NiSource Inc. (NI) Earnings Call Transcript

Hello, everyone. Thank you for joining us, and welcome to the Third Quarter 2026 NiSource Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Durgesh Chopra, VP of Investor Relations. Durgesh, please go ahead.

Thank you. Good morning, and welcome to NiSource's Third Quarter 2026 Investor Call. Joining me today are President and Chief Executive Officer, Lloyd Yates; Executive Vice President and Chief Financial Officer, Shawn Anderson; Executive Vice President of Technology, Customer and Chief Commercial Officer, Michael Luhrs; and Executive Vice President and Group President of NiSource Utilities, Melody Birmingham. Today, we'll review NiSource's financial performance for the third quarter, share updates on operations, strategy and growth drivers and walk through our extended long-term plan. Following our prepared remarks, we'll open the call for your questions. Slides for today's call are available in the Investor Relations section of our website. Some statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the Risk Factors and MDA sections of our periodic SEC filings. Additionally, some statements made on this call relate to non-GAAP financial measures. Please refer to the supplemental slides, segment information and full financial schedules for information on the most directly comparable GAAP measures and a reconciliation of these measures. With that, I'll turn the call over to Lloyd.

Thank you, Durgesh, and good morning, everyone. I'll begin on Slide 3. At NiSource, our strategy remains grounded in delivering safe, reliable and affordable energy while creating long-term value for our customers, communities and shareholders. This quarter, we are extending our long-term plan through 2033, providing a 7-year view of the investment opportunity we see across our footprint and the growth it supports. That plan rests on two complementary platforms: our base business, fixed regulated utilities situated across multiple states, delivering natural gas and electricity to 4 million customers. Our growing GenCo business adds differentiated growth, delivering power and capacity to large load customers supporting national security through data center operations. The complementary nature of these segments provide stability and diversification and a long runway of needed investment that has supported a consistent record of delivering on our commitments. With our recently announced Microsoft agreement, GenCo now serves 3 of the largest technology companies in the world and brings our signed agreements to an expected $1.75 billion in savings to existing NIPSCO Electric customers. Turning to Slide 4. We continue to advance our regulatory priorities in support of the financial plan, while AI-enabled tools and Project Apollo are strengthening efficiency and productivity across the business. Today, we reported third quarter consolidated adjusted EPS of $0.27, bringing our year-to-date consolidated adjusted EPS to $1.49. This performance keeps us firmly on track to deliver on our full year growth commitment. As a result of our progress, we are narrowing our 2026 consolidated adjusted EPS guidance to the upper half of our previously stated range of $2.02 to $2.07. We are also initiating 2027 consolidated adjusted EPS guidance of $2.22 to $2.30 and expanding our growth commitments through 2033, supported by an increased consolidated adjusted EPS compound annual growth rate of 10% to 11%. Shawn will take you through our growth drivers, financing plan, the $40 billion capital plan and the associated financial commitments later in the call. Moving to Slide 5. Safety remains our top priority and the foundation of how we serve our customers. This quarter tested our system, our people and our communities. On August 11, a derecho moved across Northern Indiana with wind speeds of up to 110 miles per hour, one of the most severe weather events in NIPSCO's history. Additional rounds of severe weather in the following days brought even more significant damage to our system. The weather pattern evolved rapidly, and while we were prepared for what was forecasted, the weather severely accelerated in the hours before the storm crossed into our [ system ]. We activated our [ instant command ] managed structure, suspended noncritical work and placed contractor resources on standby. Within 24 hours, more than 1,700 external personnel had joined the internal teams, including Columbia Gas employees, contractor partners and mutual assistance crews from across the region. By August 25, we had completed our broad restoration effort without injury, reflecting our ongoing focus on strengthening our safety culture, disciplined execution and consistent application of critical safety behaviors. I want to thank our employees, [ mutual assistants ], distance partners and the local officials and first responders who worked alongside us. We have an improvement mindset and are focused on learning from this event. We are completing a full internal after-action review, which we expect to finish by late November, and we are hiring a third-party expert to conduct an independent review of our response over the next several months. Meanwhile, we are participating fully in the review by the IURC underway in Indiana. NIPSCO will learn from this event and act on the lessons learned as we look to build a stronger and more resilient system for our community. Turning to Slide 6 and our regulatory agenda. I'll start with Ohio. Building on the tracker approvals we received this year, Columbia Gas of Ohio filed its first 3-year forward-looking rate case under the framework which took effect earlier this year through Senate Bill 103. This forward-looking structure reduces regulatory lag and better aligns recovery with the continued safety and modernization investments for our communities. Our Kentucky and Virginia rate cases remain on schedule and continue to progress constructively, with new rates in Virginia effective October 12, subject to refund, and decisions expected in both cases in the first half of 2027. In September, NIPSCO received a fourth federal order requiring continued operation of the Schahfer coal units. We continue to comply, and we are pursuing recovery of compliance costs through the FERC-approved MISO tariff schedule, having submitted Section 205 filings for each [ quarter ] period. We're evaluating a potential extension of the unit's operations through our integrated resource plan. NIPSCO's IRP will also evaluate near-term capacity needs evolving MISO accreditation rules and changes in the federal tax credit eligibility. Later this month, we held our second public stakeholder meeting focused on the 20-year low forecast, updated seasonal peak methodology, resource adequacy needs, existing unit assumptions and stakeholder portfolio concepts. Our financial plan contains a point of view on the necessary generation requirements to support expected load growth while maintaining flexibility as the IRP evaluates the appropriate resource mix and timing of those investments. We will continue to share further updates with you through our ongoing stakeholder process. Affordability remains a key focus across our jurisdictions, and we continue to engage constructively with regulators and policymakers. In Pennsylvania, the commission's ratemaking working group is evaluating ROE methodologies, rate case processes and the [ D6 ] framework as part of the state's broader affordability dialogue. We are participating constructively, and our financial plan retains flexibility to navigate these processes while continuing to invest for our customers. We are also engaged in Indiana through the IURC's broader affordability review, including proceedings on authorized returns and tracker mechanisms. We will remain actively engaged as those proceedings advance, focused on maintaining affordability while enabling investment necessary to serve Indiana's growing economy. We are already seeing meaningful progress. The IURC's 2026 residential bill survey shows our electric customers' bills declining year-over-year, and our data center agreement are expected to deliver meaningful savings to NIPSCO Electric customers. Together, these reinforce our view that Indiana remains a great place to do business with significant investment potential. And more broadly, that economic development can be a driver of savings and support affordability solutions across our footprint. Speaking of savings, our new partnership with Microsoft reflects our third GenCo customer and fifth agreement we've reached in just over 1 year. This also represents the latest agreement served through the pooled strategy we introduced in May. We're proud of the work we are doing to bring meaningful savings to our customers in Northern Indiana. We have bought ingenuity and commercial acumen to a problem many states and regions in this country have not been able to figure out. This has unlocked a truly unique win-win-win for existing retail customers and local communities. New customers advance the imperative for the U.S. to keep up with data center technology to protect our country and our shareholders. Shown on Slide 7, our signed agreements are now expected to deliver approximately $1.75 billion in savings to existing NIPSCO Electric customers, up from $1.4 billion last quarter. At full ramp, that equates to approximately $140 per year for an average residential customer, and we expect bill credits to begin as early as January, pending IURC approval. Our data center customers pay the costs associated with their load, while the use of the existing system lowers bills for our residential customers. Consistent with the objectives set up for GenCo, this partnership seeks to enable affordability for existing customers, support economic development in Northern Indiana, enhances shareholder value and is structured with prudent risk management. I'll now turn the call over to Michael to walk through this agreement in more detail.

Thanks, Lloyd. I'll begin on Slide 8. Under the agreement, Microsoft is taking electric service under a 20-year term starting in 2028. The GenCo-owned pooled portfolio will be increased by approximately 1,100 megawatts, including roughly 500 megawatts of combustion turbines and 600 megawatts of battery storage. We expect to file a special contract with the IURC by year-end and are seeking an order in the first half of 2027, consistent with the expedited 90- to 120-day review framework established for our data center agreements. Like our other GenCo agreements, it is structured to provide a return on and of our investment over the contract term, supported by minimum capacity charges, pass through treatment of variable costs and termination protections. Slide 9 highlights the significant momentum we have built in just over a year. We begin with the GenCo declination order, and our initial customer agreement in September 2025 has grown to 5 agreements across 3 signed customers, supported by meaningful progress across contract approvals, regulatory filings, zoning, construction and initial energization. That commitment is already translating to results. Following the signing of Alphabet in April, we've completed construction of transmission infrastructure ahead of schedule and begin billing this summer. Across these projects, we have been proactive in securing long-lead equipment, diversifying vendors and establishing EPC arrangements, including our partnership with Quanta and [ Zachary ] to reduce execution risk. Our teams remain focused on delivering these projects safely, on schedule and alongside our ongoing operations. Construction continues on Amazon site, the largest infrastructure project in our company's history, including a 345 kV delivery substation and associated transmission infrastructure which is expected in service next year. As civil site work progresses and permitting and regulatory approvals advance, we remain on track for the expected energization and full ramp across our signed projects. Our progress to date demonstrates we are delivering on our signed agreements, advancing approximately 5 gigawatts of capacity. And as Slide 10 highlights, we are targeting up to 4 gigawatts of potential additional load, which our model is well positioned to facilitate. Demand from large load customers remains robust. Customers are choosing Northern Indiana and GenCo because we can offer credible speed to power, transmission access, land, water, fiber, skilled labor and a supportive business and regulatory framework built for both speed and customer protection. We continue to see market dynamics that could expand opportunities beyond our 9-gigawatt pipeline, and we will share updates to reflect those opportunities in the future as we evaluate execution pathways to integrate that growth. With that, I will turn the call over to Shawn.

Thank you, Michael, and good morning, everyone. I'll begin on Slides 11 and 12. Third quarter consolidated adjusted EPS was $0.27 compared with $0.19 in the same period last year, bringing our year-to-date consolidated adjusted EPS to $1.49. Our strong financial quarter was driven by disciplined cost management and continued outperformance of customer demand for natural gas and electricity across our operating companies. Usage and customer counts were up year-over-year at NIPSCO, Columbia Gas of Ohio, Virginia and Kentucky, all creating tailwinds for our financial results. We reached a significant agreement on property tax savings in Ohio, which will pass through lower property tax rates over time. O&M was higher year-over-year due to the costs associated with responding to storm activity. Otherwise, all other activities were flat year-over-year. These drivers give us confidence as we step into the fourth quarter. We expect earnings to deliver the upper half of our guidance range. And many of the principal drivers are already in place, including step 2 rates at NIPSCO Electric, our Virginia rate case, approved tracker updates, the ramp of Alphabet load and continued progress on more than $40 million of cost optimization initiatives we identified earlier this year. Turning to Slide 13. We are excited to extend our capital plan through 2033. Our new 7-year plan totals $40 billion, including $32 billion of base plan investments and approximately $8 billion of GenCo investments to support data center customers. The extended plan reflects the depth of investment required to support a safe and reliable system, gas system modernization and safety programs, electric reliability and resiliency, generation to meet our customers' capacity needs and infrastructure to support economic growth across our territories. The plan remains diversified across our gas and electric businesses throughout 6 states and in our growing business segment, GenCo. Our new plan improves our cash efficiency by converting over 90% of our investments into initial recovery within 12 months of investment. This disciplined approach to investment supports consolidated investment growth of 9% to 10% while delivering adjusted earnings per share returns of 10% to 11% through 2033. We also continue to see upside investment opportunity of $3 billion for our base business and up to 4 gigawatts of pipeline in GenCo which are not included in our guidance, and we will move into the base plan when projects meet our threshold. Turning to Slide 14. We are narrowing our 2026 consolidated adjusted EPS guidance to the upper half of our stated range. Today, we initiated our 2027 adjusted EPS guidance at $2.22 to $2.30 per share, which implies a double-digit year-over-year growth next year at each midpoint, including $0.05 to $0.09 of contribution from our GenCo business segment. The 2027 guidance becomes the new foundation for our long-term earnings potential, which we expect to grow 10% to 11% on a compounded annual growth rate basis off of our expectations for 2027 through 2033. Additionally, we expect multiple years of double-digit growth through the planning horizon as the GenCo segment strengthens from development to serving its customers. We are also extending our base plan to achieve 6% to 8% annual EPS growth through 2033. We see continued stability in our core business operations, which have benefited from diversification and demand for natural gas and electricity throughout the regions we serve. As we move toward year-end reporting, GenCo will be disclosed as a separate segment. Consistent with our current reporting, we will provide operating income for the segment. To further support transparency and for your modeling efforts, we are also providing indicative GenCo EPS contribution targets for the present year, in 2027, 2030 and in 2033. We believe our plan remains highly executable and incorporates modest customer growth, conservative financing assumptions and a continued commitment to flat O&M. We worked hard to focus on ways to drive customer bill impacts down. Our new plan has decreased our view on bill increases by over 100 basis points down to less than 4% average annual residential customer bill increases from 2027 through 2031 on the investment base of 9% to 10%. Finally, we continue our commitment to a strong balance sheet by maintaining FFO to debt of 14% to 16% in all years of our plan. We expect our balance sheet strength to grow over time as GenCo transitions from capital deployment to meaningful cash generation over the plan horizon. Moving to Slide 15. We think it's important to view this opportunity through a longer-term lens. Our base business remains a strong foundation of the plan, expected to deliver durable 6% to 8% annual base plan adjusted EPS growth. GenCo builds on top of that foundation, contributing an incremental layer of earnings growth as these investments are placed into service and customers ramp to full demand. Today, we are increasing GenCo's expected EPS contribution, reflecting continued efficiencies in our existing Amazon and Alphabet agreements, along with the addition of Microsoft. As a result, we now expect GenCo to contribute $0.32 to $0.40 in 2030 and growing to $0.52 to $0.68 by 2033. Together, our businesses support our consolidated 10% to 11% adjusted EPS CAGR guidance through 2033 and demonstrates the compounding value of executing across both the base plan and GenCo over the full planning horizon. Factors such as the timing of regulatory approvals, construction, financing costs and the pace of customer load ramps will determine where we land within that range. Our pipeline of strategic negotiations and developing opportunities provides the opportunity to exceed the top end. Slide 16 details our financing plan. In August, we issued $750 million of junior subordinated notes, further strengthening our balance sheet and supporting the capital plan. Looking forward, we expect to issue $400 million to $600 million of maintenance equity annually in the near term, with those needs stepping down as we move through the plan to minimal levels starting in 2032 as the business increasingly self-funds its growth. We maintain flexibility to fund the plan efficiently through a balanced mix of debt, hybrid securities and maintenance equity while preserving our investment-grade credit profile and supporting our 14% to 16% FFO to debt commitment. We will also be opportunistic, [ evolving ] all aspects of capital markets to fund our growth strategies. What will guide our decision is maximizing long-term value for our shareholders while retaining the strategic flexibility to capture customer, community and shareholder benefits. And lastly, Slide 17. This quarter, we extended our plan to a 7-year view, narrowed our 2026 consolidated adjusted EPS outlook to the upper half of our range, initiated 2027 consolidated adjusted EPS guidance and executed our fifth GenCo agreement by adding a third GenCo customer, which increased customer savings to $1.75 billion. At the same time, we responded to one of the most severe storms in NIPSCO's history and are applying what we learned to strengthen our system. Taken together, these milestones demonstrate the resiliency and the ingenuity of our teams, making progress across all fronts of our business and positioning for sustained growth and customer value over the long term. We remain confident in our ability to deliver on our commitments. Regulatory execution provides visibility into earnings and cash flow. Our capital plan is diversified across businesses and jurisdictions. Our operational initiatives continue to support productivity and cost discipline, and GenCo contracts deliver stable fixed charges for our services while adding a meaningful layer of growth and lower bills by approximately $140 per year at full ramp for existing electric customers. NiSource offers investors a diversified regulated utility with the opportunity to invest in programmatic gas infrastructure and long-term energy infrastructure for a fully integrated electric business. The investment thesis extends to access the unprecedented energy development and power demand this country requires to support new data center operations and robust economic development. The complementary nature of these business segments offers a value proposition differentiated in the marketplace today. And finally, we continue to build upon our track record of execution and delivering on the commitments we make. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from the line of Shar Pourreza with Wells Fargo.

Just firstly, the disclosures around Microsoft are a meaningful addition to the quarter, right? So can you just maybe comment on the size of the site and how we should think about the longer-term opportunity with Microsoft from here? So does the agreement announced today, does that largely capture the opportunity you see with them? Or should we view this as potentially the first phase of something larger?

I mean, what I'll say to you, Shar, is we can't comment on any of our customer sites or the size of those sites. What I can tell you though, is we're actively engaged with all 3 of our major customers and the customers that we have in the queue. And we have a lot of demand in that queue with those customers, and we're really confident in our ability to execute on the pipeline that we have.

Okay. Got it. And then just -- obviously, there's been a lot of progress on the GenCo starting to accrete value. I guess, as we move through the remaining proceedings in Indiana, I guess, how are you thinking about the key regulatory risks from here? Has anything changed in terms of the risk profile as we move further through the process?

We're still optimistic and confident in Indiana. We think it's a great place to do business. It presents a significant long-term growth opportunity for NiSource. If you think about the GenCo and economic development -- economic development and affordability are among the administration's top priorities, and GenCo checks all of those boxes. So we're in Indiana. We are actively engaged with all the stakeholders. Our goal is to enhance our value proposition to our customers, our large load customers and our shareholders.

Your next question comes from the line of Julien Dumoulin-Smith with Jefferies.

Just wanted to follow up. I'll take another crack at this, if I can. Without identifying customers' internal plans, right, I think important caveat, is the current infrastructure and resource plan being designed to preserve the ability to serve additional Microsoft load? How do you think about the physical requirements, whether that's generation or transmission, to [ upside ] from here? I'm just trying to zero in on the initial [ 788 ] and what the underlying generation plan that underpins it could be and/or if you're going to plan ahead a little bit, if you will, on generation. And then maybe a subquestion on that would be, you have an initial toll on the battery. How do you think about ownership on that front over time as well?

So what I would say is that's sort of back up to more of the global perspective first, which is Indiana is a positive area of the country by which to facilitate both the generation growth and the serving of data center customers, as mentioned in the forward of it, like relative to land, fiber, et cetera. When we plan our assets, we plan our assets for the ability to -- from that full portfolio, serve the totality of our customers within it. We don't overbuild on that or overextend on that. But at the same time, we do plan for the potentials, the risk. It's one of the ways we're able to mitigate overall challenges with the portfolio and make sure that we meet our commitments in serving our customers. What I would say is you've seen us grow with Amazon, and you've seen us sign two additional agreements with Amazon which have both accelerated and incremented that capacity. We are focused on being able to continue to grow with our existing customer base. And with those high creditworthy counterparties, good, strong counterparties, we will continue to add them to the portfolio as we go forward. So overall, we feel like we're in a really good position. We feel we have the capability both from transmission and what we're looking at with generation capability to be able to both grow with our existing customers and expand our pipeline. As for the tolling agreement -- go ahead and hit that -- we look at the tolling agreement, we use a variety of mechanisms to balance everything across the portfolio, both from all the financial parameters, what we want to do overall with our long-term strategy. So as we have done with batteries, some of them we own, some only toll. Some, we have -- we continue to do these arrangements. We're not opposed to owning. But at the same time, as we continue to grow this portfolio, we're going to try to make sure we take a balanced perspective that allows us to be able to step in the opportunities at the right time and also be able to adapt to technology changes as we go forward.

Yes, absolutely. And then if you can just elaborate a little bit further as you think about the funding plan a little bit. It seems like the additional incremental payments here being made, whether it's Microsoft or otherwise, on the GenCo is what's driving the additional [ CFO ] when is the 55% to 60% to fund the plan, the level of incremental cash in the near term?

Yes. You're starting from a load position on customer ramp rate, which strengthens through the period of the plan. If you recall, we'll have customers fully ramped in 2030, 2031, 2032, which is strengthening cash from operations on the GenCo segment. Additionally, the base business continues to produce strong cash flows. As a reminder, the starting point of 16.1 at the end of 2025 on an FFO to debt basis just demonstrates the strong cash flows and capitalization of the base business was beginning at, and that just maintains itself through the plan horizon.

Your next question comes from the line of Nicholas Campanella with Barclays.

Just wanted to ask like the -- you used to talk about doing the strategic review of GenCo just in terms of being able to execute beyond the 9 gigawatts. And can you give an update on how that's going? And just -- you've made pretty steady progress here. Does that review need to happen before you execute on the remaining 4 gigs? Or could we see that a little sooner? And then I'll ask a follow-up.

So I'll answer the second question first. That review does not need to happen before we execute on the next 4 gigawatts. We show in the chart, the slides you have, we have 2 gigawatts now in strategic negotiations and then 2 more behind that. We are in the midst of studying to upsize that. We know we have the ability to upsize those, the size of the GenCo. I mean, you will roll that out sometime in 2027. That study is ongoing, and we're optimistic, and you'll see that sometime next year.

That's great. That's great. And then in your prepared remarks, Lloyd, on the Indiana storms, we have seen some legislative hearings. There's been some discussions about the need to kind of increase resiliency, reliability. I'm just wondering how that informs your capital plan if there can be kind of a wider resiliency package put forward to the state and when and what that would look like?

So we are actively and we will actively participate in the IURC hearings. We understand that long outages are not good for our customers and an investment to make to harden the system to make it a lot more resilient. We're in the midst of studying that. As we go through this process, we want to make it clear what kind of capital investment that, that takes, and we'll roll that out to the regulators and legislators as necessary. But I think that is ongoing. And I think you'll have an understanding of what the investment opportunity looks like in the near future.

Your next question comes from the line of Ross Fowler with Bank of America.

Just a real quick one first. I think if I've got it right, Amazon CCGT is shifting out to 2030. Kind of what drove that? How do you serve Amazon kind of in the meantime before that enters service? And sort of, does any -- who bears the incremental cost of that as we shift this out?

Michael?

So what I would say on that is, first of all, there's 2 CCGTs, they're not both shifting out to 2030. One has changed with what we're doing. But remember, we signed incremental agreements, acceleration agreements. We have batteries that are coming online ahead of that. We have a pooled portfolio. So this fits into the whole capability of really making sure that we're optimizing the assets to be able to serve the customers in the most beneficial and cost accretive way, and quite frankly, derisking the construction and making sure that, that construction is done in a way that has the highest probability of execution. The moves we made with the CCGTs do that for Amazon. They help to ensure higher confidence of execution and modifying those in a way. But it's not a delay in schedule, it's actually an optimization. And in fact, some of them are actually, I would say, are accelerated with it that helped produce for that acceleration that we're doing. So when you look at it overall, think about it in what we're doing in the totality, not on an individual asset.

And just to add real quick, Ross, I would note that the capital requirements were not changed in our disclosure. So there's no change necessarily. As Michael indicated, it's really streamlining the construction process for best execution. And the pricing signals still are set off of the ramp rate for the customer.

Yes. And then maybe following on Julien's question a little bit on the cash flow flywheel. It looks like if I sort of look at your funding slide and I look at the percentages against the old capital plan, the new capital plan, right? And I know this is all backward dated, but if I just quickly annualize it in my head, CapEx [indiscernible] has been changing on a sort of annualized basis. But I think the important point maybe is that funding has. I mean, debt seems like it's on average, $600 million less annually. Equity is about $100 million lower. And I know that cash is going to be front-end loaded, right? So -- but as I think about the go-forward plan, Shawn, as you add more to GenCo, there's got to be capacity to just increase the backward dated edge of that CapEx in the plan as you go forward. The more GenCo should just be more -- not only GenCo CapEx, but ability to fund regulated CapEx with the same balance sheet and sort of maybe even lower funding requirements, which was kind of a perfect trifecta of how to do this. Am I thinking about that correctly?

Yes. Yes, you absolutely are. I mean, again, you start from about a position of 16.1 at the end of 2025 with minimal capital expenditures associated with GenCo. That really is producing the intrinsic cash flow power of the base business, which is obviously above our guided range. So that business and the strength and the financial profile of the base business, we believe, has not changed. It's very consistent through the plan horizon. Therefore, it has the ability to operate with minimal to no equity as it grows throughout its rate base deployment, strengthened by that 90% recovery inside 12 months. That helps intrinsically stabilize the operating cash flow and minimize the use of equity for the base business. Meanwhile, one of the strengths of the GenCo model is the ability to shape the cash flow design through its rate structure in a manner which also balances financing requirements. That flexibility helps reduce the equivalent of regulatory lag and allows for optimization and balance of cash inflow with cash outflow based on the construction cycle and what's necessary to meet the customer needs. Again, also additionally achieving a greater than regulated rate of return enables that EPS to keep up with the rate of spend on the equivalent investment, and that's producing FFO. So again, self-sustaining itself from a funding mix point. And then finally, to Michael's point he just made, having the flexibility to procure the most efficient capacity attribute available while earning an appropriate risk-adjusted return provides that flexibility to best serve customers, that's going to matter based on the incremental, in this case, 4 gigawatts that Lloyd just alluded to and what technology solution will be necessary for us to serve those customers.

Yes. Raising CapEx and lowering equity, it's a good thing to do. Thanks.

Our next question comes from the line of Eli Jossen with JPMorgan.

Maybe just starting with the customer savings. How should we think about the regulatory positioning and playbook in Indiana? Obviously, you have to think about this post-election. Can you just kind of frame how we should think about your strategy going forward, particularly with the savings in mind?

Well, again, as I mentioned earlier, one of the largest benefits of the GenCo is it addresses the affordability issue. With this last signing of Microsoft, we start to roll back $1.7 billion to our customers. And it will grow as the GenCo grows. That customer credit should show up in the customer's bill, I think it will call my data center credit, pending IURC approval sometime either at the end of this fourth quarter or sometime early next year, and the customers will see that number ramp up as the customers ramp up.

And just to add to that real quick, we really wanted GenCo and we feel like those proof points exist to demonstrate for both our communities and our stakeholders, the value it can provide in growing the communities, as Lloyd said, providing $1.75 billion back to customers. But also remember, this is isolated. Like what we're doing for the electric utility, it is isolated from the rate base. So they do not bear that risk with us building these assets. So we feel like it's been a very positive evolution and it's proven out now and that we're able to demonstrate that with all the stakeholders and carry that messaging through, which is beneficial to our activities in Indiana.

Your next question comes on the line of Steve Fleishman with Wolfe Research.

So just looking at Slide 27 on the -- it looks like you added 2 new combustion turbines in there. And the $2.3 billion cost relative to the, I guess, 408 megawatts seems like a pretty high number. Could you maybe just talk about what -- is that more than just the generation? Is there other structural equipment transmission, other things in there?

All the transmission and infrastructure is also in that cost, Steve. So it's not just the 2 [ frame CTs ], but all the transmission and infrastructure, and well, some equipment associated with that transaction.

Okay. Is there a way to get the number just for the generation?

No.

Okay.

We haven't disclosed that.

Yes. Second question, just the GenCo CapEx is very -- I mean, it looks like the vast majority of the CapEx is pretty much the first 2 years. And is that kind of -- I mean, it fits the model of what you talked about, Shawn. And just -- does that any kind of front ending though, of what you had done before? Or is it consistent?