Xcel Energy Inc (XEL) — Q2 2022 Earnings Call Transcript

Good morning, and welcome to Xcel Energy's 2022 Second 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 2022 results and share recent business and regulatory developments. Slides that accompany today's call are available on our website. As a reminder, some comments made 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 our 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. With that, I'll turn it over to Bob.

Thanks, Paul. Good morning, everybody. It was certainly an interesting 11th hour twist in legislative news last evening, but we'll get to that in just a minute. Let's start with our financial results. We had another solid quarter, recording earnings of $0.60 per share in 2022 compared with $0.58 per share in '21. Our earnings are on track with expectations, and as a result, we are reaffirming our 2022 earnings guidance of $3.10 to $3.20 per share. During the quarter, we made good progress on our clean energy plan, achieving constructive regulatory outcomes. In June, the Colorado Commission approved our resource plan settlement, which includes approximately 4,000 megawatts of utility-scale renewable additions. The conversion of our Pawnee coal plant to natural gas by the end of 2025, and the early retirement of our Comanche 3 coal unit by the end of 2030, which will be the final coal plant retirement in Colorado. We now have the approval of both our Minnesota and our Colorado resource plans, which together will add 10,000 megawatts of utility-scale renewables to our system and achieve an 85% carbon reduction by 2030. We anticipate issuing RFPs later this year, submitting our recommended portfolios by mid-2023 and receiving commission decisions in the second half of 2023. We expect the recommended portfolio of generation assets will include self-build, build-own transfers, and power purchase agreements. Our plans are consistent with our steel-for-fuel strategy, which provides a valuable hedge for our customers against rising commodity prices. Our owned wind farms are projected to generate nearly $1 billion of fuel-related customer savings in 2022 alone and a total of $2.7 billion since 2017. We're excited about our transmission expansion opportunity. MISO's long-term planning approach identified projects in Futures 1 with an estimated investment of $30 billion that will be awarded in 4 discrete tranches. Earlier this week, the MISO board approved tranche 1, which includes $10 billion in projects. Based on the most recent information from MISO, we anticipate a $1.2 billion investment opportunity for Xcel Energy within tranche 1. Turning to electric vehicles, we're making progress on our goal to power 1.5 million EVs by 2030, supporting our states in achieving their electrification goals. We are excited to be the first U.S. energy company to introduce all-electric bucket trucks to our fleet, and we expect to file comprehensive transportation plans in Minnesota and Wisconsin in early August. These state proposals include single and multifamily residential offerings, commercial customer programs, as well as a school bus pilot. In addition, we're looking to accelerate EV adoption through the development of high-speed public charging infrastructure, partnering with our states and other organizations. The proposed programs will also foster customer affordability, providing significant fuel savings for EV drivers and helping to keep bills affordable for all customers through load growth and enabling more efficient utilization of distribution grid infrastructure. The Minnesota, Wisconsin proposals reflect capital investment of approximately $325 million from 2024 to 2026, which does not include distribution investments needed to upgrade the grid. Xcel Energy's clean energy leadership, including our long-standing track record of carbon reduction, is a direct result of the passion that our dedicated employees bring to serve our customers and our communities. Earlier this month, we received another exemplary rating from the Institute of Nuclear Power Operators for our Prairie Island Nuclear Power Plant. We've continued to improve performance and cost efficiencies, demonstrating sustainable excellence in operations. I want to congratulate and thank all of our nuclear employees, support teams, contractors, and suppliers for their commitment and impact. Nuclear remains a very important source of reliable carbon-free energy. We're proud to be one of the top operators in the nation. Yesterday, it was announced that Senator Schumer and Manchin had reached agreement on the Inflation Reduction Act of 2022. While we still need to analyze the details to understand all of the nuances of the act, it appears to include nearly all the broader clean energy tax credits, including new and extended tax credits for wind, solar, hydrogen storage, and nuclear. While it doesn't include direct pay for all taxpayers for all tax credits, it does include tax credit transferability as an option when direct pay is unavailable. As we previously discussed, our capital investment plan is not dependent on changes in federal policy. However, the energy provisions included in the act would provide substantial customer benefits and help enable our clean energy transition while keeping our customer bills affordable. There's still a lot of twists and turns that can happen in Washington, but we're optimistic that the bill could become law. This past quarter, we were honored to be among the first companies inducted into the Climate Leadership Hall of Fame, which recognizes different organizations across the country for exemplary leadership in response to climate change. We're also recognized with the Hubert H. Humphrey Public Leadership Award for our groundbreaking sustainability goals in Minnesota. And finally, we received the EEI National Key Accounts Award for outstanding customer engagement, which recognizes companies and their account executives for providing excellent support and offerings to corporate customers. Our customers are at the heart of everything we do. And it's great to be recognized for our work in helping them achieve their goals. I want to thank these organizations for the recognition, along with our employees, partners, and stakeholders who make it possible. And with that, I'll turn it over to Brian.

Thanks, Bob, and good morning, everyone. We had another solid quarter, recording earnings of $0.60 per share for the second quarter of 2022, compared with $0.58 per share in 2021. The most significant earnings drivers for the quarter included the following: higher electric and natural gas margins increased earnings by $0.25 per share, primarily driven by rises and regulatory outcomes to recover our capital investments. In addition, a lower effective tax rate increased earnings by $0.06 per share. But keep in mind, production tax credits lowered the effective tax rate. However, production tax credits are flowed back to customers through lower electric margins and are largely earnings neutral. Offsetting these positive drivers were increased depreciation expense, which reduced earnings by $0.15 per share, reflecting our capital investment program and the recognition of previously deferred costs related to the Texas electric rate case, higher O&M expenses, which decreased earnings by $0.02 per share, higher interest expense and other taxes, primarily property taxes decreased earnings by $0.08 per share. Other items combined reduced earnings by $0.04 per share. Turning to sales, weather-adjusted electric sales increased by 3.1% for the first 6 months of 2022, largely due to higher commercial and industrial sales driven by strong economic activity in our service territories. In addition, our unemployment rate is 80 basis points below the national average. As a result, we have revised our assumption for 2022 sales growth to 2%. O&M expenses increased $14 million for the second quarter, primarily driven by the recognition of previously deferred expenses related to the Texas electric rate case, additional investments in technology and customer programs, and increased costs for storms and vegetation management. Like other businesses, we are facing inflationary pressures and now expect an annual O&M increase of approximately 2%. In addition to the Colorado resource plan approval, we also made strong progress on a number of other regulatory proceedings. The Colorado Commission approved our Winter Storm Uri settlement, including full recovery of all costs with the exception of an $8 million item primarily related to conservation messaging. In Minnesota, an ALJ recommended full recovery of all fuel-related costs. We anticipate a commission decision later this summer. In Texas, the commission approved our electric rate case settlement, which provides a rate increase of $89 million. Rates were effective back to March 2021, which is why you see some year-to-date true-ups in revenue and various expense lines of the income statement. The agreement also accelerates the depreciation life of the Tolk coal plant to 2034. We have a pending natural gas case in Colorado, seeking a rate increase of approximately $175 million over 3 years, based on a return on equity of 10.25% and an equity ratio of 55.7%. In June, intervener testimony was filed. The staff recommended a return on equity of 9%, an equity ratio of 55% in a historic test year. While the UCA recommended a 9% return on equity, an equity ratio of 51.5% in the historic test year. In July, we filed rebuttal testimony providing additional support for our position. Hearings are scheduled for late August. We anticipate a commission decision later this year, with final rates implemented in November of this year. We recently filed our first electric rate case in South Dakota since 2014. We are seeking a $44 million revenue increase based on a return on equity of 10.75% and equity ratio of 53% in the historic test year. We expect a decision and final rates implemented in the first quarter of 2023. We also have pending electric and natural gas rate cases in Minnesota. We are in the discovery phase and expect intervener testimony this fall, followed by commission decisions in 2023. Details on these cases and schedules are included in our earnings release. Shifting to earnings, we've updated our 2022 guidance assumptions to reflect the latest information. Details are included in our earnings release. We are reaffirming our 2022 earnings guidance range of $3.10 to $3.20 per share, which is consistent with our long-term 5% to 7% EPS growth objective. With that, I'll wrap up with a quick summary. The Colorado Commission approved our resource plan and Winter Storm Uri recovery settlement. We received an ALJ recommendation in Minnesota for full recovery of fuel costs related to Winter Storm Uri. We will be filing our Midwest EV plan shortly. The Texas Commission approved our rate case settlement. We are reaffirming our 2022 earnings guidance, and we remain confident we can continue to deliver long-term earnings and dividend growth within the upper half of our 5% to 7% objective range as we lead the clean energy transition and keep bills affordable for our customers. This concludes our prepared remarks. Operator, we will now take questions.

Thank you for the insights on the Inflation Reduction Act, that was helpful. If there is an alternative minimum tax, could you remind us how your business is positioned with respect to that?

Hey, Nick. Good morning. This is Brian. Yes, that's a good question. We look at the book AMT in a couple of different ways. First, we have credits available that allow us to offset 75% of the book AMT impact. Additionally, when we consider the transferability included in the legislation, we believe that combining these factors will be cash flow accretive for us. However, I should note that this information just came out yesterday, and with the 700 pages of legislative text, we're still working through it. But that's our perspective on the book AMT.

Okay. Great. That's helpful. And then I guess on sales, this is like the second time, I think, this year that your electric sales forecast for the near year has changed to the positive. So just maybe kind of talk about what type of trends you're seeing for this year, how that kind of compares to your long-term forecast? And are you starting to see structurally higher demand going forward? And is that a long-term tailwind for you?

That's a great question. We've increased our sales guidance for both Q1 and Q2 this year, and I believe there is still more potential as we move through the remainder of the year. While we are mindful of the macroeconomic factors influenced by the Federal Reserve, strong commercial and industrial sales are evident. In Colorado specifically, the commercial and industrial sales are robust, especially when we adjust for the large solar farm project we undertook for a significant customer. Overall, we are experiencing strong economic performance across our service areas in the commercial and industrial sector, contributing to a good economic rebound. On the residential front, we anticipated a decline but have actually performed better than expected, leading to a higher residential budget. The first half of the year has shown a strong economy, particularly in the energy and manufacturing sectors. Looking ahead, we might face challenges if there is a recession or significant impacts from interest rates, but I remain optimistic about the long-term prospects. The electrification opportunities, increasing penetration of electric vehicles, and the electrification of industrial processes are all promising trends for us. For example, in the Permian Basin, we are witnessing significant growth and engaging with customers about electrification to meet their ESG and net-zero goals. We're in discussions on how to electrify various operations while ensuring our distribution and transmission capabilities can support them. Thus, I see positive long-term trends and appreciate the rebound in the commercial and industrial sector.

Just want to dive into MISO a little bit here now that we have some more developments and touching on your $1.2 billion. Just wondering if you could characterize a bit more in terms of greenfield versus brownfield. And I guess this is just a preliminary estimate, but what's the scope, I guess, of what could possibly fall in incremental into this? Is this some competitive processes that still could make their way in? Just trying to feel our way through what this could mean.

Yes. Good morning. This is Bob. Look, first of all, let me just comment on transmission broadly. We feel very confident and excited about the transmission build-out opportunities we have. And as you think about where we've been this past quarter between the Colorado power pathway, the transmission needs from the Minnesota Resource Plan, and now the MISO MTEP tranche that's about $3.5 billion of large-scale transmission projects that we've identified and, in some cases, have approved. So the class is important to us. It's certainly going to enable our ability to add to 10,000 megawatts of renewables that we need from the Minnesota and the Colorado resource plans and to continue to execute on our 20%, 30%, 80% carbon reduction vision. Particularly with regard to the MISO MTEP process, I think we put our best estimate out in terms of the investment opportunity around $1.5 billion for about 6 different portions of 6 different projects. We've got ROFR legislation in Minnesota, North Dakota, South Dakota and feel pretty confident about what we've put forward in terms of the opportunity in MTEP.

And Jeremy, I'd just add to that, like Bob said, we feel good about our point estimate and the Wisconsin projects were deemed upgrades, so they're not expected to be competitively bid. So what you see as we put in our earnings presentation are what we expect to be ours and owned, and that's our good estimate right now.

And the estimate does not include any competitive bid. So if we choose to be competitively bid and we're successful, that would be incremental to the $1.2 billion.

Got it. So this $1.2 billion replaces the 1 to 2 range, but there's still potentially competitive processes that could add to this is a fair way to think about it?

Yes.

Got it. And thanks for all the comments on the climate policy so far and noting that this is hot off the press. But just wondering if there's any particular items in there, if we peel back the onion more, what do you see as the largest potential impact and points of opportunity to your plan near and long term? I mean, could CCS be something that's thought about more now?

It's a great question. As Brian mentioned, you'll need to go through a lot of text since it was released last night. We've been discussing many broad topics since the third quarter call and the EEI Financial Conference last fall. There are some really interesting elements, such as the production increases in solar, and the PTC for solar is particularly noteworthy compared to an ITC. You may observe some regional differences in the use of PTCs versus ITCs. The transferability aspect is also intriguing as it pertains to not just our accounts, but for anyone developing renewable assets, along with the associated friction costs. We're financing some of these initiatives, especially through tax equity, which could lower the costs of both owned and PPA assets, providing real benefits for our customers as we continue this transition. The stand-alone storage credit is another interesting point. While there are challenges in combining solar and storage, we've managed to make it work, making stand-alone storage quite appealing. Additionally, our North Dakota company is facing an ambitious carbon neutral goal from the governor, and CCS is vital for the state. Overall, as we explore our national portfolio, you'll find various intriguing aspects. Furthermore, there are significant discussions around energy security, electric vehicles, and resiliency that we haven't fully explored yet. Overall, this legislation is highly beneficial for our company, and we're eager to see it pass through the House and Senate before the fiscal year ends.

Yes, I'll add to that, Bob. We are in the process of developing our clean heat plans for our gas local distribution companies in Colorado and Minnesota, and we have a hydrogen production tax credit. When combined with a long-term production tax credit for wind or solar, this should provide a significant boost to green hydrogen. We are excited about this and believe there are many positive aspects in this bill. Overall, it resembles what I discussed in Q3 of last year regarding its impacts on us. We see it as cash flow accretive, with slight reductions in rate base as we become more tax efficient, which should be beneficial to earnings per share as well. However, we are still examining it closely, especially regarding transferability. It's important to note that our current plan is not based on this; our existing five-year plan and long-term strategies were developed under current tax law. This legislation enhances our plans for our customers, which is crucial in the long run, making the clean energy transition more affordable. We are optimistic that it will be passed.

Got it. That's very helpful. If I could return to MISO for a moment, regarding the $10.3 billion in capital, would you be willing to share any thoughts on how much of that might go through a competitive process?

I think the estimates I've seen are about $1 billion.

Got it. I'll leave it there.

Hey, good morning. Thanks for the time and the opportunity to connect here. Really appreciate it. So I'm going to keep going on this on the same front. Let's talk a little bit more on the legislative, how does your prior discussions around debt improvement targets under BBB with direct alternatives compare to your first take of the provisions under the IRA factoring in the transferability elements, right? You specifically called that out a moment ago in your prepared remarks.

Good morning, Julien. As I mentioned, we have just received a large amount of legislative text, and we need to ensure that we fully understand its details. There are definitely some considerations to keep in mind as we analyze it. The best way to view the situation, based on our discussions in Q3, is that we could see an improvement in FFO relative to CFO to debt by perhaps 75 to 100 basis points or more, which would provide us with increased financing flexibility and potential capital capacity in the future. However, there is a lot to consider regarding transferability and how that will function. Overall, our initial impression aligns with our Q3 discussions. This development is beneficial for us and will ultimately be great for our customers as we strive to make the transition to clean energy more affordable for them.

It also be noted that Brian didn't go to bed last night. So he's doing all the math on this. So take that with a grain of salt.

Yes, totally. In his delirium though, nonetheless, you're broadly affirming your expectation that the math is not too different from what you described in the third quarter? Correct?

With the caveat that we're still understanding.

Totally, completely. With that asterisk, but also, what does that do for your equity needs, right? Let's just take that a step further if we can start to unpack that.

Look, so we talked about it gives us more flexibility. I think how we're going to unpack all this is we're rolling forward our capital plans, and we'll release those in Q3 in our October earnings release. We'll know whether or not this passes by then. We should know a lot sooner whether this passes or not, and we can provide you a full update because that will include updated capital plans and how we're going to finance that so. But it certainly does give us more financing flexibility.

Got it. Excellent. All right. And then a quick last question here. I know we already discussed transmission. What about the ROFR challenges at FERC? I understand that's more recent, but do you have any insights on the FERC situation? I guess this involves states versus FERC and also the timeline?

Julien, it's Bob. I think these have been challenged in both state and federal court and the ROFRs have held up, and we expect them to.

My first one, just regarding the inflation impact in the O&M and the higher financing costs there. Like as we look I guess, beyond '22 into '23, and you just try to get ahead of it, what are some options you have that you could do now on any levers, I guess, to get ahead and position for '23?

Certainly, we're continually looking to offset inflationary pressures, and this is no different than any other year. But we've had O&M flat since 2014, and we're very proud of that because it has a direct impact on customer bills. Now like everyone else, we're feeling the inflationary pressures this year and adjusted our O&M up by 5%. But as we go through the year and see how the year unfolds, you certainly take actions to see if you can set up next year in terms of how it's looking. And we have a continuous improvement team that is regularly working with our business areas. We're investing in technology this year; we have something called the digital operations factory that helps drive technology into the business areas to reduce O&M costs and make us more efficient. So that's just part of our DNA and part of our culture that we've stood up, and you can see in how we've managed over the long term. So that's really our focus in terms of what we see now. We do expect some inflationary pressures to continue through the balance of the year, and that's a bit why we increased our guidance. But I think you should expect more of the same as, right? We're going to deliver for our customers. We're going to deliver operationally, and we'll deliver financially this year and in the future.

Got it. My second one, and I think I know the answer to this one, but just given what could be on the table here on the legislative front for nuclear, does that change your thoughts on, I guess, over the next 5- to 10-year plan on building more, maybe it's small modular nuclear or others?

Hey, Insoo, it's Bob. I believe the current legislation is quite advantageous for existing nuclear owners and, in our case, the customers who would benefit from the production tax credits linked to the current nuclear provisions in the new legislation. Looking ahead, we've consistently stated that our country must pinpoint new clean energy sources that are flexible and carbon-free to facilitate the shift to a carbon-light or carbon-neutral economy. I feel that new nuclear energy must be included in that mix. However, I don’t see it as a role for this decade, definitely not for Xcel Energy, but we are involved and active in the development process. We are collaborating diligently with New Scale as they seek approval to construct their first new nuclear reactor. We're closely monitoring the situation and participating in discussions. I see this as an opportunity for us as a company in the next decade or beyond.

Got it. That's what I expected.

I had a quick question on the Colorado pathway and the potential upside opportunity there. Is that something that could crystallize basically after you get the RFPs done and get a sense of where the projects are coming into place there that we get a sense of whether that could be added to the plan at some point in 2023?

Yes, David, you're right. Once we see the locations of these projects and the mix of them, we'll be able to share our expectations regarding the necessary network upgrades and voltage support. Additionally, the commission has conditionally approved the $250 million lag, and we anticipate seeing projects that will fit into that as well. We'll provide insight into our renewable opportunities at that time, along with the additional transmission investments we expect to undertake, which will likely happen around the middle of next year once we finalize the portfolio.

Yes. That makes sense. Okay. And on the Minnesota rate case, I was wondering, when does the window kind of open for a potential settlement? And any thoughts on prospects of settlement given the focus areas and what you've proposed here?

Yes. Thanks, David. It's Bob. Look, the cases are progressing through the regulatory process. I think when I look at the cases, they reflect a lot of the investment categories and alignment with our policy and stakeholders. So we don't expect any contentious issues there. Typically, we don't start talking settlement with counterparties until after their testimony has been received. So on the gas case, that's expected at the end of August and in the electric case, that's early October. So probably more ripe for discussions in late Q3 or into Q4.

Okay. Great. Sounds good. Thanks so much.

If I may follow up on the MISO tranche 1, how much of the $1.2 billion is sort of low-hanging fruit here where you have right of ways and basically shovel-ready, if you will? And then the same question for your competitive opportunities in that could potentially come behind it.

Yes. So look, I think we're in early innings in terms of the development of those lines. I think that some of them are concluded into existing substations, but most of the lines themselves are going to be greenfield and require local siting and permitting processes. I think that this is an area of strength and execution for the company as we do this. We did the CapEx 2020 plans up in the upper Midwest, we did the MVP plans. And so we've got a really strong team and a good partnership with the Grid North Partners Group that we think that from an execution perspective, this is something that's right in our wheelhouse.

And I'll just add, Sophie, as we go through the regulatory processes, certificate of need processes with our commissions. And so that will take 1 year, 1.5 years to get through those processes where we'll determine final work on final routing and permitting, everything.

How much of that is already included in your long-term capital plan, if any? Can you provide a reminder?

We have included some aspects in our 5-year plan. However, when we assess it, these in-service states are projected to be implemented by 2030. As we progress with our 5-year plan, the spending will be integrated into the updated plan that we will present in October. Additionally, we will incorporate it into our 10-year plan as we advance that as well.

We did have some of it captured in the second 5 years of our...

Another question I had is on the ROEs, right? So kind of in the 9s and low 9s across the board in your territories. Interest rates keep going up, ROEs are kind of sticky at this level. And I can appreciate the fact that they were sticking on the way down, too, right? But with the rates being higher and arguments being made that the structure would be higher in the next decade. Do you see this trend kind of reverse a little bit and maybe they are picking up? Or is that pretty much not something that we should look forward to?

Sophie, that's an interesting question. We evaluate recent data points, including some from Minnesota. Last year, Otter Tail had a return on equity decision of 9.48%. Currently, we have a Minnesota electric business with a 906, and on the gas side, CenterPoint is awaiting a settlement that could affect their return on equity of 939, while Armin's gas return is 904. As inflationary pressures and interest rates rise, we find that returns tend to be sticky and not decrease easily. Overall, our authorized returns on equity in most jurisdictions are below the national average, and we aim to align them closer. We believe we are strong operators and are aligned with our commissions and states in supporting their decarbonization goals, which we hope will positively influence our outcomes in the future.

I can completely relate to the late-night experience of going through 700 pages. You mentioned that affordability could be a potential benefit from the bill. Do you have any idea what the possible rate impact might be from the bill?

So this is a longer term when we look at it, and this is some of the analysis we haven't done a very long-term model. We modeled it a while ago when we were looking at the earlier provisions. We saw about a 1% benefit to our customers over the long term on a CAGR basis as we thought about. Now there's a lot of caveats there in terms of what type of renewable deployment we have. But we are looking at inflationary right? Our target is long-term customer bill impacts at inflation, and this helped us drive below that. So I think that's kind of the magnitude. Now certainly will depend on the nuclear PTC and some of the nuances in terms of hydrogen. But I think longer term, we see a significant benefit to that. And I would just add that we're really well positioned for this type of long-term credit extension because I don't believe there's an IOU that has a better combination of wind and solar in our backyard than we do. And so our commissions approved our plans without any extension of tax credits. Now to have this on top of it just puts us in a really good position to deliver on this community transition for our customers even more affordably. And no, our view is long term customer bills matter. And for us to make this transition more affordably for our customers is great, and we look forward to working through with our commissions.

Yes, I'll just add on to what Brian said, and I agree with him completely. I think the opportunity here is really interesting because if we can make the energy transition more cost-effective, that becomes an economic driver engine. Businesses are attracted to places that have clean energy and low-cost clean energy and reliable clean energy. When I think about a transition to clean fuels and green hydrogen with the production capability that we have and the wind and the solar resources we've got in and adjacent to our footprint should make the production of clean fuels more cost-effective in the middle of the country, in the Midwest and in the Southwest than other parts. And you've seen that as we've located wind and solar across the country, they've been concentrated in those areas. And we'd expect those continued economic development drivers to drive our business long term.

Yes. And then just to clarify, going to talk about 1%. That's on a CAGR basis. So as you accumulate that over time, it becomes very significant for our customers. So like I said, optimistic this gets passed, but our plans are not built on it. But if it does, we look forward to driving forward our plans even faster.

There was a local article discussing the reduction of wind production in Southern Minnesota. I know your company is well positioned and knowledgeable about the area. Given your extensive presence, are there any potential issues you foresee? More importantly, are there specific wind farms experiencing curtailments involving other parties within your jurisdiction? The article seemed to indicate that some counties in southern Minnesota are significantly affected in terms of tax revenue. I am curious if you have any insights on this situation.

Yes. Look, I think that we have seen curtailment in Southwestern Minnesota. It was a source of a significant amount of wind build-out over the last decade for us and for the region. And so one of the great things about the MTAP program is that it's identifying the need and locating transmission resources to move that cost resource to the load. In the short term, it's led to curtailment and congestion. In the longer term, we think that frees up and is able to get to the load and deliver. I don't think that it's concentrated in any one entity in terms of the owners of the farms, but I think it's out there. And as we think about the impact for our customers, some of that is just driven by the desire and the need for clean energy curtailments built into a lot of our plans, and we recognize that sometimes that has implications for local communities on property taxes or wind production payments. But I think it's certainly manageable and something we're in conversations with our stakeholders as well.

Thank you all for participating in our earnings call this morning. Please contact our Investor Relations team with any follow-up questions.