Thank you for standing by. My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the DTE Energy Fourth Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Barbara Tuckfield, Director of Investor Relations. Please go ahead.

Thank you and good morning everyone. Before we get started, I would like to remind you to read the Safe Harbor statement on Page 2 of the presentation, including the reference to forward-looking statements. Our presentation also includes references to operating earnings, which is a non-GAAP financial measure. Please refer to the reconciliation of GAAP earnings to operating earnings provided in the appendix. With us this morning are Jerry Norcia, Chairman and CEO; and Dave Ruud, Executive Vice President and CFO. And now, I'll turn it over to Jerry to start the call this morning.

Thanks, Barb and good morning everyone and thanks for joining us. I hope everyone is having a healthy and safe year so far. This morning, I'll give you a recap on the accomplishments we achieved in 2023 and provide highlights on how we are well-positioned for 2024 and beyond. Dave will provide a financial update and wrap things up before we take your questions. As you know, 2023 was a challenging year for DTE as we face significant headwinds from an unprecedented combination of weather and storm activity. I am very proud that our company came together to face these headwinds and execute on our plan that offset the majority of the challenges. We achieved operating earnings per share of $5.73 in 2023. This was a result of overcoming $300 million of the approximately $400 million of headwinds that we faced. In the appendix, we included a summary of the headwinds and the one-time actions we took in 2023. As I said during the year, the fact that we were able to offset most of the challenges we faced while maintaining service excellence is a clear indication of our highly engaged team and our commitment to operating excellence. I couldn't be prouder of our team's effort in 2023 and our commitment to deliver for all of our stakeholders will continue into 2024 and beyond. This engagement of our team at DTE was recognized with our 11th consecutive Gallup Great Workplace Award. DTE was also recognized as one of Metro Detroit's Best and Brightest companies to work for as well as one of Time Magazine's Best Companies for Future Leaders. We continue to address our customers' most vital needs by investing heavily in our utilities to rebuild our aging infrastructure, improve reliability, and support the transition to cleaner generation. There have…

Thanks Jerry. Good morning, everyone. Let me start on Slide 8 to review our 2023 financial results. Operating earnings for the year were $1.2 billion. As Jerry mentioned, we achieved operating earnings per share of $5.73 in 2023. This was achieved after experiencing and overcoming additional headwinds with December being one of the warmest on record. You can find a detailed breakdown of EPS by segment, including our reconciliation to GAAP reported earnings in the appendix. I'll start the review at the top of the page with our utilities. DTE Electric earnings were $791 million for the year. This is $170 million lower than 2022. The main drivers of the earnings variance was warmer winter weather, cooler summer weather and higher storm expenses. There are also higher rate base costs, lower residential sales relative to 2022 with the continuation of people returning to work and accelerated deferred tax amortization in 2022. This was all offset by the one-time O&M cost reductions that we implemented in 2023. Moving on to DTE Gas, operating earnings were $22 million higher than 2022. The earnings variance was driven by one-time O&M cost reductions and IRM revenue in 2023, which was offset by warmer weather and higher rate base costs. Let's move to DT Vantage on the third row. Operating earnings were $153 million for 2023. This is a $60 million increase from 2022, primarily due to new RNG projects and steel-related earnings that were mainly a result of opportunistic byproduct sales. On the next row, you can see Energy Trading finished the year with earnings of $105 million. As I discussed through the year, we experienced favorability in 2023 due to the robust contracted premiums in our physical power portfolio. A portion of this favorability from these contracted positions is expected to continue into…

Thank you. [Operator Instructions] Your first question comes from the line of Shar Pourreza with Guggenheim Partners. Please go ahead.

Hey guys, good morning.

Morning Shar.

Hey Shar.

Good morning. Obviously, just real quick. CapEx is moving higher in the credit metrics just strong and obviously, you're highlighting that you have minimum equity needs in the current plan. I guess, can you just touch on funding sort of incremental spending opportunities maybe using some rule of thumb as we think about the percentage of equity needed to fund every new dollar of CapEx above this base plan. Maybe the answer is zero. And there's been obviously some mentions of an RNG sale in the media. Just given sort of the cash versus earnings attributes to that business, is that an accretive recycling opportunity? Thanks.

Thanks Shar. This is Dave, I'll take the first part of that. Yes, as you saw in our plan, we have really strong cash flow generation that allows us to allows us to maintain our FFO to debt at the right 15% to 16%, while issuing minimal equity. And it does give us some headroom to the downgrade thresholds, too. So, we haven't given a rule of thumb for how much new equity we would have to use for any new CapEx, but we still have some flexibility within our plan that would allow us to kind of work around any new equity that we'd have to do. But our plan, as you saw, has $2 billion of new capital in it, which we were able to bring in really due to the cash flow generation and then some of the favorability that we're seeing from the IRA tax credit as well.

Yes, Shar, I'll take the non-utility assets. Certainly, we're happy with all our assets there, but we're always looking for opportunities to -- there was an opportunity to create incremental value for our investors. We would take that opportunity in terms of optimizing the portfolio. But I would say at this moment, certainly, we don't have any incremental cash needs in our plan. And so there really isn't anything imminent at this time.

Perfect. And then just lastly on just the regulatory, maybe just expectations for 2024. You have a notice of a potential filing with the MPSC for March 1st. I guess can you just elaborate on that filing? I guess what do you see different from the prior case, which wasn't easy to get through especially as we're kind of thinking about the IRM sales forecast, rate design, et cetera? Thanks.

Sure. So, if you're referring to a potential electric rate case, we're looking to make a filing late in the first quarter, early second quarter. I would say that most of that filing will be about the capital investments we're making to upgrade the grid and transition to cleaner energy. So, again, it will be a CapEx-driven filing is what we expect at this point.

Fantastic. Appreciate it guys. See you real soon. Thanks.

Thanks Shar.

Your next question comes from the line of Nick Campanella with Barclays. Please go ahead.

Hey good morning. Thanks for taking my question.

Morning. Hey Nick.

Morning. I guess just a follow-up on the Vantage portfolio optimization comments. Just if you don't have cash needs in the current plan and there is an opportunity to do something, just how do we think about those use of proceeds?

If we did pursue some form of optimization, obviously, the cash proceeds would go to offsetting debt issuances and even potentially the repurchase of some equity. But as I said, there's really nothing imminent at this point in time.

Okay. And then I guess, just as you kind of wrap in the Michigan legislation to your outlook, you're probably looking at changes to the supply portfolio. Can you just remind us what your philosophy is in terms of owning these assets versus doing PPAs? Are you going to target to do a mix? Or do you want to do all renewable ownership? That would be helpful.

So, we certainly like to own assets because we think it's much more accretive both for our customers in terms of providing lower cost. I think we've been able to show over and over is that ownership provides lower cost to our customers. And also, it provides a greater benefit to our investors in terms of EPS growth. So, we prefer to own. I think you'll see in the IRP. In the IRP settlement, we did agree to share some ownership, and it breaks out somewhere between two-thirds and one-third ownership between -- us owning two-thirds and others only one-third in IRP piece. I think the legislation also did not talk about ownership, which we was neutral on that point. So, we are pleased with that. And in addition to that, it also provided for compensation mechanism for PPAs that will give us some upside as we sign PPAs.

All right. Thanks so much for the time today.

Thanks Nick.

Next question comes from the line of Jeremy Tonet with JPMorgan. Please go ahead.

Hi, good morning.

Hey Jeremy.

Just wanted to dive into the capital program a little bit more if we could. Looking at the $25 billion five-year plan as you laid out there. Just wondering if you could peel back -- a little bit more on the $2 billion increase in cleaner generation at DTE Electric. Just wondering what specific project opportunities, how you think about that new capital?

Yes, Jeremy, if you'll recall, we updated -- we didn't provide an update at EEIX, we're awaiting the outcome of a rate case to make sure that our capital plans were supported in which that happened. And so when we updated in December, it really reflected the IRP settlement and the new legislation were both in flight. And so I would say the combination of those two events, significant events created incremental opportunity in our clean generation space. It accelerated our journey in terms of building out renewables as well as a battery system. So that's really what drove the increase.

Got it. That’s helpful. And then just thinking about the capital program, I guess, broader and you think about the Vantage, the nonregulated side. Just wondering what you think about, I guess, run rate expectations for CapEx there? Did some capital move from Vantage into regulated? Just trying to get a sense for how much capital could go there over time, how that could potentially shift depending on what regulated opportunities you see in front of you?

Yes. Right now, we're showing a $1 billion to $1.5 billion investment over the next five years, which is pretty consistent with our prior five-year forecast. So, we really haven't made any significant change there just yet.

We will see that can be a little lumpy depending on the projects that come in to. So, the project that Jerry was talking about on in the prepared remarks, that one will have a little more capital associated with it in 2024. So, can be a little bit lumpy as it comes in.

Got it. That’s very helpful. And then I just wanted to see, I guess, as it relates to CCS, if you could dive in a little bit more in, I guess, how you think about time line for when that could become more real, I guess, as far as capital is moving in there. And as far as the, I guess, the regulatory environment being supportive enough where you feel comfortable to kind of move forward there?

Yes, I would say that in terms of carbon capture and storage, we're well advanced on 3 projects, and we're finalizing our arrangements with counterparties and some conditions precedent there to make sure that we got a viable transaction. But I would say it's feeling better than 50-50 that we're going to start executing on some capital there in that new business line. So, pretty exciting. They're small projects. Each of them are -- each of the three are anywhere between $50 million to $100 million, pretty simple projects that doesn't require a lot of pipeline, pretty short pipelines. Most of the pipelines are right on the property of the customer. So, as the wealth. So, we're deep into it and we'll continue to give you updates on that. But it's a nice synergy with our utility -- electric utility because we're -- as we think about future power plants and using natural gas, we're going to need to capture the carbon and store it. So, I think dipping our toes into this new business line creates value for investors, but also creates value for future utility investments that we'll need to make.

Got it. Very helpful. And one last quick one, if I could, just as far as refinancing new bonds. How much of the I guess the open rate exposure on refinancings has been hedged at this point in derisked?

So, as you saw, we have about $2 billion of refinancings coming up at the end of the year this year. And the majority of that is hedged. It's $1.7 billion has been hedged of that at rates that are a little bit better than what we're seeing out there in the market now. So, we just -- we continue to like our overall debt portfolio, like -- and with the rates we're getting that that's all included within our five-year plan and consistent with our strong investment-grade credit rating and our 15% to 16% FFO to debt that allows us to issue minimal equity within our plan. I know it's a little more of an answer than you were asking, but we're in a good place with that.

That’s all very helpful, all those details. Thank you very much for taking my question.

Thank you.

Your next question comes from the line of Durgesh Chopra with Evercore ISI. Please go ahead.

Hey team, good morning. Thank you for giving me time.

Morning. Hey Durgesh.

Good morning Jerry and Dave. Just maybe can you comment on the financial implications of the January storm? That's part one. And then part two, as we think about the rest of the year, what level of contingency you have in the plan as it relates to worse-than-expected storms, bad weather similar to what we had last year? So, those two things, please. Thank you.

Yes, we've -- just let me take the storm expense. We've certainly have increased our storm expense in our planning process as we've seen storms increase over time and the cost that, that brings. So, we feel pretty comfortable about the plan that we're carrying right now. And as you know, we also carry one standard deviation of whether, for example, in the winter, warmer than normal weather and/or in the summer, one standard deviation of cooler-than-normal weather. So, that's how we're planning. And at this point in time, we feel pretty good about our plan. We're moving along and right on track. I think the storm that came in January consumed some of the storm expense budget. But of course, as you would expect, we're working to replenish some of that so that we can carry a full summer storm budget. So, that's really where we're at with that.

Okay, perfect. Awesome. That’s really all I had. Thank you very much.

Thanks Durgesh.

Next question comes from the line of David Arcaro with Morgan Stanley. Please go ahead.

Hey thanks. Good morning.

Morning.

Let's see, you've got a renewable energy plan filing coming later this year, I think. Wondering if that could be an opportunity to reassess again and potentially increase the renewables in your outlook?

Well, certainly, our voluntary renewable plan is progressing really well, David. I'll just tell you that we've got 2,500 megawatts described in our voluntary program and 2,600 in our five-year plan. So we're -- it's likely that over time, it will increase. We'll -- obviously, our next filing will address the next couple of years of in-service requirements for our large industrial customers that we signed up and commercial customers. So, it could potentially be upside to our plan in the future as we continue to update our plan. So, hopefully, that helps.

And I was wondering, does your current plan kind of fully embed the opportunities arising from the legislation as you're thinking about maybe beyond the renewable energy targets, but also considering energy efficiency and the FCM and the potential upside on PPA contracts?

I would say that our current plan does anticipate incremental build-outs for the IRP legislation. So, I told you our five-year plan for voluntary is 2,600 megawatts. We have an additional 1,800 megawatts that comes in as part of the IRP and a five-year plan. So, that's all built in to the $7 billion clean generation number that you see on our slides. In terms of PPAs, we're going to have to continue to assess what value -- the incremental value that will bring as we go along here. But it could bring incremental value.

And then as we look out past that, we're going to be having to file a new IRP that will take into account this legislation even more. And so that will give us an opportunity to bring some more capital in maybe near the end of the five-year plan, but really probably a little bit past that, just more opportunity to do this clean energy generation.

Okay, great. Thanks for the color. Appreciate it.

Thank you.

Your next question comes from the line of Andrew Weisel with Scotiabank. Please go ahead.

Hi, thanks. Good morning everybody.

Morning Andrew.

Hi Andrew.

Hi. First question is on the $300 million of lower fuel cost savings. Very impressive number. Can you just give a little more detail, first of all, is that a year-over-year reduction? And how much of that relates to the fuel cost itself, the natural gas prices being lower than 2022 levels. Maybe as a follow-up, just quickly, do you have an early read in 2024 in terms of forward curves?

Yes, the $300 million reduction in 2023, that was really the recovery of the over-collection that was in 2022. So, in 2023, we were kind of on our plan and just recovering what we needed to recover into -- recovering from 2022 and 2023 and then comes off our books for 2024. So, far for this year, there's a little bit under recovery left, but we're forecasting things to be pretty flat with our plan for this year.

And in the gas business, we're fully recovered there. We're in a good position there.

Great. Then one more, if I could just sort of ask you to elaborate on the non-utility CapEx. So I'm going to ask similar questions in a different way. Last year, the CapEx was $167 million. That was well below guidance of $300 million to $400 million and now you're guiding to $550 million to $650 million for 2024. Can you just walk us through that a little bit? I heard you mentioned there's some lumpiness, maybe certain investments were deferred. I'm guessing some of the high spending this year is related to that Ford announcement. I guess just overall, how confident are you in that 2024 number, given how high it is?

Good question, Andrew. It's the capital investment really follows the development projects that we do within that business. And last year, we did three RNG projects and one custom energy solutions projects, but a smaller one and that allows us to continue with the growth we need in that business and meet our targets. This year, you're right, the Ford project that we're doing that we talked about in the prepared remarks, makes us confident that we're going to invest this. We talked about this a year or so ago. We had about $200 million of investment planned for this year from that. We've expanded that deal with them, and that's going to make up a good portion of the capital investment or non-utility this year. Still work in other projects as well. But it's really that custom Energy Solutions project with Ford that's going to take up a big chunk of that capital investment in 2024.

Okay. Thank you very much.

Your next question comes from the line of Michael Sullivan with Wolfe Research. Please go ahead.

Hey everyone, good morning.

Hey Michael.

Hey guys. Maybe just wanted to ask on the trading business that did really well in 2023. And I think, Dave, you mentioned some of that flows through in the 2024, but just -- how conservative do you feel that range is for 2024? And is this like a new normal that could extend even beyond 2024 based on what you're seeing?

Yes, Michael, you're right. We did have some really nice favorability in 2023. And again, this is due to the premiums we get on the structured physical power portfolio. So, it's all contract and hedged, just had really nice premiums in 2023. As we said, we expect some of that to continue on into 2024, probably not to the same extent as 2023. But some of those contracts, they're one and two years. So, we see some of them coming into 2024 as well. Going forward, we'll have to see what happens. We're not guiding to anything higher than that. We hit the same level of contracts as a business we've been in for a long time. We get the same level of contracts. We've just seen really good premiums in 2023, and we're seeing those come back down. So it's probably not something we're going to guide to going forward, but it is good favorability and the exact same risk profile that we've always had, too.

Okay, great. Appreciate the color. And then I just wanted to pivot to the PBR proceeding at the Michigan PSC. And just what are your guys thoughts on kind of where that stands and how that ultimately plays out?

Michael, it's moving in the right direction in terms of sort of narrowing the variables that we'd be looking at for PBR. So, we felt that, that was quite constructive in the latest release from the commission on that process. We still feel it will be a symmetrical sort of benefit and incentive to perform. So, we feel good about that. That's still holding together. And we expect that there's really no time line stipulated for the conclusion of the process. So, we're thinking sometime between the middle of the year to early next year is when this process will conclude. But we're feeling that it will -- it will be a productive process and a well-balanced process.

Okay, that’s super helpful. Thanks guys.

Next question comes from the line of Sophie Karp with KeyBanc. Please go ahead.

Hi, good morning. Thank you for taking my questions.

Morning Sophie.

Hi. A couple of questions here. I guess staying on the Energy Trading business topic, right. Could you elaborate a little more on what market conditions are enabling this relative strength and like what should we watch for in terms of this potentially reversing in the future or continuing for longer, if you will?

Yes, these are markets where we bid into utilities within PJM and New England mainly and to serve their load. And as we bid in, we get contracts and those contracts will have premiums associated with them. We just saw really nice premiums in 2023 some of which carry on into 2024. So, we'll be able to -- as we go through 2024, we'll be able to let you know more about what we see for future years on those premiums. And then the rest of that business is really gas physical business, which again is contracted and hedged. So, it's really just kind of success of our trading group and setting up the structured physical and hedge positions that is making it have these successful years.

Got it. And how much visibility do you have in that? It sounds like maybe less than 12 months out because you would be updating us as you go?

That's right. It is most of these contracts are one year, some go a little longer, but most of them are for like -- for one year and then kind of see where they come in again the next year. That's why we continue to guide usually the $25 million. We went to $35 million because we see that, but we're not pushing to something higher than that in the future years.

Got it. And then I just wanted to be clear on what you're saying about your capital plan. How much of the new energy opportunities is reflected in it? It sounds like what you're saying is that you have reflected opportunities that would be presented by the new energy law in Michigan in your plan already. So, the incremental opportunities stemming from this legislation should be fairly limited. Am I hearing this correctly?

I would say, in the first five years, that's correct, Sophie. We've -- the IRP and the legislation is reflected in the five-year plan. And we'll continue to update that as we go forward. Now, beyond the five-year plan, there is some further acceleration that we could see, but we'll continue to update that each and every year and hopefully, in November between November and the end of the year.

Thank you so much. Appreciate it.

Thank you.

Your next question comes from the line of Julien Dumoulin-Smith with Bank of America. Please go ahead.

Excellent. And just -- good morning guys. Thank you very much.

Morning Julien.

Maybe just with respect to the last question -- hey morning. Just with respect to the last question there on the -- what's reflected in the plan. Just -- I just want to clarify on the PPA ownership piece or the PPA earnings piece, the compensation mechanism there, that is reflected for the one-third piece in the IRP settlement and therefore, in your outlook, right? So, again, as you talk about this, the different pieces, the substantive upside from the legislation really moves beyond the five-year period at this point, just on the compensation specifically.

So, again, the ownership component is reflected in our capital plan, the $7 billion component of clean energy generation that's in our plan. The financial compensation mechanism, we'll have to see what levels we sign the PPAs, obviously, as you know, it's a -- the price that we signed the PPAs for. So, as we sign those, we'll continue to update our plan, but it will provide some incremental value in our plan as we go forward, if that's what you're asking?

Yes, right. So, the FCM is included at least preliminary to the extent to which that might need to be updated later.

There's thoughts. We have something in there for now. But as we sign PPAs, there should be some upside in the plan to that what we have in there now.

Got it. All right. Thank you for clarifying. I know it was back and forth here a little bit. All right. Excellent. And then just coming back to the top of the roster on the Q&A. Real quickly on the RNG conversation briefly. Sounds like that was non-committal and frankly, but seems like opportunistically which you might see something of interest to you given where your balance sheet sits. Is there something about like resolution and IRS regs on RNG and how that's treated under IRA that's driving some decision free here for you guys? Or I just want to make sure I heard that right, that it doesn't seem like that's a particularly pressing subject for you guys?

Yes, I would say that it's not imminent, some sort of optimization of our are rent portfolio. We like the returns. We like the cash flows from it. And actually, the IRA Inflation Reduction Act has been quite beneficial to that business from an ITC, investment tax credit perspective. It's made projects more attractive and higher return. And we're also seeing positive movement in some of the markets, like the Federal market moved in a very positive direction and our renewable fuel standard that is. And in California, the California Air Resources Board is looking to tighten up the carbon intensity targets. So, I think as that plays out, that will provide even more upside in those markets as we see them today.

All right. excellent. So, it doesn't sound like you're too worried about the way the IRA came out the way in terms of being the [indiscernible]

We are monitoring that, and we are commenting, but we're not overly concerned. We don't think that it's really consistent with what the congressional intent was there either. So, we're just continuing -- we're continuing to watch and monitoring comment, but not overly concerned.

Okay, wonderful. Excellent. Thank you guys very much. Take care.

Thank you, Julien.

Thanks Julien.

Next question comes from the line of Gregg Orrill with UBS. Please go ahead.

Yes, thanks for the question. Just following up on the RNG, are you able to provide how much that contributed in 2023? and also the steel business?

Yes. We saw -- we did see some good upside from the RNG because we brought in three new projects in 2022 and in 2023 and associated with some of that, there's some tax credits that come with that, that helped out in 2023. The steel business was the other part that gave us the favorability that we saw in 2023. And probably a little over half of what we saw there. And that was due to some opportunistic sales of some of our byproducts, some of the other products we're making within that business and some other kind of one-time things that we've done there. So it's yes, some good one-time opportunity that we saw in the steel business and the RNG development.

And how are you thinking about the returns in the RNG business, just how they're trending?

We have noticed it's gotten a little more competitive as more people have come in. We used to say we got high double-digit unlevered after-tax returns. We're still seeing good returns, particularly what we see it is in our conversion projects, we have projects that now make power that we can convert to make in RNG. And so in those projects, we continue to see very strong returns. And then there's still a good development pipeline that has strong returns as well.

Yes, we're still seeing unlevered returns and I would say, north of 10% unlevered after tax, so in the teens, low teens.

Okay. Thank you.

Your next question comes from the line of Anthony Crowdell with Mizuho. Please go ahead.

Good morning Jerry, good morning Dave.

Morning Anthony.

Hey Anthony.

Hey, just two quick ones. Most of them have been already answered my questions, but just I think you talked about a potential rate filing late first quarter, early second quarter electric filing. Just do you expand the undergrounding program in that filing or as much as you'd like to disclose thoughts on expanding the undergrounding and the filing?

Anthony, we put five miles underground in last year in 2023, and it went really well. And what we're doing is proposing that we continue to do more. This is going to take a few years to ramp, Anthony, as we kind of work with our commission. We actually had the commission staff looking at some of the undergrounding that we did in the last few days. And so they -- I think there's a process here to make sure that we're working together with our commission, come up with a reasonable plan. I would say the key part of it is we need to ensure that on an NPV basis, undergrounding is going to be least equivalent or better than putting it up in the air. We've got 19,000 miles of infrastructure to replace that's very old. It's a 4.8 kV system. So, a huge opportunity from a customer perspective to improve infrastructure for the future. And we'd like to put as much of that underground as we can, but we're going to have to prove out the concept. So, we're in the early stages of proving it out and to ourselves and then secondly, to our commission. So, that's where we're at with it. I think it's going to take a few years before we can ramp it, but we feel pretty good about how smoothly the first five miles went. It's all directional bore through very highly congested urban areas. So, a very cool project. More to come on that.

And then just a quick follow-up. I guess, I'll throw it to you, Dave or Jerry, if you want to take this, it's fine. Just I guess on a credit metric basis, where did you end 2023, and I think your target range is 15% to 16%. When do you believe you'll hit that target range?

Yes, we did end 2023 right around 15%, Anthony. And as we look through the five-year plan, we stay within that range throughout the five-year plan that we talked about, even with the minimal equity that we're issuing.

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

Thank you, Anthony.

Next question comes from the line of Ryan Levine with Citi. Please go ahead. Excuse me Mr. Ryan Levine, your line is open. Please go ahead with your question.

Apologize. So, good morning. Hoping to follow-up on the utility ownership for PPA and some of the generation assets. Is your plan largely solidified at that point? Or is there opportunity to convert some of the owned assets into PPAs given the incentives that the law provides.

I'll let -- Ryan, thanks for the question. I'll let Dave sort of elaborate, but I'll start by saying that we prefer to own the assets for really two reasons. One is if you look at the value to our customers, it's much more affordable for our customers for us to own the assets. And then secondly, for investors, it provides a much greater significant EPS growth opportunity if we own. So, we don't see converting any current ownership to PPAs. Dave, did you want to add to that?

No, that's exactly right. It's better for our customers. We've gotten really good at developing these projects. And we're the leading renewable developer in the state and continue to do it and what we see as the lowest price, which is kind of borne out through the auctions that we're in. So we think it's better for our customers. And then on an EPS basis, investing the capital is better for our shareholders as well. So, I don't know that we'll be converting any. We'll do what we need to do. But and the FCM it's great. It's a great addition for the PPAs that we do, but it's still much better for our customers and much better value if we continue to develop these.

Okay. And are you still pursuing opportunities to build dedicated pipelines to chemical plants near your service territory, but that you maybe have been pursuing in the last few quarters?

Are you referring to carbon capture and storage, Ryan?

More carbon-dedicated pipes, right?

Yes, we are. We've got three transactions that are well advanced with large carbon dioxide producers, and we're looking to capture that CO2 source and stored underground essentially under property. These are very short pipelines, a couple of thousand feet each less than a mile. So, we're looking to finalize those arrangements and also satisfy some of the technical conditions precedent that we want to accomplish before we get too far into that business.

Okay, great. Thanks for the answers.

Thanks Ryan.

I would now like to turn the call back over to Jerry Norcia for closing remarks. Please go ahead.

Well, thank you, everyone, for joining us today. I'll just go by saying we're feeling great about 2024 and also our long-term plan as well as our position for future years. Have a great morning and stay healthy and safe.

Ladies and gentlemen, that concludes today's call. Thank you all for joining and you may now disconnect.