Ameren Corp (AEE) — Q1 2022 Earnings Call Transcript

Thank you, and good morning. On the call with me today are Marty Lyons, our President, Chief Executive Officer; and Michael Moehn, our Executive Vice President and Chief Financial Officer; as well as other members of the Ameren management team joining us remotely. Marty and Michael will discuss our earnings results and guidance, as well as provide a business update. And we will open the call for questions. Before we begin, let me cover a few administrative details. This call contains time-sensitive data that is accurate only as of the date of today's live broadcast, and redistribution of this broadcast is prohibited. To assist with our call this morning, we have posted a presentation on the amereninvestors.com homepage that will be referenced by our speakers. As noted on page two of the presentation, comments made during this conference call may contain statements that are commonly referred to as forward-looking statements. Such statements include those about future expectations, beliefs, plans, projections, strategies, targets, estimates, objectives, events, conditions and financial performance. We caution you that various factors could cause actual results to differ materially from those anticipated. For additional information concerning these factors, please read the forward-looking statements section in the news release we issued yesterday and the forward-looking statements and Risk Factors sections in our filings with the SEC. Lastly, all per share earnings amounts discussed during today's presentation, including earnings guidance, are presented on a diluted basis, unless otherwise noted. Now here's Marty, who will start on page four.

Thanks, Andrew. Good morning everyone, and thank you for joining us. We've had a solid start to the year and our team continues to effectively execute our strategic plan across all of our business segments, allowing us to deliver consistently strong results for our customers and shareholders. Yesterday, we announced first quarter 2022 earnings of $0.97 per share compared to earnings of $0.91 per share in the first quarter of 2021. The year-over-year increase of $0.06 per share reflected increased infrastructure investments across all of our business segments that will drive significant long-term benefits for our customers. The key drivers of our first quarter results are outlined on this slide. I am pleased to report that we remain on track to deliver within our 2022 earnings guidance range of $3.95 per share to $4.15 per share. Michael will discuss our first quarter earnings, 2022 earnings guidance and other related items in more detail later. Moving to slide five, you will find our strategic plan reiterated. We continue to invest in and operate our utilities in a manner consistent with existing regulatory frameworks, enhance regulatory frameworks and advocate for responsible energy and economic policies, and create and capitalize on opportunities for investment for the benefit of our customers, shareholders and the environment. Turning out to page six, which highlights our commitment to the first pillar of our strategy, investing in and operating our utilities in a manner consistent with existing regulatory frameworks. Our strong long-term earnings growth guidance is primarily driven by our infrastructure investment and rate-based growth plans, which are supported by constructive regulatory frameworks. Our plan includes strategically allocating capital to all four of our business segments. You can see on the right side of this page, we have invested significant capital in each of our business segments during the first three months of this year, in order to maintain safe and more reliable operations all while facilitating and driving a clean energy transition. Regarding regulatory matters in late February, new Ameren Missouri electric and natural gas service rates went into effect, reflecting significant investment in grid modernization, reliability, resiliency, security, and renewable energy generation. In addition, in April Ameren Illinois filed its required annual electric distribution rate update, reflecting similar infrastructure investments and service improvements in that jurisdiction and requesting an $83 million increase. Ongoing investment across all four business segments is building a safer, stronger, smarter, and cleaner energy grid for our customers now and in the future. At the same time, we are maintaining discipline with regard to costs, leveraging our investments and focusing on continuous improvement to optimize our performance and drive greater value for our customers. Moving to page seven and the second pillar of our strategy, enhancing regulatory frameworks and advocating for responsible energy and economic policies. Over the last several years, we have worked hard to enhance the regulatory frameworks in both Missouri and Illinois, to enable meaningful and needed infrastructure investments to support reliability, resiliency, and safety. In order to consistently deliver strong value for our customers, communities, and shareholders, while practicing responsible environmental stewardship, we continue to work towards enhancing regulatory frameworks and advocating for responsible energy and economic policies. Workshops related to the implementation of the Illinois energy transition legislation enacted last year are ongoing and performance metrics related to the multi-year rate plan are expected to be approved by the ICC by late September. We believe this legislation will support important energy grid investments and will deliver value to customers, such as the utility owned solar in optional battery storage pilot projects in two communities, Peoria and East St. Louis. We're excited to announce that we began construction of an approximate $10 million, 2.5 megawatt solar energy facility in East St. Louis in early March. This energy center will strengthen the energy grid while building a cleaner energy future for this Illinois community. Before moving on, I'd like to briefly discuss recent energy and capacity purchases made by the Illinois power agency on behalf of our Ameren Illinois customers for the upcoming June 2022 through May 2023 planning year. As you know, global events have been impacting the cost of energy commodities, and power prices in the Midwest have been elevated. Further, a combination of factors, including higher energy usage, a reduction of dispatchable generation and the construct of MISO's capacity market are all being cited as causes of a spike in regional capacity prices. Unfortunately, as a result of these factors, some of our Illinois customers will see a meaningful increase to the energy supply component of their bills beginning in June. It is important to note that energy and capacity costs are passed on to our Ameren Illinois customers through a rider with no markup. While factors leading to these increases and potential perspective mitigation will undoubtedly be discussed amongst stakeholders, our approach remains the same. We will continue to focus on supporting our customers and communities by connecting them with bill assistance where needed and continuing to invest strategically to support a responsible clean energy transition in Illinois. Moving now to page eight and Missouri legislative matters. As part of Ameren Missouri's smart energy plan, a multi-year effort to strengthen the grid, our customers are benefiting from stronger poles, more resilient power lines, smart equipment, including modern substations and upgraded circuits to better withstand severe weather events and restore power more quickly. I am pleased to report that yesterday afternoon, Senate Bill 745 passed by strong majority support in the general assembly. This bill enhances the smart energy plan legislation enacted in 2018. More specifically, the bill extends the sunset date on the current smart energy plan legislation through December 31, 2028 with an extension through December 31, 2033, if the utility requests and the PSE approves. The bill also modifies the rate cap beginning in 2024 from the current 2.85% compound annual all-in cap on growth in customer rates to a 2.5% average annual cap on rate impacts of piece of deferrals. In addition, the bill expands and extends economic development incentives and provides for a property tax tracker. The bill will now be sent to the governor for signature. We believe extending Missouri's smart energy plan will continue to benefit our customers and communities as we transform the energy grid of today to build a brighter energy future for generations to come, all while creating significant economic development and jobs in the state. Turning to page nine, we will now provide an update on developments related to our plan to accelerate the retirement of the Rush Island Energy Center. As discussed on our year-end earnings call in late February, Ameren Missouri filed an attachment Y with MISO notifying it of our intention to close the energy center. As a result of that filing MISO is now studying the grid reliability implications of Rush Island's planned closure in order to determine any investments and interim operating parameters required prior to closure in order to mitigate system reliability risks. I would note MISO's preliminary study completed in January 2022 recommended transmission upgrades and indicated additional voltage support will be needed on the transmission system to ensure reliability. While MISO is under no deadline to issue a final report, we expect a draft report will be issued this month. The District Court, which is awaiting MISO's analysis, is also under no deadline to issue a final order regarding the accelerated retirement date. Ameren Missouri expects to file an update to its 2020 integrated resource plan with the Missouri PSE in June, which will reflect the expected accelerated retirement date of the Rush Island Energy Center. Such filing will also include discussion of the expected use of securitization in order to recover the remaining investment in Rush Island. We continue to work with all parties involved to move forward with the accelerated retirement in the most responsible fashion. On page 10, we turn our focus to the third pillar of our strategy, creating and capitalizing on opportunities for investment for the benefit of our customers, shareholders, and the environment. This page provides an update on the MISO long-range transmission planning process. As we have discussed with you in the past, MISO completed a study outlining the potential roadmap of transmission investments through 2039, taking into consideration the rapidly evolving generation mix, that includes significant additions of renewable generation based on announced utility integrated resource plans, state mandates and goals for clean energy or carbon emission reductions, as well as electrification of the transportation sector among other things. Under MISO's Future 1 scenario, which is the scenario that resulted in an approximate 60% carbon emission reduction below 2005 levels by 2039, MISO estimates approximately $30 billion in future transmission investment would be necessary in the MISO footprint. Under its Future 3 scenario, which resulted in an approximate 80% reduction in carbon emissions below 2005 levels by 2039, MISO estimates approximately $100 billion of transmission investment into the MISO footprint would be needed. As part of Tranche 1, MISO working with key stakeholders, including transmission owners has identified projects located in MISO North estimated to total more than $10 billion. The projects crossing through our Missouri and Illinois service territories provide significant investment opportunities. We believe we are well-positioned to execute on these projects given the location of the projects and our expertise constructing large regional transmission projects. MISO approval of Tranche 1 is expected in late July. Work on three additional Tranches has begun and MISO has indicated that an initial set of Tranche 2 projects also located in MISO North is scheduled to be approved in the first quarter of 2023. Projects included in Tranche 3 are expected to be located in MISO South, with approval scheduled in the fourth quarter of 2024, while projects identified in Tranche 4 are expected to improve transfer capability between MISO North and MISO South with approval scheduled in the fourth quarter of 2025. Moving now to page 11. We are focused on delivering a sustainable energy future for our customers, communities and our country. This slide summarizes our strong sustainability value proposition and focus on environmental, social, governance and sustainable growth goals. Our preferred plan included in Ameren Missouri's 2020 IRP supports our goal of net-zero carbon emissions by 2050, as well as interim carbon emission reduction targets of 50% and 85% below 2005 levels by 2030 and 2040, respectively, which is consistent with the objectives of the Paris agreement and limiting global temperature rise to 1.5 degrees Celsius. As previously noted the IRP will be updated in June to reflect among other things, MISO's long-range transmission planning, legislative and regulatory developments, and the early retirement of Rush Island. We continue to work diligently to optimize our sustainability value proposition, including our clean energy transition. Last month, we announced completion of our newest clean energy resource, a six megawatt solar facility. The Montgomery County solar center is part of our Missouri community solar program, which began in 2018, offering customers the opportunity to invest in solar energy generation in their community through a shared system. The energy center is now up and running, supporting more than 2,000 customers who want to take part in clean energy generation without having to pay high upfront costs to install solar equipment on their own roofs or property. The program is fully subscribed, and we are evaluating expansion opportunities at additional sites. We also have a strong long-term commitment to our customers and communities to be socially responsible and economically impactful. I'm excited to say that this week DiversityInc announced once again that they named Ameren Number One on their top utilities list for diversity and inclusion, a list we have proudly been part of since 2009. DiversityInc also recognized Ameren as a top company for veterans, black executives, as well as a top company for ESG among all industries. This slide highlights a few of the many things we are doing for our customers and communities, including being an industry leader in diversity, equity and inclusion. Further, our strong corporate governance is led by a diverse Board of Directors focused on strong oversight that's aligned with ESG matters. We recently named our first Chief Sustainability and Diversity Officer to further optimize our ESG impact by aligning these interconnected areas. Finally, this slide summarizes our very strong sustainable growth proposition, which remains among the best in the industry. As mentioned on our call in February, we have a robust pipeline of future investments that will continue to modernize the grid and enable the transition to a cleaner energy future. This pipeline includes over $45 billion of investment opportunities over the next decade that will deliver significant value to all of our stakeholders by making our energy grid stronger, smarter, and cleaner. Of course, our investment opportunities will not only create a stronger and cleaner energy grid to meet our customers' needs and exceed their expectations, but they will also create stronger economies and thousands of jobs for the communities we serve. I encourage you to take some time to read more about our strong sustainability value proposition. You can find all of our ESG related reports at amereninvestors.com. Turning to page 12. To sum up our value proposition, we remain firmly convinced that the execution of our strategy in 2022 and beyond will deliver superior value to our customers, shareholders and the environment. In February, we issued our five-year growth plan, which included our expectation of a 6% to 8% compound annual earnings growth rate from 2022 through 2026. This earnings growth is primarily driven by strong rate-based growth, supported by strategic allocation of infrastructure investment to each of our operating segments based on their constructive regulatory frameworks. I will note renewable generation and regionally beneficial transmission projects represent additional investment opportunities. We expect to announce further agreements for the acquisition of renewables over the course of this year and to file certificates of convenience and necessity, or CCNs with the Missouri PSC after the updates to the 2020 IRP have been filed in June. We expect to deliver strong long-term earnings and dividend growth, which results in an attractive total return that compares favorably with our regulated utility peers. I'm confident in our ability to execute our investment plans and strategies across all four of our business segments, as we have an experienced and dedicated team to get it done. Again, thank you all for joining us today. And I will now turn the call over to Michael.

Thanks, Marty and good morning, everyone. Turning now to page 14 of our presentation. Yesterday, we reported first quarter 2022 earnings of $0.97 per share compared to $0.91 per share for the year-ago quarter. Earnings in Ameren Missouri, our largest segment, increased $0.01 per share due to several factors. Earnings increased by approximately $0.03 per share from higher electric retail sales driven by colder than normal winter temperatures in the first quarter of 2022 compared to near normal winter temperatures in the year-ago period. We've included on this page the year-over-year weather normalized sales variances for the quarter that showed total sales to be of one-half percent compared to the first quarter of 2021. The earnings comparison also reflected investments in infrastructure and wind generation eligible for PISA and RESRAM which benefited earnings in January and February by $0.03 until rates were set. These favorable factors were partially offset by higher operations and maintenance expenses, which decreased earnings by $0.05 per share. This was driven in part by the unfavorable market returns in 2022 that occurred during the first quarter on the cash surrender value of our company-owned life insurance. Moving to other segments, Ameren Transmission earnings increased $0.03 year-over-year, which reflected the absence of the March 2021 FERC order addressing materials and supplies inventories and increased infrastructure investments. Earnings for Ameren Illinois Natural Gas were up $0.01 reflecting increased infrastructure investments and higher delivery service rates that were effective in late January 2021, partially offset by higher operations and maintenance expenses. Ameren Illinois Electric Distribution earnings also increased $0.01 year-over-year, which reflected increased infrastructure investments and a higher allowed ROE and the performance-based rate making of approximately 8.5% compared to approximately 8.2% for the year-ago quarter. And finally Ameren Parent and other results were comparable to the first quarter of 2021. Before moving on, I'll touch on the sales trends for Ameren Illinois Electric Distribution in the quarter. Weather normalized kilowatt-hour sales to Illinois residential customers decreased by about one-half percent. And weather normalized kilowatt-hour sales to Illinois commercial and industrial customers increased about one-half of percent and 1.5%, respectively. Recall that changes in electric sales in Illinois, no matter the cause, do not affect our earnings since we have full revenue decoupling. Turning to page 15. I would now like to briefly touch on key drivers impacting our 2022 earnings guidance. We're off to a strong start in 2022. And as Marty stated, we continue to expect 2022 diluted earnings to be in the range of $3.95 to $4.15 per share. Select earning considerations for the balance of the year are listed on this page and are supplemental to the key drivers and assumptions discussed on our earnings call in February. I encourage you to take these into consideration as you develop your expectations for our second quarter earnings results. Turning now to page 16 for details regarding the Ameren Illinois Electric Distribution rate increase request. In April, Ameren Illinois submitted a request for an $83 million revenue increase to the ICC in its annual performance-based rate update. Our Illinois customers are continuing to realize the benefits of significant investments in energy infrastructure. Since performance-based rate making began in 2012, reliability has improved by over 20% and over 1,400 jobs have been created. J.D. Power ranked Ameren Illinois number one in residential customer satisfaction in the Midwest among large electric utility providers for 2021. Major investments included in this request are the installation of outage avoidance and detection technology, integration of storm-hardened equipment and implementation of new technology to optimize interaction with customers. We expect the ICC's decision by December 2022 with rates effective in January 2023. On page 17, we provide a financing update. We continue to feel very good about our financial position. On April 1st, Ameren Missouri issued $525 million of 3.9% green first mortgage bonds due 2052. We intend to use these proceeds as the offering to fund capital expenditures and refinance short-term debt. Subsequently, we plan to allocate an amount equal to the proceeds to sustainable projects, meaning certain eligibility criteria, including investments in transmission and distribution infrastructure designed to make the system more resilient, improve customer reliability, investments in energy efficiency. Additionally, in order for us to maintain our credit rating and a strong balance sheet while we fund our robust infrastructure plan consistent with the guidance in February, this year we expect to issue approximately $300 million of common equity under our aftermarket equity program. We're well-positioned to fulfill our 2022 equity needs through forward sales agreements entered into as of April 1st and expect to issue 3.4 million common shares by the end of this year upon settlement. Together with the issuance under our 401(k) and DRPlus programs, our $750 million ATM equity program is expected to support our equity needs through 2023. On page 18, we summarize our green bond issuance over the last few years. Our sustainability financing framework, one of the first of its kind for utilities in the nation, supports Ameren's sustainability goals and the current target of net-zero carbon emissions by 2050, as well as other social initiatives. The financing proceeds from the issuance of the framework will be allocated to eligible environmental and social projects, including renewable generation, climate change adaptation, clean transportation, socioeconomic advancement, and employment creation. Finally, turning to page 19. We're well-positioned to continue executing our plan. We're off to a solid start and expect to deliver strong earnings growth in 2022 as we continue to successfully execute our strategy. As we look to the longer term, we continue to expect strong earnings per share growth driven by robust rate-based growth and disciplined cost management. Further, we believe this growth will compare favorably with the growth of our regulated utility peers, and Ameren shares continue to offer investors an attractive dividend. In total, we have an attractive total share of return story that compares very favorably to our peers. That concludes our prepared remarks. We now invite your questions.

Hi, good morning.

Morning, Jeremy.

Thanks for having me. Just want to start off with MISO long-range transmission planning here Tranche 1. Just wondering if there's any way that you could quantify what the opportunity set might be specific to Ameren here? Trying to get a sense for how big that could be in your mind.

I appreciate the question, Jeremy. As mentioned in our prepared remarks, we believe we are well-positioned for the projects that MISO has outlined in our Missouri and Illinois areas. However, at this moment, we don't want to get ahead of MISO regarding their overall project approvals or their classifications of which projects are brownfield or greenfield. We anticipate that when MISO approves these projects in July, they will specify which ones are brownfield and indicate the transmission owner assigned to each project. So, stay tuned. As I mentioned in the February call, we expect to have more to discuss in our Q2 earnings call.

Got it. We'll eagerly await that. And just wanted to see that there's some new development in Missouri as well as it relates to PISA. And just wondering if that comes through, what your thoughts would be there as far as PISA flexibility and how that impacts Ameren's planning.

Yeah. Thanks, Jeremy. Yeah. We were actually very pleased that yesterday the legislature did pass Senate Bill 745, which was great. That's a bill that really extends the longevity of the smart energy plan that we have in Missouri. And so, we're very appreciative of the strong support of the legislature with regard to that legislation. And I think it's a recognition that the investments that we've been making in Missouri have really been producing good benefits for our customers in terms of safety and reliability of the service that we provide. And the fact that we're really scratching the surface in terms of the investments that we need to replace aging infrastructure and modernize our equipment throughout our Missouri footprint. I think it's also a recognition of the economic development benefits associated with that legislation. We're having a positive impact as we invest on our economies through the creation of jobs. We concentrate on using Missouri vendors substantially for the things that we procure and the things that we invest in. And there's some great economic development incentive rates associated with this legislation that help Missouri businesses grow as well as attract Missouri businesses to the state. So, we're really excited about the legislature passing Senate Bill 745. It now heads to the governor's desk for signature, and we're excited to be able to extend the benefits of the smart energy plan prospectively.

Got it. That's helpful. And just one last one, if I could. On a similar note, recent eminent domain legislation in Missouri, could you comment on the implications for Greenbelt, MISO, or anything else as far as investment that could be related to Ameren in the state going forward there?

I don't think there are any immediate impacts from that legislation, except for ensuring that as we advance, owners of agricultural properties are compensated fairly for their land in future greenfield transmission projects. That seems to be the main consequence moving forward.

Got it. I'll leave it there. Thank you.

Good morning. This is Dariusz for Julien. Thank you for the opportunity. Regarding the proposed multi-year rate plans for Illinois Electric, could you share some insights on the types of performance metrics being considered as you progress through the workshop process?

Good morning. This is Michael Moehn. I would say that things are progressing well. There have been a lot of productive discussions and workshops happening. Several different avenues are being explored, including performance metrics. I can share a few details about that. There’s a multi-year rate plan in the works as well. Everything is moving along as we expected last year, and we don’t see anything concerning. Regarding the performance metrics, they are primarily focused on reliability aspects. We are looking at system averages, days of disruption, and customer response times on calls, which are standard metrics. Currently, we are advocating for about 24 basis points across approximately eight different metrics, with three basis points assigned to each. Everything is on track to be concluded by September of this year, at which point we will make our decision. As we mentioned before, we plan to opt into that, and the multi-year rate plan needs to be filed in January 2023. Does that answer your question?

That does help. I appreciate it. I have one more question regarding the equity financing. Can you confirm that the forward agreement you executed for your funding in 2022 covers the requirements for the entire year, except for the drip? Also, is the amount under the forward agreement part of the $750 million included in the ATM program? Is that correct?

Yeah. You got both of those correct. So that $300 million that we've sold for, that does take care of the requirements here that we outline in February for 2022. And then that is part of that $750 million. That $750 million should get us through the end of 2023.

Okay. Great. Thank you for clarifying that. I'll leave it here.

You bet.

Hey, good morning guys.

Good morning, Shar.

Good morning. I would like to discuss Illinois. The recent bill and the reliability issues seem somewhat complex given the significant increase in PRA costs, planned retirements in the capacity resource auction, and the general concerns raised by some C&I customers. How do you anticipate these matters will be addressed in the coming years, particularly as you navigate through multi-year rate plans in the meantime?

There's a lot to unpack here. First, we've noticed an increase in power prices in the Midwest recently, and the MISO capacity auction resulted in high capacity prices, reflecting the cost of new entry. These elevated power and capacity costs will affect our Illinois customers since it’s a retail choice state. Historically, around 60% to 65% of our customers have obtained power from various retail electric suppliers, while about 30% to 35% have procured through us. However, the Illinois Power Agency manages power and capacity procurement, and they have indicated that prices are high. Consequently, some of our customers will experience significant increases in their bills starting in June. We are concerned about our customers and are working to educate them about these price impacts, so they know what to expect and can take appropriate actions. We are also offering bill assistance and promoting our strong energy efficiency programs. Some customers will continue to receive power through local municipal aggregation programs, which might delay their bill increases. Looking at the broader picture, there are reliability concerns as we approach summer. High capacity clearing prices suggest that the resources available to meet demand are limited, and we anticipate that MISO will face challenges this summer. MISO is responsible for ensuring grid reliability and will collaborate with stakeholders to utilize every available resource. We are also focused on optimizing our Missouri energy resources to be ready for the hotter months. In the long run, the high capacity prices signal a need for more dispatchable energy resources to meet demand. We will be working with stakeholders to address this situation. Regarding our multi-year rate plan, we are preparing to file in January, with the Illinois Commerce Commission expected to make a ruling by the end of 2023 and implementation set for 2024. As I mentioned earlier, there is still significant aging infrastructure in Illinois. The investments we're making are enhancing reliability for our customers by ensuring safe and dependable service. The tight market conditions in Illinois justify ongoing investments in both transmission and distribution infrastructure. We see a clear need for continued investment and don’t currently anticipate any impact on our multi-year rate plan filing.

Got it. That's perfect. And then, lastly for me. Obviously, you have the opportunity to earn on some of your generation length in MISO and flow that back to Missouri customers. Are you seeing that today? And any sort of quantification of the potential benefit to customers there?

There is no specific quantification of the benefits at this time. In Missouri, we currently have a strong generation profile. If power prices remain high, it creates an opportunity for us to improve our margins, and most of those margins—about 95%—are returned to our customers through lower rates. While we can't provide a quantification of that right now, your observations about how this operates are accurate.

Okay. Terrific. Thanks guys. I stop there. Appreciate it.

Thank you.

Hey. Good morning.

Good morning, Paul.

Congratulations on achieving your goal. I would like to follow up on Shar's question regarding Illinois. You mentioned that the situation does not affect the company's outlook on your plans. However, I am curious if the concerns raised by Illinois legislators—and possibly others—might result in a more favorable reception or increased support for your proposals from policymakers in Illinois. Or do you believe it is essentially the same situation, just some sort of legislative drama?

It's difficult to determine at this moment. I would suggest it's too early to reach a conclusion. What we are currently observing is that people are processing the news regarding higher power and capacity prices and how this might impact future policies. We'll just have to wait and see; I believe it's still too soon to tell.

Okay. Regarding the Greenbelt legislation, it seems that this could facilitate the construction of Greenbelt. I'm curious about how a transmission project like that or similar ones might affect your infrastructure development plans, especially if there is a major line coming into your area.

With regard to Greenbelt, this project has been in progress for some time, and we anticipated that. As we mentioned previously, last fall when we filed our integrated resource plan, we evaluated the possibility of using some capacity for wind in Kansas to achieve our renewable goals as part of this plan. The key point for us, Paul, is when considering the update to our integrated resource plan that we will file in June, it’s about the ongoing options related to those resources and how they might meet the needs of our integrated resource plan. We will continue to evaluate this as we proceed.

Okay. Thanks so much. And have a good weekend.

Thanks.

Hey, good morning, Marty. Good morning, Mike.

Good morning.

Hey, like the Blues, I don't think they tie it up here. So, I'm rooting for them until they meet the Rangers. But just hopefully, two quick questions, I guess. One, if I think about Missouri and Illinois, both right of first refusal states. And if the transmission lines are greenfield, does that mean they are competitively bid? Or maybe just wondering what's the distinction you're making between brownfield and greenfield?

You’ve generally understood it. However, Missouri and Illinois are not states with a right of first refusal, which is why the difference between brownfield and greenfield is significant. If it's a brownfield, which you should consider as new transmission along existing right-of-way, we would expect to be designated as the transmission owner. The question then will be whether there are parts of the projects that are greenfield, which could be open to competitive bidding. We will wait to see how this unfolds following MISO's approval of these projects in July.

Great. And then, just another follow-up here. Moving to Illinois, I think the 30-year treasury is currently about 90 basis points above expectation for the year compared to what you had anticipated. I estimate that this could represent a $0.07 tailwind. Are there any headwinds to consider that might offset that benefit, or could my calculation be incorrect regarding the expectation for the 30-year treasury versus its current position?

Yes, you have the estimate correct. In February, we projected 2.25, and it's important to remember that this is an average over the year. It seems to have averaged around 2.25 for the first quarter. However, based on our guidance for the rest of the year, we're expecting it to average about 2.7. If you combine that with the first quarter, it would be approximately 2.9. So you are right, it is elevated compared to that. There are factors that could counterbalance this, such as increased financing costs that we've encountered with some of the short-term debt. Nevertheless, this is a positive trend to have at this time. There's still plenty of the year ahead, and we have a significant amount of work to do. We will remain focused and not rush ahead.

Great. Thanks for taking my questions and congrats on a good quarter.

Thank you.

Thank you.

Yeah. Thank you all for joining us today. We're really pleased. We had a strong start to 2022. And we certainly, as Michael said, remain focused on continuing to deliver throughout the year for our customers, our communities, and our shareholders. I'd like to invite all of you to attend our Annual Shareholder Meeting, which is being held on May 12th, and we look forward to seeing many of you at the AGA Financial Forum in the next couple of weeks. So, with that, thank you all, and have a great day.