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Xcel Energy is a U.S. electricity and natural gas utility, with operations in Western and Midwestern states. They include portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. Xcel serves approximately 3.7 million electric customers and 2.1 million natural gas customers. It was formerly known as Northern States Power company.

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Xcel Energy (XEL): Company Profile, Stock Price, News, Rankings

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Xcel Energy

xcel energy

Hello, and welcome to Xcel Energy's First Quarter twenty twenty five Earnings Conference Call. My name is Melissa, and I will be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star followed by one on your keypad to register your question at any time.

Questions will only be taken from institutional investors. Reporters can contact media relations with inquiries and individual investors and others can reach out to Investor Relations. I'll now turn the call over to Rupesh Agarwal, Vice President, Investor Relations. Please go ahead.

Good morning, and welcome to Xcel Energy's twenty twenty five first quarter earnings call. Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer and Brian Van Able, Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer your questions if needed. This morning, we will review our twenty twenty five first quarter results and highlights, provide updated 2025 assumptions and share recent business and regulatory updates. Slides that accompany today's call are available on our website.

Some comments during today's call may contain forward looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and SEC filings. Today, we will discuss certain metrics that are non GAAP measures. Information on the comparable GAAP measures and reconciliations are included in our earnings release. I will now turn the call over to Bob.

Thanks, Rupesh, and good morning, everybody. At Xcel Energy, we know that economic growth and prosperity of our communities and country depends on our ability to deliver energy to our customers when and where they need it, while keeping their bills as low as possible. This commitment to our communities and customers is demonstrated in our results this morning. In the first quarter of twenty twenty five, Xcel Energy delivered earnings of $0.84 per share, invested $2,300,000,000 in resilient and reliable energy infrastructure for our customers, and accelerated our wildfire risk reduction efforts to enable safer and more resilient communities. Brian will provide more details in a minute, but based on our results for the first quarter, we remain confident in our ability to deliver on our earnings guidance for the twenty first year in a row, one of the best track records in the industry.

As you can imagine, over the past several months, we've been engaging at the federal level with legislators and administration officials as executive orders, trade and tariff actions, and pending legislation will likely have impacts on future energy infrastructure. Not surprising to anyone on this call, we're in an unprecedented period of electric demand growth and believe that we need a broad scope of energy resources to meet those needs. We see increased electric demand from the oil and gas sector. We see demand from residential customer growth, EV adoption and beneficial electrification across our service territories. We see demand from data centers in Texas, Colorado, Wisconsin and Minnesota.

And in the medium term, we expect to see continued trends towards electrification as well as reonshoring as potential outcome of federal actions. The infrastructure to serve this demand growth needs to be thoughtfully planned as well. We and many in our industry have been advocating in DC for policies that allow for cost effective and rapid adoption of new energy resources. That includes preservation of tech neutral tax credits, wind, solar storage, and nuclear. There are associated transferability provisions in various loan and grant programs.

That includes advocating for citing, permitting and other federal actions that would allow for more rapid construction of the assets needed to serve this growing demand. And that includes advocating for federal actions that can mitigate the potential for wildfires and their associated financial impacts. Additionally, we're paying close attention to ongoing tariffs and other recent federal actions. As you are all aware, this remains a highly fluid situation, potentially positively changing as recently as yesterday. On the tariff front, we believe that our base capital plan remains intact, that the impacts are both modest and manageable.

While we're still evaluating, we estimate that roughly 40% to 45% of our capital expenditures are material based with the balance being labor, permitting and other items. And of this percentage, a majority is domestically sourced. There are some notable exceptions though. In particular, our industry has exposure to Chinese tariffs related to battery storage. In our base capital plan, we only have one significant battery project, which we continue to work to mitigate any risks.

But in our longer term plans, we see a need for more battery and other related energy storage assets. Based on these recent tariff actions, we expect a relatively rapid evolution of the battery supply chain similar to what we've experienced in solar panels over the last three to four years. We estimate that our total tariff exposure on our $45,000,000,000 base capital plan for twenty twenty five to twenty twenty nine is approximately 2% to 3%. And that's before we work through any incremental vendor mitigation actions. We remain confident in our ability to navigate this evolving environment and keep delivering for our customers and investors.

We see incredible energy and demand needs across the country. In total, Xcel Energy anticipates that we will need to deliver between fifteen and twenty nine thousand megawatts of new generation by year end 02/1931 to serve our customers and communities. During the first quarter, we continue to make progress on our with our various commissions on these needs, which also helps give line of sight to our 10,000,000,000 plus incremental investment pipeline. In February, the Minnesota PUC approved our integrated resource plan settlement for nearly 5,000 megawatts of generation. Included are seven twenty megawatts of company owned natural gas generation and battery storage and approximately 2,800 megawatts of wind generation, which will reuse the transmission interconnect from our Sherco facility.

RFPs for resources that make up the balance of the IRP will work their way through regulatory processes in '25 and '26, details of which are included in our disclosures and in the attached presentation. In Texas and New Mexico, our teams continue to evaluate proposals for generation to meet growing demand. As a reminder, we're seeking 5,000 to 10,000 megawatts through a competitive RFP process, including projects being proposed by the company. We're encouraged by the early results and plan to make a recommended filing in q two. And in Colorado, we continue to make progress with our energy resource plan filing that we made in October of last year.

We're recommending the addition of 5,000 to 14,000 megawatts of new generation to meet projected sales growth of 3% to 7% per year. The commission decision is expected in the fall of this year. As part of these resource planning processes, I've been asked to comment on the impacts of recent executive orders on coal plants. Our generation retirement strategy is the product of long term planning process with state commissions and other stakeholders that seeks to balance energy demand with long term assets that we need for our customers. With access to some of the country's best wind and solar resources as well as incremental natural gas generation, we've demonstrated that we can retire these inefficient and aging coal plants while ensuring reliability and keeping customer bills low.

Continue to evaluate the executive orders and work with federal and state agencies as well as our communities and customers on any next steps. Alongside our access to some of the country's lowest cost renewable resources, our thoughtful investments and focus on continuous improvement have helped keep our residential electric bill growth below the rate of inflation for the past decade and among the lowest in the country. As we continue to grow, the tech neutral and nuclear PTCs have also proven a critical tool for customer affordability. Since 2018, XL Energy customers have saved over $5,000,000,000 in avoided fuel costs and PTCs from wind generation. And this year, our Upper Midwest customers will see an additional benefit of nearly $250,000,000 on their bills from nuclear production tax credits.

We continue to actively engage with elected officials in the US House and Senate and key agencies such as DOE to reinforce the critical importance that these incentives play in keeping bills low for our residential and business customers. We believe the policymakers are aligned in the belief that lowering energy costs for Americans is a key policy objective. We continue to remind them these incentives play an important role in helping us meet that objective. Xcel Energy also continues to make significant progress to protect our customers and communities and systems from the threats of extreme weather. On the regulatory front in Colorado, we reached a constructive settlement on our updated $1,900,000,000 wildfire mitigation plan, including a securitization mechanism to manage customer bill impact.

In Texas, we also reached a constructive settlement on our $500,000,000 system resiliency plan. We expect commission decisions in both proceedings by third quarter twenty twenty five and will continue to prioritize these investments to improve resiliency and reduce risk on our systems. And on the policy front, we've seen progress with several pieces of constructive wildfire legislation. In Texas, legislation was introduced where material compliance with an approved wildfire mitigation plan provides an affirmative defense to civil liability related to wildfire damage. In North Dakota, legislation that provides utility similar protection was passed by both chambers and awaits the governor's signature.

We we believe these bills could also serve as frameworks in our other states for future legislation. Looking forward, our focus for 2025 remains unchanged. Xcel Energy is working to deliver on our earnings for the twenty first year in a row to capture the unprecedented opportunities for growth we laid out in our capital plans, to deliver on our incremental capital opportunities backlog, advance our clean energy leadership and raise the bar on delivering a compelling experience for our customers in order to make energy work better for them and the communities we serve. And with that, let me turn it over to Brian.

Thanks, Bob, and good morning, everyone. Starting with our financial results, Xcel Energy had earnings of $0.84 per share for the first quarter of twenty twenty five compared to earnings of $0.88 per share in the first quarter of twenty twenty four. The most significant earnings drivers for the quarter include the following: electric and natural gas sales growth and regulatory outcomes increased earnings by $0.21 per share and other items combined increased earnings by $01 per share. Offsetting these positive drivers, higher O and M expenses decreased earnings by $0.11 per share. Higher depreciation and amortization, reflecting our capital investment programs, decreased earnings by $09 per share and higher interest expense decreased earnings by $06 per share.

Now let me comment quick in more detail on O and M expenses for the first quarter, which totaled $686,000,000 or $81,000,000 higher than in 2024. We expected O and M expenses to be front loaded this year with the increase due to known items such as higher nuclear outage amortization costs, increased insurance premiums, benefit costs, and the impact of a 2024 gain on land sale. Some of the increased wildfire related expenses are subject to regulatory decisions later this year. These results are in line with our year to date O and M expense budget, and we reaffirm our full year guidance of a 3% increase in O and M expenses relative to 2024. Turning into sales.

First quarter weather and leap year adjusted electric sales increased 2% driven by growth across most operating companies and customer segments. For 2025, we continue to expect full year weather adjusted electric sales to increase 3%. As the current tariff and economic outlook evolves, we will continue to monitor any potential impacts to our sales outlook. Shifting to rate case activity. In Wisconsin, we filed our 2026 to 2027 electric and natural gas rate cases, requesting a total revenue increase of $151,000,000 and $24,000,000 respectively over two years.

That's based on a forward test year, a 10% ROE and an equity ratio of 53.5%. We're evaluating filing electric and natural gas rate cases in Colorado and an electric rate case in New Mexico later this year. Moving to data centers. We're making solid progress on our high probability pipeline and remain on track to meet our goal of contracting our total base plan by this fall. Xcel Energy continues to receive requests for new data centers in its service territories.

We are managing a robust pipeline and remain committed to our data center contract principles, ensuring new contracts maximize benefits to all customers and protect Xcel Energy from stranded asset risk. We also continue to make strong progress in the Smokehouse Creek wildfire claims process. We've resolved 151 of the 225 submitted claims, which we continue to view as constructive. We have committed $113,000,000 in settlement agreements, of which $79,000,000 have been paid through q one. Based on current information and settlement activity, we have updated the low end of our estimated liability to $290,000,000 which remains well below our insurance of $500,000,000 as we described in our earnings disclosure.

As part of the increase, we have reached settlements related to some previously excluded categories such as compensation for railroad claims and settled claims related to tree damage. We've also updated our disclosures in Marshall, in particular as it relates to two new causation theories introduced by plaintiffs and expert reports that were submitted in the first quarter of twenty twenty five. We remain an expert discovery until mid July and are preparing for a trial in late September. Moving to guidance. We remain confident and reaffirm our ability to deliver earnings within our $3.75 to $3.85 guidance range for the year.

Updates to key assumptions are included in our slides and earnings release. With that, I'll wrap up with a quick summary. Xcel Energy posted first quarter twenty twenty five earnings of $0.84 per share. We continue to lead the clean energy transition while ensuring safe, clean and reliable service and keeping customer bills as low as possible. We are focused on reducing operating risk in our system from extreme weather, resettlements with our Texas and Colorado resiliency and wildfire mitigation plans, and see progress on constructive legislation in Texas and North Dakota.

We have strong line of sight with our $10 plus billion investment pipeline with approval for at least 5,000 megawatts of generation resources in Minnesota and awards for $3 to $4,000,000,000 of transmission in MISO and SPP. We continue to maintain a strong balance sheet and credit metrics using a balance of debt and equity to fund accretive growth. And finally, we reaffirm our 2025 EPS guidance of 3.75 to $3.85 This concludes our prepared remarks. Operator, we will now take questions.

Thank you. Our first question is from Nicholas Campanella from Barclays. Please go ahead.

Thanks so much for taking the questions. Hey, morning, Nick. I just wanted morning. Morning. I wanted to ask, you know, I appreciate all your comments, in the prepared remarks.

You know, you are kind of a big transferability beneficiary. We're going through budget reconciliations right now. You know, if there's any kind of outcome where the the the tax credits get sunsetted sooner within your five year plan. You know, how do you kind of think about the offsets to to cash flow considering, you know, there might be a a positive attribution to rate base as well? Do you still see, like, some type of true cash impact?

And maybe you can kind of walk through how the plan could absorb that.

Nick. It's Bob, and I'll start, then I'll give Brian, some time to get to some of the details. But, you know, there's been a lot of conversation around transferability in general, at least in the investor community. Not actually a lot in DC, and I've spent a lot of time there. You know, transferability was architected as part of the IRA.

We think it's explicitly explicate explicably linked to the credit program themselves. We know there's a lot of support as evidenced by letters that that congress and the senate have have written to their respective, finance and ways and means committees around support for continuation of the credits in some fashion and form. And by that measure, we think the transferability continues along with those credits. So, you know, as I sit here today, I I think very positively about the credits that come from our our legacy projects, projects that are in service, projects that we safe harbored. And then depending on where the credits go in general, you know, I think the transferability stays aligned with those credit profiles over time.

Maybe I'll let Brian comment a little bit on some of the details you asked on rate base and or cash flow implications.

Yeah, Nick. Maybe I'll talk about it in two different avenues, and feel free to ask further questions if I don't hit on exactly what you're thinking about. No. I think about it. One is there's been a lot of discussion around the bill introduced by representative Fedorchak, in terms of but when you actually look at what that bill does, it doesn't impact transferability on any projects in service, and it doesn't impact transferability on projects that would have been safe harbored last year under the old regime of tax credits.

So when we think about it in terms of what we safe harbored last year for projects, we're in a really good spot, basically, through 2028 when you look at the four year safe harbor, with projects last year. And so we would expect those to have credits and transferability associated with them. So, really, the four the door check bill would be a 2029 impact, but how it steps down, it's it's a 20% credit in 2029. Now, certainly, we're not advocating for that bill because there's significant long term customer impacts. But from a transferability perspective, and our cash flow perspective, we are very comfortable with with that in terms of of, how it deals with prior wind farms and what would have been safe harbor last year in the old regime.

Now your question I get is a little bit more what happened if transfer really went away for all projects even in service or future projects. We do not believe, as Bob said, that will happen. Congress generally does not disturb decisions that have made by businesses. They they recognize the need for business certainty. But if that did happen, pick a point, you hit it on the head.

Right? Rate base goes up because you you're less tax efficient. We have an impact to our cash flow. So you'd look at, you know, issuing some equity to manage some of those credit impacts. But longer term, it just becomes a timing issue where you're pushing those cash flows out in the future.

But there's also alternative ways you could look at tax equity in the regular regulated environment. But one of the more interesting concepts, and we do this in one of our jurisdictions, is you can pull PTCs back in an alternative method. And everyone thinks about PTCs being flowed back over the ten year period as they're generated. In one of our jurisdictions, we've flown back over the life of the project. So pick a wind farm thirty years, flown back over thirty years, that improves your cash flow in the near term, reduces the tax inefficiency, and also provides a pretty stable, call it, customer profile from bill impacts.

So there's absolutely things that we think of internally that that maybe not be understood externally when we think about how do we manage if that scenario like I said, we don't expect will happen, but how we'd manage it if if it did happen.

That's really helpful color. I appreciate that. Thank you. Just one one quick question. Just the broader kind of tariff outlook and how it's affecting economic development in your service territory.

Your C and I sales that you guys put up on a weather adjusted basis still seems strong. I know that's at the March. Maybe you can kind of comment on how activity has changed in the service territory at all in real time. And clearly, you're kind of reaffirming your load outlook here. So it seems like you're comfortable, but, yeah, maybe just a few more details there.

Yeah. Hey, Nick. Let me start. Look. Definitely, the sentiment meter has changed over the last, you know, forty five days.

I don't think we've seen a lot of change in actual activity yet, either on the consumer or the C and I side. But what you see in here in in this earning season from a lot of people who've already announced, whether it's banks or industrial manufacturers, you know, there's a a a thoughtfulness around deploying capital right now, a thoughtfulness about the certainty of the regime that we sit in. And there is a lot of conversation that maybe sparked over the last couple two or three days around, you know, how quickly could this environment change as well. We saw it hit very quickly. We've seen some peel back already.

You've seen the market respond to that already. And so, you know, we use the word in our in our prepared remarks of of dynamic or fluid, and I continue to believe that, you know, we don't see a lot of impacts right now in the customer. But we're, you know, we're cautiously optimistic that we work through this through the balance of the year. And obviously, we've reiterated our guidance and sales forecast accordingly.

Yeah. Nick, I can just provide a little bit extra color on that too. Obviously, area is when you think about where the price of oil has gone, And we serve the Delaware Basin, the most prolific basin. So but we've been in contact with our large oil and gas customers in terms of expectations there, and they haven't changed. Well, a little bit of feedback we got though is they're watching tariffs and how that could impact their business.

But so far, we haven't seen that impact on us. Our our sales to that mining and transportation sector were up 9% quarter over year over year, specifically down in SBS. So still seeing it there. One area we saw a little bit of weakness in March was just in, Colorado on the small c and I sales. But, again, one month doesn't make a trend, so just something that we're watching.

But overall, right now, we sit here feeling comfortable with reaffirming our 3% sales growth for the year.

Thank you. Our next question is from Julien Dumoulin Smith from Jefferies. Please go ahead.

Hey. Good morning, team. Thank you guys very Appreciate it. Look. If I could follow-up on Nick's question, it's really been a focus from a lot of folks on this transferability stuff.

Just to go back to the, should we say, alternative that you were talking to a second ago about the thirty year flowback. I mean, would that suffice in most of your case, I get everything is discrete and specific, but do you see that sort of meaningfully offsetting the equity risk scenario here that could emerge from going back to, shall we say, the prior regime? I just wanna make sure I understand kind of the total impact of what you're contemplating there. As well as just to clarify your specific docs. I know there's several different credits here and, you know, the the eligibility for various credits to qualify for transferability.

It could it could be bifurcated, it seems like. You can speak to

Yeah, Julian. Let me first let me, again, reiterate that we don't expect transferability to go away, particularly for projects that are in service, and for for the stuff that have already been safe harbored, particularly under the old regime as we think about it when the credits change from old regime to tech tech neutral this year. But, yeah, the the an alternative mechanisms, significantly reduces our equity impacts. We also have to remember that or the how we think about financing it.

We also have to remember this drives rate base goes up too when you're have tax inefficiency. So but, you know, as we think about this alternative flowback mechanism, obviously, we'd work with our regulators on approval of it, but it is what we think about a very good solution in terms of how to manage some of the credit impacts. And another, I'd say, we have a strong balance sheet. We we maintain a strong balance sheet for a reason. If you have to manage through any of these impacts, it's a timing issue when you think about this, in terms of when you can monetize it.

So overall, I wanted to provide some color on on scenario that probably most of our investors don't understand that there are alternatives out there in terms of how you can pull back these, and there are benefits to come us customers and, to the company and how we do it. So and then your question was around bifurcating, different treatment of credits. Certainly, the FedoraCheck bill was just focused on wind and solar. It would didn't impact the storage credits or the nuclear credits. But, also, we think that is just a marker out there.

As Bob's comments provided, there is a lot of support, across Republican states. If you think about the house of the house letter that had 21 Republicans signed on to it, the senate letter that had four senators signed on to it, four Republican senators. So I think there's an understanding of the importance of the economy of these credits and what they do. There's a couple of good studies out there about the economic impacts and the 14,000,000 plus jobs that the IRA will create over the next ten years. So that's how I think about it in terms of overall and transferability being a key part of it.

Actually, guys. Hey. Thank you for the details. Just following up here. Nicely done.

But can you provide some further, elaboration on what's in this Colorado wildfire mitigation plan, settlement agreement? It seems like there's some good stuff in there. But just wanna speak to that a little bit more if you can elaborate on what exactly is, in that sort of plan.

Yeah. Thanks, Julian. I can I can handle that? Yeah. Overall, a very constructive settlement with a unanimous settlement with all the parties in that wildfire mitigation plan.

Again, if you remember, that's a three year plan, $1,900,000,000, split between $1,600,000,000 of capital and and $300,000,000 of o and m. And how we think about it is it's a win win for from all sides is we get constructive cost recovery here in the near term. We also get an extension of our insurance deferral that we had a one year extension that that expired in, October. So we have an extension of that excess liability insurance deferral. But we also agreed to securitize approximately one point or seek to securitize $1,200,000,000 of spend by '20 and by 2029.

And that's really a helpful way to manage overall customer affordability. So when we look at this total package, we think it's a really good outcome to reach a unanimous settlement with a number of parties in that proceeding, was, again, a good outcome, and we look forward to having the hearing in front of commission here, I think, within a month.

Excellent. Thank you, guys. See you soon.

Thank you. Our next question is from Carly Davenport with Goldman Sachs. Please go ahead.

Hey, good morning. Thanks for taking the questions. Maybe just to start on your comments on the tariff exposure, that 2% to 3% on the capital plan. Could you just talk a little bit about the process or the timeline over what you'd expect to have those discussions with vendors? Any sense of where you think that exposure could potentially go post having those discussions?

Yeah. Hey, Carla. Good morning. I can take that one. Some of these discussions have already happened when you think about certain project specific contracts that that we're working on, whether it's renewable projects, store storage projects.

I think about that two to 3% being as as absolutely manageable when you when you think about, let's say, five year time period. So it's the the conversations have started working through specific ones, but also, you know, working with various suppliers in terms of, you know, how much do they absorb, what happens there. But we also are already looking at, you know, how do you diversify from a supply base. So I'll give you a recent example. We recently signed an agree agreement for substation power transformers.

This is, I believe, last week that we signed it. This is where scale and and scope comes in. So we signed agreement with nine different suppliers, five US domestic manufacturers, four, global manufacturers to give us that kind of ability to source where we think it is most effective for our customers. So, I would say these discussions have been going on, and not only just recently, but there's an expectation that tariffs were coming. When the election happened back in November, we expected tariffs.

We included tariff impacts into the bids we made in our RFP and down in SPS in January. So I wouldn't view it as conversations that just started, but it's now as we understand where they are, then it's how do you navigate.

Got it. Appreciate that. That's helpful. And then maybe just a quick follow-up on the liability related to to Smokehouse Creek going up to $2.90. I think you had highlighted in the prepared remarks, inclusion of some previously excluded verticals.

But just curious if there's anything else that you see at this point that could pose risk to that number continuing to move higher, or you guys still feel good, you know, about wherever that number goes relative to the insurance coverage?

Yeah. Absolutely. I'll give you a little bit more color. No. I the way I think about it is we're making really good progress on the overall claims.

If you look at the details, we've settled a 51 of the claims that's come through our process. So we've settled more than we took in in q one. So we're making progress in term of closing that from our internal claims process. We also have 25 lawsuits filed against us. What I didn't say in the opening remarks is we've settled or dismissed five of those already.

So we've turned to settling the represented claims. As you said in your question, as I said in my opening remarks, we've now had settled with the railroad entities, which was not in our low end accrual before. We settled with the utility entity that was not in our low end accrual. And we have made some settlements for tree damages, and so we've we've included the settlement payments in our $290,000,000 accrual. There's also one other, call it, large claim that we've gone through the discovery process and included in our our accrual.

So, you know, from that perspective, again, it is following account accounting guidance. It's a low end accrual, and you can see what we just included in our disclosures. But overall, you know, I I I was pointing to people that we have five approximately $500,000,000 of insurance coverage, and we are well under that policy limit as we sit here today. And we'll continue to make progress over the balance of the year on these claims.

Great. Great to see the progress there. Thanks so much for all the color.

Thank you. Our next question is from Durgesh Chopra with Evercore ISI. Please go ahead.

Hey, team. Good morning. Thank you for, taking my questions. I actually just have one. All of the questions have been asked.

Just, any updated thoughts on, the the Marshall Fire? Any conversations with stakeholders as we're approaching trial here this this fall? Anything new there? Thank you.

Hey, Durgesh. Yeah. I I think just as I noted, in my prepared remarks that, in the plaintiff's expert reports, we received two new causation theories. One related to a partially unattached piece of telecom equipment, making contact with our line, and the other one that, being an unidentified flying object making contact with our line. So four theories in total when you look at the sheriff's report, the Boulder Sheriff's report, which had the ignition being, our our first line and then the underground coal seam.

So that's where we are. I I think a little bit of discussions just from a process perspective. We have mediation process in this case. That's standard for trials such as this. Deadline for mediation is May 29.

So we'll work through that process. But as we sit here today and as we've said before, we're diligently preparing ourselves for trial, which starts September 26.

Yeah. Hey, Dugesh. Just one thing I'd add on there that I think, you know, is important is is the, that we believe that our indemnity agreements on our poll attachments are strong.

As we think about the causation theories that have been proposed, that's just an important one to think through.

Thank you. Our next question is from Jeremy Tonet with JPMorgan. Please go ahead.

Good, good. Thanks. Just want to, I guess, start off, could you elaborate on the potential regulatory treatment of wildfire related O and M expense? And are you expecting to recover some of these costs? And what type of, what kind of assumptions underpin your guidance at this point?

Hey, Jeremy. You know, I I think, you know, underpinning our guidance assumptions is always constructive regulatory treatment. And I'll kinda hit on a couple. One, we talked about the Colorado wildfire mitigation plan. Now that's a unanimous settlement still awaiting commission, commission hearing and approval, but that includes concurrent recovery for our o and m expenses related to to our wildfire investments.

And so that what as I said, is a is a very good constructive outcome in awaiting the decision by the commission there. We have filed regulatory deferral for regulatory deferrals around our insurance premiums. We've made a filing in Wisconsin, Texas, and New Mexico. And so we expect decisions there, probably q two, q '3 time frame on those three filings. And then in Minnesota, that would just be part of our rate case.

We've included our wildfire O and M expenses and investments, in the rate case, which has a forecast year for 2025. And that decision will play out. That proceeding is a little bit longer dated. But overall, we do assume constructive regulatory outcomes overall just as part of general guidance assumptions year in and year out.

Got it. Thank you. And then maybe pivoting towards back towards data centers here. It seems like a lot of the pipeline has been in Minnesota, but just wanted to see, I guess, how you see things developing across other service territories, especially Colorado. Could they be kind of a broadening of of this?

Yeah. I I think, you know, as we we've spoken about this, you know, the last few calls, we talked about you're absolutely right. You've heard us talk about the opportunities in Minnesota and the interest we've seen there. We've seen it expand beyond Minnesota, as you allude to. One, we already have a a data center in construction in Colorado, and that was one of our signed contracts.

And the threes the three contracts we're working on right now is what I talked about in my opening remarks that we expect to have signed by the this fall. One is in Colorado. We're also we also worked on what we call a large load cluster study in Colorado. When you look at looking at, call it, this colocation area near the Denver Airport in Aurora, which is not only some data center customers, but also a large industrial customer and a large distribution, center. So oh, gaining interest in Colorado, but we also have a lot of interest in Wisconsin too.

So as we think about it, you know, we have signed agreements in three different states today. And then we also the three agreements that we're working on, one in Wisconsin, one in Minnesota, one in Colorado. So it's helpful to kind of see that interest across our states. And we're also seeing growing interest in the Dakotas. There's a land sale last year in South Dakota to a a data center.

So I I would continue to get receive inbound inquiries, and have a strong pipeline. So our goal is to execute on fulfilling that kind of what we call high probability pipeline by by this fall for for our investors and and really for our customers when we look at the benefit it creates for our customers and maintaining affordability.

I'd add, in the Southwest as well, we filed a few studies with the Southwest Power Pool for thousands of megawatts of data center inquiries down there, a little bit further back in our probability pipeline for data centers, but we're still seeing lots of interest down there. You know, you got to think about it, our SPS C and I tariff is one of the lowest in the country, and has attracted some attention as well.

Got it. That's helpful there. And just want to go back to Colorado if I could, one last one. How do you think about pacing a high Colorado investment against high sales growth as you've outlined there? Do you see any periods of relatively elevated bill inflation as investments come in ahead of load?

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