Evergy, Inc. (NASDAQ:EVRG) Q4 2024 Earnings Call Transcript

Evergy, Inc. (NASDAQ:EVRG) Q4 2024 Earnings Call Transcript February 27, 2025

Evergy, Inc. misses on earnings expectations. Reported EPS is $0.35 EPS, expectations were $0.46.

Operator: Good day, and thank you for standing by. Welcome to the Q4 2024 Evergy, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your select phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Peter Flynn, Director of Investor Relations. Please go ahead.

Peter Flynn: Thank you, Jill, and good morning, everyone. Welcome to Evergy’s fourth quarter 2024 earnings conference call. Our webcast slides and supplemental financial information are available on our Investor Relations website at investors.evergy.com. Today’s discussion will include forward-looking information. Slide two and the disclosures in our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations. They also include additional information on our non-GAAP financial measures. Joining us on today’s call are David Campbell, chairman and chief executive officer, and Bryan Buckler, executive vice president and chief financial officer. David will cover 2024 highlights, provide updates on economic development activities, and discuss our regulatory and legislative agendas.

Bryan will cover our fourth quarter and full year results, retail sales trends, and our financial outlook. Other members of management are with us and will be available during the Q&A portion of the call. I will now turn the call over to David.

David Campbell: Thanks, Pete, and good morning, everyone. I’ll begin on slide five by first thanking our employees who worked tirelessly throughout the year to advance our strategic objectives of affordability, reliability, and sustainability. I’m proud and honored to lead the Evergy team. And with respect to 2024 results, I’m pleased to report that we had a solid year. Overcoming weather headwinds in the fourth quarter and throughout the year, we reported adjusted earnings of $3.81 per share, compared to $3.54 per share a year ago. Strong cost management helped offset the impact of the mild weather. Ryan will discuss earnings drivers in more detail as part of his remarks. In 2024, we also executed on our capital investment plan to improve reliability and resiliency, investing $2.3 billion in infrastructure to modernize our grid and replace aging equipment.

As we look ahead, executing on our five-year $17.5 billion capital plan is a great challenge and a great opportunity to support and enable the economic prosperity of our region. Our success will come from the tremendous teamwork we have within Evergy. 2024 also proved to be a strong year in regulatory execution and advancing initiatives that allow us to invest for growth in Kansas and Missouri to the benefit of the customers and communities we serve.

David Campbell: In Kansas, the passage of House Bill 2527 demonstrated the support of Kansas legislators, regulators, and stakeholders for infrastructure investment to power economic development. It also underscores the importance of a competitive and constructive regulatory framework, helping to mitigate regulatory lag and supporting our credit profile. In Missouri, we are pleased to reach unanimous settlement with stakeholders in our Missouri West rate case, which included the addition of a joint ownership interest in the Dogwood Energy Center, a low-cost energy solution for our customers. The settlement provided a balanced outcome for customers and communities we serve and reflects the broad-based alignment around our infrastructure investments while ensuring we continue to provide reliable and affordable electric service.

We also requested to go ahead to construct three new natural gas facilities and three solar farms. If approved by our Kansas and Missouri regulators, these will represent the first new dispatchable resources we’ve built in over ten years and our first utility-scale solar farms. Together, these plants total just over 2,100 megawatts. As we outlined in our 2024 integrated resource plans, our overarching goal is to identify the most cost-effective and resilient plan that reliably serves our customers. We expect to file our annual updates to our IRPs in March and April in Missouri and Kansas, respectively. In targeting top-tier performance in operations, 2024 was another solid year. After achieving significant improvements in reliability in 2022 and 2023, we matched and maintained that strong performance during a year with unusually severe weather.

Through the summer, we experienced ten severe storm events, with wind gusts in excess of 50 miles per hour, downing trees and causing extensive damage to equipment and structures across our territories. Our line crews, who are the bedrock of safely delivering affordable and reliable power to our customers, worked tirelessly through the extreme weather to restore power to our customers, and we thank them for their contributions. In November, we raised our dividend 4% to an annualized $2.67, consistent with our 60% to 70% target payout ratio, and gradually lowering the payout ratio within that range, which is a trend that we expect to continue. As noted on slide five, we are reaffirming our 2025 adjusted EPS guidance range of $3.92 per share to $4.12 per share, with a midpoint of $4.02 per share.

We’re also reaffirming our long-term growth target of 4% to 6% through 2029, based on the 2025 midpoint of $4.02 per share. From 2026 to 2029, we anticipate being in the top half of this guidance range relative to the 2025 baseline.

David Campbell: Moving to slide six, we highlight our three major economic development wins: Google, Panasonic, Meta, and two traditional data centers in Missouri. In total, their demand represents 800 megawatts of load. Based on these announcements, we are reaffirming our weather-normalized demand growth forecast of 2% to 3% through 2029. Additional large customers will be additive to this forecast. Slide seven describes our economic development pipeline in greater detail. Reflecting the economic vitality and geographic advantages of our region, the overall pipeline remains robust in both Kansas and Missouri and has grown from roughly 6 gigawatts to over 11 gigawatts, including the customers announced today. As a point of reference, our projected peak summer demand for 2025 is approximately 10.6 gigawatts.

So relative to our size, this makes our backlog of growth opportunities one of the most robust in the country, reflecting the competitiveness of our region. Of course, the environment for new economic development projects is competitive, and we do not expect to win all projects in the queue. As we discussed in our third quarter earnings call, we remain in advanced stages of negotiation with two large customers. We have identified generation and transmission solutions for both. We previously shared with you that the load from these projects could total 500 megawatts to 1,000 megawatts in aggregate, which we now anticipate will be 1.6 gigawatts. One of these customers is evaluating Kansas service territory, and the other, an existing data center customer, is evaluating an expansion in Missouri.

Subject to final agreements and project announcements, we expect to begin to see an impact on our demand growth from these customers in 2027 or in 2028 and into the next decade. We’ll be very excited to add these new projects and further establish our region as a leading player in the US digital and advanced manufacturing economy. Both customers are tracking to share announcements regarding their plans later this year. In addition, we are actively working with customers whose loads would represent approximately 3 gigawatts. These are customers that have acquired land or land rights, presented a site plan, and in some cases, signed letters of agreement to advance the evaluation process. The remaining 6 gigawatts in our pipeline are associated with preliminary conversations we had with potential customers.

David Campbell: While all of this load may not be addressable, the dialogue nonetheless demonstrates the significant activity and interest in Kansas and Missouri and customers who stand ready if others drop out of the queue. We’re very excited about the economic impact and prospects of prosperity that these large customers will bring, including construction jobs, permanent jobs, an expanded tax base, and many other benefits such as helping us to advance our affordability and reliability goals. It is truly a transformative time for our company, reflecting and further advancing the vitality of Kansas and Missouri. As a reminder, our capital investment and load growth forecast only reflect the projects announced today that are shown on slide six.

Many of you will ask about the timing of revising our plan to reflect new large customers. As a general rule, we won’t outline specifics on these projects in tandem with customer announcements regarding their plans. Our focus on affordability and regional rate competitiveness is an important contributor to this pipeline and throughout the foundation for supporting the tremendous growth in our region. As part of the exercise alongside the economic development rates that are in place in both Kansas and Missouri, we have filed large load power service tariffs in both states to ensure that there is appropriate and adequate recovery associated with large new loads. The procedural schedules have not been finalized, but we anticipate resolution in both states in the third quarter.

Slide eight lays out our updated capital expenditure forecast. Our latest rolling five-year investment plan totals approximately $17.5 billion from 2025 to 2029, which represents a $1.3 billion increase relative to the revised five-year core forecast we provided on our third quarter earnings call. This quarter’s update primarily reflects the assignment of one-half of a combined cycle gas plant to Missouri West, which was previously unallocated across our operating companies and excluded from our capital forecast. It also incorporates an updated cost estimate for the natural gas combustion turbine facility we announced last year, along with some minor shifts across divisions.

David Campbell: To summarize, our revised capital forecast includes a significant portion of the 2024 Integrated Resource Plans, and we’ll continue to evaluate incremental projects pending our 2025 IRP updates, including a third combined cycle unit at Kansas Central and a combustion turbine unit in our metro jurisdiction. Our five-year investment program is expected to result in 8.5% annualized rate base growth through 2029, which compares to our prior forecast of approximately 8%. We’ll take a prudent approach to financing the tremendous growth opportunity this investment plan represents, utilizing a balanced mix of debt, equity, and equity-like securities, as well as internally generated cash flow, to support our balance sheet and strong investment-grade credit rating.

We’ll take a flexible approach to equity financing with optionality around timing and execution. Ryan will provide more details on our financing strategy in his remarks. The plan is focused on transmission and distribution projects and other investments that advance our strategic objectives of affordability, reliability, and sustainability and enable us to support economic prosperity and growth in our state. Turning to slide nine, I highlight our adjusted EPS growth outlook, which projects 4% to 6% growth of the 2025 adjusted EPS guidance midpoint of $4.02, with an expectation to grow in the top half of the 4% to 6% range through 2029. The midpoint of the 2025 guidance represents a 5% increase over the 2024 guidance midpoint, consistent with our prior target.

The growth outlook is driven by our $17.5 billion five-year capital plan, which includes the investments to serve the 2% to 3% load growth that we expect through 2029. We anticipate a regular cadence of rate case filings across our jurisdictions approximately every eighteen months, though that won’t be true every cycle or in every jurisdiction. Importantly, our growth outlook only reflects new customers announced to date, and any new announcements will be additive to this forecast. Moving to slide ten, I’ll provide a brief update on regulatory and legislative priorities in both Kansas and Missouri. In a nutshell, it’s been a busy and productive start to the year. On January 31st, we filed our Evergy Kansas Central rate review, requesting a $196 million revenue increase premised on a 10.5% return on equity, an approximate 52% equity ratio, and a projected $6.7 billion rate base as of the proposed March 31, 2025, test period.

We believe this rate request is straightforward and reflects the capital plan and infrastructure investment priorities we’ve communicated to Kansas regulators and stakeholders in workshops and other settings over the past few years. The principal items include recovery of and return on our grid modernization and infrastructure investments since our last rate review in 2023. The procedural schedule calls for staff and intervener testimony by June 6th, rebuttal testimony on July 3rd, settlement conferences on July 8th and 9th, and hearings beginning on July 21st. As a reminder, Kansas rate cases run on an eight-month clock.

David Campbell: We look forward to working with our regulators and stakeholders over the coming months to achieve a constructive outcome for our Kansas customers. We also have pending requests for predetermination on partial ownership of two combined cycle gas plants and a solar farm in Kansas. Next up in the predetermination procedural schedule is staff testimony, which is due March 14th, followed by rebuttal testimony on April 4th, a settlement conference on April 9th, and hearings beginning on April 21st. We anticipate an order from the KCC by July 7th. As I mentioned earlier, we have filed a request to approve a large load power service tariff that would apply to prospective data center customers. We are currently awaiting a procedural schedule and anticipate resolution in the third quarter.

We believe the tariff allows for adequate cost recovery associated with large new loads while being competitive with rates in neighboring states. The filing presents a strong framework that will advance the prosperity of our region, and we look forward to working with KCC staff and all of our stakeholders through the approval process. Now switching to the legislative front, we introduced House Bill 2107 in Kansas this year. If passed, this bill would codify in statute the legal framework around wildfire damages and call for a workshop before the KCC to assess wildfire mitigation strategies and cost recovery. We view wildfire mitigation through the lens of safety and reliability, which are driving principles behind our transmission and distribution capital plan.

Along with a limit on punitive damages, the legislation requires potential lawsuits to prove that a wildfire was caused by utility negligence and calls for a wildfire-focused workshop at the KCC, providing an opportunity for constructive dialogue with Kansas stakeholders to explore additional risk mitigation and cost recovery options. The bill passed unanimously out of committee and was recommended favorably for passage in the house yesterday afternoon. Later today, in fact, we expect the house to bring HB 2107 up for final action in the house. The bill would then be sent to the senate. We appreciate the engagement from legislative committee members, the Kansas Farm Bureau, Kansas Livestock Association, and many others in advancing this legislation.

Pivoting to Missouri, earlier this week, Senate Bill 4 cleared a major hurdle and was passed out of the senate. It has now been sent to the house where it will wait for further action. Key provisions include amending the PISA statute to include new natural gas units, extension of the PISA sunset to the end of 2025, as well as allowing for recovery of construction work in progress or CWIP for new natural gas plant investment, and base rates similar to that in Kansas. There are also provisions that would streamline the generation resource process and ensure we have sufficient capacity to serve our customers. In addition, SB 4 expands CWIP to all forms of generation as part of a new integrated resource planning process, replacing a nearly fifty-year-old prohibition on CWIP put in place by a statewide vote way back in 1976.

If passed, this legislation will be transformative for the Missouri regulatory framework. We are grateful for the collaboration with the Missouri Public Service Commission, legislative leadership, the governor’s office, commission staff, the office of public counsel, our utility partners, and our key stakeholders in making the significant progress that we’ve achieved thus far. This bill positions Missouri to support infrastructure investment, resource adequacy, reliability, and growth. As a reminder, the legislative session in Missouri is scheduled to wrap up in May. On the Missouri regulatory front, we have pending requests for certificates of convenience and necessity or CCNs related to two solar farms, partial ownership in two combined cycle natural gas units, and full ownership of a simple cycle natural gas plant all in Missouri West.

Staff’s recommendation in the solar case is due on March 17th, and staff’s report and rebuttal in the natural gas case is due April 25th. Similar to Kansas, we filed a request for Missouri to approve a large load power service tariff on February 14th. We are currently awaiting a procedural schedule. We anticipate resolution in the third quarter. I’ll conclude my remarks with slide eleven, which highlights the core tenets of our strategy. Our efforts to enhance affordability have yielded significant progress in improving regional rate competitiveness over the past few years. Our strategic plan is designed to sustain this momentum by keeping our long-term rate trajectory in line with the rate of inflation while investing in infrastructure to support growth across our region.

By prioritizing affordability, we contribute to the robust economic development pipeline ahead of us and support the substantial economic potential within our state.

David Campbell: As outlined in our capital plan, we will continue to invest in grid modernization to ensure reliability, strong customer service, strong performance in SAIDI, safety, public safety, and grid resiliency. This includes a focus on metrics related to personnel safety, customer service, generation availability, and infrastructure investment. Our primary sustainability goal is to lead a cost-effective energy transition, reflected by our investments in new natural gas plants and solar farms in support of our Kansas and Missouri customers. We look forward to continuing to demand a balanced mix of resource additions over the coming years to support growth and prosperity in our states. With that, I will now turn the call over to Bryan.

Bryan Buckler: Thank you, David. Thank you, Pete. Good morning, everyone. I’ll start on slide thirteen with a review of 2024 financial results. For the full year 2024, Evergy delivered adjusted earnings of $878 million or $3.81 per share compared to $816 million or $3.54 per share for the same period last year. As shown on the slide from left to right, the year-over-year increase in adjusted EPS was driven by a few factors. First, a cooler summer and mild winter weather drove a 5% decrease in cooling degree days and a 4% decrease in heating degree days, leading to a $0.13 decline in EPS versus 2023. When compared to normal, weather drove an estimated $0.11 unfavorable impact. Next, load growth was strong, increasing 1.1% driven by higher residential and commercial sales volumes, which added $0.14 per share.

Recovery of and return on regulated investments driven by new retail rates and FERC regulated investments contributed $0.48 of EPS for the year. Unfavorable variances for the year included operations and maintenance expense, which drove a $0.05 negative variance for the year. As expected, O&M costs were approximately 1.8% higher than the prior year, demonstrating continued excellence in cost management. Higher depreciation and interest expense due to increased infrastructure investment drove a $0.17 decrease in EPS. Turning to slide fourteen, I’ll provide a brief update on sales trends. As I mentioned, 2024 weather-normalized retail sales increased 1.1%. The trend has been primarily driven by solid growth in both residential and commercial usage, including loan results that are beginning to benefit from the start-up of Meta’s data center operations.

At a macro level, the continued robust customer demand in our service areas is supported by a strong labor market, as the Missouri, Kansas, and Kansas City metro area unemployment rates remain below the national average. As a reference on the slide, our 2025 load demand growth forecast contemplates a 2.4% growth relative to 2024. This includes solid contributions from all customer classes and reflects the resilient growth of our local economies. We expect Meta and Panasonic’s operations to contribute a little less than half of this 2025 total load growth, with Panasonic expecting substantial operations to begin by midyear. As David noted in his earlier remarks, we expect weather-normalized demand growth through 2029 of 2% to 3% when factoring in the impact of the announced new large customers, with upside potential as additional customer wins come to fruition.

Let’s move to Slide fifteen, which lays out how we expect to deliver on our previously announced 2025 EPS guidance midpoint of $4.02. Starting on the left-hand side and beginning with 2024 adjusted EPS of $3.81, we’ve modeled a reversion to normal weather in 2024, which would add $0.11 per share. Next, we expect a $0.19 increase from weather-normalized load growth in 2025, reflecting the 2.4% increase in kilowatt-hour sales. Of the $0.19, we expect a contribution of about $0.04 from the new commercial and industrial large load customers as Meta and Panasonic begin to come online. Recovery of and return on our regulated investments from new rates is expected to primarily relate to new rates that came into effect January 1, related to last year’s Missouri West rate case, as well as the recovery of FERC regulated infrastructure investments.

Offsetting these improvements in earnings is an expected increase in O&M as well as the combined impact of higher depreciation and interest expense net of AFUDC, which is expected to drive a $0.31 unfavorable impact. Lastly, we assume $0.04 of drag related to our $1.4 billion convertible debt that matures in December 2027. This reflects our assumption around a share price higher than the threshold price in the convertible note option, which would increase diluted shares outstanding for accounting purposes. The impact of this dilution is reflected in our long-term forecast. As a reminder, we continue to assume no common stock capital market issuances in our 2025 guidance. In relation to the entirety of this 2025 EPS forecast, we believe this financial plan is highly achievable.

Our teammates across the company are hard at work on its effective implementation, including the deployment of the 2025 infrastructure investments to the benefit of our customers and communities. Let’s now turn to our updated financing plan on slide sixteen. As David mentioned, our projected capital investments over the five years through 2029 now stand at $17.5 billion, which is $1.3 billion higher than the plan we discussed in our third quarter call. This plan now reflects the addition of 355 megawatts of our McNew combined cycle, which is being assigned to Missouri West, along with the updated cost estimates for Mullen Creek CT unit. We plan to fund our investments prudently, targeting an FFO to debt ratio of approximately 15% throughout the forecast period.

Our strong cash flows from operations will be supplemented by the issuance of debt, equity, and equity content instruments. As a result of the $1.3 billion increase in capital investments, our forecasted equity issuances across 2026 to 2029 is now forecasted to be $2.8 billion. This represents a $600 million increase over our previous forecast, equal to approximately 50% of the capital investment increase, which is consistent with the approach we described on our third quarter call. As stated earlier, the EPS and financing plan we are sharing with you today only includes load growth expectations from the first set of large customer additions. We are optimistic that our equity needs will be lower for this $17.5 billion capital plan if additional large customers begin to come online by 2028, which as previously discussed is becoming increasingly likely.

In short, our customer pipeline has the potential to not only increase Evergy’s earnings power, but it would also provide a substantial benefit to operating cash flow, allowing us to moderate equity issuances in the future. As I stated earlier, our 2025 guidance does not contemplate new equity. That being said, you may soon see us set up the structure to begin to address our future equity needs. This could include an ATM program, an equity distribution program representing a little less than half of our five-year need, and a size roughly equivalent to our expected issuances in 2026 and 2027 combined. We would expect any activity in 2025 under such a program to settle no earlier than 2026. These steps will allow us to be nimble in our approach to accessing the capital markets.

And one last reminder on equity: while we have conservatively forecasted common stock as the form of equity to be issued, we will continue to evaluate other forms of equity content instruments as we execute on the plan in the years ahead.

Bryan Buckler: I will close on slide seventeen with a recap of our financial expectations. We are reaffirming our 2025 adjusted EPS guidance range of $3.92 to $4.12 per share. From the baseline midpoint of $4.02 in 2025, we expect to grow in the top half of our 4% to 6% adjusted EPS target range through 2029, with tailwinds to the plan, including potential additional wins from our large customer pipeline. Our updated five-year capital plan for 2025 to 2029 totals $17.5 billion, allowing us to build the infrastructure for a resilient, reliable grid with capacity for strong economic development in Kansas and Missouri. Our rate base growth trends upward throughout the five-year period, with average rate base growth of approximately 8.5% from 2024 to 2029.

This is a plan in which we have high confidence. Our employees are focused on consistent execution of our customer, operational, and financial goals as we advance our strategic objectives of ensuring affordability, reliability, and driving a sustainable business model for the long-term prosperity of our customers and communities. Thank you for joining us today. We will now open the line for your questions.

Operator: Thank you, Bryan. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please standby while we compile the Q&A roster. The first question comes from the line of Shahriar Pourreza with Guggenheim Partners. Go ahead. Your line is open.

Q&A Session

Shahriar Pourreza: Hey, guys. Good morning.

David Campbell: Morning, Shahriar. Morning.

Shahriar Pourreza: Morning, David. Obviously, really good update. What’s the timeline for these 1.6 gigs of finalizing agreements? And then just more broadly, what is the podium for revisiting the growth rates at the quarterly update later this year? Wait until the next 4Q? Just any more color on how all this is interacting with your thoughts and updating the street? Just maybe elaborate a little bit on the prepared.

David Campbell: Sure. And thank you, Shahriar. So with respect to the pipeline, we wanted to try to provide a bit of detail around how it breaks down, which should be obviously reflected on slide seven. These discussions are advancing well. We filed our large load power tariff earlier this month in both states. With large customers over time, we have seen with many customers, as is the case with those who are actively building, many of them are advancing their work, advancing their plans while the tariffs are being finalized in parallel. It’s actually pretty common. We saw, I mean, with the Panasonic, if you’ve ever gone over that facility, it’s an amazing, incredible facility, and much of that was built before the tariffs were done.

So we expect announcements later this year. We’re tracking for that. We’re working with the counterparties on that. And the way we’ve approached things in terms of when we’re incorporating into our guidance, Shahriar, I know there’s a range of approaches of our peer utilities, but we thought it made the most sense to include it once our customers have made their announcements. So we’re not specifying when exactly which quarterly call that will be. It’ll depend a little bit on the customer activity. We do expect these agreements to be finalized over the course of the year. Typically, we give updates on our plan in the third quarter call and then often refreshers in the year-end call. So it could be that timeline, but obviously, we’ll base it on when we finalize the agreements with the customers.

Hopefully, that makes sense.

Shahriar Pourreza: No. It totally does. And I appreciate the conservative stance. Just on the GRC in Kansas, we just saw the commission reject the cap structure legal analysis request. I guess, what is the next step for the cap structure? Is it gonna go through the normal testimony process and kinda more importantly, is this something you wanna get finality on, or could we see it wrapped up in another settlement like last time? Thanks.

David Campbell: It’s a good question, Shahriar. Thanks for raising it. So I would characterize the proceeding as really a procedural step that we took asking whether the capital structure issue could be considered on purely legal grounds. The commission ultimately decided that from a procedural basis, it posed substantive issues. They want to address it in the body of the rate case, which we think is fine and is a typical place where it is addressed. We were glad to be able to advance the legal arguments because a lot of the issues here are more legal in nature, but there are substantive issues too. So we look forward to addressing them with staff and the parties in the rate case. With respect to resolution, you know, we typically, like most parties, really drive towards trying to seek a constructive settlement.

We were able to reset last time around. So I would expect that that will be our focus is whether we can get a constructive settlement this time around and be one of the important issues that we address as part of the settlement. But we will be seeking a settlement.

Shahriar Pourreza: Got it. That’s perfect. Congrats to you and Mr. Buckler. Appreciate it.

Bryan Buckler: Thank you, Shahriar.

David Campbell: Shahriar.

Operator: Stand by for our next question. The next question comes from the line of Julien Dumoulin-Smith. Please go ahead. Your line is open.

Julien Dumoulin-Smith: Hey. Good morning, team. Congratulations. Really nicely done, guys. Seriously. With that said, obviously, you gave some sense of timeline here. How do you think about the timeline to develop that associated generation? You specifically called in the slides here 2026 to 2029. As you think about serving that need, is some of this potentially gonna be collocated and they’ll be self-served by the potential client, or is this something potentially you’re thinking along the lines of short-term PPAs? Just thinking through how this could filter into the CapEx from a timing perspective as you think about that generation build. And correspondingly, how do you think about that tariff filing too just given how compressed the potential demand is here?

David Campbell: So, Julien, I think we really have been thoughtful on how we’ve advanced our IRPs relative to loads that have been announced. So for the customers who are in the actively building and finalizing agreements categories, we think we’ve got a good plan to serve them from both the transmission and generation perspective. As we advance additional customers, we’ll need to make sure we’re working in tandem with the generation plans for those. As we discussed on our call in the third quarter, the forward capital plan at that time did not include about a thousand megawatts of generation in our 2024 IRP of gas generation. Those are the CCGT coming online in 2031 and CT in 2032. So as we advance, you know, when we need to be factoring those in our plans, we did add though in this update 50% of the CCGT that’s coming online in 2030.

So that is part of the forward cap plan. So we do think that we’ve got the game plan at the transmission generation capacity to serve the customers in this category, but it’s a set of dynamic discussions. And you’re absolutely right. Now you laid it out. Some of the customers have, in particular, renewable generation options they’re bringing to the table. The extent those are solar or involve storage, they bring more capacity than if it’s only wind. So that’s part of the dynamic in the discussions you have with the various counterparties. And some have that, some don’t. But we are developing a transmission and generation plan to be able to serve that load. And we’re excited about it, and it’s obviously an integrated set of discussions that have to consider all those factors.

On the tariff, I think we’re on a good schedule. So while the procedural schedule hasn’t been finalized, we do expect those to be resolved in the third quarter. We’ve had good discussions with our counterparties in advance of and in tandem with those filings and done some previewing of it as well. So, of course, those will be involved processes. But we think we’ve got a good framework for approaching those. And from what I’ve read of other states, I think it’s pretty similar. It’s got the right set of protections you’d want to look for for our existing customers because I think there’s a real win-win here for both existing and the new customers and for the company.

Julien Dumoulin-Smith: Excellent. Just a quick verification there. In terms of IRP, would you be going back and amending that and then subsequently going out with some sort of new procurement effort here? Just in terms of process on that front.

David Campbell: Yeah. So it’s I think you’ve probably seen with the number of peers as well. IRPs are a little more dynamic than they might have been back in the day when you could do triennial filings with modest annual updates. We have a regularly scheduled update to our IRP we filed in March and April, so you can expect that to incorporate the changes that we think make sense. And, you know, as there’s mechanisms to do updates on an interim basis. But our next IRP filings are in March and April in our two states, so you can expect that those are gonna reflect the latest view of our expectations. And to the extent there’s additional generation capacity and a timeline that requires action sooner rather than later, you’ll see associated action with that.

I would we were happy with you may recall, Julien, when we initially had CCGTs in our integrated resource plans, for example, it was at a time when many companies were still more focused on CTs. I think we’ve I’ve proud of how our team has advanced the IRP and been thoughtful about staying lockstep with what we expect from a demand perspective. So very dynamic environment, but we have that integrated long-term planning view as we have these discussions.

Julien Dumoulin-Smith: Awesome, guys. Congrats again.

David Campbell: Thanks, Julien.

Bryan Buckler: Thank you. One moment.

David Campbell: Ashton?

Operator: The next question comes from the line of Durgesh Chopra with Evercore ISI. Go ahead. Your line is open.

Durgesh Chopra: Hey. Hey, team. Good morning. Thanks for giving me time. Good morning, David. David, I wanted to continue the discussion on the large load tariff. Can you share some additional color? You mentioned protections for existing customers. Maybe just compare and contrast to, you know, that tariff to what is in place today, what protections are you seeking? Just some color would be helpful there. Thank you.

David Campbell: Sure. So, great question. So we’re really trying to get a well-balanced tariff that is designed to cover the incremental costs to serve the customers and in consideration of the fixed cost of the system. So it’s set up as a win-win for the existing customer as well. Now the various protections that we’ve teed up and these will be subject to discussion, of course, but they’re pretty consistent. And we’ve obviously been looking at to see what has been happening in other jurisdictions. So the kind of protection that we’re talking about are minimum bill, a contract period our filing references fifteen years. A lot of those you see typically in the ten to twenty year time frame, but so our contract period and exit fees and protections like that.

In general, in speaking with our big customers, they’re interested in knowing that we have the capacity to serve them. They want to move quickly and they want to have a clear framework as well. So we think we’ve got a setup that presents a well-balanced framework for existing and for the new customers.

Durgesh Chopra: That’s very helpful. And seems consistent with some of the other filings you’ve seen from in other states. Okay. And then just a quick follow-up. Would you need sort of the green light from the commission on these tariffs before you announce something as it relates to the 1.6 gigawatt opportunity, or are those two independent paths?

David Campbell: You know, it’s a great question. So, for example, we’ve had some large customers in the past, including one example would be the Panasonic brothers, who have announced and started building going well known the path when the tariffs are renegotiated in parallel. Other customers want to wait and have more clarity. It’s actually not uncommon to have a lot of activity underway while tariffs are advancing because there’s a lot of there’s a pretty clear framework for how it goes. So we haven’t we’ll see when the timeline is for making the announcements, but it’s not dependent, in many cases, on actually having the tariff finalized and certainly seen that in our history, including our recent history.

Durgesh Chopra: Very clear. Okay. Thank you so much again.

Operator: Thank you. One moment for our next question. The next question comes from the line of Michael Sullivan with Wolfe. Please go ahead. Your line is open.

Michael Sullivan: Hey. Good morning.

David Campbell: Morning, Michael. Morning.

Michael Sullivan: Hey. Hey, David. Hey, Bryan. Wanted to start with the SP4 in Missouri. I think you referred to it as potentially transformative. Can you maybe just give a sense of timeline for that to get passed and likelihood there, and then also if it does, what it actually means for your plan?

David Campbell: So I think the look. This was a tremendous week for the legislation this week and reflected a ton of hard work. So I really appreciate the leadership of the commission and a lot of players in advancing it. The legislative leaders involved. So often in Missouri, as you know, my leaders said in the state, getting through the senate is a very involved exercise because there’s a significant filibuster rules or otherwise. So it’s clearing the senate is often the most significant step to get through in Missouri. Now it has to get approved in the house, but it was passed in full out of the senate, so now it’s moving over to the house for action. The governor’s office, we believe, is fully supportive. So obviously, they’re key players in the dialogue in the legislature and ultimately in signing.

So the legislative session wraps up by May. So we’ll know pretty soon. But to get through the senate, the way it did reflects widespread support, widespread alignment around the provisions. We think it’s transformative really in the elements of how it approaches how new generation is treated, inclusion in natural gas, in PISA, the provision for the commission being able to grant CWIP for new natural gas plant investment, the creation of a new the enablement of a new integrated resource planning process that would allow CWIP for all forms of generation as part of that process. In Missouri, for fifty years, you haven’t been able to get CWIP. So I think how it’s transformative and there’s some other provisions as well, of course, including funding for the commission and OPC, but it’s transformative in the sense that it’s really signaling and putting in place provisions that are supportive of new generation investments, helping to make sure that those can be done in a way that’s protective with a credit of utility with CWIP, but also better enabling planning with a better IRP.

I think that’s a little more certainty. So it really positions Missouri to support infrastructure investment and help support growth. So we think it’s a very important bill, and we’re confident that it will get passed. And, you know, we’ll know in the coming months because it’s a pretty tight legislative calendar.

Michael Sullivan: Okay. Appreciate all the thoughts there. And just back to the kind of load and supply side. I know you made a lot of comments there, and apologies if I’m just not following it along. Right? But if we just look at the new builds that you’re planning, I think you gave a list on slide twenty-eight. How do we think about that matching up with the economic development pipeline you show on slide seven? Like, how much of the load is covered by the generation projects you currently have out there? And what would be to come? If you’re following.

David Campbell: Yeah. No. I and I appreciate the feedback. I think it’s a well, I think it’s very important we try to lay this out. So let me talk through this in a couple of different lenses and see if it covers your question. So as noted on slide seven, Michael, we’ve included approximately 500 megawatts of demand through 2029 from customers who we’ve categorized in the actively building category. Now if you add in the finalizing agreements category to that amount, it’s a total of about 2.4 gigawatts of the pipeline. We received estimates for the from these customers in total, no. Expect load to ramp up to about 1.1 gigawatts by the end of 2029. So that’s 500 megawatts from the actively building and 600 megawatts from the finalizing agreements category.

So it’s about 1.1 gigawatts by the end of 2029. We’ve only included the 500 megawatts in that 2% to 3% load forecast. Obviously, it’d be additive if we got up that 1.1 gigawatts by the end of 2029. We believe that we’ve got we’ve, you know, done a lot of analysis. So I should say we expect to have the transmission and generation capacity to serve that load by that timeline. Of course, the remainder of the load ramp would be in the 2030 and the early 2030s. And both with our existing IRP and the IRP that we’re gonna file in March and April, lay out the solution we have to serve those customers. Again, we think we’ve got good line of sight for how we’re gonna serve them. As I mentioned, what our capital plan does not yet include is the CCGT in 2031 and the CT in 2032.

As we add any additional customers, I think you would expect to see those plants be added to the mix and, of course, we’ll have an IRP update March and April and may have some further refinements. But that’s how I describe it in terms of the timing of the ramp rate and the incremental generation requirements because the 2031 and 2032 plants that I mentioned about a thousand gigawatts of gas help in that the ramp rate in the early 2030s.

Michael Sullivan: Okay. Thanks for holding my hand, really helpful.

Operator: Your next question comes from the line of Travis Miller with Morningstar. Go ahead. Your line is open.

Travis Miller: Good morning. Thank you.

David Campbell: Morning. Morning.

Travis Miller: Just another clarification here, marrying kinda slide six and seven. So that 800 megawatts of actively building, does that correspond to the 800 megawatts on slide six or is there some mixing and matching there? Right? Trying to understand exactly what’s in that 800 megawatts we’re actively building.

David Campbell: Yeah. So 800 megawatts of actively building is the 800 megawatts that are sprawled on slide six. So it’s the three Google, Panasonic, and Meta as well as two additional data centers that are comprised of that category. So that’s that sort of top bar of the actively building category shown on slide seven. And I know there’s a confusing timing element of that too. It’s about 500 megawatts out of the 800, we expect to be, you know, that’s so their full load in 2029. They haven’t ramped up fully up to 800 megawatts, and 500 megawatts are included in the demand forecast for 2029.

Travis Miller: Okay. Great. So the 300 delta would be beyond 2029?

David Campbell: Exactly right. Yep. They’re ramping up over time, and we just have to load forecast. We’ve only done a five-year forecast. So you got it exactly right.

Travis Miller: Okay. Very good. Thanks. And then higher level, there’s a lot of your peers, really, to the use of you, but same area is thinking about a Genco type of structure where they again, like you’re like you’ve been talking about do very specific large load contracts, put some of the generation into a separate entity. All regulated. What’s your thought in terms of maybe a different or additional corporate type structure, all regulated or maybe not regulated? To handle some of this large investment.

David Campbell: You know, at some level, I’d say I think I should respond by emphasizing the size of the pipeline that we have and the large load opportunities for all the companies in the US are leading to more creativity, certainly, and I think a lot of that sense. You’ll see in our large power tariff, for example, we have provisions that could accommodate if folks bring their own renewable generation. Because that is a relatively common that some of the larger companies that have direct relationships with renewables developers even own some on their own, bring some generation there. No. It’s less common historically to bring dispatchable generation, but we’ve certainly seen different approaches in different places. To how you would bring dispatchable generation like gas, particularly as you go deeper into the pipeline, that’s certainly something we could consider whether it be a Genco type structure.

I mean, who knows? I won’t comment or speculate on the structure might be, but the size of the growth opportunities will likely result in some creativity. And I think still unexplored or still untapped potential, maybe some kind of, you know, the demand response or load flexibility elements or leveraging backup generation in some of these players have. So the various elements that from a more traditional approach of leveraging renewable generation they may bring think those elements could be part particularly part of the solution, particularly, as you go deeper and deeper into the in the pipeline. But on this specific question, we have not announced nor are we currently advancing that would set any of our plans around a Genco type set of structure.

Travis Miller: Okay. Great. No. That’s very helpful. I appreciate the thoughts. Thank you.

Operator: One moment for our next question. The next question comes from the line of Nicholas Campanella with Barclays. Go ahead. Your line is open.

Nicholas Campanella: Hey. Good morning. Morning. So just to the comment for equity, Bryan, just that it doesn’t include CFO from finalizing some of these agreements that we’ve been talking about. Just what’s the magnitude or ratio there, you know, if you were just to bring one hundred megawatt customer online, you know, how does that impact the equity needs? Is that, like, hundreds of millions off that figure? Or how would you kinda frame that? Thanks.

Bryan Buckler: Yeah. Hey, Nick. Good morning. You know, David did talk about the ramp rate, if you will, for this I’ll call it next set of customers with on slide seven, let me make sure I do see the exact wording right, but we’re calling it in the finalizing agreements stage. That obviously is some really robust gigawatts of peak load that will come on over time, there is a ramp rate. For that second category, what we described is that could be another six hundred megawatts that could come online by 2029. So we talked about five hundred megawatts for the first set and then another six hundred megawatts that could come online from this second set by 2029. So that’s pretty substantial. You think about our load growth today that we’re projecting through 2029 is 2% to 3%.

If we were able to bring in that portion of the next set of customers that could take that load growth, you know, upwards to 4% to 4.5%. So that’s pretty substantial load growth. With that comes, you know, margins from serving that load, of course. We’re probably not gonna give you exact numbers yet because we want to let this play out a bit, but it would be hundreds of millions of dollars of less equity need over that five-year period if these loads play out the way we hope and expect them to.

Nicholas Campanella: That’s very helpful. And then I guess just to tie it all together, you know, you were already biased higher in the range in the communication, I think, last quarter. And you know, now you’re delivering a CapEx increase, net of some equity, obviously, you have more upside to these large load customers. So you know, what are we missing in the math or, like, the offset that we should kinda be contemplating on why you wouldn’t be kind of above the 6% growth rate here if everything kinda comes to fruition. Thanks.

David Campbell: Thanks, Nick. I guess I’ll take that one. So as we’ve described, we’re gonna layer in the impacts of customer announcements once those are made. So we have not included those. Those will be added into the plan. We have increased CapEx. That’s primarily in the out years of the plan, but that will, you know, over time, our capital and most of it’s related to adding that the 50% share of the CCGT, which comes online in 2030. You know, over time, you’ll see those impacts flowing through. So I think it’s really just a matter of when we try to be very clear that as we get the incremental customer announcements and as we advance through time, we’ll provide updates on what that gross earnings. So we’re very confident in the current plan. We see some really nice tailwinds behind them. Trying to take a systematic approach as we see those custom estimates. We’ll layer in what the impact is in the plan.

Nicholas Campanella: Okay. That’s great. Have a great day. Thanks.

Bryan Buckler: Thank you. Thank you.

Operator: This concludes the question and answer session. I would now like to turn it back to David Campbell for closing remarks.

David Campbell: Thank you, Jill, and thank you everyone for your time and interest in Evergy. Have a great day. That concludes the call.

Operator: Thank you for your participation in today’s conference. This does conclude the program and you may now disconnect.