Xcel Energy Inc

NASDAQ:XEL

Hello, and welcome to Xcel Energy 2024 Year-end Earnings Conference Call. My name is Melissa, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions]

I'll now turn the call over to Rupesh Agrawal, Vice President, Investor Relations. Please go ahead.

Good morning, and welcome to Xcel Energy's 2024 Fourth Quarter Earnings Call. Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer; and Brian Van Abel, 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 2024 full year 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. As a reminder, we recorded a charge of $0.06 per share in 2024 related to the disallowance of replacement power costs associated with an extended outage at our Sherco plant in 2011.

Given the outage occurred 13 years ago and nonrecurring nature of this item, this charge has been excluded from full year ongoing earnings. As a result, our GAAP earnings for 2024 were $3.44 per share, while our ongoing earnings, which exclude this nonrecurring charge, were $3.50 per share. All further discussion in our earnings call will focus on our annual ongoing earnings. For more information on this, please see the disclosure in our earnings release.

I will now turn the call over to Bob.

Thank you, 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. And in 2024, we delivered on another year of solid operational and financial progress to that end.

Across our 8 states, we invested more than $7.5 billion to build and maintain infrastructure that supports our customers' energy needs in areas like advanced technology for a smarter, more reliable grid long-haul and regional transmission to support customer growth and system reliability needs and carbon-free generation to continue our pursuit of a cleaner energy future. We navigated considerable headwinds during the year and posted ongoing earnings of $3.50 per share, delivering within our guidance range for the 20th consecutive year, one of the best track records in our industry.

Our long-term performance is attributable to our committed team at Xcel Energy, you show up every day on behalf of our customers with safety, affordability and reliability as their top priorities. Recognize this is the first time we've been below the midpoint of our target range in over 15 years. We made decisions in 2024 to make investments to improve resiliency and protect our customers throughout the year. And we coupled with December weather that was considerably warmer than normal and little time to adjust the result was earnings at the low end. But because of the operational improvements and investments we made in 2024, we remain confident in our ability to deliver on our 25% guidance range of $3.75 to $3.85 per share.

The midpoint of which reflects 7% growth from the midpoint of our 2024 range. And over the next decade, we expect to invest significantly in our infrastructure to deliver reliable, resilient and cleaner energy for our customers as well as serve significant forecasted customer growth. Our 5-year base capital plan delivers rate base growth in excess of 9% and should deliver long-term EPS growth in the upper half of our 6% to 8% guidance range.

At Xcel Energy, our long-term strategic model and value proposition is to make smart capital investments for the benefit of our customers, which improve reliability, resiliency and sustainability provide excellent customer service and to keep bills as low as possible for our customers. In 2024, we reached several important milestones towards these goals.

In November, Phase 1 of our Sherco's solar project started commercial operations, 2 additional phases will come online in 2025 and 2026. And once complete, Sherco's total capacity of 710 megawatts will make it the largest solar facility in the Upper Midwest. And by using existing interconnection from our retired coal unit, we save customers money and accelerated deployment by several years. providing opportunities to serve new customers, including multiple data center projects on and around the Sherco's site.

We're also near completion of the conversion of our 1,000-megawatt Harrington coal plant to natural gas. Which provides essential energy resiliency and reliability to our customers and will benefit the local community there for years to come. In 2024, our wind fleet achieved availability of 97%, marking our best performance in 5 years in achieving first quartile benchmarks. High turbine availability ensures our customers benefit from the zero fuel cost resource and provides production tax credits that keep their bills low. In line with our Minnesota resource plan, the NRC approved a 20-year license renewal for our Monticello nuclear facility. This allows customers to continue to benefit from a critical low-cost, carbon-free energy resource through 2050.

One of the keys to energy resiliency and growth is expanding our electrical grid to ensure that customers have access to the generation resources needed to meet their daily requirements. And I'm proud to say that for the past 15 years, Xcel Energy has been the leading provider of new transmission line miles in the country. In July, we began construction on the final segment of our Colorado Power Pathway project, which started construction in 2023. The power pathway is a 675-mile double-circuit 345 kV transmission loop that will enable Xcel Energy to connect more than 5,000 megawatts of essential energy resources in Eastern Colorado. And in the fourth quarter, the MISO board approved tranche 2.1 of its long-term transmission portfolio and the SPP board approved its 2024 ITP portfolio.

These 2 portfolios will enhance transmission systems in our regions and inter-regionally, ensuring that we can meet customer growth and resiliency needs. Our portion of these transmission projects could result in $3 billion to $4 billion of capital investment in excess of our base plan. We've also made considerable progress to protect our customers, communities and system from the increasing threats of extreme weather that we continue to see across the country.

During 2024, we filed an updated wildfire mitigation plan in Colorado, a new system resiliency plan in Texas and issued wildfire mitigation plans for each of our other states. We've also accelerated a number of risk reduction efforts, including operational mitigation, such as enabling public safety power shutoff and wildfire safety operations across our entire system and making investments to better sectionalize and automate these capabilities. Physical mitigations include the repair or replacement of priority 1 and 2 distribution poles across our system in over 600 miles of vegetation management in Colorado, amongst other milestones.

We've developed foundational tools, completing comprehensive wildfire risk mapping of our system and deployment of advanced risk modeling tools like Technosylva, and we've increased situational awareness where in Colorado, we completed installation of 42 AI equipped cameras and completed the installation of 25 utility coal mounted weather stations with many more planned across our system in 2025 and beyond.

Equally importantly, our customer bills have remained amongst the lowest in the country, is attributable to our thoughtful investments, access to some of the lowest cost renewable resources in the country, and focus on continuous improvement through our lean operating principles. Since 2020, our continuous improvement programs have generated nearly $500 million of sustainable savings for customers while improving operations and reducing enterprise risk.

Since 2017, our steel for fuel program has saved customers nearly $5 billion in avoided fuel costs and production tax credit benefits. Our average residential electric and natural gas bills are 28% and 12% below the national average with historical growth rate well below the rate of inflation.

In addition, we've reduced our residential [indiscernible] 2005 levels and remain on track to meet our goal of 80% carbon reduction by 2030 be proving that our geographic advantage for renewable communities to advance our clean energy leadership and to 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.

Finally, I'd like to express my thanks to Paul Johnson [indiscernible] service. Over his career, his commitment, his integrity and his acumen have been critical to the success of our controller, our treasury and our investor relations programs has -- he's become a personal friend. I know you will all miss him as well. I want to extend my sincere [indiscernible]

So let's turn to -- starting with our financial results. Earnings drivers for the year include the following: outcomes from rate cases $0.12 per share due to interest income on cash balances and a gain on debt repurchase that we [indiscernible] we use to offset increased spend on our wildfire risk reduction measures offsetting these positive drivers. Higher depreciation and amortization decreased earnings by $0.40 per share.

Turning to sales. Fourth quarter and full year weather adjusted electric sales increased by 3% and 1%, respectively driven by increased C&I load and SPS Shifting to expenses. O&M expenses increased $96 million in 2024, reflecting actions we took to reduce future operational risk by increasing investment in wildfire mitigation. In addition, we experienced increased costs from generation maintenance, damage prevention and storm response.

We also made progress on a light rate case calendar. In our Minnesota electric rate case, interim rates of $192 million were approved effective January 2025. And in North Dakota, we filed an electric rate case and the commission approved our settlement in our natural gas rate case. Moving to 2025, we're looking to several milestones as we make progress on adding 15,000 to 29,000 megawatts of generation to replace retiring capacity and serve load growth. In the first quarter, we anticipate a decision from the Minnesota Commission on our RFP an IRP settlement. The RFP includes 720 megawatts of company-owned firm dispatchable resources. The IRP includes an additional 4,200 megawatts of generation needs. By summer 2025, we expect to file recommendations for up to 3,500 megawatts of this need across 3 RFPs. In the second quarter in SPS, we anticipate filing recommendations for 10,000 megawatts of generation from our RFP that is in flight. And finally, in the third quarter in Colorado, we anticipate a commission decision on our resource plan for the 5,000 to 14,000 megawatt resource needs with RFPs to follow in late 2025 or early 2026. We're excited to execute on the significant opportunity and look forward to -- we expect to have executed contracts for the remaining amount that is included in our 5-year sales forecast by this fall. We are in active -- given our large backlog of additional opportunities, we are confident in our long-term sales forecast. Additionally, we continue to see significant growth in other parts of the business, particularly in the oil and gas region and SPS. As a reminder, our data center growth represents only half of our 5% long-term sales growth that we are projecting. To help fund our $45 billion 5-year capital plan we issued nearly $1.4 billion in forward equity in 2024. This issuance significantly reduces financing risk, helps maintain a strong balance sheet and credit metrics and funds accretive growth for our customers and investors.

We also continue to make strong progress in the Smokes Creek wildfire claims process. We've resolved 113 of the 199 submitted claims, which we continue to view as constructive. We have committed $73 million in settlement agreements, of which $35 million have been paid. There is no change to our estimated liability of $215 million as we described in our disclosure.

With that, I'll wrap up with a quick summary. Xcel Energy posted ongoing 2024 earnings of $3.50 per share, navigating significant headwinds and meeting guidance for the 20th consecutive year one of the best track records in the industry. 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, including proactive mitigations across our system, our resiliency plan filing in Texas and updated wildfire mitigation plan in Colorado.

Going forward, we are excited to make significant progress on our $10 billion pipeline of additional investment opportunities. 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 are reaffirming our 2025 guidance of $3.75 to $3.85 per share. This concludes our prepared remarks.

Operator, we will now take questions.

[Operator Instructions] Our first question is from Nick Campanella with Barclays.

Thanks for all the information today. I just wanted to kind of get your general thoughts. I know there's been a lot of headlines in the new administration, but particularly around renewable permitting and siting and -- are any of your projects kind of in scope from either federal or private permitting halt perspective? And then maybe you can kind of also just remind us what's embedded in the plan from a transferability perspective.

Nick, it's Bob. Thanks for the question. Look, broadly speaking, when I think about the EOs, they support the energy dominance goals of the administration we're supportive of a broad and all of the above energy strategy. And Brian's comments in the prepared remarks talking about sales growth and need of our customers for our product and our electrons would suggest that. We need to move, we need to be able to move very quickly on building our infrastructure and making sure that we can serve our customers. We know that the administration supports economic development. We know that they support low-cost energy and while many of the EOs are directed at oil and natural gas, and our focus area is really on the electricity side of the ledger. Look, we support permitting reform broadly at a national and even state and local levels. in order to be able to build the infrastructure we need to meet this era of growth.

We have about 30% expected load growth over the next 5 years and making sure that we can deliver on that is important. So any -- we think that any of the executive orders and any of the challenges that may be embedded in there today are things that we can always work through. As a reminder, we don't have any offshore wind. We don't have projects on federal lands and our permitting needs are actually relatively light for wind and solar and storage assets. So I think we'll be able to work through it all, and I'm optimistic that our capital plan for '25 and beyond are going to remain intact and we'll be able to work with the administration and all the agencies to make progress here.

Now, Brian, you want to thing to add .

Yes. Nick, I can just add a little bit of color to that. And there was an article yesterday around the Army Core and our projects, we do not expect that to impact our projects in flight. And as Bob said, the other projects in flight, we feel comfortable with where we stand in the permits that we have in our continuing construction and continuing progress on all our projects in flight. And obviously, with the RFPs once -- whether it's tariffs or regulations or , we can certainly look at how that impacts RFPs. But we feel very good about the need and our overall pipeline and executing on both the stuff in flight and the pipeline.

Just quickly, you asked -- your other question is about PTCs. We have approximately $700 million a year in transferability embedded in our forecast, right, that's a reduction to revenue, and then we transfer the credits -- and so that's been pretty consistent over the past year in terms of what we've forecasted.

I appreciate the answer on that. That's really helpful. And then the -- at the end of your prepared you kind of talked about you do seem to have some line of sight to announce additional customers this year. Just how do you kind of think about the cadence of pulling in those 8.9-gigawatt customer requests? And at which point do you think you would reevaluate that sales CAGR? Is that more of an EEI later in the year item? Or just how much of that connection in where you are in the 6% to 8%.

Yes. And I think expect us in terms of updating capital plans, 5-year sales forecast plans, all of that generally is our earnings release so we can talk about EI. So I expect that all of that be comprehensive update on a regular cadence. Now what I mentioned in my prepared remarks is we expect to be able to signed contracts that will fulfill the -- what we have in our base plan for the data centers, and we expect to -- we're working actively working in negotiations on several of those and expect to have them all executed by the fall. So pretty excited about that. And then, yes, as you alluded to, we have a backlog behind that, which we'll turn to working on that as we get through these. And I think that just highlights the kind of pretty significant opportunity we have. By the time we're doing expect to talk about this in greater detail in the follow is, we'll have a data center in every 1 of our operating companies.

So we have regional diversity, data center diversity, they'll be with different hyperscalers. So we feel really good about the long-term sales prospect. And as we continue much forward, we'll see if there's opportunities to add more it's not just the demand there, but ensuring that we have the discussions with our stakeholders and commissions about being able to build those assets. I mean you heard Bob say we need all of the above energy strategy, we need to build these. And so it's really working with our stakeholders to drive economic development and benefit for all of our customers.

Our next question comes from Jeremy Tonet with JPMorgan.

Paul, we will certainly miss working with you, best of luck in retirement. Maybe just if we could touch on the wildfires a little bit here, just given national headlines recently, it seems like developments in other states might have impacted Excel trading recently. I'm just wondering what thoughts you could provide here incremental as far as the outlook, the possibility for federal wildfire policy changes, any views from D.C. here just in conversations within Colorado as well, just trying to get some color there.

Jeremy, it's Bob. Look, obviously, the California fires were a tragedy for that community, and it does bring a both a federal and a state highlight to potential solutions there. And we're going to work at both levels through EI largely at the federal level and then obviously, across our states for anything we can do to continue to protect our customers and our communities from that kind of threat and that kind of risk. I'd say the dialogues are active across the federal government and at the state level.

Obviously, at the federal side, there's a lot going on. I think a lot on TCJA, IRA and items like that. So I think any wildfire movement and the federal level is probably a back half of the year kind of efforts and focus. But California certainly put a bright light on the issue and national problems, the national solutions. And I think there's a big role for the federal government here to help setting standards, helping with insurance backstops, getting to functional markets. both on the insurance side and on the capital market side, as you alluded to. So I think there's a big role for the federal government here. On a state basis, we're having great conversations, Texas, Colorado, the Dakotas, around everything from roles of the companies and roles of the states and how are we going to set standards for forestry, how we're going to set standards for building infrastructure for operations and making sure that there's a clean line of responsibility for who's doing what to make sure that we can protect our customers and our communities. I don't have anything to talk about that's advancing right now, but we're early in legislative sessions, and maybe we'll come back to you in the first quarter call.

Got it. That's helpful there. And just going to DC at large, is there anything else? I know you talked about a bit with Nick there as far as changes you think going forward, especially as it relates to, I guess, transferability, is there a need to go through the federal government in any way? Do you see anything changing there?

Jeremy, you just broke up in the very first part of your question there. Why did you say I got the last part.

Just about any changes on D.C. I know you touched on it a bit there.

Yes. Certainly, we're working very closely with our policymakers around D.C. Obviously, one of the things we're not in working is around the IRA and what happens through legislation. And certainly, as we see it now, I think what we're hearing is that they're going to attempt to do 1 bill, but if that was on a split into 2. I think you've heard me speak before, is we believe the key tenets of the IRA are intact. When I say that, I'm talking about tax credits and transferability to kind of go hand in hand. And so we feel good about that. I mean it is -- there's an incredible amount of jobs in manufacturing and economic benefit being driven by there, right, which is primarily going into red states. So I think there's a recognition of that. So we feel good about where that stands overall, and we'll just watch a play out and continue to be plugged in.

Got it. And just the last point there, does transferability go through the federal government? Or is it bilateral?

So I think the permissibility of transferability is definitely embedded within the IRA. I think the transferability themselves is a bilateral contract with us and any other tax paying entity and I think that persists.

Yes, that's exactly. We negotiate directly with our other companies. We have a number of Fortune 500 companies in our [indiscernible] Minneapolis that we partner with. The 1 caveat is co-opt municipalities that use direct pay would go directly with the government, but we don't use direct pay reason transferability.

Got it. And if I could just finish up on D.C. real quick here. The new administration is more of a focus, I think, on gas and maybe there was in the past in -- at the same time, resource adequacy has been very much in focus. And just wondering your thoughts on adding incremental gas fired generation to meet higher-than-expected load growth. Is that evolved in any way based on what's coming out of DC or just higher growth expectations and have conversations with large C&I customers changed on this side as well at all?

Yes. So Look, we -- I made a comment in my prepared remarks about sort of the real advantage we have across our 8-state footprint and the ability to deliver low-cost energy with wind and solar and that persists. And so we think that those are very valuable asset classes for our customers. They're very important for our hyperscaler and data center customers who are trying to have their own sustainability goals and we think that persists.

We've been clear that we're going to continue to focus and achieve our 80% carbon reduction by the end of the decade. But we've been clear since we made that announcement that we need dispatchable resources to support that. So gas has a real role to play in our active resource plans right now, we've got CT builds in the Upper Midwest. In Colorado and in the Southwest and in our resource plans that are on the come. We also have incremental gas resources in the combustion turbines. So we think we need peaking resources and we don't think we need baseload gas because of our advantage in wind and solar and our ability to deploy solar and storage. But we will have new gas across our systems. They'll have low capacity factors. We've talked about having them clean fuel capable at construction and other items to make sure that we can meet sustainability goals in our states but we will have new gas coming and we are converting some of our coal stations to gas as well. So increasing importance for gas in our footprint but a maintenance of a real sustainability footprint as well, given our geographic advantage.

Our next question is from Julian Dumolin Smith with Jefferies.

Paul, it's been a real pleasure, I got to say.

Thanks.

Got absolutely. So guys, let me talk a little bit about '24 and '25 quickly. I know we've talked about some of the bigger picture items here, but coming back to, obviously, as you say, a little bit out of the norm for you guys historically on '24, some items that, as you say, you were trying to deal with through the course of '24. But in addition here, when you look at the '25 drivers there's a few items that net to, I suppose, up to $40 million negative versus the prior kind of bits and pieces here, if you will. How do you think about where you're positioned on '25 and getting back on track and what I mean by that is back on track relative to what you guys have consistently delivered in terms of within your -- within or at or above your midpoint level?

Yes. Julien, thanks for the question. I can provide a little bit of color. I think on face it adds up to that, but I think you got to look at the property taxes are offset in regulatory mechanisms. So that doesn't have an impact, and I look at some of the other offsets. It's probably less than half of the impact that you quoted. And so when I think about 2025, we feel very comfortable with where we sit. It's early in the year. We always target midpoint of guidance. So I expect that we deliver this year, like you said, last year was a little bit of an anomaly for us. But overall, I feel very comfortable with 2025, and there's just some other offsetting stuff in there that gives me that comfort.

Got it. Right. So bottom line, back on track, '25 onwards here.

I appreciate it. And I don't want to work with you guys too much, but you guys have made several times your confidence in the sales growth outlook you made it in the prepared remarks, you said it in the Q&A. At the same time, how do you think about the backdrop here when I think you guys dropped the sales growth number from the slide itself, I can't discern is that -- was that purposeful? Is there some sort of update coming at some point here? I just wanted to kind of ask you to elaborate. Maybe I'm depicting too much.

I think you might be reading into that too much. Julie. And I mean, generally, we talk about our 5-year sales growth on the Q3 call. I mean you just heard me reiterate it. In 2025, our 3% sales growth is unchanged. We feel good about that. So there has been no change. I mean, basically sitting here, what we wanted to do is give a little bit more context in the data center growth because that's about half of that 5% and the fact that we already have 3 signed contracts in construction. All 3 of those plan to energize later this year. We expect to deliver the rest of that contract or the capacity that's in our base sales forecast by this fall, and we're in active negotiations exchanging term sheets right now with multiple counterparties. So that's where -- so I think you might be reading into it a little bit, but our 2025 sales growth is unchanged and our outlook -- 5-year outlook is unchanged. And I think I'd just add -- I said this in the opening remarks is plus only half of our load is from data centers in our 5-year sales forecast, having this diversity of growth is also a benefit to, I mean we continue to see very strong growth out of the oil and gas sector in the Permian and Texas in New Mexico.

So overall, hopefully, that helps with a little bit of additional color with how we feel.

Our next question comes from Steve Fleishman with Wolfe Research.

I'll wish you a final's call. So just, I guess, just 1 other thing on the data centers that I can't recall the 8,900 megawatts pipeline, is that -- did that -- is that number the same as before? Did that go up? And just maybe on that topic, just a little more on the the tone of conversations, any shift in the last few months.

You'll see that number is unchanged. We just provide additional color into kind of that what's included in our base and what we have contracted ready. So we didn't change that top side. We have a lot of discussions. But the question around tone, I guess you could you bring this back to Deep Seek and what we're hearing. So we had discussions with a number of hyperscalers post Deep Seek. And some of the common themes is the efficiency gains were expected. It didn't catch them off guard and Deep Seek was focused on training and not inferencing where we really think the long-term growth is going to be. And then in all of our discussions with the data to these active discussions around the ESA is there is no change in tone. There is no slowing down. So absolutely not. I think that's why we feel really good about where we are relative to the data center. So as you'd expect us to be, we are in contact with a lot of them post that news and just given the reaction it had on or the impact it had on our industry. So -- but we feel good about the growth line going forward.

Okay. And then just a quick numbers question. SPS, I think, was basically flat on the year despite all that growth. Is that just regulatory lag?

We actually had a wholesale customer load roll-off that started last year. So you saw the full annualization of it this year is 1 of the bigger drivers of it. So that will get captured going forward.

Our next question comes from Carly Davenport with Goldman Sachs.

Maybe just 2 quick follow-ups on a couple of the topics we've hit on so far. First, just on the data center comments. As you sign those remaining contracts that are in the 5-year plan by the fall, is that something where we should expect to see any sort of announcements around those transactions or investments to support those facilities? Or is that something that more will happen in the background?

Carly, good question. A little bit depends on the counterparty and potentially the regulatory filing around it. So maybe a little bit whether there'll be actual formula or not or not. But we're certainly wanting to respect the wishes of our data center customers, depending on how they want to handle this.

I might just add that there are times that the local economic development teams are also very happy to have supported the Governor's priorities in our states. And so sometimes, the communities or the state wants to make an announcement, too. So I would suggest that. We may have more to say as we go through the year or it might be quiet until we give an update on the third quarter call.

Got it. Great. That's very clear. I appreciate those comments. And then maybe just circling back to the wildfire mitigation front. Obviously, it's been very much in focus. Just as you think about the 2 proceedings on the Colorado mitigation plan and the Texas SRP. How are you guys thinking about the prospects to reach a settlement in those proceedings? Or do you think they'll go the full way.

I think we're certainly -- as we look forward, we'll take Texas first. We've seen the settlement in the SRP by some of our peers in Texas. So we're certainly hopeful that we can reach a settlement. I think it's recognized in Texas by our stakeholders, the importance of wildfire mitigation and making sure that we are protecting our communities and our customers and so I think we're hopeful there in Texas. In Colorado, we'll just start to engage. We haven't received any testimony yet. We'll receive answer testimony from our stakeholders here later in Feb should be next week. I think, late next week. And then there's a settlement deadline. So that's the deadline to watch April, mid-April is a settlement deadline in Colorado. So we'll start to engage those conversations and certainly hopeful we can reach a settlement. But certainly, we're comfortable going through this, given the importance of this plan, the significance of this plan going through hearings in a decision deadline, which we would expect at the end of August from the commission.

Our next question comes from Durgesh Chopra from Evercore ISI.

Just maybe March so far, that's where I want to start and then I'll go back to a big picture question. Just what's the latest there? Obviously, a trial started September 2025. What should we be tracking between now and '25? Could there be sort of a settlement or some sort of a resolution between the parties -- maybe just latest thoughts there, please.

Durgesh, it's Bob. Thanks for the question. Look, there's not a lot going on a lot of changes in the Marshall proceeding. As you indicated, the trial is set for September and the judge reaffirmed that recently. And as we indicated in the fourth quarter, we have made some decisions, the presiding judge has made some decisions around the structure of the trial.

We'll do a liability-only trial in September and if necessary, subsequent trials around damages. And so not much has changed. I guess the only new news out of the judge is probably the venue decision that we made was going to keep the trial in Boulder County as opposed to the adjacent county Jefferson, which is there was a venue change request. So not much going -- not much new there. And again, back to your second question, which is really around settlement and settlement opportunities. As we said previously, we disagree with the share support and the source of the second edition and are prepared to defend that in the trial in September.

Got it. And then 1 big picture question on tariffs. Obviously, you have a very sizable renewable investment in the plan. and the China tariffs are now in effect. So if they're going to be sort of there for a prolonged period of time, how are you thinking that impacts your plan, how you're derisking your supply chain? Your thoughts there, please?

Thanks for the question. I mean I think the China tariffs were probably well communicated. And it's not as though we haven't dealt with tariffs before, there was tariffs under the previous Trump administration. We had tariffs under the Biden administration, AD CVD investigation. So something that we've gotten pretty familiar with in working with our suppliers and the manufacturing in terms of whether there's manufacturing capacity outside of China or just ensuring we're making the right procurement decisions to deliver the best possible price to our customers. So I would say the China tariff is not unexpected and not surprising and as you would expect, given our forward-looking nature and all the renewable stuff fablights that we had planned for something like that and have taken the appropriate actions.

Our next question comes from Anthony Crowdell from Mizuho.

Congrats, Paul. Just I guess 2 quick questions. I wanted to follow up on Steve's comments, I guess, more on the tone of the data center. I'm just curious if we can contrast the tone between maybe customers associated with the data centers and non-data centers. I mean is there more of a sense of urgency with maybe data center customers to hook up? Or do you see it's the same across whatever customers are coming to you?

Anthony, you mean like other C&I or oil and gas or just.

Exactly. Yes.

I mean I think from the data center side, it is certainly always speed to market continues to be the 1 of the most important factors in terms of can we deliver the transmission generation capacity on the time line that they're looking for.

As for other customers, I mean, we continue to see significant growth out of the oil and gas industry. And I think that's probably reflect not probably. It is reflected in the resource plan that we filed in New Mexico, when you look at the upside of that RFP in Texas and New Mexico, that is 14,000 megawatts of generation, that's informed by our oil and gas customers in terms of what their electrification needs are. I also think what you saw out of SPP with the recent approval of this big portfolio of projects, including a 765 kV that is awarded [indiscernible] and we'll build is that continued growth and our customers are looking to get connected. So I wouldn't differentiate. We don't differentiate between among customers, among customers. But overall, it hasn't changed -- the tone hasn't changed with data centers related to kind of their speed to market and how important it is for them.

Great. And then just on that, if I think about maybe political or regulatory support that you get with new customer hookups, I'm sure it's great for all the communities, whether it's property tax offsets or what the property tax would pay, I mean, but I think there's probably more economic development associated with the non-data center customers. Is that fair to look at it that way and maybe that they get maybe greater continued regulatory support or political support than maybe the data centers are actually, as you said earlier, there's no differentiation between the type of customer that's getting hooked up, a hookup is great for regulators.

Well, I think, Anthony, I think it really depends. I mean, if you're talking about a data center that's going to build out to a gigawatt plus of capacity, you have years and years of construction jobs -- and then they may be doing other development within the community support the community's significant property tax base -- and it does provide benefit to all of our other customers. And when you're talking about a data center load that large, it does drive benefit for all of our customers. So I don't think it -- I wouldn't characterize it that way. because the data centers and these large low customers understand that they need to bring economic development and benefit to all of our customers for us to get it approved in front of the commission.

Our next question is from Travis Miller from Morningstar.

I'll echo much appreciation, Paul, enjoyed over the years and appreciate all the help over the years. question on a high level, we're trying to figure out kind of what are some of the constraints really across the industry on some of the big CapEx numbers and the growth numbers coming out. What about labor a lot of questions about equipment and tariffs and side or other, but what about labor availability, both for you and what you maybe see across the industry? Is that a [indiscernible] constant Travis.

This is Bob. Great question and certainly 1 that we're focused on and probably have been focused on for a number of years. We've been working actively with both national and local IBEW and other trade organizations that we work with to hire the critical talent that we need to own and operate these assets. We've been working trying to give insights into our backlog of capital projects that we need to our vendor partners to make sure that they know where our growth is coming from. And so our job is really massively in terms of partnership with people who help provide us the human talent that we need to do this big build-out.

Now that gets pressured by other people also needing talent. And so we are in constant competition for human capital and talent both at our vendor side and for our company talent as well. So it's a great question. I think we started the process. There's more work to do there. everything from funding programs in developmental geo colleges and technical colleges going into high schools and recruiting at that level, trying to get folks that may want to bypass the university and go straight into a trader craft.

So any and everything we can do to make sure that we've got the human capital to make sure that we can do the build-out that we need.

Okay. Great. That's very helpful. And then just specific on the data centers, Apologies if I missed this in many of the comments, but do you anticipate any specific regulatory filings for any of the customers either you have signed or you're working with or just thinking about something that might need such a big build-out that you need some kind of preapproval or approval.

Travis, yes, we would likely expect -- we haven't disclosed which states that we're negotiating with these customers on. But yes, we'd likely expect that we would seek regulatory approval. And that's a little bit back to my comment of the data centers understand for us to get regulatory approval, it's got to show benefit to our current customers and benefit kind of the communities.

So well, with that, I just want to lastly echo Bob's comments around Paul retiring, you can tell he's in the room with us for 1 last time. He's been a mentor to me, a mentor to many of us in this room and a close and personal friend to me ever since the 15 years that I've been at the company.

So thank you again, Paul. Rupesh. Welcome to the first earnings call. We look forward to to many more going forward. So with that, I'll wrap up. Thank you for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions.

Thank you very much. That concludes today's conference. You may now disconnect.