CenterPoint Energy Aktie

Good morning, and welcome to CenterPoint Energy's First Quarter 2026 Earnings Conference Call with Senior Management. [Operator Instructions] I will now turn the call over to Ben Vallejo, Vice President of Investor Relations and Corporate Planning. Please go ahead.

Good morning, and welcome to CenterPoint's Q1 2026 Earnings Conference Call. Jason Wells, our Chair and CEO; and Chris Foster, our CFO, will discuss the company's first quarter 2026 results. Management will discuss certain topics that will contain projections and other forward-looking information. and statements that are based on management's beliefs, assumptions and information currently available to management. These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially based on various factors as noted in our Form 10-Q, other SEC filings and our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statements other than as required under applicable securities laws.

We reported $0.48 per diluted share for the first quarter of 2026 on a GAAP basis. Management will be discussing certain non-GAAP measures on today's call. When providing guidance, we use the non-GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non-GAAP EPS. For information on our guidance methodology and a reconciliation of the non-GAAP measures used in providing guidance, please refer to our earnings news release and presentation on our website. We use our website to announce material information. This call is being recorded. Information on how to access the replay can be found on our website.

Now I'd like to turn it over to Jason.

Thank you, Ben, and good morning, everyone. On today's call, I'd like to address 4 key areas of focus for the quarter. First, I'll walk through our strong first quarter financial results. Second, I'll provide an update on our load outlook for Houston Electric, including yet another significant increase in our firmly committed load forecast to 12.2 gigawatts of new industrial load. Third, I will cover how our continued and accelerating growth in the greater Houston area to provide incremental capital investment opportunities and further support customer affordability. And lastly, I'll touch on our growing optimism for transformational load growth opportunities for our Indiana electric service territory, which would similarly provide for incremental capital investment and support customer affordability.

I will start with our strong first quarter financial results. This morning, we reported non-GAAP EPS of $0.56 for the first quarter of 2026. Chris will walk through the details of these results, but I want to highlight that our execution through the first quarter positions us well for the remainder of the year. With that said, we are reiterating our full year 2026 non-GAAP EPS guidance of $1.89 to $1.91, which, at the midpoint, would represent 8% growth over actual 2025 delivered results.

As a reminder, we rebase our long-term earnings guidance from each year's actual results. This approach provides our investors with the direct benefit from compounding effect of the earnings we have consistently delivered. In addition, this approach helps contribute to the durability of our earnings profile, underscoring our commitment to delivering value through disciplined execution and sustained growth each and every year. Over the long term, we continue to expect to grow non-GAAP EPS at the mid- to high end of our 7% to 9% annual guidance range through 2028 and 7% to 9% annually thereafter through 2035.

I would now like to provide an update on the accelerating growth our Houston Electric business continues to experience and our strong execution, which enables us to take advantage of the growth in the near term. As we shared on the fourth quarter call, we have meaningfully accelerated our load growth outlook, bringing forward our forecast for a 50% increase in peak demand by a full 2 years. Our conviction in that accelerating time line was grounded in 7.5 gigawatts, a firmly committed load that we expected to be energized by 2029, including 2.5 gigawatts that was already under construction as of our last update.

Since then, we have made significant progress in executing against our prior forecast, while adding additional customers. As a result, we now have clear line of sight to 12.2 gigawatts of firmly committed load. With the team's disciplined execution, we have already secured ERCOT approval for 3.2 gigawatts of this load. 2.5 gigawatts was approved since our last earnings call alone and within less than 80 days of filing for approval. We expect to submit the remaining 9 gigawatts of projects to ERCOT for approval within the next few weeks.

Importantly, this firmly committed load is highly diversified, spanning more than a dozen unique customers across nearly 20 distinct projects. We believe these projects are manageable in size with 90% representing 0.5 gigawatt of demand or less. That, along with our utilization of existing capacity and our customer selection of project sites near substation allows for quick and efficient interconnections.

Our focused execution over the last few months has also provided us with a clear path to energization. Notably, we are positioned to energize approximately 8 gigawatts of this firmly committed load by 2029, which is 80% of our 10 gigawatt increase we originally forecasted to be energized by the end of 2031. This diversified growth and economic development has another key benefit to the Greater Houston area, which helps us keep electricity delivery charges affordable. The Greater Houston area is no longer an emerging destination to site new data centers. It is now firmly established as a location of choice for some of the world's largest hyperscalers and developers. However, this is only one facet of Houston's multidimensional growth.

The region's growth is being propelled by significant investments in life sciences, energy, energy exports and advanced manufacturing. With this growth comes new jobs in an influx of new residents, which has fueled a 2% annual residential growth, the areas experienced for the last few decades. The expansion of the economy and increase in population have significant affordability benefits for our customers. Notably, we expect that utilizing 10 gigawatts of existing system capacity to provide approximately $4 billion in aggregate savings for Texas residential and commercial customers over the next 10 years. supporting affordability and creating headroom for future customer-driven investments.

This affordability profile is one that very few areas in the country can offer as our charges are 11% below the national average and the lowest in ERCOT. Looking ahead, we believe this growth will continue for years to come, requiring the further expansion of our system to support growth beyond the near term. We are making steady progress on a refresh load study that will inform our transmission planning process. and we expect to complete the study later this year.

In Indiana, we are increasingly confident in our ability to secure potentially transformational opportunities to support local economic growth and address affordability. We continue to make considerable progress in our conversations with a large load customer on a project that would represent our single largest load in our Southern Indiana service territory with substantial upside for additional growth. Beyond the significant economic development benefits this opportunity would bring to the local community, it represents a powerful lever to enhance affordability for our customers. We estimate that this initial incremental load could enable $250 million in savings to our residential customers over 15 years, meaningfully reducing customer bills with the opportunity for even greater savings as potential upside for growth materializes.

In closing, we continue to believe we have one of the most tangible and executable long-term growth plans in the industry. We are uniquely positioned to move at the speed of business to execute on near-term customer-driven opportunities. while also delivering our service affordably. We are laser-focused on making longer-term investments to enhance growth across all of our service territories while also improving customer outcomes.

With that, I'll turn it over to Chris to cover the financials in more detail.

Thanks, Jason. This morning, I will cover 4 areas of focus. First, the details of our strong first quarter financial results and how they position us for the rest of the year. Second, I'll provide a brief regulatory update and our progress with respect to timely recovery of our capital investments through the filing of our interim capital trackers. Third, I will touch on our planned capital deployment in 2026, which is right on track as we target to invest $6.8 billion this year for the benefit of our customers and communities. And finally, I will provide an update on our derisked financing plan, balance sheet health and credit metrics.

Now starting with our strong financial results on Slide 6. On a GAAP EPS basis, we reported $0.48 for the first quarter of 2026. On a non-GAAP EPS basis, we reported $0.56 for the quarter. Our non-GAAP EPS excludes the impacts from the tax gain and other expenses related to the sale of our Ohio LDC, which is on track to close in the fourth quarter of this year. In addition, we continue to exclude the impacts of removing our temporary generation units from base rates as they are no longer part of our regulated utility business. As a reminder, we expect to start marketing these units for either a sublease or sale later this year in anticipation of getting those units back no later than spring of next year.

Taking a closer look at the drivers of our first quarter earnings. Growth in rate recovery contributed $0.11 when compared to the same quarter last year. driven by a full quarter impact of updated rates, reflecting the interim filing mechanisms that went into effect late last year. Weather and usage were $0.02 unfavorable when compared to the comparable quarter last year, driven by milder weather across our Texas and Indiana service territories. Additionally, higher interest expense was $0.04 unfavorable, reflecting new issuances, slightly offset by lower commercial paper balances and favorable pricing on the convertible debt we issued during the quarter. O&M was flat for the quarter as we continue to accelerate our peer-leading vegetation management program to enhance the customer experience, and improve customer outcomes during severe weather events.

Lastly, the absence of earnings from our Louisiana and Mississippi businesses post divestiture resulted in $0.05 of unfavorability when compared to the first quarter of 2025. The divested rate base has already been replaced by the acceleration of investments in our Texas businesses. These results reinforce our confidence in delivering on our full year 2026 non-GAAP EPS guidance range of $1.89 to $1.91.

The accelerated growth that Jason highlighted and the work we've done to derisk our financing needs and more efficiently execute are additional tailwinds that further position us well to deliver and could continue to provide upside as we move through the year. Over the long term, we continue to expect to grow non-GAAP EPS at the mid- to high end of our 7% to 9% long-term annual guidance range through 2028 and 7% to 9% annually thereafter through 2035.

Now turning to a broader regulatory update. As a reminder, we continue to recover approximately 85% of our investments through capital trackers, several of which we filed this quarter. I'll start with Houston Electric. In February, we submitted the first of our 2 permitted filings of our Distribution Capital Recovery Factor, or DCRF, and our Transmission Cost of Service tracker or TCOS. The DCRF filing requested a revenue requirement increase of approximately $108 million, capturing incremental distribution investments over the last 6 months. I'm pleased to share that we entered into a settlement agreement earlier this month and requested new rates to be effective in June, ahead of our planned timing.

The TCOS filing requested a revenue requirement increase of approximately $36 million, incorporating transmission investments made between July and December of last year. During this quarter, the filing was approved and new rates went into effect just last week.

Turning now to Texas Gas. In February, we also filed our annual capital investment recovery mechanism, or GRIP, requesting a revenue requirement increase of approximately $62 million, capturing capital investments made through 2025. Pending approval, we expect these investments to be reflected in customer rates in June. Lastly, as a reminder, we plan to file rate case applications for our gas businesses in Minnesota and Indiana later this year, which in the aggregate, represent less than 20% of the earnings power of our consolidated base.

Next, I will touch on our continued execution against our planned capital investments for 2026 as shown on Slide 7. We invested $1.2 billion in the first quarter for the benefit of our customers and communities. The quantum of capital deployed in the first quarter is consistent with the seasonal timing of our capital plan as we expect larger construction and resiliency projects to ramp throughout the year. In short, we remain firmly on track to execute the $6.8 billion of planned work this year as we continue to make investments to strengthen our system, improve customer outcomes and build the most resilient coastal grid and safest gas systems in the nation.

Beyond our base 10-year $65.5 billion plan, we will continue to fold in the over $10 billion of incremental capital investment opportunities as we gain better clarity on project costs currently embedded in our plan. as well as line of sight to new projects required to meet the unprecedented load growth across our service territories. And in addition, we'll potentially discover more capital investment opportunities as we refresh our transmission planning later this year, which we are targeting to complete in the second half of this year. These additional investments will continue to provide upside to our over $65 billion base plan through 2035, further increasing the earnings power of the company.

Lastly, I want to touch on our credit metrics and balance sheet. As of the end of the first quarter, our adjusted FFO to debt ratio based on Moody's rating methodology was 12.5%. This metric reflects temporary timing pressure from opportunistically pulling forward planned debt issuances in the quarter to take advantage of attractive market conditions. As that capital is deployed and financing normalizes, we expect this impact to reverse over the course of the year. And as a reminder, we expect to end the year at the high end of our targeted cushion in light of the corporate AMT revised guidance.

Importantly, we have filed for a refund of some of the previous paid cash taxes and expect to receive a refund later this year. We expect to incorporate the impacts of this favorable guidance into our financing plan later this year. Overall, from a financing standpoint, we have completed nearly 70% of our planned 2026 financing needs, significantly derisking this year's financing plan. I also want to highlight that the $650 million convertible debt issuances we executed in February has allowed us to reduce near-term exposure to floating interest rates.

I would like to highlight that our commercial paper balance at the parent at the end of the first quarter was 0 compared to our normal average balance of approximately $1 billion. In summary, we are confident in our ability to execute in the near term and beyond given the derisked nature of our plan. We are reiterating our 2026 non-GAAP earnings guidance targeting at least the midpoint of $1.89 to $1.91. At the midpoint, this would represent an 8% increase over 2025 delivered results.

Looking ahead, we expect to grow non-GAAP EPS at the mid- to high end of our 7% to 9% range from 2026 through 2028. And over the long term, we expect to grow non-GAAP EPS at 7% to 9% annually through 2035. We remain committed to investing to improve customer outcomes and enabling growth across the states that we have the privilege to serve.

And with that, I'll now turn the call over to Jason.

Thank you, Chris. In closing, with our focus on disciplined execution, we have made meaningful progress in enabling more growth faster. -- particularly in our Houston and Indiana electric service territories. We believe that our ability to attract and serve large load customers will unlock the potential to transform the communities we have the privilege to serve. This growth, combined with our delivery of strong and consistent results in our proactive efforts to significantly derisk our regulatory profile and financing plan. increases our conviction that we have one of the most compelling affordability profiles and one of the most tangible and executable long-term growth plans in the industry.

Thank you, Jason. Operator, I'd now like to turn it over for Q&A.

[Operator Instructions] Our first question coming from the line of Shahriar Pourreza with Wells Fargo Securities.

Just first, just there's obviously more specificity around the Houston Electric load, including the 12 gigs of firmly committed demand and the 8 gigs of data center load expected online by 29. Can you just help us bridge how much of that committed load is already embedded in the current plan versus what could represent incremental upside and of the projects not embedded. I guess what are the gating items to include it in plant?

Thanks for the question, Shar. The model in ERCOT is a little bit different than the rest of the country. We just provide transmission and distribution service. From a CapEx standpoint, the incremental system modifications, switchyard and substations that are needed to connect these customers timely are paid for by the large load customer. So I wouldn't look at this as necessarily a direct impact to the CapEx plan. There are 2 though tailwinds to the financial plan that I think are important.

The first is despite the fact that there is not significant CapEx again, the customer is paying for the modifications in the interconnection, it does represent a significant amount of incremental demand charges, Probably the way to think about this is it's about -- for every 1 gigawatt of industrial load that we add to our system, it's about $6 million a month of incremental demand charges. So that provides a pretty significant tailwind both from an earnings standpoint but also a customer affordability benefit. And then indirectly related to CapEx is the need to replace that capacity on the system.

And that's what we've been highlighting in terms of the trendy working through right now. That will result in the second half of this year in incremental projects to effectively replace the capacity and make sure the system is able to accommodate future load growth. So again, I wouldn't think about the 12 gigawatts of firmly committed load is directly driving CapEx. What it does is it directly drives demand charges that are outside of the plan. So that's a tailwind from an earnings and an affordability standpoint, and then indirectly supports the need for future CapEx that we will roll into the plan later this year.

Got it. Got it. And then just maybe just kind of correlated to the first question is just with ERCOT's new preliminary long-term forecast that projects now like 278 gigs of total demand by 29% and $3.68 by 2032. But both obviously ERCOT and PUCT have indicated that those forecasts likely overstate. I guess, remind us how you're using this kind of in your planning process? And should we think about it as mostly supportive of Houston's growth or as something that could ultimately drive incremental wires investment above what is already embedded in your current plan through '26?

Yes. As we've highlighted on previous calls and what you've seen in our ERCOT emissions, we are much more disciplined in terms of load that we submit to ERCOT for planning purposes. The loan that we submitted to ERCOT in this most recent study was effectively consistent with the load that we have under construction. We submitted about 3.6 gigawatts. And as we're reporting today, we have 3.5 that we're actively under construction in terms of committing. We will be filing with ERCOT, as I said, another 9 gigs in the coming couple of weeks. From a CapEx standpoint, again, I think the real opportunity here is replacing the capacity for future growth. And so in the second half of this year, you'll see an update from us where we articulate the new projects that will be needed to support future growth, the dollars associated with those. And then I think this continues to be a tailwind for the continued buildout of the 765 kV system on what I would call more of a medium-term, longer-term opportunity.

So again, the growth is fantastic and the fact that it provides significant customer affordability benefits by effectively spreading the fixed cost of our system out over a much larger customer base provides near-term opportunities for earnings for incremental demand charges and then sets us up for incremental transmission projects that likely will need to be executed before the end of the decade and again, supports the buildout of the 765 KV system early into the next.

Our next question coming from the line of Steve Fleishman with Wolfe Research.

Just wanted to go to the commentary on Indiana, and it sounds like things are maybe getting closer there. Could you talk to -- I think you've talked in the past about the potential to turn your CT into a CCGT? And I don't know if there's other investments if you were to land this customer. Could you give us some sense of the investment opportunity there, both physically and then also in dollars?

Yes.. No, absolutely. Steve, happy to provide that color. So if you've looked at the MISO Q, we have a transmission project that we've filed for to provide incremental capacity in that region. And in our integrated resource plan filing that we that we recently filed with the commission, we've got a scenario that supports the potential for a large load customer. Effectively, we've got existing capacity on our system today. We can enhance that with the new transmission investments that are articulated in that MISO Q. We can also then as you mentioned, provide incremental capacity by converting our simple cycle to a combined cycle facility up there. All of that unlocks at least 1.5 gigawatts of incremental capacity for a large load customer because we have existing capacity because we have the simple cycle plant already, Bill. I would think about this as more around about $1 billion opportunity as opposed to several billion dollars just to put some scale around the incremental CapEx.

Again, this is I think an incredible opportunity for our customers up in that region. It allows us to provide customer affordability benefits that will be significant. It will provide incremental earnings from those sales and it will provide tailwinds around about $1 billion of incremental CapEx. Outside of that initial $1.5 billion -- 1.5 gigs, we are continuing to evaluate the opportunity to support future large load customers and that could result in even more incremental CapEx down the road.

Would the $1 billion opportunity be kind of by 2030 or after 2030?

No, no. This is all -- Yes, definitely within '27, '28, '29.

Okay. And then I guess just on the -- I just want to clarify on the ERCOT. So that number that we got from ERCOT last week on demand, that huge number. Your what the numbers that you have for your region territory within that, they're consistent with what we heard today? Or is there like a bigger number based on however they ask the data to be given to them, that matches up with their total number?

Yes. Our total submission as part of that process for large loads was roughly 4 gigawatts. That was included in those reported tables. Outside of -- and that was effectively the large load customers that we were currently and actively constructing transmission modifications, interconnection facilities. Outside of the number that was picked up on that table, we also filed a large load study that incorporated continued residential growth, the potential for large load customers. And that was a little bit more than 11 gigawatts. Those weren't picked up in ERCOT's numbers, but were filed with ERCOT.

Today, what we're doing is updating those numbers. So this is in excess of what ERCOT just reported. We felt that given the methodology that ERCOT asked us to submit the customers, the 9 gigawatts that we will be filing for in a couple of weeks didn't meet that criteria back earlier this year. But certainly, we made a significant amount of progress in these 9 gigawatts that we will be filing in the coming weeks, meet all of the related commitments under the batching process for ERCOT, and we feel confident our committed load firmly to be low customers. So this is an incremental amount to what was reported by ERCOT.

Our next question coming from the line of Richard Sunderland with Truist Securities.

Just circling back to this transmission commentary, I want to understand what you're studying for that 2H update it sounds like if I was following you earlier that the transmission need is all this decade. Could you maybe frame what's in flight now and what it's doing for capacity that's being utilized by this new load and what that might mean for this next batch of transmission out of the study? I'm just trying to think about total dollars that might come this decade that aren't reflected in the plan right now.

Yes. As we've been talking about on previous earnings calls, we think probably the most important aspect to focus on for large load is existing hosting capacity. These large load customers need to connect in any power timely. For us, we have existing capacity on our system of roughly 10 gigawatts. We also have about 9 gigawatts of generation that wants to connect it, is in the process of connecting to our system here in Houston. We're using that capacity to satisfy those customers that we talked about today. Part of the transmission plan that we have outlined in our $65 billion includes projects to make sure that we have the existing capacity where we need it.

So think about that as sort of like intra-regional investments to move power around the greater Houston region. Also in the $65-plus billion CapEx plan, we have increased import capacity, primarily through the 765 kV lines that really will start to come online in '31 and '32. And so this transmission study that we've been alluding to really seeks to kind of fill a gap around '29, '30 and '31, where we see existing capacity being exhausted and before those new 765 kV projects provide incremental import capacity.

So again, it will be increasing our capacity at the tail end of this decade and then there will be incremental projects to move this load around the Houston region to where it's needed. And there will likely be system stability investments to make sure that the system can accommodate the number of large load customers that are being proposed here. So it should be a fairly significant set of new transmission projects that we'll be able to highlight in the second half of this year.

Understood. That's very helpful commentary. And then I realize [indiscernible] was briefly referenced in the script, but just thinking high level here with all of this load commentary you've been offering today, how are you thinking about the market opportunity around those units as it stands now versus, say, a year ago? .

Sure. We are in the market actually on the -- some of the smaller units at this stage and already seeing very strong market receptivity. As you can imagine, when we first took these units under lease, this was back in 2021. So you can imagine just how much of the demand has changed since then. So we're really seeing directionally almost double the original lease rates that we had in place. So the way to think about this at a high level for those larger units, as you know, those are currently serving the San Antonio area. At this stage, the back-end data when they return to the company from when we could start to market those units would be by the end of March 2027. So at this point, our focus would be on getting ready, being prepared ahead of that to make sure that we can take advantage of what would probably be a cash upside to the company's plan.

Our next question is coming from Jeremy Tonet with JPMorgan.

Just wanted to kind of go to the credit side, if I could. I was just wondering if you might be able to expand a bit more on the timing of the trajectory of the credit metrics here and how you expect to exit '26 at this time?

Sure thing. This is purely [indiscernible], a function of timing. So we're still highly confident that we will end the year at the high end of the cushion that we talk about relative to the Moody's methodology. So it's 150 basis points of cushion. And so the why behind that is a couple of things. First, from a timing perspective, we pulled forward a substantial amount of debt issuances in the plan. So now we've got 70% of our planned 2026 financing needs taken care of.

The other attribute I would remind you of is just that -- just before our prior earnings call, there was a treasury related announcement associated with the corporate alternative minimum tax. And there, there's a very good outcome, right? We'll have the opportunity to no longer be a cash taxpayer, which was previously on the order of roughly $150 million a year.

So we'll get that benefit, right, in the form of a refund that will occur here in the next few months. Beyond that, what I think is also less appreciated is that we will also pursue some prior period recoveries, which would allow for even more cash improvement once we see those refunds. So those elements really give us good confidence at a year-end again, we will be at the high end of that range.

Got it. That's very helpful. And I just wanted to expand the conversation a little bit. A lot has been talked about data centers here. But just wondering, I guess, if you could talk a bit more on traditional large load drivers in the Gulf Coast and Houston area. And I guess, maybe how you see that trending?

Absolutely. Look, I think a lot of this has been oriented to data centers, but really when we talk about the large load customer updates today, it includes both advanced manufacturing and data centers. As you know, as we've talked about on previous calls, [indiscernible] is becoming kind of an epicenter for advanced manufacturing, basically manufacturing almost the entirety of the equipment, except for the chips that are going into these data centers. There's also advanced manufacturing on the life sciences front. These types of facilities are heavy users of electricity and power, they themselves run their own data centers to tune their advanced manufacturing facilities. And so while it's not data centers for the market, they're heavy users of electricity for their function.

So we see this growth really driven again by advanced manufacturing data centers. We continue to see significant activity on the energy and energy export side of things. Really, I want to continue to underscore, I think the diversity of economic and load growth drivers is really what sets this region apart. We don't see any slowdown in any of the large industries that are driving propelling Houston's economic development.

Our next question coming from the line of Bill Appicelli with UBS.

Just a question on the batch study review process or COD. And maybe you could just expand on how the firm load commitments you guys have fit within that framework that they are in the process of reviewing?

Yes. So as I mentioned, we've got about 3.2 gigawatts already approved through the ERCOT process that will likely show and qualify for the baseline concept. The 9 gigawatts that we're filing for will likely qualify for batch 0. There's effectively 2 load studies that we have to have approved by ERCOT to qualify for Baxter, one of those 2 need to be approved to the steady state load study. We're on track to have those submitted to ERCOT. In a time period that would allow ERCOT to again, approve those to be included in bags. As I've mentioned, we have had very successful approvals of our previous submissions anywhere from 55 days to just under 80 days.

So outside of kind of the interconnection and load studies that are required, the customers here have the land they're prepared and ready to pay all of the associated fees. We have the equipment, all of the long lead time equipment, in particular for us, this is the high voltage breakers and transformers, customers that will actually utilize the power or signed up. And so all of the definitions that are going to be required to be either a baseline or back 0 customer.

Okay. And then shifting gears a little bit, I mean -- what are you guys seeing in terms of the penetration of battery storage in your service territory and what kind of impact is that having from your view? I know you realize that you're responsible for on the T&D side, but just curious, you've seen a big uptick in storage in ERCOT broadly. And so just curious from your perspective what the impacts are and the outlook there?

It has been -- I mean -- and you know the numbers, a significant level than battery investment in the state that is all but sort of changed the summer peak pricing in the ERCOT market as batteries have helped really kind of smooth that summer peak demand. What we see kind of going forward, as I mentioned, from our vantage point, we've got about 9 gigawatts of incremental generation that is connecting to our [indiscernible] Greater Eastern region. And that is largely solar and batteries almost exclusively. We continue to see a high degree of interest in -- for the solar projects in particular to qualify for the tax credits before they expire.

As a result, many of -- most of these projects are co-locating batteries. And so we continue to see batteries as effectively a tailwind to keeping energy costs low for customers for at least the next couple of years. And then we know that there are some incremental gas development that will really help after the tax credits expire and potentially, we see sort of a slowdown in the solar and battery build-out as we approach sort of the end of the decade. So we believe that strongly the generation is going to be there for this growth. Battery is going to help moderate the cost of electricity for customers, and we continue to see a robust pipeline connecting to the system over the next 2 years.

Our next question is coming from the line of Julien Dumoulin-Smith with Jefferies.

I'll move on to the next questioner. Our next question coming from the line of Anthony Crowdell with Mizuho Group.

I know Julian does 3 calls at once, so he's probably a little tied up. Just -- I don't believe it's apples-to-apples. Apologies for the question. Just when I look on Slide 4, and you talk about the 8 gigawatts of data center load expected to be energized by 2029. Is that the same 8 gigawatts that in fourth quarter slide deck you guys are focused on getting that on by year-end '28. I mean -- my question is that load getting pushed back a year or it's actually not an apples-to-apples comparison?

Anthony, let me just go and lay off for you. In the prior quarter, we had talked about 7.5%. That number is now going to 8%. And it's by the end of 2028 is the way to think about it. So apples-to-apples, that's the number from 7.5% to 8%. What we provided this morning, though, is that the firmly committed top line number is actually going to 12.2 gigawatts.

Perfect. Great. And then just lastly, a quick follow-up on -- you talked about -- I think you going to file Minnesota and Indiana gas cases later this year. Any -- is it just infrastructure investment that's driving that filing or anything else in those -- in either of those 2 filings?

Sure. Pretty straightforward. Definitely, it's really about replacement CapEx in Minnesota on a very straightforward program to focus on safety and reliability. As it relates to Indiana, there, what I think is important that we have already signaled is our focus on affordability. In particular, we are evaluating actually, Anthony combining what are currently 2 gas rate cases up there into 1 which we would likely file in Q4 of this year. By combining the cases, we're likely to see a customer build benefit explicitly for those customers that we serve in Southwest Indiana as a result of the cost allocation changes. And so excited to be able to put those forward. Both of those, I think you should anticipate for Q4 of this year, both Minnesota and Indiana.

Our next question coming from the line of Andrew Weisel with Scotia Bank.

First question is you've talked about the utilizing 10 gigawatts of existing system capacity around Houston to generate those $4 billion of savings, but you now have over 12 gigawatts of committed mode -- obviously, no 2 projects are the same, but do you have a rough ballpark number of what would be required or cremental gigawatt of demand going forward? I know you alluded to some new transmission projects that may be you'll announce later this year. I'm asking more like a sensitivity in terms of assets and CapEx needs and then what kind of impact would that have on the rest of the customer base? Would it bring further customer benefits? Or should we think about it more like net neutral going forward?

Yes. Ultimately, I think about it as further customer benefits. I think we have been in a very unique position in holding our rates relatively constant since 2014. And and that largely has been a function of the economic growth in Houston. I can't size for you kind of $1 per gigawatt for incremental because it is going to be so unique. What's the cost of and the length of the import lines, where specifically are the intra-regional lines needed what's needed from a system stability standpoint. Those are all the things that we're evaluating as part of the transmission study.

This will create incremental capacity at a cost, but -- the way that I would think about it is it unlocks the benefit of future economic growth for the region. And just as we've invested in capacity in the past, that's been utilized and kept our rates flat. The same will happen here. And ultimately, the single biggest lever for affordability of utility service is economic development. and we are laser-focused on continuing to make sure that we support the greater Houston region, Indiana and Minnesota's economic development opportunities.

Okay. directionally helpful. Then second, in terms of the balance sheet, on cash taxes, I know you mentioned you'll be getting some refunds and you expect to see lower cash tax outflows going forward. Do you see that as being meaningful enough to reduce the guidance calling for $4 billion of common equity. Obviously, that will depend on CapEx, which is constantly rising. But all else equal, would that be meaningful enough to impact equity? And then please remind me, was the convertible already embedded in the assumptions? Or could that also imply some downside?

Sure. So thanks for the question. On the convert, you can imagine that helped reduce kind of near-term floating rate pressure. So that was a nice add to the plan. As I think about the corporate alternative minimum tax benefit, what we had shared is that not only will you get the refund improvement for this year, right? So just think about that as roughly in line with that $150 million a year of cash tax payments that would go away, you would keep that benefit, right, as you go forward, right? So that roughly $150 million a year. So what we've shared actually is that can provide us the equivalent of adding an incremental $1 billion of CapEx to the plan with no incremental equity.

And so as you can hear from what Jason has shared this morning, certainly, there are multiple opportunities. So that's how we've tried to share that. Actually, we've got even more CapEx we can add to the plan without adding incremental equity.

I see there are no further questions in the queue at this time. Ladies and gentlemen, this concludes CenterPoint Energy's First Quarter 2026 Earnings Conference Call. Thank you for your participation, and you may now disconnect.

Good morning, and welcome to CenterPoint Energy's Fourth Quarter and Full Year 2025 Earnings Conference Call with Senior Management.

[Operator Instructions]

I will now turn the call over to Ben Vallejo, Vice President of Investor Relations. Mr. Vallejo?

Good morning, and welcome to CenterPoint's Q4 2025 Earnings Conference Call. Jason Wells, our Chair and CEO; and Chris Foster, our CFO, and will discuss the company's fourth quarter and full year 2025 results. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are based on management's beliefs, assumptions, and information currently available to management. These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially based on various factors, as noted in our Form 10-K, other SEC filings and our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statements other than as required under applicable securities laws.

We reported $1.60 per diluted share and $0.40 per diluted share for the full year and fourth quarter of 2025, respectively, on a GAAP basis. Management will be discussing certain non-GAAP measures on today's call. When providing guidance, we use the non-GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non-GAAP EPS. For information on our guidance methodology and reconciliation of the non-GAAP measures used in providing guidance, please refer to our earnings news release and presentation on our website. We use our website to announce material information. This call is being recorded. Information on how to access the replay can be found on our website. Now I'd like to turn it over to Jason.

Thank you, Ben, and good morning, everyone. I'd like to begin by extending my sincere appreciation to all frontline team members who continue to work tirelessly to deliver better outcomes for our customers. Whether it's responding to severe weather like we experienced in January, or executing on the reliability and resiliency work that resulted in a reduction of more than 100 million outage minutes across the Greater Houston region last year. Our dedicated workforce executes for our customers and communities each and every day.

On today's call, I'd like to address 3 key areas of focus. First, I'll touch on the strong and consistent execution over the fourth quarter and throughout 2025. Our continued performance is reflected in our delivery of 9% EPS growth for the fourth time in the last 5 years. Second, I will discuss the increased acceleration of the significant growth in our Houston Electric business. We are now forecasting peak load demand to increase by 50% or an additional 10 gigawatts by 2029. This is 2 years earlier than previously planned. More importantly, this growth continues to be positive news for the region as it drives jobs, increases tax base and helps keep our portion of the bills essentially flat, benefiting our customers and communities. And lastly, separate and apart from this accelerated growth, we are adding $500 million of incremental capital to our 10-year $65 billion capital investment plan to fund an additional 765 kV import line.

We continue to see CapEx upside in excess of $10 billion to further support economic development throughout our region. Let's start with our fourth quarter and full year financial results. This morning, we announced non-GAAP EPS of $0.45 for the fourth quarter and $1.76 for the full year 2025. In addition to delivering this 9% EPS growth, we also delivered 9% dividend per share growth last year. I am proud of this track record of consistent execution for our stakeholders. Chris will provide additional details around these strong results and consistent delivery of industry-leading performance in his section. As a reminder, we continue to rebase our long-term growth targets from our actual performance as we seek to deliver value for our investors each and every year. Consistent with this approach, Today, we are reaffirming our 2026 non-GAAP earnings guidance of $1.89 to $1.91, an 8% increase at the midpoint from our 2025 delivered results. Over the long term, we continue to expect to grow non-GAAP EPS at the mid- to high end of our 7% to 9% long-term annual guidance range through 2028 and 7% to 9% annually thereafter to 2035.

I'd now like to touch on the increased acceleration of growth in our Houston Electric business, which is fueled by a diverse set of drivers. We are fortunate to have a proven track record of serving large loads and rapid growth across our region. Our diverse growth and a substantial increase in our interconnection queues continue to accelerate at an unprecedented pace, driven primarily by reshoring of advanced manufacturing facilities and new data center demand. As a reflection of that, we are now expecting peak load to grow by 50%, 2 years earlier than originally planned. Looking further ahead, this continued growth and significant acceleration of pace gives us even greater confidence in our forecast that low demand will more than double by the middle of the next decade. However, it also suggests the continued reporting of an unconstrained interconnection queue does not offer meaningful insight into the level of expected growth, which will largely be driven by existing system capacity and ability to scale and execute quickly. Instead, we believe that the most meaningful measure of current growth projections is the pipeline of large load requests that are either already under construction or large projects that are firmly committed.

To provide context for the 50% increase in peak load today, we have already 2.5 gigawatts of projects that are in the construction phase with another 5 gigawatts of firmly committed projects that we expect will be energized by 2028. This is in addition to the 3 gigawatts of ordinary course growth that our region is already expected to experience. We are confident that we can execute on this near-term demand as it will be met with existing system capacity and manageable system upgrades. Outside of these projects, we will continue working on converting the remaining interconnection requests, which could further add to this projected growth. The rapid acceleration of pace of this large load growth combined with the ordinary population of growth across the Greater Houston region will have positive impacts for our customers and communities and help keep our portion of the bills essentially flat.

To illustrate the potential benefit of energizing data center customers, we believe that 5 gigawatts of existing hosting capacity were utilized. We estimate it could reduce average residential delivery charges by over 2% based on the 2025 average bill. This continues a trend that has allowed us to keep customer charges nearly flat over the last decade. To be ready for the incremental growth that we continue to see beyond the near term, we are updating our transmission planning study that will likely lead to incremental transmission projects to keep pace with our region's explosive growth. Outside of the potential for additional transmission projects from this accelerating growth, I want to briefly touch on some recent updates on ERCOT and the incremental capital investments we will be making to support our previously planned growth. In response to feedback from ERCOT indicating the need for additional infrastructure to support the continued growth of the Greater Houston region, we have filed for an additional 765 kV transmission line in January. This will be the third 765 kV import line providing enhanced resiliency and reliability to our region as it continues to grow.

Today, we are incorporating this needed project into our outlook, and we are increasing our capital investment plan by approximately $500 million, bringing our 10-year total to more than $65 billion. Beyond this increase announced today, we continue to see over $10 billion of incremental opportunities. We will fold these incremental opportunities into our 10-year investment plan when we are confident we can execute the work for the benefit of our customers. These additional investments will provide further upside to our over 11% rate base growth through 2030. Before I hand it over to Chris, I want to thank our teams for continuing to execute for our customers and communities and delivering on our strong 2025. With that commitment to consistent execution, and the rapid acceleration of firmly committed growth opportunities, we are well positioned to continue our track record of delivering for our stakeholders. With that, Chris will walk through the financials in more detail.

Thanks, Jason. This morning, I will cover 4 areas of focus. First, the details of our fourth quarter and full year financial results; second, I'll provide a brief regulatory update. Third, I'll touch on our capital deployment execution, including the $500 million positive revision of our 10-year capital investment plan. And finally, I'll provide an update on where we stand with respect to the balance sheet and our financing plan. Let's now move to the financial results, beginning on Slide 5. On a GAAP EPS basis, we reported $0.40 for the fourth quarter and $1.60 for the full year 2025. $1.60 includes $0.11 related to the disposition of goodwill allocated to Louisiana and Mississippi natural gas businesses in addition to $0.07 of depreciation, related to our large temporary generation units.

As a reminder, we expect to start marketing those units for either a sublease or sale later this year in anticipation of getting those units back no later than spring of next year. We continue to believe that the sublease revenue over the remaining years of our lease will equal at least the lost revenue from the period they were donated to San Antonio. On a non-GAAP basis, we reported $0.45 for the fourth quarter and $1.76 for the full year 2025. Our 2025 results reflect 9% growth compared to 2024 results. These strong results give us confidence in meeting our 2026 non-GAAP EPS guidance of $1.89 to $1.91. As a reminder, our 2025 year-over-year rate recovery reflected the delayed timing of several interim recovery mechanisms until the second half of the year. As we move into 2026, we expect to return to a more typical and timely filing cadence, which should support stronger and more consistent recovery throughout the year.

Now taking a closer look at the drivers of our fourth quarter earnings. Growth in rate recovery contributed $0.12 when compared to the same quarter last year which was driven by the implementation of constructive rate case and interim filing mechanism outcomes throughout the year. Weather and usage were $0.01 favorable when compared to the comparable quarter last year driven by higher customer usage as temperatures across our service territory were largely in line with historical norms. O&M was $0.02 unfavorable for the fourth quarter as we accelerated certain work, including reliability and resiliency work originally planned for 2026. Additionally, higher interest expense was $0.05 unfavorable from an incremental approximately $3.3 billion in debt issuances.

I'd now like to touch on our recent regulatory activity. During the quarter, we received a final order in our Ohio gas LDC rate case, which continues our track record of constructive outcomes. The order made slight modifications to the settlement agreement, approving a modestly lower revenue requirement of $53.1 million and ROE of 9.79% with no change to the agreed-upon 52.9% equity ratio. As a reminder, we anticipate closing on the sale of this business in the fourth quarter of this year. I want to highlight that we have limited regulatory activity over the next few years. We anticipate filing rate cases in the latter part of this year in Minnesota and Indiana, which, in the aggregate, represent less than 20% of the earnings power in our consolidated base. We will provide more color with respect to those cases, the closer we get to their respective filing dates.

Outside of those 2 rate cases, we will continue to file our interim capital trackers across our various service territories. And as a reminder, we anticipate recovering approximately 85% of our capital investments through our various capital trackers. We expect to file within the next month, both our TCOS and DCRF mechanisms, which support recovery of ongoing investments and help reduce regulatory lag. Next, I'll touch on our capital investment execution for 2025 and our increased 10-year capital plan, as shown on Slide 9. Through the end of the fourth quarter, we invested $5.4 billion for the benefit of our customers and communities. This exceeded our already positively revised 2025 plan of $5.3 billion which incorporated a $500 million increase over our initial capital investment profile as we accelerated certain investments related to our system resiliency plan. This increased level of investment should allow us to partially offset the loss of Ohio investments upon the close of the sale later in the fourth quarter of this year.

For 2026, we are reaffirming our capital plan outlined in our 10-year plan at $6.8 billion for the benefit of our customers, and we expect continued execution across electric and gas infrastructure, resiliency and system modernization. As Jason highlighted earlier, increased visibility into incremental transmission needs supports a $500 million increase to our long-term capital investment plan, bringing the total to over $65 billion through 2035. Knowing the time lines on these electric transmission projects, we anticipate the CapEx to be added towards the end of the decade. This reflects opportunities that we now have greater confidence in moving forward consistent with our disciplined approach of formally incorporating incremental capital as clarity and approvals are achieved. Finally, I want to touch on our credit metrics and balance sheet. As of the end of the year, our adjusted FFO to debt ratio based on Moody's rating methodology was 13.8%, slightly below our targeted cushion of 100 to 150 basis points. We believe we are well positioned to be within our target cushion, in particular, given the updated rulemaking provided by the U.S. Treasury Department just yesterday that I'll provide more color on shortly.

We see further improvement in our metrics through the remainder of the plan as well as we've signaled previously, given we anticipate significant cash proceeds from the issuance of securitization bonds related to Hurricane Beryl and the closing of our Ohio gas LDC sale later this year. Our execution remains on track as just yesterday, we priced roughly $1.2 billion in securitization bonds. With these proceeds, we will look to extinguish a $500 million term loan at Houston Electric and reduced commercial paper. In addition, we expect to receive cash proceeds net of tax of $800 million in the fourth quarter from the closing of the Ohio transaction, which will provide additional balance sheet support and further enhance our financial flexibility. I would now like to briefly touch on draft guidance issued by the U.S. Treasury Department with respect to computation of the corporate alternative minimum tax that will add additional financing flexibility to our existing plan.

As some of you may have seen, yesterday, the U.S. Treasury issued guidance that modifies how this tax is computed and now clarifies that eligible utilities like CenterPoint should reduce their tax liabilities for the repairs deduction. As a reminder, when the corporate alternative minimum tax was first enacted under the Inflation Reduction Act, we conservatively estimated our annual cash tax liability to be approximately $150 million. And while we're still analyzing the impacts of the notice, we now believe that our annual federal income tax cash tax liability should be near 0 through 2035. With this new cash tax profile, we anticipate a 60 to 70 basis point improvement to our credit metrics in the near term. This is a great outcome for our customers as the reduction in cash taxes should flow through to reduce customer charges. In addition, it could allow us to incorporate an incremental $1 billion of customer-driven capital investments into our now over $65 billion plan without the need for incremental equity. Lastly, we could potentially see guidance related to the use of the tax repairs deduction to reduce cash tax liability associated with the corporate alternative minimum tax.

As a reminder, we estimate approximately $150 million of annual cash taxes from the corporate alternative minimum tax. The removal of this cash tax impact would result in a 60 to 70 basis point increase in our FFO to debt metrics over the next few years. In summary, we believe we are well positioned to execute in 2026 and beyond given the derisked and conservative nature of our plan. We are also reiterating our 2026 non-GAAP earnings guidance targeting at least the midpoint of $1.89 to $1.91. At the midpoint, this would represent an 8% increase over 2025 delivered results. Looking ahead, we expect to grow non-GAAP EPS at the mid- to high end of our 7% to 9% range from 2026 through 2028, and over the long term, we expect to grow non-GAAP EPS at 7% to 9% annually through 2035. We remain committed to delivering continued improvements in customer experience and look forward to executing our plan that delivers on the most diverse growth drivers in the country, propelling economic development for years to come. And with that, I'll now turn the call over to Jason.

Thank you, Chris. In closing, our executable growth is now coming at an even faster pace and more significant scale than before, helping to bring economic growth for our region in supporting customer affordability. As Chris covered, we are also fortunate to have achieved regulatory clarity through 2029 on approximately 80% of our rate base, supported by approved final orders. I continue to have full confidence that with our exceptional low growth fundamentals, constructive jurisdictions and derisk financing plan, we continue to have 1 of the most tangible and executable growth plans in the industry.

Thanks, Jason. Operator, I'd like to turn it over for Q&A.

[Operator Instructions]

And our first question comes from David Arcaro with Morgan Stanley.

Jason, I think you mentioned updating the transmission planning study. Was that something that was already done and reflecting the 765 kV line that you added to the plan here? Or is that yet to come. Wondering if you could give timing and just thoughts on what the upside potential would be if it's still ahead.

Yes. Thanks, David, for the question. I would separate the $500 million of additional capital we announced related to that 765 kV line this quarter from the incremental transmission work that will be needed as a result of the acceleration of the large loads that I mentioned. The third and 765 KV line that we introduced this quarter had been in the works, had been part of ERCOT's planning for a while. We had just gotten to the point that where we confirm the need on our system and a file for it at ERCOT, which is why we included it as an update to the 10-year CapEx guidance.

Separate from that, as we're seeing this large load accelerate, we have internally accelerated our annual transmission planning I expect we'll be able to provide an update in the second half of the year of incremental transmission projects that will be needed to accommodate this new load. What we're seeing with respect to these new large loads, as I said, they're coming faster and also importantly, they're coming to different geographies, different areas within the Greater Houston region. So it will likely result in incremental import capacity for our Houston system as well as incremental intra-regional transmission projects to make sure that we have capacity where we need it within the Houston region. As I said, we'll likely be able to provide an update on what that means from a CapEx standpoint in the second half of the year.

Got it. Okay. That makes sense. That's helpful. And then Chris, apologies if I missed it, but just as you reflect on the repairs adjustment now in the AMT, does that could that potentially formally reduce the equity needs in the plan versus what you've got baked in there? When might we learn more in terms of how the balance sheet impacts might flow through.

Sure thing, David. And again, as you may have seen, it just came out actually yesterday afternoon. So I think ultimately, it is in line with where our expectations were and it will have a couple of benefits. First, remember that the general profile we talked about, it was about $150 million per year. So what this will do is really 2 things as we think about it. First, definitely have near-term balance sheet benefit of 60 to 70 basis points. And we think about it as unlocking an incremental roughly $1 billion of CapEx that we could also add to the plan without adding any incremental equity.

Our next question comes from Shar Pourreza with Wells Fargo Securities.

Good morning. I just wanted to tease out a little bit of David's question that he had on sort of the growth and stuff. I mean just the 2 years ahead of schedule, that's just massive amount of growth, it could be sizable, obviously, to the current guide. Can you just help us frame just maybe a little bit with more specitivity just what this means in terms of timing and scale of CapEx and maybe how we should think about year 7 to 9, especially since you're already near the top end of that trajectory. I guess, how do we sort of think about what this could mean to the ultimate trajectory?

Ultimately, I just think this is another very strong tailwind for the company on an already great industry-leading plan. But let me try to provide a little bit more color. We are able to accelerate this these large load interconnections because we have existing capacity in our system. I think that, that is a unique asset for us. Many of these companies are [indiscernible] advanced manufacturing data centers are looking for power over the next 2 years, and we're uniquely positioned to connect them over that period of time.

Those projects don't require significant incremental capital. It's effectively building a new substation off our existing transmission lines. What this will do, though, is it will create, as I mentioned to David, incremental need for more import capacity into Houston as well as more intra-regional transmission ties to make sure we're moving the power to where we need it here in Houston. So if you think about the timing of those projects, those are going to likely be projects that, well, impact sort of CapEx guidance I would estimate at this point towards the tail end of this decade into next. I wouldn't look at it as a near-term opportunity as much as, as I said, towards the tail end of the decade. But again, this just provides an exceptional -- exceptionally strong tailwind to an already great plan.

Got it. Okay. That's perfect. And then just lastly, on ERCOT's batching and study process changes, there's kind of a view out there that it can affect timing and certainly for new interconnections and upgrades. Do you sort of expect any approval slowdowns or delays within service dates, especially with this accelerated load you're targeting? Or is the impact kind of manageable?

I definitely think it's manageable. We support the overall direction of batching I think it will help provide relief in the overall ERCOT market. But as a quick reminder, we're pretty unique here in Houston. We've been very disciplined in what we've put in the ERCOT [ queue ] and our large load in our connection applications have been processed within 70 days. So we don't see the backlog that many regions have. And as ERCOT transitions to this batching process, we're still operating under those current rules that exist today when we've been, as I said, achieving reviews and approvals within 70 days.

Many of these firm projects will follow that time line. And again, I think it will -- whether they are approved under the current rules that are in a factor as part of Wave 0, [indiscernible] so we feel like we can bring these projects online, really in the '27 and '28 time line. So again, supportive of the long-term direction, but I think given the fact that these are prospective rules we have the opportunity to move quickly to accommodate the large load requests that are here today.

Our next question comes from Steve Fleishman with Wolfe Research.

Just following up on the low growth in transmission capacity. Jason, how would you kind of think about how much excess do you have left, if at all? Are you kind of filling that up with these 2 buckets that you laid out?

Good morning, Steve. We're certainly making a pretty big debt in the excess capacity I have today, but not fully exhausted it. If you recall for the investor update this past fall when we rolled out the $65 billion 10-year CapEx plan. Included in that plan, we're a little more than 200 transmission projects that were geared at keeping pace with the growth. What we're seeing here with an acceleration is it's here at a higher quantum sooner and in different geographies, which will likely lead to even more transmission projects, but that base plan that we had proposed allowed us to make sure that we stay in front of these capacity needs.

And so today, we're estimating we have roughly a little shy of 10 gigs of existing capacity, but we're already working on the transmission projects that will unlock more capacity as we bring these large loads on. And so I don't see -- foresee at this point a challenge with not only accommodating these projects, but additional large loads that we're working with.

Okay. And then just from the standpoint of like pricing to your customers, I assume this growth helps with your customer bills long term? Or should we think about that?

That's it. This is phenomenal opportunity for our customers and communities because the existing capacity is there today, we're going to be spreading those fixed costs out over a wider base driving down customer bills. We've been connecting large loads before it was cool for the industry. This is what has kept kind of our rates flat over the last decade here in Houston. And this is just a continuation of that trend, the more that we bring these large projects into our region or they not only help with the tax base in this region, but back to the point that you're making, and they help us keep our rates affordable. So we continue to project that we'll now keep rates flat through 2028 as a result of this incremental load.

Okay. And then 2 more quick ones, I guess. Just on the One last one on the data center opportunity. You have mentioned in the past potentially looking at something in Indiana. Is there any update on that?

We continue to have very active conversations up there. I remain very optimistic that we'll be able to finalize those opportunities that we're pursuing. But right now, where we see the trend in the data center market is really looking at available capacity. Many of the hyperscalers have needs for power really, they're not trying to optimize over the next 2 years. And Texas is one of the few areas of the country where we have capacity at scale and can move quickly, which is why we've seen such a fundamental shift to the Houston region.

Again, I remain optimistic about our ability to land and secure at least one large data center opportunity for Southwest Indiana. But what we're seeing today is really this pursuit of existing capacity in Texas.

Okay. And then lastly, just on the balance sheet with [indiscernible] benefit and then you mentioned [ Boral ] and the LDC sales. So if you don't change your capital plan, where would FFO to debt be by, I don't know, end of '26 or '27?

I think you probably -- sure, Steve. I think if you just kind of hold everything constant, we'd probably be on the order of roughly 15% directionally is the way to think about that. So it's definitely a good outcome in terms of the new regulation coming out.

Our next question comes [indiscernible] from [indiscernible]

Team, thank you very much. I appreciate the time. Maybe just to come back to a couple of subjects. First, a little bit of detail, but we've seen ONE Gas update their guidance here on the Texas legislation from last year. Can you comment a little bit about the deferrals and any opportunities there? How are you leveraging that versus your peers? We see [ Atmos ] also reflected pretty meaningfully -- just would love to hear your latest updated thoughts on that and to what extent it's perhaps just within the range of guidance? Or is that something that's perhaps not fully utilized thus far?

Julian, thanks for the question. It is in the guidance that we've currently issued thus far. As you know, we were out in kind of front of this issue. I really think it makes sense from the standpoint of helping reduce regulatory lag, which is both helpful for our customers and our shareholders. We pursued this because we -- again, we thought it was in the best interest of all of our stakeholders. As a result of pursuing it, we had line of sight to it, I think, earlier than a number of our peers. And as a result, reflected in the guidance that exists.

Got it. Yes, I know you guys did it last year. I just wanted to make sure that it was more fully utilized. And then separately, if I can come back to the batch process conversation, I know it's gotten a lot of attention here. Can you comment a little bit about just when it kicks back off here later this -- in June or whatever they ultimately move, is there any risk that you perceive on timing here ultimately? Or is the intent by moving into June or later [indiscernible] to really sidestep some of the delays that you could conceivably or at least are perceived to be feared to be pushed out.

Thanks again for the question. I mean I think we're all waiting kind of for the revised timing. But backing up from what has been signaled as sort of a summer adoption. We are advising our customers on is that they complete their load studies as quickly as possible so that we can finalize our work and submit them to ERCOT here this spring. The large load numbers that we put in the firmly committed column are -- those customers that we've been working with that have already fully completed their large load requests inclusive of the timing of the ramps. So I don't see any challenge with getting those requests into the ERCOT queue and getting it moving again, either under the existing rules as part of batch which will be consistent with the timing that we've outlined here.

So we've been working constructively to, again, continue connect large as we haven't had the issue of the backlog than many of the other regions in ERCOT have experience. We'll continue to do that, and then we will work with ERCOT as they transition this summer to the vast process.

Awesome. And then the last little nuance here. This is, as you say, I think the third 765 project thus far. Can you comment a little bit about -- just should we expect sort of incremental cadence in coming quarters again? Or would it rather be at some point having a bigger 765 update just based on the ERCOT process, right, in identifying transmission needs? Or is it going to continue to be sort of 1 off and to us?

We think it makes sense to be conservative. We've identified a number of 765 kV opportunities that are included in the $10 billion plus of CapEx upside. We think it makes sense, though, to identify it as upside and then work with ERCOT and others to ensure that these lines are needed and are the best support kind of the growth of the Greater Houston region. And that's what occurred here.

ERCOT proposed this third line. We needed to assess it. We agreed with the assessment. We filed for it, and that's why we're incorporating it. So I would expect a track record similar to this where there is just a serial set of updates as we get more comfortable with each individual project as opposed to one comprehensive 765 update.

Our next question comes from Nicholas Campanella with Barclays.

I like the tagline connecting large [ lows ] before it was cool. I appreciate that. So just one for me. A lot of good questions have been answered, but just -- you guys have a track record for consistently kind of raising CapEx every quarter here, it seems, and it's great to see the $500 million increase to the 10-year plan. Just when you think about like executability, supply chain, labor constraints, like what is the ability to bring more into the 5-year plan? Or is that kind of fully baked at this point? I know you have a bunch of items kind of listed on the slide that are incremental and it does seem like some of these transmission connections are in the '27, '28 and beyond time frame. But just maybe kind of frame how much capital you can actually facilitate bringing into the next 5 years versus the 10 years?

Yes. Given the fact that some of these large loads are in new regions in the Greater Houston area. So historically, we've connected a lot of these large loads near the ship channel, the petrochem complex. We're now seeing kind of different areas within Houston, really target accommodating kind of these large log requests. We are going to need more intra-regional transmission capacity. That is work that will need to be done in the first 5 years of the plan.

Import lines generally take a little longer. I'd expect those to kind of really be hitting sort of towards the tail end of the decade, early part of next. But we undoubtedly will need more transmission in their Greater Houston area in the first 5 years. We have capacity to accommodate that. Again, since we've been connecting large loads for such a long time, we have had purchasing spots and all of the critical equipment, high voltage breakers and transformers. We've had relationships with third parties. We can move quickly, the pace of our customers to connect these loads. So I don't see materials being a constraint. I don't see labor being a constraint. I think really, what we need to do is continue to finalize the details of our PowerFlow study, propose these projects. and begin working on them. I think some of that's going to come in the first 5 years, and some of it will be a tailwind into the next decade.

Our next question comes from Jeremy Tonet with JP Morgan Securities.

I just wanted to dive in a little bit more on smart meters and undergrounding in Houston, if I could. Just wondering if you might be able to provide a little bit more detail on what the time line can look there and what the size of the opportunity as you see it now?

Sure. Jeremy, the short of it is, I think there's opportunity here, maybe bridging off the last question, too, maybe even in 5-year plan as well. So the short of it is on the new smart meter program, we're probably going to be looking to file in Q4 at the PUCT, that's a natural time. We'll be able to give you insight there for the more potential CapEx upside to the plan. I think the other one maybe to touch on, which makes sense is a really important project again for the city of Houston, it's this downtown revitalization effort, as we've talked about.

Here, we're going to be in a position to update probably second half of this year. due to the fact that at that stage, we're spending the time now to work with the city to talk about where -- what locations make the most sense to relocate and cite our new substations. So those will be decisions, and that will certainly drive the cost profile and potential upside to plan there as well. Finally, on the system resiliency plan. There, we are starting some of the strategic undergrounding work as early as this year. The natural timing of filing the next system resiliency plan is probably going to be 2028. So the -- excuse me, yes, 2028. So really, it's about feeding the back half of the plan, 2029, 2030 and 2031, for potential upside there as well.

Got it. That's helpful. And just one more, if I could. You talked about keeping bills flat through 2028 and I think O&M reduction has been a meaningful part of the story over time and looks like it continues to be. Just wondering how deep do you see that well at this point, given how much has been accomplished.

I think we're still in early innings. I really proud about the progress the team has made driving efficiency. But when we continue to look at system. I think we've got further opportunity. Just sort of case in point, I highlighted in my prepared remarks, the fact that we saved 100 million outage minutes last year through our Greater Houston resiliency initiative. We are just getting started on that work as we continue to have another year of investment under our belt. We're going to drive down outage levels in a way that will be a significant tailwind for O&M.

Just to put this in context, we achieved reliability numbers that we haven't seen here in Houston since 2014. And since 2014, we've added north of 1 million metered homes and businesses. And so as I said, we're just getting started. So as we continue to drive down outages, improve and increase the automation in our system. We're going to reduce the amount of trouble work. And it is just an example of another, I think, tailwind with respect to O&M for the company.

Our next question comes from Anthony Crowdell with Mizuho.

Just one quick question. I think earlier, Chris, you talked about the additional balance sheet capacity you guys had with change in the recent decision? Just other items. I think you talked about maybe 15% FFO to debt. You've also been pretty opportunistic on selling some gas assets over the last couple of years to help fund a lot of the growth you have. Does now this additional balance sheet capacity maybe delay future divestitures at the gas business and given you also have this substantial growth still in front of you?

Anthony, we're going to constantly look at what makes the most sense. The capital recycling we've done has been highly efficient in feeding growth that's primarily been occurring here in the Greater Houston area. Ultimately, we're going to stay very open-minded to what makes sense. What Jason was getting at earlier, is, certainly, there's balance sheet help here in the next few years from really multiple things. The Ohio gas LDC sale, we've referenced was $400 million better than planned. The outcome here on the corporate alternative minimum tax certainly provides additional cushion.

At the same time, Jason, I think you can certainly hear us saying at the back end of the decade, right, we could have substantial CapEx opportunities, which we're required to have us, again, look at the most efficient way to finance that growth. So we're always going to stay open-minded on that front.

And our last question comes from Andrew Weisel with Scotiabank.

Two quick ones, please. First, on the fourth quarter, electric volumes, I noticed that the total throughput was down modestly. Residential was up 4%, and we've seen positive C&I trends in the last few quarters. Just wondering if there's any noise in the data or anything to call out? Obviously, you're bullish on the long-term trends. Just was wondering what's going on in the near term.

Sure, Andrew. I think what the takeaway there is we continue to see more of a weighting towards the commercial and industrial growth. among our overall base. I'll think I'll put it that way. If you just look across all of 2025, we're talking about roughly 7% industrial growth. It's pretty dramatic. I think what you're also hearing us allude to is we're highly confident in the long-term growth potential, including because these opportunities we've talked about from a customer standpoint are going to create material new jobs to our communities.

Two examples being maybe most recently, the over $15 billion investment that Eli Lilly has referenced for the Greater Houston area, it's pretty incredible that will represent thousands of jobs to come with it as well as the loans that we're talking about actually include the ecosystem associated with data centers, which is the advanced manufacturing category that we talk about. The benefit there is that is really about production and manufacturing of the components that go in the data centers, that means same situation there. It comes with a large number of permanent jobs as well. So it gives us a lot of confidence for years to come on both that excellent dynamic we have had in both residential growth as well as accelerating industrial growth.

Okay. So not to worry about the 4Q number then, in other words?

No, sir.

Okay. Very good. And then lastly, in terms of the CapEx update, you're increasing the overall plan, thanks to the 765 kV line. It looks like, if I'm getting the numbers right, that was an increase of $800 million then you lowered the gas spending by about $300 million or so, I believe. Can you walk us through what drove that? Was that about preserving the balance sheet? Or were there specific projects on the gas side that you chose to remove for fundamental reasons?

You've got the puts and takes there, right? I mean, largely, the increase is driven by the 765KV line, as you mentioned. We're always constantly looking at the execution of our integrity management work. We were able to pull forward some of that here into 2025, gave us a little bit of an opportunity to be flexible on the gas side. And in the outer years. We'll always tune the portfolio based on kind of executability, kind of where we're seeing demand. I wouldn't look at that as a signal of a long-term trend.

Thank you. This concludes CenterPoint Energy's Fourth Quarter 2025 Earnings Conference Call. Thank you for your participation.

Good morning, and welcome to CenterPoint Energy's Third Quarter 2025 Earnings Conference Call with senior management. [Operator Instructions] I will now turn the call over to Ben Vallejo, Director of Investor Relations and Corporate Planning. Mr. Vallejo?

Good morning, and welcome to CenterPoint's Q3 2025 Earnings Conference Call. Jason Wells, our CEO; and Chris Foster, our CFO, will discuss the company's third quarter results. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are currently based on management's beliefs, assumptions and information currently available to management.

These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially based on various factors as noted in our Form 10-Q and other SEC filings as well as our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statement other than as required under applicable securities laws. We reported diluted earnings per share of $0.45 for the third quarter of 2025 on a GAAP basis. Management will be discussing certain non-GAAP measures on today's call. When providing guidance, we use the non-GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non-GAAP EPS.

For information on our guidance methodology and reconciliation of the non-GAAP measures used in providing guidance, please refer to our earnings news release and presentation on our website. We use our website to announce material information. This call is being recorded. Information on how to access the replay can be found on our website. Now I'd like to turn the call over to Jason.

Thank you, Ben, and good morning, everyone. On today's call, I'd like to address 3 key focus areas for the quarter. First, I will briefly touch on the 10-year financial plan update we introduced just weeks ago. Second, I will walk through our strong third quarter financial results. And lastly, I'll discuss our announcement from earlier this week regarding the sale of our Ohio gas LDC. Last month, we introduced an ambitious 10-year plan focused on supporting economic development, delivering strong customer outcomes, reducing O&M through operational efficiency and driving value for our investors.

Our capital investment plan of at least $65 billion is supported by some of the fastest-growing demand for energy anywhere in the country. Importantly, we also have visibility to at least $10 billion of incremental capital investment opportunities over the course of the plan, particularly in Texas, given the dramatic growth the communities we serve continue to experience. Specifically, in our Houston Electric service territory, we forecast peak load demand to increase by 10 gigawatts in 2031. This forecasted growth would represent a nearly 50% increase in peak demand over the next 6 years.

Additionally, through the middle of the next decade, we estimate the electric load demand on our system will double to approximately 42 gigawatts. This level of demand will continue to support a strong investment profile. Our capital investment plan through 2030 drives a projected rate base CAGR of over 11% through the end of the decade and the potential for double-digit rate base growth through the middle of the next decade. The Greater Houston area is thriving, powered by what we believe is the most diverse set of growth drivers in the sector. It is not relying on any single industry and the results speak for themselves. This growth isn't aspirational. It's already here.

Notably throughput in our Houston Electric business were up 9% year-to-date. This strong growth is anchored by our surge in industrial customer class throughput, which are up over 17% quarter-over-quarter and up over 11% year-to-date. This incredible growth provides a solid foundation for our earnings guidance. Specifically, we have strong conviction in our ability to achieve non-GAAP EPS at the mid- to high end of our 7% to 9% annual growth guidance from 2026 through 2028, and 7% to 9% annually thereafter through 2035.

I continue to believe we have one of the most differentiated plans in the industry because of our unique combination of the diversity and pace of electric demand growth, a derisked regulatory and financing profile and our ability to continue investing affordably for the benefit of our customers. These attributes set us apart from our peers and enable us to continue to deliver value for all our stakeholders over the next decade and beyond.

Now moving to our strong third quarter financial results. This morning, we reported non-GAAP EPS of $0.50 for the third quarter, representing a 60% increase over the same period last year. As we signaled last quarter, 2025 earnings reflect a more back-end weighted profile for the year, consistent with our return to traditional capital recovery mechanisms now that the bulk of our rate case activity is behind us. I'll let Chris cover the details in his section, but we remain well positioned to execute on our recently increased 2025 non-GAAP EPS guidance.

As such, we are reiterating our full year 2025 non-GAAP EPS guidance range of $1.75 to $1.77, which would represent 9% growth over 2024 delivered results of $1.62 per share. Additionally, we are also reiterating our 2026 non-GAAP earnings guidance we initiated a few weeks ago. As a reminder, we are targeting at least the midpoint of $1.89 to $1.91 per share. At the midpoint, this range would represent an 8% increase over the midpoint of our 2025 non-GAAP EPS guidance range.

Further, we continue to expect to grow non-GAAP EPS at the mid- to high end of our 7% to 9% long-term annual guidance range from 2026 through 2028 and 7% to 9% annually through 2035. As a reminder, our guidance is based on actual delivered results as we continue to execute and deliver value for our shareholders each and every year.

I'd now like to discuss the recent announcement regarding the sale of our Ohio gas LDC. Earlier this week, we announced the signing of our Ohio gas LDC transaction, which is expected to generate approximately $2.6 billion in gross proceeds, representing a significant milestone in executing our 10-year financial plan. The strong valuation of approximately 1.9x 2024 rate base underscores the exceptional demand for U.S. natural gas LDCs.

This outcome once again demonstrates our ability to efficiently finance our growth investments, this time by recycling the transaction proceeds of a high-quality business at nearly 2x book value and reallocating capital into our remaining portfolio at 1x book value. The after-tax net cash proceeds of approximately $2.4 billion will be redeployed into higher growth jurisdictions to efficiently fund our capital investment plan. Importantly, the proceeds should also provide additional flexibility in funding for future incremental capital investments.

The transaction is expected to close in the fourth quarter of 2026. Chris will go into the details of the transaction, including its structure, which will allow us to more smoothly redeploy capital while maintaining a strong earnings profile. It has been a privilege to serve the customers and communities in our Ohio gas business, and we are committed to a smooth transition for our customers. This is a tremendous business with fantastic employees, and we know they will continue to provide great service to the 335,000 meter customers in Ohio.

This transaction reflects our continued commitment to disciplined capital allocation as we seek to further enable growth, especially in Texas and long-term value creation for all stakeholders. Our growing capital investment opportunities are supported by accelerating and diverse set of load growth drivers. This, coupled with our ability to efficiently finance our plan continues to support our conviction that we have one of the most tangible long-term growth plans in the industry. And with that, I'll hand it over to Chris.

Thanks, Jason. This morning, I will address 4 key areas of focus. First, I will review the details of our third quarter results. Second, I'll discuss the transaction structure of the recently announced sale of our Ohio gas LDC. Third, I'll highlight our progress on the execution of our 2025 capital investment plan. And lastly, I'll provide an update on where we ended the third quarter with respect to the balance sheet.

Let's now move to the financial results shown on Slide 5. On a GAAP EPS basis, we reported $0.45 for the third quarter of 2025. On a non-GAAP EPS basis, we reported $0.50 for the third quarter of 2025 compared to $0.31 in the third quarter of 2024. Our non-GAAP results removed $0.03 of charges, primarily consisting of tax true-ups related to the sale of our Louisiana and Mississippi businesses and transaction costs in connection with our announced Ohio gas LDC sale. In addition, it removes $0.02 related to our temporary generation units as these units are no longer part of our rate-regulated business.

These strong results give us confidence in meeting our positively revised 2025 non-GAAP EPS guidance of $1.75 to $1.77.

Now taking a closer look at the drivers of our third quarter earnings. Growth and rate recovery when netted with depreciation and other taxes were a favorable variance of $0.07 when compared to the same quarter of last year. This positive variance underscores the strength of our interim capital tracker mechanisms, which continue to support the efficient recovery of our investments. We expect these tailwinds to continue driving earnings through the remainder of the year.

During the quarter, we filed for our second set of interim capital recovery trackers at Houston Electric, the TCOS and DCRF mechanisms, which support the timely recovery of transmission and distribution investments, respectively. Our TCOS filing, which included a $15 million annual revenue requirement increase was approved and reflected in customer rates on October 10.

Our DCRF filing, which includes a $55 million annual revenue increase is on the PUCT open meeting agenda for later today with updated rates expected to take effect in December. Weather and usage were $0.01 favorable when compared to the comparable quarter last year, driven by fewer outages across our Houston Electric service territory related to storm activity. O&M was $0.12 favorable compared to the third quarter of 2024. This significant improvement in O&M is primarily driven by last August vegetation management and other storm-related costs, where we spent approximately $100 million to accelerate work and improve customer outcomes.

Additionally, we had $0.03 of favorability in other, which is primarily driven by an income tax remeasurement. This reflects our continued efforts to optimize our tax structure to align with the evolving composition of our portfolio, which after the closing of our Ohio transaction, will skew more heavily towards Texas. These favorable drivers were partially offset by $0.04 of higher interest expense and financing costs, primarily due to incremental debt issuances since the third quarter of 2024.

Next, I'll go through the details of our recently announced Ohio gas LDC sale. As many of you may have seen earlier this week, we announced the sale of our Ohio gas LDC, which is expected to generate gross sale proceeds of approximately $2.62 billion, garnering a multiple of nearly 1.9x 2024 year-end rate base. We anticipate total net proceeds of roughly $2.4 billion after taxes and transaction costs. This is an outstanding outcome. This result exceeds what was contemplated in our financing plans, underscoring the conservative approach we take to our planning process.

As such, the transaction will be accretive to both our plan and alternative financing sources. In the near term, these proceeds will serve to further strengthen our balance sheet. And over the long term, as Jason alluded to, this transaction will allow for greater financing flexibility and may enable us to fund incremental capital investments with less equity than the 47% rule of thumb we provided at our September investor update.

Transaction proceeds will be redeployed into higher growth jurisdictions to support near-term capital investments in our Texas Electric and Gas businesses. Notably, after the close of this transaction, Texas will represent 70% of our investment portfolio. In connection with the transaction, we will enter into a 1-year seller's note with a 6.5% annual coupon, which will help support earnings in 2027. As a reminder, last quarter, we announced an increase to our 2025 investment plan as we continue to make targeted system enhancements. These incremental investments will help partially offset the loss of Ohio investments upon the close of the sale. The transaction is expected to close in the fourth quarter of 2026, aligning with our financing plans and long-term value creation goals.

Next, I'll touch on our capital investment plan execution through the third quarter, as shown here on Slide 7. For the quarter, we are right on track to meet our positively revised 2025 capital investment target of $5.3 billion. In the third quarter, we invested $1.3 billion of base work for the benefit of our customers and communities, which, combined with the $2.4 billion we invested in the first half of the year, represents approximately 70% of our total year target. In short, we remain well positioned to achieve our investment targets for 2025.

Now moving to an update on our balance sheet and credit metrics. As of the end of the quarter, our trailing 12 months adjusted FFO to debt ratio based on the Moody's rating methodology was 14% when removing transitory storm-related impacts. We anticipate these credit metrics could be further improved by early next year as we expect to issue securitization bonds in connection with Hurricane Barrel in the first quarter of 2026. We continue to target 100 to 150 basis points above our Moody's downgrade threshold of 13% as we remain laser-focused on efficiently financing our robust capital investment plan.

Earlier this month, we once again illustrated our commitment to a strong balance sheet through our $700 million junior subordinated note issuance, which provides 50% equity credit. Our common equity guide through 2030 remains unchanged at $2.75 billion. As a reminder, we have derisked over $1 billion of these equity needs through the forward sales we executed earlier this year, and we do not anticipate common equity needs beyond those forward sales from now through 2027.

We believe we are well positioned to execute the remainder of the year and beyond, and we are reaffirming our 2025 non-GAAP EPS guidance range of $1.75 to $1.77, which equates to 9% growth at the midpoint from our delivered 2024 non-GAAP EPS of $1.62. Additionally, we are also reiterating our 2026 non-GAAP earnings guidance we initiated a few weeks ago at our investor update from the midpoint of our new and higher 2025 range.

For 2026, we are targeting at least the midpoint of $1.89 to $1.91. At the midpoint, this would represent an 8% increase over the midpoint of our 2025 non-GAAP EPS guidance range. Looking ahead, we expect to grow non-GAAP EPS at the mid- to high end of our 7% to 9% range from 2026 through 2028. After 2028, we will target growing earnings annually at 7% to 9% through 2035. We look forward to executing our plan that delivers on the most diverse growth drivers in the country, fueling economic development for years to come. And with that, I'll now turn the call back over to Jason.

Thank you, Chris. I'm proud of the team's continued execution over the past quarter and the results that firmly put us on track to deliver our guidance this year. This management team will work to not only execute the ambitious targets we set forth in our new industry-leading 10-year plan, but we will also work to enhance the plan for the benefit of all of our stakeholders.

Thanks, Jason. Operator, I'd now like to turn it over to Q&A.

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

I just wanted to ask, Chris, you talked a little bit about it in your prepared remarks on balance sheet capacity here from the Ohio transaction. How are you kind of viewing it on like an FFO to debt improvement basis versus the plan? You mentioned financing maybe less than the 47% equity assumption. Is that now 30% or 15%? Is there any kind of way to further quantify that?

Sure. Nick, if I could just maybe take a step back. And as you look at the transaction, there's really a couple of things going on. One is, over time, you've seen us continue down this path of increasing really the focus on the portfolio where we're reducing also earnings and cash lag where we can. So maybe that kind of goes to your FFO to debt point. As you look at the total outcome as we do sources and uses, you'll probably see us initially step into reducing the OpCo debt that's there. So that's roughly $800 million if you base it on a year-end '26 rate base of $1.6 billion.

And then as we look at our plan overall, you're probably looking on the order of $400 million of benefit net to plan. So ultimately, what this puts us in a position to do, as you can imagine, is we'll evaluate both the improvement to the balance sheet here in the near term. And then as we go forward, it could allow us to deploy additional CapEx to the plan in an accretive way.

Okay. Great. Appreciate it. And then just maybe on the deal, just any update on how local feedback has been on the ground and reception to the deal from state leadership since it was announced?

Yes. Nick, it's Jason. Reception has been great so far, very supportive. Don't anticipate any challenges and obviously going to work with our counterparty to successfully transition this business and continue the track record of great service in Ohio.

Our next question is from Steve Fleishman with Wolfe Research.

Just maybe, Jason or Chris, more color on the sales growth in Texas, which obviously that's very strong. Just what sectors are driving the industrial sales so much higher this year?

Steve, thanks for the question. I think the throughput growth quarter-over-quarter, year-over-year really reflects the diversity of drivers that we have here in the Greater Houston area. We've already connected this year alone over 0.5 gig of data center activity. Much of that is on the transmission sort of industrial rate side. We continue to see very strong demand from energy, refining, processing and exports.

And I think what we really saw as a differentiator this quarter was the increase in activity at the Port of Houston. It's the largest port by waterborne tonnage in the world. And we saw about an 18% increase quarter-over-quarter in exports. So it's really just a diversity of drivers. This isn't growth that we're anticipating coming down the line. This is growth across a number of different industries that we're experiencing today.

Okay. Great. That's helpful. And then just any update on prospects of data center activity in Indiana. And I don't know if you want to share any thoughts on how you're feeling about the regulatory environment in Indiana. I know you don't have any cases there right now, but just thoughts there.

Yes. We continue to actively work on data center opportunities in Indiana and feel well positioned to deliver on that. As we've talked about in the past, I think we're pretty uniquely positioned in the fact that we've got excess capacity today in the system that allows us to move quickly. It's an area that is very constructive, both from a cost of and availability of land, water, et cetera. And we've just brought online our simple cycle plant that was built to be easily converted to combined cycle that would allow us to efficiently increase the level of capacity available.

So we continue to feel good about the prospects of bringing data center activity to Southwest Indiana. Stepping back on kind of a broader basis, we are all focused on affordability of our service up there. We, like many of the other Indiana utilities had a fairly significant step-up in rates last year as a result of a long-term trend of closing some very old generating facilities.

As we project forward, though, we don't -- we see our rates growing in line with inflation over the remainder of this decade. We've taken some steps to help kind of mitigate the impact. We've canceled about $1 billion of renewable projects and we'll push out the retirement of our third and final coal facility a few more years. And so I think at the end of the day, we, like other utilities, are taking proactive steps to make sure that we moderate the pace of rate increases, but working constructively to bring economic development activity to the state. And I think that's very much aligned with the state leadership goals.

Our next question is from Jeremy Tonet with JPMorgan Securities.

Chris, thanks for the comments there on the asset sale. I was just wondering if you might be able to expand a little bit more. It sounds like a nice credit accretive properties to the final deal terms versus expectations. I'm just wondering if you could expand a bit more, I guess, on whether you see this being accretive to the earnings over time or any thoughts on that side?

Sure. I think, Jeremy, a couple of ways to look at this. We do see it as directly beneficial to the financing plan, as I mentioned, and helpful from an earnings standpoint, too. A thing to keep in mind is, as we looked at the sale here of Ohio specifically from a -- as we reallocate spend, we're going to be in a situation where we're experiencing 25% to 30% less cash lag just on a historical basis. So I think that's certainly helpful as well.

Going forward, we'll be putting those dollars to work, as Jason mentioned, certainly heavily in our Texas Gas and Electric business, including in a set of Texas gas projects that we're excited about really for years to come, where it really is a great business, as you know, coming out of the rate case last year there. So I think well positioned both financing-wise and from an earnings standpoint.

Keep in mind, I alluded to this in my prepared remarks, but I would just emphasize here, too, as we're stepping into making sure that we were managing any otherwise earnings impact, we've already deployed about $500 million this year that we expressed in our plan. And keep in mind, as I mentioned earlier, this is about $1.6 billion of year-end '26 rate base. So you should assume that we're also going to accelerate another roughly $1 billion in 2026. That means that here, we're going to fully replace that rate base by the beginning of 2027. So overall, positions us well going forward.

That's very helpful. And just one more, I guess, on the seller's note as you guys are receiving in the deal as far as how you think about how that helps facilitate the plan and what value, I guess, that brings to CenterPoint here being able to layer that in and how that allows you, I guess, to manage earnings going forward, but it sounds like the capital plan, as you said, really is a big offset there.

Yes. Certainly, from a capital allocation plan, we've been prefunding thoughtfully. What I would say on the seller note is it's a pretty straightforward instrument there where we'll have that opportunity for the second year to 2027, having that 6.5% coupon associated with it on just over $1 billion. And so it allows us, again, to have good clarity. It also settles on a quarterly basis, I think, which is nice, too. So there's no real lag there. So straightforward instrument, one that it's a helpful component of the plan as well.

Our last question comes from the line of Julien Dumoulin-Smith with Jefferies.

Jason, quickly, a couple of things to follow up on. First off, I know you alluded to it a few weeks ago here, but how do you think about the AMI and rollout and the time line on that front? I mean, certainly, it seems like this is a multiyear project here. But certainly, within the scope of the 5-year plan, how do you think about the cadence of that rolling in? When do we start to get some visibility around that and contributions?

Yes, Julien, thanks for the question. This next generation of AMI investments really will start to fold into the plan in '26. Maybe taking a step back for a second, as we released the new $65 billion 10-year CapEx plan we identified more than $10 billion of upside. I would consider one of these projects as one of the upside opportunities to that plan.

I think coming back to the timing, the most important thing that we can do is run a pilot in '26 to prove the use case and benefits for our customers. And then I would really look at that once we have that pilot in hand, making a filing with the PUCT and really starting to kind of work this project in earnest beginning in 2027 and beyond. I think there are very real benefits for our customers.

As we've talked about in the past, when we experienced Winter Storm Uri, because of the generation of meters we had at the time, we could not use those meters for load shed-related activities. Instead, we had to shed load at the circuit level. This next generation of smart meters would allow us to do that at the home and I think would allow us to be much more targeted and allow for even more rolling of power if an event like Winter Storm Uri was to occur again. So a number of benefits to our customers. We need to prove those out with a pilot in '26 and then look towards more fulsome deployment beginning in '27.

Excellent. And then if I could pivot in a slightly different direction, obviously, kudos on the transaction here. The other item, if I were to think about like what's not in terms of included in the formal guidance on cash flows is mobile gen. I perceive that the economics and price points there continue to improve as evidenced maybe by some of the folks out there like Fermi talking about this. But how would you characterize today where you are around that and the opportunities that exist more in the longer term, obviously, is that it's less committed in terms of the existing units and your exposure to some of that improved market pricing?

Yes. There's really 2 aspects to that, Julien. There's first, we've got what we call medium-sized units, just a little bit larger than 5 megawatts a piece, 5 units, 5 megawatts a piece that currently we have the ability to market and are actively doing that. The market for those units remains very strong and would be a potential cash flow tailwind to the plan. On a larger basis, we have 15 units that are roughly kind of call them, 30 megawatts a piece that are now actively supporting the grid outside of San Antonio until either kind of late '26, early '27 at the latest, at which time then we'll be able to remarket those units.

As you said, the market remains strong. If anything, it is improving modestly. That will become a cash flow tailwind when we can release those units from the support of the ERCOT grid in San Antonio and remarket those again probably likely around spring of '27. So we continue to work with brokers, third parties to keep a pulse on the market and think about how we can kind of derisk and take advantage of this growth. But obviously, more to come here as the quarters unfold and as we get closer to those -- the release of those units.

Excellent. Sorry, nothing to, but one final detail here. HB4384, right? So that's -- your peers in the state, your peer gas utilities in the state have been talking a good bit about this. I know that you all in the interim have talked up even more gas investments in your plan a few weeks ago. Is the scope of the contribution from that legislation fully included in the plan? And to what extent is there anything else that we should be considering here given your expanded investment in gas in recent weeks?

Yes. We think that was a very constructive piece of legislation to help sort of reduce regulatory lag. What I would say is the benefit of that legislation is incorporated in the plan that we released with respect to the investments that we have identified as we continue to look at enhancing the plan, and we've alluded to the $10 billion plus outside, there is opportunity as we fold gas-related capital in that the plan could be enhanced further with the benefit of that legislation. So partially in the plan has the opportunity to be improved as we fold more capital in.

Thanks, Jason. Operator, this concludes our call. Thank you all for joining.

This concludes CenterPoint Energy's Third Quarter 202 Earnings Conference Call. Thank you for your participation.

Good afternoon, and welcome to CenterPoint Energy's 2025 Investor Update Call with Senior Management. [Operator Instructions].

I will now turn the call over to Ben Vallejo, Director of Investor Relations. Mr. Vallejo?

Good afternoon, everyone, and welcome to CenterPoint's 2025 Investor Update. Speaking on today's call will be various members of the CenterPoint management team, including Jason Wells, President and Chief Executive Officer; Jesus Soto, Executive Vice President and Chief Operating Officer; Jason Ryan, Executive Vice President of Regulatory Services and Government Affairs; and Chris Foster, Executive Vice President and Chief Financial Officer.

Management will discuss certain topics that will contain projections and other forward-looking information and statements that are based on management's beliefs, assumptions and information currently available to management.

These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially based upon various factors, as noted in our SEC filings and earnings materials. Other than as required under applicable securities laws, we undertake no obligation to revise or update publicly any forward-looking statement.

We will be discussing certain non-GAAP measures on today's call. When providing guidance, we use the non-GAAP EPS measure of adjusted diluted earnings per share on a consolidated basis referred to as non-GAAP EPS. For information on our guidance methodology and a reconciliation of the non-GAAP measures used in providing guidance, please refer to our news release and presentation, both of which can be found under the Investors section on our website.

As a reminder, we use our website to announce material information. This call is being recorded. Information on how to access the replay can be found on our website. Now I'd like to turn the discussion over to Jason.

Thank you, Ben. Good afternoon, and thank you to everyone joining us for our 2025 investor update. As many of you may have seen from the press release we issued earlier this afternoon, we have a lot of exciting updates to share. Over the next hour, we will discuss our vision for the company for the next 10 years and illustrate why we continue to believe that we have one of the most tangible long-term growth plans in the industry. The plan that we'll cover today seeks to advance economic growth and improve our customers' experience across the 6 service territories we have the privilege to serve.

Before we get into the details of our new 10-year plan, we have 3 updates to our near-term guidance components that I would like to briefly highlight. First, with the additional clarity to our 2025 earnings today, we are raising our 2025 non-GAAP EPS guidance range from $1.74 to $1.76 to a revised range of $1.75 to $1.77. At the midpoint, this represents 9% growth from last year's delivered earnings.

This would be the fourth year delivering 9% year-over-year growth out of the last 5 years. More importantly, each time we have rebased our future earnings guidance off of the higher rates. Second, we are initiating our 2026 non-GAAP EPS guidance range of $1.89 to $1.91, and we are targeting the midpoint or better of this range. At the midpoint, this represents 8% growth from the midpoint of our new and higher 2025 non-GAAP EPS guidance.

Lastly, we are announcing another $2 billion increase to our current customer-driven capital investment plan through 2030. Like the other increases we have announced this year, this $2 billion is being added without the need for additional common equity. This is our fourth positive revision since the beginning of this year for a total increase of $7.5 billion through 2030.

These updates build upon a track record of execution that began at our 2021 Analyst Day. During that update, we introduced an ambitious 10-year plan aimed at improving outcomes for our customers and our investors. Since that time, our management team has been laser-focused on not only executing that plan, but also enhancing it for the benefit of all stakeholders. With that said, it's clear that the past 4 years have brought remarkable changes to the utility landscape. Perhaps most notable is the surging demand for power and the pivotal role utilities are now playing in meeting this unprecedented growth.

Our Houston Electric service territory exemplifies this trend as we are anticipating a nearly 50% increase in peak electric load demand to over 30 gigawatts by 2031 and nearly doubling to 42 gigawatts by 2035. To put that growth into context, it took us nearly a century to reach our current peak load of 21 gigawatts. Yet, we anticipate peak demand to increase approximately 50% in just the next 5 years.

Importantly, our anticipated demand growth is differentiated from our peers because of the diversity of the economic drivers. Our growth profile is not contingent on a few big projects, and we have been very conservative in forecasting the conversion of our interconnection requests to the forecasted demand growth. The new 10-year plan we are introducing today is aimed at meeting this new explosive growth to support economic development across our 6 service territories.

In addition, our investments over the next 10 years are intended to improve our customers' experience through enhancing the safety, reliability and resiliency of our systems.

Now I'd like to touch on the highlights of our new 10-year plan. My colleagues will provide the details in their sections. It starts with the work to serve our customers and communities. We plan to make at least $65 billion in customer-driven capital investments through 2035. Of this $65 billion 10-year total, we expect to invest $33 billion from 2026 through 2030. This is up nearly 40% from the 10-year plan initiated in 2021.

As I mentioned, this new plan includes a $2 billion increase through 2030 with no anticipated additional common equity needed. From 2031 through 2035, we are targeting to invest $32 billion. In addition to an outside of our $65 billion capital investment plan, we have more than $10 billion of incremental capital investment opportunities through 2035. Included in this $10 billion are investments that we believe can further accelerate, improve customer outcomes and advance economic growth. These incremental investment opportunities include our next-generation electric smart meter deployment, increased strategic undergrounding of distribution lines, additional electric transmission work and data center-related investments in Indiana.

We will efficiently finance our investments by recycling capital related to our Ohio Gas LDC business, which we expect to announce by the end of this year. Our improved operating cash flows that will allow us to self-fund approximately 65% of our capital investments over the next 10 years, moderating our dividend growth to approximately 6% over the duration of our 10-year plan. And lastly, modest common equity issuances of roughly $3 billion from 2028 through 2035.

As a reminder, we have already derisked our financing plan through 2027 with our previously executed forward sales of $1.1 billion of common equity. With a solid foundation of over 11% rate base growth expected through the end of this decade, combined with our ability to efficiently finance our capital investment, we are increasing and extending our long-term earnings guidance range. Over the longer term, we are targeting non-GAAP EPS annual growth of 7% to 9% through 2035.

As a reminder, we grew earnings from the prior year actuals as we seek to deliver value for our investors each and every year. This approach, combined with the earnings increases from our original targets, has resulted in nearly 10% incremental earnings from our original 10-year plan.

In the nearer term, given our derisked regulatory and financing profile, we are targeting the mid-to-high end of the 7% to 9% range over the first 3 years of our plan. From 2026 through 2028, we will target the mid-to-high end of our 7% to 9% non-GAAP EPS annual growth rate.

Over the duration of our 10-year plan, we anticipate reducing O&M 1% to 2% per year on average through 2035 as we continue to stay laser-focused on cost control and customer affordability. We anticipate these reductions will help us keep our customer charges roughly in line with the historical long-term rate of inflation as we strive to invest for the long-term benefit of our customers. Our approach to this new plan and even many of the targets we're introducing today may look familiar to many of you. The 10-year plan we put forth 4 years ago had many of the same ambitious goals, including aggressive O&M reductions and peer-leading earnings growth guidance.

We believe we are well positioned to execute over the next 10 years, just as we were when we introduced our last plan. Since the introduction of our prior plan, we have delivered strong outcomes for the benefits of all of our stakeholders. These outcomes include increasing the original 10-year $40 billion customer-focused investment plan by $15 billion or nearly 40%.

Our disciplined approach to driving efficiency in operations which has resulted in a cumulative 7% reduction in O&M over the last 4 years, meeting our 1% to 2% average annual O&M target, while at the same time, increasing vegetation management in our Houston Electric business, by over 30%. This focus on taking cost out of our business helped us achieve a revenue reduction in our Houston Electric rate case as we continue to emphasize affordability of our service. Importantly, we have made these investments while keeping our average customer bills and charges at or below our in-state peers, notably in our Houston Electric service territory, our residential customer delivery charge is nearly the same as it was in 2014.

Lastly, we've delivered peer-leading non-GAAP EPS and dividend per share growth that supports a strong investment thesis. This helps us to continue to compete for capital to efficiently fund the investments we make on behalf of our customers. From 2021 through 2023, we grew non-GAAP EPS 9% each year and 8% in 2024. Each year, we have grown non-GAAP EPS from the prior year's actual delivered results.

With today's announced non-GAAP EPS guidance increase, we will have grown our earnings 9% in 4 of the last 5 years, which would be the highest amongst our peers over that same period. In addition, we grew our dividend per share closely in line with earnings over that period. This was one of the fastest dividend growth rates in the sector. Many of these results have far exceeded the ambitious targets we put forth during our 2021 Analyst Day.

We are confident that over the next 10 years, we will have the opportunity to continue the strong level of execution as we work to improve customer outcomes and enhance value creation for our investors each and every year. Bolstering our confidence is the dynamic and growing jurisdictions that we have the privilege to serve, especially those in the state where we have our largest presence, Texas. Texas continues to experience unprecedented growth as low taxes, affordable housing and a constructive regulatory environment, attract not only some of the world's largest businesses but also individuals that work for them.

Notably, if Texas were a country, it would have the eighth largest economy in the world. Fueling that economy are the over 30 million residents that reside in the Lone Star State, a figure that only continues to grow. From 2020 to 2024, Texas added over 560,000 residents annually, driving a 7% cumulative growth rate over that period. 2024 marked the 14th consecutive year in which Texas outpaced every other state in the country in annual population growth. Our Texas Gas and Houston Electric service territories have undoubtedly benefited from this tremendous growth that much of the state experiences.

Houston, already the fourth largest city in the United States, is uniquely positioned to continue this growth through both industrial expansion and residential development in the decades ahead. Houston industrial backbone is second to none. As the energy capital of the world, the city boast 14 headquarters for leading publicly traded energy companies, but Houston's industrial profile extends far beyond the energy. With the largest port in the nation by waterborne tonnage, the greater Houston area is a central hub for global trade and logistics. Manufacturers, chemical producers and high-tech firms are also flocking to Houston for its unmatched infrastructure, supply chain connectivity and business-friendly environment.

The underlying fundamentals of these rapidly growing industries have resulted in significant increases in energy demand from our industrial customers. Notably, since 2018, weather-normalized industrial sales and our Houston Electric business have increased at a 7% CAGR. Emerging industries are also fueling the future, Houston's rapidly growing medical sector, anchored by the Texas Medical Center, or TMC, the world's largest medical complex positions the city as a leader in biotechnology, health care, innovation and life sciences.

Recently, many of you may have seen that Eli Lilly announced a new advanced pharmaceutical ingredient manufacturing plant, which complements the leading clinical and research work in the Texas Medical Center.

The introduction of pharmaceutical manufacturing is yet another growth driver for this region. As AI and data centers continue to evolve Texas and more specifically, the Greater Houston area is expected to play a major role. Many of you may have focused on the announcements of planned data centers and the Greater Houston area remains fertile ground for these types of projects with its access to energy and abundance of land. However, what may be underappreciated is the growing ecosystem in the greater Houston area that supports the manufacturing of components of these facilities. For example, Foxconn has recently announced a $450 million investment in its already existing plants here in Houston, and we anticipate sustained growth in this sector as the expansion of data center infrastructure continues.

Industrial and commercial strength means job creation and with jobs comes people. Houston's affordable cost of living, especially compared to coastal cities makes it an attractive option for families, professionals and entrepreneurs alike.

Over the last 5 years, the Greater Houston area has created over 350,000 jobs, which has supported Houston Electric's annual residential customer growth in excess of 2% since 2018. The city's continued investments in transportation infrastructure, green spaces and urban revitalization have further enhanced its livability. New master planned communities are sprouting on the city's outskirts, while urban redevelopment projects bring new life into historic neighborhoods. This balance between suburban comfort and urban vibrancy helps enable Houston to meet the housing needs of a growing and diverse population.

Earlier this year, the city of Houston announced a new and unique vision for the downtown Houston landscape. This multifaceted plan for the transformation of Downtown Houston weaves together Urban design, public art, greenery, pedestrian first infrastructure and welcoming public spaces.

As Jesus will discuss in more detail in his section, CenterPoint will make key contributions to this project with a relocation and modernization of our energy infrastructure. As the only investor-owned utility headquartered in Texas, we are humbled to be called upon to help further advance initiatives like these and further support the Texas economic miracle. This sentiment is shared across all of our service territories as we work every day to advance safe, reliable and resilient energy for all of the customers we serve across our 6 service territories.

I'll now turn it over to Jesus who will discuss the significant projects and capital investments. We anticipate executing for the benefits of our customers and our communities.

Thanks, Jason. As a 30-year veteran of the utility industry, I am passionate about safety and serving the customers that rely on the energy we deliver each and every day. I was attracted to CenterPoint's vision to build the most resilient coastal grid and operate the safest gas system in the United States to better serve its customers and communities. I feel both excited and privileged to leverage my years of experience in driving safety cultures and construction-led project execution to help achieve the company's vision and execute what I see as a truly differentiated plan for the industry.

This is perhaps the most unique period of my career as the explosive growth in energy demand only increases the importance of the service utilities provide. I am excited to be part of this transformative time that will undoubtedly have a lasting impact on the landscape of the communities we serve for years to come. In my role immediately before joining CenterPoint, I had a front row seat to witness the generational growth that is driving energy demand across the many utilities I had the privilege to work with.

With that said, I don't believe there is faster or more durable growth than what my hometown, the Greater Houston area is experiencing. Undoubtedly, achieving customer-focused outcomes will require strong execution as we substantially ramp up our investments.

The $65 billion of planned investments is certainly a step change in the company's pace of capital deployment as we target enhanced customer outcomes across our businesses. We are targeting to invest nearly $7 billion across our 6 service territories in 2026 alone. Approximately half of this planned capital will be invested in our Houston Electric business. For context, next year's planned investments at Houston Electric are more than triple the approximately $1 billion we invested in this business just 5 years ago.

Even with this dramatic rate of growth, I am confident that we are well positioned to execute our various planned projects and programs across our footprint over the next 10 years. My confidence stems from the set of characteristics that I believe make our portfolio of planned projects and programs unique. The characteristics of this plan, I believe, not only provide a smoother path to execution but also differentiate us for much of the industry.

First and foremost, our capital investment strategy does not rely on the execution of one large project. Second, much of our planned work will be programmatic in nature with tried and true methods of executing where we can improve capital throughput. And third, our investments are expected to drive enhanced customer outcomes while also helping serve the incredible growth our service territories are experiencing, especially here in Texas.

We have the luxury of having a large set of projects in our capital investment plan that when managed as a portfolio of projects will lend themselves to continuous improvement and economies of scale. Simply put, we aren't reliant on big bets. I would now like to unpack each of these 3 elements and illustrate why I believe they provide a clear glide path to executing our customer-driven capital plan over the next 10 years.

I will begin by discussing the unique composition of our planned investment portfolio that feature smaller and more readily executable projects. Undoubtedly, the dollars associated with some of our planned projects are substantial. However, the complexity of the work is not expected to be of the same magnitude. For example, we anticipate investing at least $19 billion over the next decade in our Houston Electric transmission system.

With that said, this $19 billion of investment is comprised of over 200 discrete projects. Notably, we expect that nearly 95% of these projects will require an investment of less than $400 million in the aggregate.

On top of that, over 2/3 of these projects are brownfield opportunities where existing structures are already in place. This profile will allow for reduced construction costs and an increased speed to energization, thereby reducing execution risk and benefiting customer charges. I think of our planned investment in the gas transmission pipeline project in our Texas Gas service territory, the same.

Over the next 10 years, we anticipate building out approximately 200 in miles of pipe as part of this project. However, over that period, we will complete and place into service smaller segments of the full 280 miles. This work, again, will not only reduce our risk by reducing execution complexity but will also allow our customers to benefit from this asset well before the total completion of the project. Chris will discuss the potential customer savings associated with this project in his section.

Second, outside of the stand-alone projects in our plan, a significant portion of the $65 billion we plan to invest is related to more routine and programmatic investments in safety, resiliency, reliability and growth. For example, we plan to invest over $6 billion in the deployment of upgraded meters and pipeline replacement programs across our natural gas service territories. This is work that's already underway and we will further standardize our work methods across the states we serve to further enhance the safety of our systems and the efficiency of our work as we aspire to operate the safest gas system in the country.

Similarly, at Houston Electric, we will systematically execute on our resiliency investment plan as we work to build the most resilient coastal grid in the country. We've already started on this journey, and over the last year, our customers have experienced tangible results.

Our focus on consistent performance as a team cuts across both our financial and operational plans. This leads me to the third characteristic of our capital investment portfolio of planned work that I would like to discuss. Our plan is anticipated to deliver significant improved outcomes for our customers while supporting the incredible growth we continue to experience, especially in Texas.

At Houston Electric, our work portfolio to enhance the resiliency of our system has already yielded tangible results for our customers. Notably, our customers experienced an approximately 45% reduction in average outage minutes as a result of our focus on and investments in this area through June of this year compared to the same period in 2024. This reduction equates to approximately 1 billion outage minutes saved in the aggregate. That's a huge improvement and credit to the team for the sprint we started last August, but there's much more to be done.

We will continue to target investments and activities to further advance the resiliency of our system over the next 10 years and beyond. This work will be completed in parallel with build-out of the Houston Electric transmission system I touched on earlier. We believe these investments in the transmission system will further support the Texas miracle.

Across our gas service territories, we seek to advance the safety of our systems and completely eliminate cast iron pipe. As a 30-year veteran of the utility industry, I understand what it takes to execute the projects and programs that will deliver improved outcomes for our customers. Although I have only been here for a short while, I have been inspired by the talent and passion my colleagues have for delivering for our customers each and every day. I look forward to collaborating with them to execute the important work we have ahead.

I will also continue to focus on areas where we may need additional expertise and make targeted hires to supplement an already strong team. In closing, I am so excited to be here and be part of this team. I firmly believe that our customer-centric investments in our construction-led project execution model that is anchored with strong engineering, procurement and construction partnerships will deliver the strong and improved outcomes for our customers.

And with that, I'll hand it over to Jason Ryan to discuss the strong regulatory environments that enable us to serve our great customers and communities.

Thank you, Jesus. I want to echo my colleague's comments on what a privilege it is to serve customers in our 6 great service territories, supporting our ability to continue to efficiently and effectively make investments for the benefit of those customers, are the strong regulatory constructs and relationships in each of the jurisdictions in which we operate.

There's perhaps no better example of this than the outcomes of the 5 general rate case filings we executed over the last 2 years. In all 5 rate cases, we were able to improve our equity ratios and we are able to improve returns on our equity in all but one, which reset that return in line with current markets.

Notably, 3 of these cases were all-party settlements with the other 2 settlements being contested by one or more parties but not commission staff. These constructive outcomes continue to support a strong investment profile enabling us to more efficiently fund our regulated businesses for the benefit of our customers. With those rate cases now complete, over 80% of our rate base is not anticipated to be subject to a rate case for the next 4 years.

In between rate cases, we will continue to file our interim capital trackers, which notably allows us to timely recover over 85% of our capital investments. These capital trackers are an incredibly efficient way for us to recover our capital investments without the administrative burden and cost of the general rate case, and it also avoids rate shock for our customers that could happen if these trackers didn't exist. In addition to the constructive regulatory outcomes and capability for efficient recovery of future capital, we believe that we have the support of stakeholders to navigate extreme weather events.

Notably, this year, we have successfully collaborated with stakeholders to settle on the recovery of over 98% of costs incurred to restore our customers after extreme weather events such as Hurricane Beryl, that directly hit the Greater Houston area last year. In addition to strong regulatory outcomes, we have also seen significant support of our growth strategy through bipartisan legislation, especially in our Texas service territories.

In Texas, a number of laws have been enacted that support Texas utilities as they build to enable the tremendous growth that the state continues to experience. For example, Senate Bill 1076 which passed in 2023, enables Texas utilities to move at the speed of business by reducing the regulatory process to approve transmission line applications from 1 year to 6 months. The importance of this legislation is even greater today as Texas utilities look to build out large transmission projects to serve the ever-increasing load demands of both new and existing customers.

Constructive legislation also allows Texas utilities to reduce regulatory lag in connection with making our customer-driven investments. For example, the enactment of Senate Bill 1015 during the 2023 legislative session allows us to recover our distribution-related capital investments twice per year, which not only improves cash flow supporting more efficient financing, but also smooth customer charges.

Additionally, House Bill 2555 which passed that same year, reduces regulatory lag on investments made under approved system resilience plans. Most recently, we've seen similarly constructive outcomes as it relates to our Texas Gas business with the enactment of House Bill 4384 earlier this year, which reduces regulatory lag for all capital investments of our Texas Gas business. All of this legislation was negotiated with stakeholders, so it includes benefits for both consumers and the utilities that serve them.

Outside of Texas, in Minnesota, we are now implementing programs under our Natural Gas Innovation Act plan, which was enabled by bipartisan legislation in 2021. And in Indiana, legislation enacted this year addresses accelerated time lines for new generation projects as well as expedited generation cost recovery. We believe that we operate in constructive jurisdictions that support utility investments leading to improved experiences for our customers. We have made significant advancements in this regard, and we will continue to proudly advocate for policy that benefits our customers.

And with that, I'll turn it over to Chris for a discussion on customer affordability and financing.

Thanks, Jason. Since I started here at CenterPoint as CFO, this management team's focus has been and will continue to be focused on delivering for all our stakeholders. For me, this means executing 2 key objectives: first, prioritizing customer affordability with our plan design by striving to keep average customer charges around the historic level of inflation. And second, efficiently and sustainably financing the significant capital investments ahead.

This objective is supported by moderating our dividend growth rate and by the improved operating cash flow resulting from our constructive regulatory outcomes. I firmly believe that the 10-year plan we are introducing today helps to meet both these objectives for the benefit of our customers and further positions us to update our guidance as Jason covered.

I want to start with discussing my first key objective, investing for the benefit of our customers with a strong focus on affordability.

Before I dive into how we're thinking about the customer bill impacts of the investments included in our new 10-year plan, I would like to provide some context on where we are starting from. Notably, across our service territories, our average customer charges have been in line with or less than our in-state peers. In our largest jurisdiction, Houston Electric, we have been able to invest approximately $8 billion over the last 4 years, while customer delivery charges have remained nearly flat for over a decade, this unique outcome has been driven principally by 3 factors: our relentless focus on reducing O&M across our businesses, as you can see here on Slide 32, we have made significant strides in reducing O&M over the last several years across our businesses, resulting in the lowest O&M per customer amongst our peers. The over 2% average annual residential growth or service territories experienced for decades and prior to securitization charges rolling off the bill.

Moreover, we have a track record of identifying other levers to reduce customer bills throughout our businesses. For example, for Houston Electric, we worked with stakeholders to remove our temporary generation facilities from future customer charges which are expected to ultimately result in residential customer savings of up to $2 per month on average.

In Indiana, we supported a bill to allow for the securitization of aging generation facilities that would have required significant cost to maintain operation for going the remaining equity return on that facility. And going forward, affordability remains top of mind for all of us here at CenterPoint, and we will work to continue to keep annual residential customer delivery charges related to our investments consistent with the historical level of inflation over the long term.

We plan to accomplish this by: first, reducing O&M through investing in the modernization of our system; second, continuing to take out costs by implementing more efficient processes. And lastly, supporting the exponential economic growth ahead that continues to fuel 2% annual residential customer growth in our Houston Electric jurisdiction.

For our natural gas businesses, we plan to continue to make important investments in the safety of our systems while also targeting to keep natural gas delivery charge increases across our natural gas service territories to increase at rates around the historic level of inflation on average. We believe we can accomplish this affordability objective by modernizing our gas systems through the deployment of new technologies like upgraded gas meters with remote capabilities.

In addition, Investments in the Texas Gas transmission pipeline that Jesus outlined in his section could significantly reduce fuel charges that pass through to customers. We believe this project could result and an aggregate average annual savings of up to $25 million per year. In addition to these cost reduction initiatives for our natural gas businesses, we've continued to find other levers to reduce customer bills throughout our businesses. We will continue to stay focused on our cost structure and explore other opportunities to make our customer-driven investments in safety, reliability, resiliency and growth and a sustainable and more affordable manner for the benefit of our customers.

Now moving to my second key area of focus, efficiently and sustainably financing our capital investment plan. Since our 2021 Analyst Day, we have been laser-focused on supporting the balance sheet and maintaining a 100 to 150 basis points cushion above our downgrade threshold. To accomplish this, we have evolved our financing plan to adapt to the higher for longer interest rate environment and efficiently support the significant increases to our customer-driven capital investment plan. This has informed our financing approach over the past year. We have first worked to improve operating cash flow through constructive regulatory outcomes and portfolio optimization.

Second, we have sought to issue credit supportive instruments were beneficial. And third, we've introduced a modest amount of opportunistic equity issuances. I first want to touch on the improvements we've been able to make in our operating cash flows. We have made strong progress in increasing our cash flow from operations as a direct result of our constructive rate case outcomes.

Across the 4 cases in which we have received a final order, we have improved our enterprise weighted return on equity by over 100 basis points. This improvement drives an increased annual cash flow of approximately $40 million based on a projected 2025 year-end rate base.

Beyond the cash flow benefits driven by stronger returns from recent rate case outcomes, we are now beginning to recover investments for which earnings have already been recognized but customer rates had not yet been updated. For example, in our Indiana electric service territory, we benefit from strong interim recovery mechanisms that allow us to recover a significant portion of our annual capital investments between rate cases. However, approximately 20% of certain investments were not reflected in customer charges until we file a rate case and received a final order. And with the recent order in our latest case, we have now begun recovering these deferred amounts, which accumulated since our previous rate case filing in 2015.

With respect to portfolio optimization, we have made strategic decisions to sell certain gas LDCs and efficiently recycle capital back into our higher-growth jurisdictions. For example, earlier this year, we closed on the sale of our Louisiana and Mississippi Gas LDCs. Those were great businesses, and we were privileged to serve those customers and communities. Not only has this sale enabled us to efficiently fund the significant increases to our customer-driven capital investment plan, but it has also improved our earned returns and operating cash flow. We were able to take the proceeds from that transaction and reinvest them into other jurisdictions where we experienced a significantly lower level of regulatory lag.

As we have previously disclosed, we are targeting to execute a definitive agreement to sell our Ohio Gas LDC assets by the end of this year. With this transaction, we will look to replicate the same efficient capital recycling strategy as we previously used for our asset divestitures.

Second, we have been and will continue to be opportunistic in issuing credit supportive instruments. Over the last 1.5 years, we have taken an all-of-the-above approach to financing our robust capital investment plan. This approach has included convertible notes, senior subordinated notes, traditional debt issuances, and most recently, securitization notes to supplement our modest common equity issuances.

Moving forward, you can expect that we will continue to fund our customer-driven capital investment plan while also supporting the balance sheet. Lastly, we have introduced a modest amount of equity to fund our growth capital investments. As many of you may recall, the plan that we introduced at our 2021 Analyst Day did not require common equity issuances. However, as we introduced more capital expenditures to our 10-year investment plan for the benefit of our customers, which, with today's announcement, now totals $15 billion. We did not want to pressure the balance sheet by only issuing traditional debt instruments. This increased capital investment plan in addition to the higher for longer interest rate environment that we have had, led us to the decision to introduce a modest amount of equity issuances to our financing plan.

We have derisked our planned equity issuances by executing approximately $1.1 billion of forward common equity sales earlier this year. We anticipate that these issuances will satisfy our common equity needs through 2027. Our anticipated common equity issuance needs through 2030 remain unchanged at $2.75 billion. This figure includes the already derisked $1.1 billion. And after 2027, we anticipate common equity needs of approximately $3 billion through 2035. These 3 areas of focus have helped us support the 100 to 150 basis points of cushion above our downgrade threshold which we continue to target.

And now looking forward, today, we are once again evolving our financing plan to efficiently fund our capital investment opportunities. As many of you may be aware, we have targeted to grow dividends in line with earnings over the past several years. Today, we are slightly moderating our dividend growth rate. And going forward, we will now target growing dividends at approximately 6% per year. We recognize that we already have an advantage to many peers with a lower overall dividend payout ratio of approximately 50%.

Looking ahead over the next 10 years, we expect our payout ratio will not fall below the 45% area. We believe that moderating dividend growth will allow us to more efficiently fund our customer-driven investments and reduce our reliance on common equity issuances in the future.

In addition, we believe that it will provide financing flexibility as it pertains to folding in incremental capital investment opportunities through 2030. And if you recall, we previously provided a financing rule of thumb that we would fund with 50% equity and 50% debt. Today, we're updating this guide through 2030, and you should now expect that we will fund incremental capital investments in line with our consolidated regulated capital structure of approximately 47% equity. This efficient financing provides a path to increase our 2026 and forward non-GAAP EPS guidance that Jason introduced in his opening remarks.

From 2026 through 2028, we will target to grow non-GAAP EPS annually at the mid-to-high end of 7% to 9%, growing from the previous year's delivered results. After 2028, we will target growing earnings annually at 7% to 9% through 2035. This strong earnings profile is driven by an anticipated rate base CAGR of over 11% through 2030, as we continue to invest on behalf of our customers. We also have a clear line of sight to the end of this year's earnings.

And as such, we are increasing our 2025 non-GAAP guidance range from $1.74 to $1.76 to now $1.75 to $1.77, which, at the midpoint, represents 9% growth from our 2024 non-GAAP EPS delivered results. We are also initiating our 2026 non-GAAP EPS guidance range of $1.89 to $1.91, where we are targeting at least the midpoint of this range. The midpoint of this range would represent 8% growth from the midpoint of our new and higher 2025 non-GAAP EPS guidance range.

We are excited to continue to execute for the benefit of all of our stakeholders. We look forward to enabling the tremendous economic development our communities continue to experience. And of course, we remain laser-focused on making those investments in a manner that is sustainable for both our customers and our investors.

And with that, I'll hand it back over to Jason for his closing remarks.

Thanks, Chris. I want to once again thank all of you for joining our call today. All of us here at CenterPoint are excited to deliver for all of our stakeholders over the next 10 years. That starts first and foremost with our customers. As we enter what is anticipated to be one of the fastest and largest increases of energy demand of the past century, we believe that we are uniquely positioned to make the investments that, one, continue to support and enable economic growth; two, deliver safer and more resilient and reliable energy during extreme weather; and three, focus on maintaining affordable service for our customers.

For our investors, we remain focused on delivering value each and every year. We anticipate that our customer-driven capital investments will result in a rate base CAGR of over 11% through the end of the decade. We believe that this strong investment profile drives our ability to deliver non-GAAP EPS at the mid-to-high end of our new 7% to 9% growth rate from 2026 through 2028 and 7% to 9% thereafter through 2035. During our 2021 Analyst Day, I stated that I firmly believe that we have one of the most tangible long-term growth plans in the industry. 4 years later, I have even more conviction in that statement. We look forward to delivering for all of our stakeholders over the next 10 years and beyond.

Thanks, Jason. Operator, we'd now like to turn it over for Q&A.

[Operator Instructions] Our first question comes from the line of Spark Lee of Jefferies.

We'll go to the next question. Our next question comes from the line of Nick Campanella of Barclays.

So just real quick on the equity that you have in the financing slides, maybe you can just talk about '28, '29 and '30? Is this something that you kind of plan to issue ratably? And then any other kind of thoughts on maybe being able to offset that with further capital rotation?

Sure, Nick. Thanks for the question. You're right that maybe if I could just take us one step back, just to be clear, right, we've completely taken care of our equity needs for '25, '26 and '27. And so what we talked about is really for that time period from '28 through '35. You've got a remaining $2.75 billion of equity left. And yes, you should assume just through that period that it's a ratable treatment of that equity during that time frame.

From a capital asset recycling standpoint, I think it's fair to say you've seen the team's track record here. We will continue to keep an open mind where it makes sense. I'm certainly very happy as well with the businesses we're currently operating, especially now that we've made so much progress in our rate cases as of recently.

All right. That's great. And then just maybe just on some of the $10 billion of CapEx upside. Can you kind of talk to your ability to kind of pull some of that forward into the, I guess, '25 to 2030 time frame? And what should we be kind of looking for to know that maybe some of that's coming into the plan? Is there a specific project that you can maybe talk to?

Yes, happy to give a little bit more color around that, Nick. I think a couple of the -- we mentioned 4 or so large drivers of that incremental $10 billion plus in capital, a couple of those are likely nearer term. The next generation of smart meters in the electric side of the business would likely begin to limit sometime here over the next year or so and then it would be a program that would continue into the early part of next decade.

Equally, we've highlighted that we continue to work on serving data centers in Indiana, that is outside the plan. If that moves forward, that would likely be nearer term, certainly within the remainder of this decade. As we start to kind of look a little bit longer term, I would say that one of the big opportunities on the system resiliency side would be the undergrounding of the laterals as part of our distribution network. That would be a multi-year decade-plus program that likely won't get started until the end of this decade.

And then finally, it's incremental transmission. And I would think about incremental transmission opportunities as being opportunities here of this decade as well as extending well into the next. We've got a diverse set of drivers outside of the $65 billion plan. And I just want to reinforce, it's at least $10 billion in incremental CapEx opportunity that has time that could be deployed here within the next few years.

Our next question comes from the line of Anthony Crowdell of Mizuho.

If I could just follow up on Nick's question on Slide 34. You talked about improved equity ratios and ROEs. You do quantify $35 million to $45 million. Any color you can provide on where -- whether it's basis point change or overall ROE, do you think you may be at the end of 5 years or something also on the equity ratio?

Anthony, thanks for the question. I think what we were trying to convey on that slide is the incremental improvement that we already made with respect to the 5 rate cases that we settled over the course of last year. This is the resulting cash flow impact from what has been done. Obviously, as we continue to file future rate cases, we'll look to improve that. But as we've mentioned in the prepared remarks, we substantially derisked the regulatory calendar with minimal rate case activity over the next few years.

And then I know you -- Chris, you talked about maybe moderating your dividend growth. I think it was -- I apologize I had the numbers wrong, 9% over the last several years. You're now targeting 6%, but you're still below the utility group. Just thoughts on using that as a source of capital versus trying to get to maybe the midpoint or the average of the sector.

Sure, Anthony. Happy to answer it. And there, I think you can imagine, just with the growth that we're seeing in front of us, we do see it as a reasonable lever for us at this point. You're right that we are moderating it to 6%. What that allows us to do is save roughly $800 million in equity equivalent in the plan itself. We'll also be focusing on not falling below the roughly 45% area on the payout ratio itself going forward. Again, at this point, we thought about it as one of the most efficient ways we can use our capital to be able to put forward more growth on the system.

Just to further that point, Anthony, yes, the 6% annual dividend per share growth that we're targeting is still higher in the industry than average for our peers. And so we offer competitive dividend per share growth while most efficiently funding our capital investment plan.

Our last question comes from the line of Julien Dumoulin-Smith of Jefferies.

Can you hear me now?

Julien, yes, we can hear you just fine.

Perfect. Excellent. Well, congrats on this update. Nicely done. Jesus, nice to see you and the team, sir. It's a pleasure. And maybe to come back to some of the things that you were responding to Nick about. Look, obviously, '28, you provide a nice outlook till then. Obviously, we're always going to ask a little bit more here. Nick did a nice job in teeing that up.

But as you think about the Houston Electric CapEx, it ticks down for those last final years. I presume that's part of the system resiliency plan rolling off from the initial 3 years, is basically the way to think about kind of the biggest moving driver to kind of get to a firmer upper end of that outlook through the full 5-year period going to be the full articulation of that SRP as far as those moving pieces. You laid out 4 different buckets there. But it seems like the biggest bucket there would be just getting the next roll forward of that SRP.

Yes. Julien, thanks for the additional question on the SRP. We have updated this plan to reflect some of the programs that we proposed as part of our last filing.

I do think there is additional upside, particularly as it relates to proposing a decade-long program of underground laterals. So this -- again, it reflects closing some of the gap after we refiled our original system resiliency plan, but we still have more upside towards the end of the decade as we incorporate other resiliency measures.

I really -- in the kind of confidence though in the overall plan. I mean we have, as I said, identified at least $10 billion of incremental CapEx opportunities, this is a valid systematically working through and incorporating those as we have, higher rates of confidence and efficient execution support of all stakeholders and efficiently financing those additional amounts as well.

Got it. Excellent. Can you guys just clarify what the baseline is and what the expectations on earned ROEs and equity ratios? I mean, obviously, you guys provide some degree of sensitivity here, but just to understand what that premises, if you will, through the plan here, at least the first handful of years.

Sure. The way you should think about that 100 basis point movement on the ROE was roughly 9.7%, moving up to roughly 9.8% across the business. On the earned returns, you'll see us, over time, continue to improve from a basis point standpoint, including with further ideas that we'll be pursuing both in the regulatory environment as well as in the legislature.

Got it. And to clarify that last one on Indiana here. You alluded to it. I mean, is that data center opportunity more or less, right? I mean, obviously, we've seen some of your peers announce things very recently here. How would you characterize the status of your conversations in the state?

We continue to have very active conversations. I think we're pretty uniquely positioned as we've highlighted previously, with the fact that we have a pathway to 600 megawatts pretty quickly and the fact that we have just commissioned our simple cycle gas plants that can easily be converted to combined cycle. It gives us an opportunity to kind of move that pace within a state that is attracting a lot of data center activity. So very active conversations and hopefully looking to provide more clarity here shortly.

Operator, that was our final question. That concludes our call. Thank you all for joining.

This concludes CenterPoint Energy's 2025 Investor Update. Thank you for your participation.

Good morning, and welcome to CenterPoint Energy's Second Quarter 2025 Earnings Conference Call with senior management. [Operator Instructions] There will be a question-and-answer session after management's remarks. [Operator Instructions]

I will now turn the call over to Ben Vallejo, Director of Investor Relations. Mr. Vallejo?

Good morning, and welcome to CenterPoint's Q2 2025 Earnings Conference Call. Jason Wells, our CEO; and Chris Foster, our CFO, will discuss the company's second quarter results. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are currently based on management's beliefs, assumptions and information currently available to management. These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially based on various factors as noted in our Form 10-Q and other SEC filings as well as our earnings materials.

We undertake no obligation to revise or update publicly any forward-looking statement. We reported diluted earnings per share of $0.30 for the second quarter of 2025 on a GAAP basis. Management will be discussing certain non-GAAP measures on today's call. When providing guidance, we use the non-GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non-GAAP EPS. For information on our guidance methodology and reconciliation of the non-GAAP measures used in providing guidance, please refer to our earnings news release and presentation on our website.

We use our website to announce material information. This call is being recorded. Information on how to access the replay can be found on our website.

Now I'd like to turn the call over to Jason.

Thank you, Ben, and good morning, everyone. On today's call, I'd like to address 4 key areas of focus. First, I will touch on our second quarter financial results. Second, I'll provide an update on the strong growth that our Houston Electric Service territory continues to experience fueled by a diverse set of economic drivers. Third, I'll touch on our recent announcement to efficiently recycle proceeds through the proposed sale of our Ohio gas LDC. And lastly, I'll discuss today's announced $500 million increase to our capital investment plan, which will be deployed this year.

Today's added customer-driven investments represent our third capital increase this year, now totaling $5.5 billion. Importantly, these increases to our capital investment plans will be funded without the issuance of incremental common equity. Now starting with our second quarter financial results. This morning, we announced non-GAAP EPS of $0.29 for the second quarter. Combined with our reported first quarter non-GAAP EPS, we are approximately 46% of the weight of the midpoint of our full year earnings guidance range of $1.74 to $1.76.

This quarter's earnings are in line with our expectations for the first half of 2025. As we discussed on our first quarter call, we anticipated earning 40% to 50% of the full year 2025 non-GAAP EPS guidance in the first half of this year. In short, we are right on track. As such, we are reaffirming our 2025 non-GAAP EPS guidance range of $1.74 to $1.76 which equates to 8% earnings growth at the midpoint from our delivered 2024 non-GAAP EPS of $1.62. Over the long term, we continue to expect a non-GAAP EPS at the mid- to high end of our 6% to 8% range annually through 2030. We also expect to grow dividends per share in line with the earnings growth over the same period.

Now I want to provide an update on our strong load growth outlook for the Houston Electric service territory, which continues to be catalyzed by a discrete and diverse set of economic drivers. Over the previous 2 quarters, we have shared the drivers of the substantial growth opportunities ahead. By 2031 alone, we expect a forecasted peak load increase of 10 gigawatts which represents a nearly 50% increase in peak demand on our system over the next 6 years. We have strong conviction in this forecast as we've made conservative assumptions related to the projects and our low interconnection queue.

Notably, since our first quarter call, our load interconnection queue has grown by 6 gigawatts or more than 12%. What differentiates this potential increase is that it continues to be propelled by a diverse set of drivers, including data centers, advanced manufacturing, energy development and energy exports. Together with the 7 gigawatt increase we discussed in our first quarter call, this additional 6 gigawatts of growth results in a cumulative increase of over 30% to what we included in our ERCOT load filing we made earlier this year. At this time, we are not formally increasing our load forecast above the nearly 50% growth target by the end of the decade.

However, these positive trends in customer demand only serve to reinforce our confidence in our growth forecasts. Most importantly, this growth is already beginning to materialize when observing year-over-year sales trends. Through the first half of this year, weather-normalized commercial and industrial sales were up 8% when compared to the first half of 2024. The growth we're currently experiencing in addition to the significant growth we are forecasting requires the construction and regional build-out of our electric transmission system that we will begin executing on in the near term. To fund this exponential growth in our Houston Electric service territory, we have continued to evaluate the most efficient forms of financing.

This, along with the timing needs for growth-driven capital ultimately led to our announcement of our Ohio Gas LDC sales process kick off during the quarter. I would like to share some additional color around our decision to efficiently recycle capital through the proposed sale of our Ohio Gas LDC. I want to begin by saying that these decisions are never easy. We value this constructive jurisdiction and our great employees that execute and deliver for our Ohio gas customers every day. However, as our Houston Electric and Texas Gas jurisdictions continue to experience increased and accelerated growth, we have decided to shift our strategic focus even more towards Texas.

In connection with the shift, we believe the proposed sale of our Ohio Gas business makes sense at this time, principally for 3 reasons.

First, the sale will allow us to efficiently recycle cash proceeds to support our continually increasing investment programs. We have previously demonstrated our ability to monetize assets above book value and efficiently reinvest those funds back into our regulated business. This transaction is yet another opportunity that we believe we can execute to finance our increasing capital needs efficiently.

Second, we anticipate that the sale of the Ohio Gas business will allow us to reprioritize nearly $1 billion of capital expenditures through 2030 to support our Texas jurisdictions. This reprioritization of $1 billion will help support the ongoing set of customer and community needs in Texas. In addition, we anticipate that the investing of these proceeds will result in a higher consolidated cash return in the future. We believe its improved cash flow profile will allow us to more efficiently self-fund our future investments and potentially allow us to rely less on common equity issuances.

Third is we look to optimize our portfolio, it makes sense for us to focus our time and resources in jurisdictions where we have both gas and electric service or we have a larger customer presence.

We anticipate that the recycling of cash proceeds from the sale of our Ohio Gas business. In addition to this reallocation of capital will result in Texas constituting over 70% of our portfolio after the close of the sale. The proposed sale of our Ohio Gas business and our derisked equity needs through 2027, which Chris will touch on in his section, has allowed us to increase our capital investment plan by $5.5 billion since the beginning of this year. All of these increases are anticipated to be funding without incremental common equity. In addition, we believe any further increases to our capital plan this year can be achieved without the need for additional common equity.

I now want to discuss the $500 million increase to our 2025 capital investment plan, which, as I mentioned, is on top of the $5 billion of increases already announced this year. The $500 million increase announced today will be invested in 2025 as we continue to make targeted system enhancements for the benefit of our customers. This increased capital investment will also help partially offset the loss of Ohio investments upon the closing of the sale. As I discussed earlier, our forecasted low growth will necessitate significant investments in our transmission system in both the near and longer term.

To address these forecasted needs, we are taking a leading role with peer utilities in ERCOT to advance the key planning studies and proposed projects that will help us enable the tremendous economic development in the eastern part of Texas. Through our own work with ERCOT's regional planning group, in addition to our own internal work, we have identified approximately 200 projects that we will look to execute over the next 10 years. We believe we are well positioned to execute these projects over this relatively short period of time.

Unlike many other transmission systems, we have a significant number of brownfield opportunities where existing transmission structures are already in place reducing construction costs and increasing speed to energization. Although we've already significantly increased our capital investment plan this year with our plan now at $53 billion through 2030. We have 3 significant investment drivers outside of electric transmission that continue to reinforce an upward bias to our capital investment plan. The first of these opportunities is related to furthering our resiliency-based work as we aspire to be the most resilient coastal grid in the country.

Over the last 12 months, we've made targeted assist improvements through our Greater Houston Resiliency initiative, which have already yielded improved outcomes for our customers. Notably, through May of this year, the average duration of outages, our Houston Electric customers experience has gone down nearly half as compared to the comparable period in 2024. This is a significant improvement and we are proud of our teams and our field crews focus on executing on our system automation strategy and pole replacement program at such an accelerated pace. However, we know there's still more work to be done.

With this in mind, we still see incremental resiliency capital investment opportunities through the end of the decade that go well beyond our current system resiliency plan, which will likely run through 2028. Chris will discuss the progress we've made on our current related regulatory filings in this section. The second driver of incremental capital investments I want to highlight is related to the revitalization of downtown Houston, which our plan does not currently include. This work will require substantial investments to support both growth and modernization of our underground electric system and our substations that support the downtown area as the city is in the process of undertaking a very exciting set of infrastructure plans to dramatically change the downtown landscape.

The third driver of potential incremental investments is in our Texas Gas service territory. that we've previously mentioned on our first quarter call. This relates to the opportunity to build a high-pressure distribution system in our Texas gas business, which currently relies on a series of contracts that are more costly for customers to move our owned gas throughout the greater Houston region. We're excited to share more about these capital investment opportunities later in the third quarter when we plan to provide a new comprehensive 10-year plan.

We continue to believe that we have one of the most tangible long-term growth plans in the industry. The growth of our businesses have continued to experience has resulted in $5.5 billion of increased capital investment so far this year, including the $500 million increase we announced this quarter. Even with these announced increases, we believe there is still further upside to our capital investment plan that runs through 2030. Our ability to efficiently fund our plan has allowed us to take our capital investment plan from $47.5 billion at the end of 2024 to $53 billion without introducing additional common equity.

In addition, we have derisked our modest common equity needs through 2027 through executing a forward sale of our common equity earlier in the second quarter. We believe we are well positioned with tailwinds exceeding headwinds, and we are excited to share a refreshed comprehensive 10-year plan by the end of the third quarter of this year.

And with that, I'll hand it over to Chris.

Thanks, Jason. This morning, I plan to cover 4 areas of focus. First, the details of our second quarter results Second, I'll touch on our regulatory progress through the first half of this year, including our recently announced proposed settlement in our Ohio gas rate case. Third, I'll discuss our progress on the execution of our 2025 capital investment plan, including our $500 million increase, bringing our 10-year plan to $53 billion, which we will fund without issuing incremental common equity. And finally, I'll provide an update on where we ended the second quarter with respect to the balance sheet and how we're thinking about the future financing of our capital investments in light of the proposed sale of our Ohio Gas LDC.

Let's now move to the financial results shown on Slide 8. On a GAAP EPS basis, we reported $0.30 for the second quarter of 2025. On a non-GAAP basis, we reported $0.29 for the second quarter of 2025 compared to $0.36 in the second quarter of 2024. Our non-GAAP EPS results for the second quarter removed the impacts from the sale of the Louisiana and Mississippi Gas LDCs. As Jason alluded to and as we discussed on our first quarter earnings call, we anticipated a more back-weighted shape to our 2025 earnings profile this year. As a reminder, this earnings profile is primarily driven by the different cadence of capital recovery as we were unable to access certain interim capital recovery mechanisms during our various rate case proceedings in the first half of the year.

Slide 9 depicts our expectations for the remainder of the year. Now taking a closer look at the quarter. Growth in rate recovery when netted with depreciation and other taxes was an unfavorable variance of $0.01 when compared to the same quarter last year. Again, this is largely driven by the off cadence filings of our interim capital tracker mechanisms. Weather and usage were a favorable $0.01 when compared to the comparable quarter of 2024. The largest impact here was from our Houston Electric service territory, which has experienced a warmer start to 2025, and as compared to slightly milder weather in the second quarter of 2024. O&M was $0.03 unfavorable when compared to the second quarter of 2024.

Like the first quarter, this unfavorable variance was largely driven by timing of vegetation management and other activities, which we accelerated to be ready ahead of the official start of the 2025 hurricane season. With much of this work moved into the first half of the year as compared to a more ratable work schedule in prior years, we anticipate this unfavorability to reverse over the second half of the year. In addition, interest expense and financing costs were $0.03 unfavorable when compared to the second quarter of 2024. These $0.03 were primarily driven by the increased debt issuances since the second quarter of last year, some of which were slightly higher coupon junior subordinated notes, given our focus on the balance sheet and emphasis on credit supportive instruments.

Lastly, as you may recall, last year, we issued $500 million of common equity. $250 million of these issuances were a pull forward from 2025 as we sought to strengthen our balance sheet after our storm restoration. These equity issuances resulted in an unfavorable variance of $0.01 quarter-over-quarter. Next, I'll briefly touch on our regulatory progress, starting with our Ohio Gas rate case settlement. As many of you may have seen 2 weeks ago, we reached a proposed settlement in our Ohio gas rate case. The settlement agreement includes a revenue requirement increase of $59.6 million based on an equity ratio of 52.9% and return on equity of 9.85%.

We began hearing earlier this week and anticipate those hearings continuing through the end of next week. We look forward to continuing to work with stakeholders in this case to reach a reasonable outcome for all parties. Moving now to Houston Electric. I'll begin with our system resiliency plan filing where we recently reached an all-party settlement. The proposed settlement includes distribution system resiliency investments and spend of approximately $3.2 billion over the next 3 years. There are 3 key categories of investment included in this figure, an acceleration of our polar placement program, undergrounding with vulnerable areas of our system and automation and increased resiliency of distribution circuits and substations.

In addition to those investments, the proposed settlement also includes certain non-investment activities for which we will receive a deferral related to the spend. Most notably, the proposed settlement provides for $140 million of vegetation management, which will allow us to defer costs associated with our industry-leading plan to reduce our trim cycle from 5 years to 3 years for the benefit of our customers. The proposed $3.2 billion included in the settlement represents a reduction of approximately $2.5 billion from the $5.75 billion included in our January filing. The primary driver of this reduction is the removal of transmission-related investments we included in our filing.

We thought it was important to include these investments in our initial filing to present a comprehensive picture of how we're approaching resiliency investments to improve outcomes for our customers. However, in settlement discussions, we agreed with stakeholders that these investments are better considered outside of the system residency plan process. To be clear, we still intend on executing this important transmission system hardening work. Over the last few years, we've made many investments to improve the backbone of the system by investing approximately $1 billion.

With much of that work already completed, we anticipate fully achieving our initial hardening targets on our transmission system within the next 10 years. We want to thank all stakeholders for engaging in constructive discussions about the resiliency investments that will help improve outcomes for customers in the Greater Houston area. We anticipate the PUCT to vote on this proposed settlement agreement by the end of the third quarter.

Next, I'll move to our 2 storm cost recovery filings starting with the Hurricane Beryl filing. Just this week, we started a set of mediated discussions with all parties to the case, and they are currently hearing scheduled on the cost recovery request at the end of this month. Moving to our process to recover costs associated with last year's May storms. As a reminder, we have fully settled this request and now have received an approved financing order.

Our next step is we will seek to issue these bonds in the third quarter of this year. We will continue to work with all stakeholders in connection with the storm cost recovery filings in advance of the securitization of these costs, which is beneficial for our customers.

Next, I'll touch on our capital investment plan execution through the second quarter and our positively revised capital plan through 2030, as shown here on Slide 10. As Jason mentioned, today, we are increasing our 2025 and 10-year capital investment plan by $500 million without anticipating any need for additional common equity. This represents our third capital plan increase this year. bringing our total 2025 increases to $5.5 billion with our total plan through 2030 now at $53 billion. And as Jason indicated, cumulatively, the $5.5 billion comes without any anticipated increases to our common equity guidance through 2030.

As a reminder, our equity needs still stand at $2.75 billion through the end of the decade, of which over 1/3 has been derisked through our forward equity sales. Today's announced investment increase will help further support the accelerated economic growth investments that we continue to execute in our Texas Gas and electric service territories to move at pace for our customers. I want to be clear that even with the increases or announced this year, we continue to see strong tailwinds to support further enhancements to our capital investment plans.

We are excited to aggregate all of these updates as well as provide others to give everyone a comprehensive update, a new 10-year plan later third quarter of this year. For the quarter, we are right on track to meet our positively revised 2025 capital investment target of $5.3 billion. Through the first half of 2025, we invested $2.4 billion of base work for the benefit of our customers and communities. Finally, I want to provide an overview of how we're thinking about the financing of our $5.5 billion of capital investment increases and touch on where our credit metrics are currently tracking. We continue to explore the most efficient forms of financing to fund the incredible growth our businesses continue to experience.

During the quarter, we made significant strides towards both addressing and derisking our future equity financing plans. We did this by announcing the proposed sale of our Ohio gas LDC with the intent of recycling the proceeds back into our Texas businesses, executing additional forward sales under our ATM program, which totaled $165 million for the first half of the year and executing $920 million of a forward sale of common equity to be settled by the end of February 2027. As Jason highlighted, we have made a strategic decision to allocate more capital to our high-growth businesses in Texas and recycle capital through the proposed sale of our Ohio Gas LDC business.

The proceeds from this transaction are intended to support the funding of the $5.5 billion increases we have already announced this year. With additional progress in our Ohio rate case proceeding, we anticipate having a transaction signed by the end of the year with the closing expected by the end of next year. I want to be clear that we view this transaction similarly to the others we have executed. This sale will not result in making a downward revision in our earnings guidance.

Today's announced $500 million increase to the 2025 capital plan will help partially offset the investments we have made previously in our Ohio Gas business. In addition to the announcement related to our Ohio Gas business, we were able to derisk our planned equity issuances for 2026 and 2027 through forward sales of our common equity and with the execution of $165 million of forward sales under our ATM program and $920 million through our block transaction we have been able to satisfy our anticipated commodity equity needs for both '26 and 2027.

Now moving to an update on our credit metrics. As of the end of the quarter, our trailing 12 adjusted FFO to debt ratio based on the Moody's rating methodology was 14.1%. And when removing transitory storm-related costs. Much like our historical profile, we anticipate our credit metrics to strengthen throughout the remainder of the year. As a reminder, we anticipate receiving nearly $400 million in securitization proceeds related to the May storms in the third quarter of this year. In addition, in light of the progress in the Hurricane Beryl storm securitization process I highlighted a moment ago, we expect to receive nearly $1.3 billion of proceeds by the end of the year or early next year.

Also, as we mentioned on our first quarter call, with the bulk of our rate cases now complete, we anticipate a 5% improvement to our operating cash flow beginning next year. We expect this cash flow to allow us to more efficiently self-fund capital investments for the bit of customers. This same operating cash flow improvement helps fund today's $500 million announced increase without any anticipated need for incremental common equity. And although we are not formally changing our guide regarding incremental investments requiring funding with 50% equity and 50% debt.

This new operating cash flow profile may provide financing flexibility to reduce that ratio in the future. With the anticipated receipt of the combined $1.7 billion of securitization proceeds, in addition to improved operating cash flow, we remain confident that we will exit 2025 with a 100 to 150 basis point cushion above our downgrade threshold without the need for common equity issuances. With the first half of 2025 in the books, we are right on plan to deliver our full year results. We are reaffirming our 2025 non-GAAP EPS guidance range of $1.74 to $1.76 which equates to 8% growth at the midpoint from our delivered 2024 non-GAAP EPS of $1.62.

Over the long term, we continue to expect to grow non-GAAP EPS at the mid- to high end of the 6% to 8% range annually through 2030. We also expect to grow dividends per share in line with earnings growth over the same period of time. We look forward to the second half of 2025 and executing for the benefit of all stakeholders.

And with that, I'll now turn the call over back to Jason.

Thank you, Chris. I'm proud of our team's continued execution over the past quarter and the results that put us firmly on track to deliver on our financial guidance this year. We are looking forward to sharing our 10-year plan refresh later this quarter. I believe that this refresh plan will reflect our confidence in our exciting growth prospects ahead and why we have such strong conviction that we have one of the most tangible long-term growth plans in the industry.

At this time, we will begin taking questions. [Operator Instructions] Our first question comes from Julien Dumoulin Smith from Jefferies.

Nicely done again. Maybe just kicking it off here. Just with Beryl, can you go back a little bit on just time line and expectations to close that out here? I mean it seems like you're coming to some finality here.

And then secondly, just on the 6 gigawatts, the updated number. I mean, it's just not a trivial number to kind of update quarter-over-quarter here. Can you elaborate and elucidate a little bit further what exactly comprises and especially the time line, mean how front-end loaded can that be at this point, just especially as you continue to compound these kinds of numbers? And then I got a quick follow-up, if you don't mind.

Julian, how about I take the first piece with respect to the Beryl related cost recovery proceeding. We are on track at this point. In fact, this week, we had some mediated sessions with parties to see if we could seek potentially the potential for a settlement framework. The hearings are currently actually set publicly for next Thursday. So as you can imagine, we'd love to be able to make progress and ideally be in a situation where we could ideally push out those hearings if possible, reflecting progress in those discussions. So quite a bit of activity here in the near term.

Julien, this is Jason. Thanks for the other question on the interconnection load growth. The 6 gigawatts we referenced this quarter, as you said, is not trivial at all. What I think is really unique and what we try to highlight is the diverse set of drivers that are driving that increase. What I would say is probably about 2/3 of that increase relates to data center activity. The other 1/3, I would put more in the camp of advanced manufacturing, energy exports and life sciences. In terms of the demand or the timing of that demand, these customers are really looking for interconnections sort of wait '26, '27 and '28. So this is sort of relatively near term.

I think thankfully, we've got excess capacity on our system. We've built our transmission system, our substations, where we can move quickly address these interconnection requests. And I think that is just creating a great set of conditions where we continue to see increases in the interconnection queue quarter after quarter. So we're looking to move quickly to address these new demands.

Excellent. And then if I may, just a quick question here on the adjustment for the quarter with the mobile gen here. How long do you expect that to remain a drag there? Just given the dynamics here on those assets over time? Just to understand the drag that you're currently booking here. How long is that going to remain the case in terms of a drag?

Yes. This is a reflection of the transaction we announced where we've effectively contributed these assets to San Antonio for free through no later than spring of '27, could be as early as fall of '26. And so we see a drag in earnings over that period of time. And then as we talked about, the market for these assets has doubled and we intend to remarket them as soon as they free up. So again, as early as fall of '26, no later than the spring of '27, these will flip to be a tailwind for the company.

Our next question comes from Nick Campanella from Barclays.

Question for the updates. Just a question on the capital. It seems like you're well positioned on the system to connect the 6 gigs right away. But you're highlighting a lot of other tailwinds that are not in the plan. And is this going to be more skewed towards the 10-year kind of plan? Or do you see a lot of this kind of falling into the 5-year plan?

And then I just wanted to kind of clarify the comment of Chris at the end with the 50-50 funding. Do you still see the ability in the 5-year plan to fund with less equity?

Nick, and I appreciate the questions. Look, from a capital standpoint, I really think we were trying to emphasize 2 points here. I think there is an upward bias towards CapEx through the remainder of this decade. There is still opportunity based on the capital investment opportunities I outlined in our prepared remarks. The second point that we are trying to highlight and we'll be much clearer as we roll out our new 10-year plan is the longevity of the spend. We continue to see this capital investment opportunity drive significant capital investment well into the next decade. And so they're still ensured more opportunity here through the remainder of this decade and then extending well into the next.

Maybe if I could build on the second one, Nick, in short, what I was pointing to was that as we look to the third quarter update that we'd be providing in particular. And again, that's a third quarter update that would not be on our third quarter call, delinked from that in the calendar third quarter. We would be providing an update on how to think about how we're going to be funding growth CapEx going forward. I think what you saw today is that maybe a little preview of some improvements we've had in our focus on improving operating cash flows through legislative proposals and our rate cases.

And so I think you can envision a situation we're able to update and improve from the current 50-50 equity debt profile that we provide. And with something to keep in mind, right, as we look at the $500 million that we rolled into the 2025 plan, we were still able to report today voted debt at 14.1%. So pleased with that outcome given historically, Q2 has been really our lowest quarter from a recovery pattern standpoint.

And Nick, if I could wrap kind of our 2 answers. In my prepared remarks, I alluded to one, sort of an upward bias in CapEx remainder of the decade and two, I do think we have the ability to fund incremental CapEx this decade without any additional common equity.

Okay. I appreciate that. And then just as we're getting into the later innings of this Beryl proceeding, the agencies are still on negative outlook. And just is there anything else that they're kind of communicating to you that looking for now that your metrics are starting to get back into that range?

I appreciate the question. It's certainly key. And I can't speak certainly on exactly on their behalf, but the nature of our conversations have been really around 2 areas of focus. The first have been the ability to effectively execute the underlying rates themselves. And so as you've seen in both of our Texas cases as well as Minnesota and Indiana, we've completed all of those.

The second key area of focus has been the cost recovery filings themselves, both for the May storms or Derecho event as well as Beryl. We've now fully completed, as I mentioned, the Derecho related or may storms process.

We'll be in a position to execute that securitization during the calendar third quarter. So we're definitely on track there. And I do believe that they are closely watching the Beryl outcome. And again, as I mentioned, I think where we are at this point is a place where we do see a path to have very constructive conversations here in the coming days. And so I think that could ideally position us well for their agencies -- agencies to revisit that time frame because really, the key step in the process is the cost recovery prudency step. After that, it's a very straightforward process for executing the financing order and then the securitization itself later this year.

Our next question comes from Jeremy Tonet from JPMorgan Securities.

Just a couple of quick ones for me. Has the finalization of [ SV6 ] impacted inbound interconnection interest in any fashion at this point?

No, I wouldn't say it's changed at all. The velocity of the interconnection requests, I do think that there are questions around where the cost allocation potential changes may go. But I think there are many other drivers that continue to support these load interconnection requests, so they continue at an accelerated pace.

Got it. And then was just wondering you talked a little bit about Houston revitalization work. And just wondering if you could expand a bit more, I guess, on how this aligns with city efforts, priorities here going forward?

Yes. No, thanks for the question. This is an exciting time for downtown Houston. This has been a project that's been in the works for decades. We've received the federal funding to effectively bury the interstate system that circles the effectively circles, the downtown area and isolate it from the rest of the Greater Houston region. By doing so, it frees up a significant portion of land that would be used to redevelop parks, more mixed-use space. It's just an incredibly exciting time.

But with all of that construction work, it gives us an opportunity as the roads are torn up to replace the underground network here in the downtown -- there are a couple of substations that we've alluded to that will need to be moved to help facilitate some of this redevelopment effort. We will build those to a modern -- into our gas insulated substation design standard and so I just think it's an incredible time to be a partner with the city to help with what will be an exciting transformation of the downtown here in Houston.

Got it. Just a last quick one, if I could. If I think about all this CapEx coming into plan without equity, it seems like that will drive upward pressure to the CAGR here? Or are there any other components to the equation that I'm not appreciating at this point?

Yes, I'll take that question. And look, as we continue to reiterate, there's more tailwinds than headwinds here. We've constructive really resolved these rate cases. We've had thankfully some legislation that's helped reduce regulatory lag, which helps us more efficiently invest for the benefit of our customers. And look, we'll update what that means from an earnings guidance standpoint here later in this calendar quarter, but certainly more tailwinds than we have headwinds.

Our next question comes from Andrew Weisel from Scotiabank.

My first question, I just want to further elaborate on the Houston downtown project. I know it's a really big one that's been talked about for a long time. Seems like you're talking about it a bit more detailed and a bit more confidently today. Is there any reason for that? has it been progressing a bit more? And can you maybe talk a little bit more about timing and potential magnitude of when the spending might show up in the capital plan?

It is an exciting project that is continuing to come into greater focus and clarity. We -- the city made some commitments as it relates to some of the modifications to our convention center here. that has jumped started this project in terms of work that we need to do with 1 of the 2 substations. And so what I would say is work is beginning as we speak under this project. This is something that is going to be a multiyear effort. I think the bulk of this spend is really going to be through the remainder of this decade, some of that kind of early part of next, but think about this as a driver over, call it, the next 5, 6 years.

The larger infrastructure project to bear this interstate system, is going to be much longer in nature, a multi-decade investment project for this region. But the work that we had to do upfront helps kind of enable the early part of that. So think of our work is sort of front-end loaded and over the next 5 years or so.

Okay. Great. That's helpful. Next question. You've mentioned this a couple of times we're saying additional increases to CapEx this year wouldn't need additional equity. Can you -- I mean, how high can that go? I know you're going to give the more detailed update later this quarter. But I mean, are you talking magnitude of $500 million like you did this quarter? Or are you talking $4 billion like you did a few months ago? I mean, can you give us some sizing of what is the comment like that's supposed to me?

I appreciate the question. Look, I think we were working hard to improve our operating cash flow profile, we feel confident, as Chris said, in some of the other activities underway, including the sale of the Ohio Gas business. And so that does give us flexibility, order of magnitude more than what we increased today. But maybe I'll just leave it at that. And we look forward to discussing it more later here in the third quarter.

Okay. Fair enough. We'll try our best to be patient. Last one. Apologies if I missed it, but what exactly was in the $500 million increase today? What is that spending going towards?

Sure, Andrew. You should think about it as dominated by us stepping into our electric transmission work starting this year, a little bit of system resiliency related investments and then a small amount of Texas Gas-related investments. Recall that we've also talked about over the long term, some potential opportunities there in the Texas Gas business for some stable infrastructure work here in the Greater Houston area.

Okay. So kind of more of the same?

Correct.

Our next question comes from Steve Fleishman from Wolfe Research.

I guess, just could you give us a sense of any timing on the gas LDC sale process and closing?

Sure, Steve. Generally speaking, we'd like to be in a position to be able to announce towards the end of this calendar year. putting us in a position to ideally if you just look at history of about a year later in a position to close. And so where we are at this point is we've just recently kicked off the process. As you know, our focus philosophically has been on, and we'll continue to have the focus here of not rebasing our earnings through any kind of capital asset recycling like this.

We've had a strong amount of interest even in kicking off the process so far, which is a good thing. And maybe just one other thing I'd want to emphasize is flexibility. We want to be flexible for counter parties in terms of where their interest lies relative to where the expertise is they bring to kind of an operating a management team as we go. And so good progress so far, but all putting ourselves in a position to be able to announce more toward the end of this year.

Okay. And then one other area that you've talked in the past about as opportunities as data centers in Indiana. Is there anything to kind of update there?

Steve, we continue to have, I think, very productive conversations up in Indiana around a potential new data center demand. Look, as we stressed in previous calls, I think it's a really unique situation up there that is candidly, I think, very compelling for a number of these data centers, it's abundant, land, good access to water on our system, in particular, we have excess capacity available today, we're commissioning, as we speak, a simple cycle plant that has been designed and built to be converted to CCGT if needed. And so there's a clear pathway to significant electric capacity. So it continues to be a series of active discussions in that region as well.

Our next question comes from Bill Appicelli from UBS.

Just one question for me to clarify on the equity again. So the base plan, the $2.75 billion of equity or equity-like then plus the Ohio asset sale that you've highlighted, right? And then I think what you're communicating here is that additional capital beyond that the target would be then to not have to issue additional equity. Is that correct?

You've got it right, Bill. Maybe if I could just kind of step through it briefly. The simple way to think about it is that $2.75 billion of what we've indicated is we were front-footed on equity, and so we've already derisked 1/3 of that, right? So you can go ahead and reduce by that amount. And then what Jason was emphasizing is we do see even in the period now between now and the end of the decade, an additional upward bias CapEx that we could fund without incremental common equity.

Okay. And would that contemplate additional asset sales beyond Ohio?

It would not. And so maybe if I can touch on that for you. If you look at the Ohio Gas LDC sale, it was specifically intended to help us fund what is now a $5.5 billion total update we provided this year. So you combine that with the operating cash flow improvement which really came through the mix of legislative and regulatory outcomes, and it certainly helps our operating cash flow focus. Maybe just one simple example of that is if you looked at some -- Indiana, for example, as you know, we have to basically hold back about 20% of our CapEx while we're out of our rate case. While we were out of a rate case for nearly 15 years there, right? So you can imagine now we've been able to catch up there. And maybe that's just one discrete example to help you see kind of how the operating cash flows have improved here.

Our next question comes from Anthony Crowdell from Mizuho.

Maybe a third cracker, I want to jump on Bill's question. Have you quantified what that like optionality is for how much more additional CapEx you could absorb without having to either do like Bill mentioned, an asset sale or additional equity like by the end of the decade. What's that balance sheet capacity that you have there?

Anthony, it's Jason. I appreciate the other question. but we're not going to get any more specific. As I indicated, we're talking about something north of the CapEx increase that we announced today. It's north of $500 million. After that, we haven't quantified the capacity and so it's just part of the excitement that's building for the planned refresh that we intend to provide here later in the quarter.

Great. And then, I guess, on operating cash flow, you just mentioned there's a 5%, I missed my question, is it a 5% growth of operating cash flow or it's a 5% improvement that the total operating cash flow growth is greater than the earnings per share growth?

It's a 5% improvement in operating cash flows. So the actual operating cash flows increased by 300 basis points. which equates to a 5% increase in operating cash flows.

Great. And then just lastly, you guys are very clear on the tough decision of selling Ohio and focusing where you have greater customers or also maybe greater growth. But how do you balance that with maybe sicker equity layers and better ROEs. Like -- and I guess it's a hard balance. I'm wondering if you maybe could shed some light on that? Ohio did provide maybe thicker equity layers I think I forgot the settled return, I think it was like [ 97 ] or something like for other jurisdictions maybe greater growth, but lower equity ratios?

We take a number of factors into it. From a financial standpoint, as we stressed here, it's an incredible business, but we see the recycling of these proceeds to enhance the earned cash returns the consolidated enterprise. So you might look at just the earned or the allowed returns or the authorized equity ratios. But importantly, it's as much an interest to improve kind of earn cash returns, and we see the opportunity of recycling fees, the proceeds from this asset sale and improving the overall consolidated earned cash return profile.

So a number of different financial metrics we're looking at and then it comes down to focus as well. It's an incredible jurisdiction. We have the privilege to serve up there, but with so much growth here, it helps focusing management's attention on this exponential growth that we've been talking about in the Greater Houston region. So a number of different factors financially, though, I wouldn't just concentrate on a difference between the authorized return on equity or equity layer.

Great. And will we see September? Are we going to be virtual in September? Any clarity on like early September, late anything like that?

Anthony, we're still working on exactly how to do it. I think at this stage, we would intend to come to the East Coast.

Our last question comes from Paul Fremont from Ladenburg Thalmann & Co.

Congratulations on a really strong quarter. I guess my first question really is a follow-up of Jeremy's earlier question. With all of the spending your plan is to update your EPS guidance later in the year? Is that the takeaway there?

We will provide a full plan refresh. So the extension of that 10-year CapEx planned in the middle of the next decade. And then 1 of the resulting obviously, impacts from that will be a discussion around the earnings power of the company. So it will be a comprehensive financial update, CapEx, financing, earnings, all of it here at the end of the calendar third quarter.

And then given sort of the large increases that we've seen in your spending plan between now and the third quarter, would you expect to provide any type of an update of your '25 through '29 spending broken down by Houston Electric, SIGECO and your gas operations?

Yes. As part of this plan refresh, we plan to provide, obviously, an update over the full 10 years, so kind of maybe the -- through the end of this decade plus the initiation of the next 5 years into the 2030s and then to your point, sufficient detail by operating company to help understand sort of the growth in each of those jurisdictions. So yes, we'll provide a pretty significant financial update around all of those elements.

Yes. But I'm talking like between now and the third quarter update that you're talking about any additional breakout of the 5 years under sort of the existing numbers?

I wouldn't anticipate anything between now and the plan refresh.

And then a couple of, I guess, housecleaning questions. The rate base for the Ohio subsidiary that you're selling?

Sure, Paul. That's $1.5 billion as of the end of last year.

And then -- and the tax base of that of the Ohio LDC?

Obviously, at this point, reviewing what the tax implications would be there for any transaction. So up to get into more detail today.

Great. And one more, last one. And then the additional $1 billion of gas spend, that's included in the $4.5 billion increase since we've seen from the first quarter, right, in your 10-year plan?

No. I think you should assume that there is opportunity outside the existing plan for the large project that we've referenced in Houston that would allow us to have high-pressure distribution lines that circle the city over a long period of time. So there's only a small amount of that currently in plant at this stage, Paul.

Right. Okay. So that would be incremental and may show up in the next 10-year plan update?

Would anticipate that correct. Operator, with that final question, that will conclude our call for today.

This concludes the CenterPoint Energy's Second Quarter 2025 Earnings Conference Call. Thank you for your participation.