get it into rates. Yes.
Paul Patterson: And when I read the 10-Q, it said West Virginia was — they’ve agreed to the stand-alone approach, correct? In the past, they’ve been a little bit — is that right?
Benjamin Gwynn Fowke: Yes, that’s correct.
Paul Patterson: Okay. And then just with respect to transmission, FERC has some stuff coming out in a few weeks. And I was wondering if you had any idea about — if you know what I’m talking about, it’s the planning and what have you, sort of long-awaited reforms.
Do you guys have any sense as to what you might — we might see there? And then sort of a related question on grid-enhancement technologies. Do you — how do you see those playing with your large transmission system? Just any thoughts you have with respect to that?
Benjamin Gwynn Fowke: Yes. As far as the planning, I am told from our experts — in-house experts that we don’t anticipate having much of an impact on us. The grid-enhancing technologies, I’m not quite sure about that one.
Peggy Simmons: So we do use grid-enhancing technologies. And as it relates to the planning information at FERC. I mean, our team has been very involved in it. I mean, I think they’re looking at longer planning horizons and things of that nature. So our team has been at the table the whole time working with FERC on those.
Darcy Reese: Thank you for joining us on today’s call. As always, the IR team will be available to answer any additional questions you may have. Abby, would you please give the replay information?
Operator: Thank you. This call will be available for replay today approximately 2 hours after the conclusion of the call and will run through Tuesday, May 7, 2024 at 11:59 p.m. Eastern Time. The number to access the replay is 1 -800-770-2030 or 1 -609-800-9909. The conference ID to access the replay is 79-39-795#. Thank you, ladies and gentlemen. This concludes today’s call. We appreciate your participation, and you may now disconnect.
