CMS Energy (CMS) Q3 2026 earnings call transcript

Thank you, Piercy. Good morning, everyone. And thank you for joining us today. With me, our Gary Groeschau, President and Chief Executive Officer, and Shree Matapati, Executive Vice President and Chief Financial Officer.

This presentation contains forward-looking statements, which are subject to risks and uncertainties. Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actor results to spur materially. This presentation also includes non-GAP measures. Reconciliations of these measures to the most directly comparable GAP measures are included in the appendix and posted on our website.

And now I'll turn the call over to Gary.

Thank you, Jason, and thank you, everyone, for joining us today. I always start with our investment thesis, because it is a durable and proven model that has delivered for more than 20 years of consistent industry leading performance for all stakeholders.

For our customers, it enables important investments in safe, reliable, and clean energy across our electric and gas systems while maintaining affordable bills. For our investors, it delivers a premium total shareholder return, made up of 6% to 8% adjusted EPS growth toward the high end, which reflects 7% or better, compounded annually, impaired with an approximately 3% dividend yield.

And as shared on our Q2 earnings call, with the restructuring of North Star Clean Energy, our model is further simplified as we exit non-utilities, renewable development, and deliver approximately 100% regulated utility earnings growth after 2027. Let's start with North Star. As of today, we have more than 35% of the assets at signed agreements or closed. There continues to be strong interest across the remaining assets with the majority of these assets in exclusivity with buyers.

In summary, good progress. We are in track to complete the restructuring by year end. As a reminder, as part of this restructuring, we retain Dearborn Industrial Generation, or DIG, several small gas speakers, and four commercial solar projects, all of which generate strong cash flows and support our long-term growth strategy.

This restructuring strengthens our balance sheet and allows us to reduce over $500 million of funding within our current five-year plan for use at the utility, supporting important and needed customer investment in our systems.

Simply put, nearly 100% regulated utility earnings growth after 2027. Reduced parent funding requirements improve earnings quality. This restructuring strengthens our business model in positions of the company to make the long-term utility investments our customers need.

Speaking of customer-focused utility investments, in September, we filed our long-term integrated resource plan for IRP. Outlying how we will meet Michigan's clean energy targets while ensuring reliable electric service through 2040.

The IRP details in all of the above resource strategy that combines natural gas, solar, wind, pump storage, and battery storage to deliver reliable, affordable, and cleaner energy for Michigan customers.

We foreshadowed a portion of these customer investment opportunities in previous earnings calls, but as noted on the slide, the plan includes 15.8 gigawatts of clean energy resources, an increase over our already approved renewable energy plan of 10.8 gigawatts, 4.1 gigawatts of battery, an increase over our previous plan of 850 megawatts, and 1.4 gigawatts of new simple cycle gas generation to replace the aging, oil, and gas-fired speakers at our CARN 3 and 4 plants and to ensure reliability of the electric grid.

The plan further reflects energy waste reduction in virtual power plan options that help customers save money while providing additional earning opportunities.

In summary, our IRP provides significant capital investment opportunity of roughly $27 billion in new clean energy resources, battery storage, and gas generation.

Another important aspect of the plan is the ability to earn on power purchase agreements. Frankly, it's a differentiator in our sector. The IRP assumes a financial compensation mechanism, or FCM, of approximately $125 million beginning in 2031, growing to approximately $195 million by 2040, assuming a 5050 ownership split. On the right side of the slide, we've offered visibility into how the value of the FCM has progressed over the last few financial plans and the path to achieve those earnings.

The ability to earn in a capital-like way has grown as we have signed more PPA's for renewables, batteries, and clean energy. Of note, the file of IRP includes a recently signed large clean energy PPA of 680 megawatts. This PPA de-risk new renewables development supports Michigan's clean energy targets, delivers the energy and capacity our customers need while ensuring the continued strength of our balance sheet. I look forward to sharing more details at the EEI conference in November.

I'm also pleased to share we continue to deliver on the approximately 900 megawatts of growth that supports the two to three percent annual low growth we've highlighted within our five-year plan period. As noted on the slide, we've added approximately 745 megawatts of new contracts in our service territory, and we've energized more than half of that load or approximately 450 megawatts. Essentially, we are adding the equivalent of a large data center through primarily the manufacturing and semiconductor industries, and it comes with more jobs and other tertiary benefits, such as supply chain, housing starts, and potentially higher margin commercial and residential growth.

And keep in mind, this does not include the large load agreement, a large data center signed earlier this year. That project continues to progress through zoning in multiple locations, and I expect further movement after the elections. I continue to be proud with what the CMS energy team has delivered and know that the benefit of growth flows to our customers as we spread fixed costs across a larger customer base, driving affordability while these opportunities create jobs and strengthen our communities and our state. As we turn to the regulatory calendar, I'll highlight the constructive order from the Commission in our gas rate case, approving $139 million or approximately 60% of our final ask, a 9.8% ROE, and 50% equity ratio.

The Commission order delivers another proof point of the constructive regulatory environment in Michigan and supports the important and needed investments in our gas distribution system. In October, we filed our revised or updated electric rate case requesting a $443 million revenue increase, a 10.25% ROE, and a 51.75% equity ratio. Staff also filed their position in October, recommending a $265 million revenue increase, or 60% of our revised ask, a 9.85% ROE in 50% equity ratio.

Additionally, staff support our storm deferral recovery for the 2025 storms within the electric rate case. In the Commission approved the deferral of 2026 Q1 storms in August, further in our confidence and recovery and evidence of the constructive regulatory environment in Michigan. If I pull up from the details and reflect on the entire electric rate case, staff's position is constructive, a good starting point, and their opportunities will pursue in the rebuttal process to ensure we support the important and needed investments to improve reliability.

And at the record further reflects our reasonable sales forecast for both residential and commercial growth. We expect the PFD position in late January in a final order by early April of next year.

Now on to the financials. Your today, we reported adjusted earnings per share of $2.95. We are reaffirming our full year 2026 guidance of $3.83 to $3.90 per share with continued confidence toward the high end. Our financial performance has positioned us to reinvest in the business, the risking future years, and further enhancing service for our customers.

We are also reaffirming our 2027 guidance of $4.08 to $4.17 per share, which incorporates the North Star restructuring. Longer term, we continue guide toward the high end of our adjusted EPS growth range of 6 to 8 percent.

Finally, as we've done in previous years, we'll provide an update on our year-end call regarding the roll forward of our five-year utility capital plan and broader financial plan. With that, I'll hand the call over to Street.

Thank you, Garrick. Good morning, everyone. I'm excited to be with you all this morning and to provide an update on our business. Today, my remarks will largely focus on continued execution through 2026, our reinvestment of favorable performance, which will benefit customers, strengthen next year, and future long-term growth, as well as an update on our financing activities, and how we'll continue to leverage the benefits of restructuring North Star into our annual planning process. Given the progress Garrick highlighted in our IRP, we see plenty of opportunities between rate-based and FCM on PPA's and our supply business. In addition, there's a robust capital backlog in both our electric and gas distribution businesses.

We'll provide an update of our capital plan in Q4 for our normal practice. Starting on slide 9, we have the standard water pole chart, which illustrates the key drivers are of financial performance for the first nine months of 2026 and are year-to-go assumptions for meeting our full year guidance range, where we plan to deliver toward the high end. Year-to-date, the company delivered adjusted net income of $915 million for $2.95 per share, which you'll note excludes the restructuring activities at North Star and is 29 cents favorable to last year.

We're trending ahead of last year and are well positioned relative to plan, reflecting strong execution at the utility, including constructive regulatory outcomes, as well as completion of the Michigan solar projects we are retaining at North Star.

Favourable weather in the quarter and benefits from the storm referral give us greater flexibility as we manage the remainder of the year, including weather and storm risk, while continuing to reinvest in the business to benefit customers and strengthen 2027 and beyond. Compared to last year, you can see that weather results in a five cent unfavorable variance. However, from a planning perspective, we assume normal weather. So relative to plan, we have benefited eight cents a year to eight, primarily driven by Q3 cooling degree days. New rates, net of investment costs, resulted in a positive variance of 34 cents, with the benefits of last year's gas rate order, new electric rates from earlier this year, and continued investments in renewable projects at the utility.

We are pleased with the commission's approval of the storm referral on Q3, offsetting the full year impact of the ice storm earlier in the year. Year-to-date, O&M is unfavorable 16 cents, primarily due to additional storm activity, as well as a portion of the reinvestments we have already made across the business, including electric reliability, gas operations, customer service, and digital investments that will enhance future productivity.

The 16 cents a favorable variance in parent and other has been primarily driven by North Star performance, with much of that being reinvested back into the business, which I'll touch on in a moment. Looking at the remainder of the year, we are well positioned to meet our financial objectives in 2026, as Gary noted. Our assumptions already reflect an unfavorable variance of 9 cents for normal weather. With our 2026 regulatory outcomes complete, we're confident in the positive variance of 8 cents in the fourth quarter for rates, net of investments. From an O&M perspective, we expect to net 10 cents a favorable variance given our conservative planning assumptions for storm activity. This already accounts for 10 cents of reinvestments to improve safety, reliability, and enhance future productivity, as previously noted.

As always, we'll remain flexible throughout the quarter and look to take advantage of additional opportunities to reinvest for customer benefits that will strengthen future years. Closing out the glide path through the remainder of the year in the bar on the right-hand side, you'll note 9 cents to 16 cents of negative variance, which incorporates the flexibility we have for the rest of the year for contingency or career invest back into the business. We remain well positioned to deliver toward the high end of our guidance range while maintaining the flexibility to manage the remainder of the year and continue investing for the long term.

Moving to slide 10, you'll note that our plan financing for the year is nearly complete, given the 900 million utility first mortgage bonds we raised in the third quarter, all within our planning assumptions. From an equity perspective at the parent, we've completed $495 million at a tract of prices relative to plan. For the remaining equity, we'll continue to match the pricing and issuance relative to our needs given the North Star restructuring, where it'd be disappointed if we're not above the $500 million dollar funding benefit, as Derek noted. We're already optimizing those benefits this year, and we'll incorporate it into our five-year planning cycle. From a debt maturity perspective, we have approximately 625 million maturing at the parent next year.

Keep in mind, with our conservative approach, our conservative approach already incorporates interest rates consistent with where the market is today. So we'd look to potentially de-risk next year by pulling some of that refinancing forward. Also, I remind you that nearly all our debt is fixed rate. I'm confident in the strategy we are executing to deliver on our objectives this year and strengthen the plan going forward. I look forward to sharing more in the future.

Now, I'll turn the call back to you before we take the question.

Thanks, Shree. At CMS Energy, we deliver every year for 23 years. Consistent industry-leading performance, regardless of circumstances, you can count on CMS Energy to deliver for all of its stakeholders.

With that, Piercy, please open the lines for Q&A.

Hey, Marcela. Good morning. Thanks. So then DSC has had some commentary recently on the FCM, specifically as it relates to contracts, you're legally obligated to enter, but just more broadly, how should we be thinking about durability of the FCM and energy policy in Michigan, you know, post-election?

The short answer is we don't see the FCM going away, but let me talk a little bit more about that. And I'm glad you brought up the FCM because we've been very deliberate, including in our slide deck, right? It's on the right-hand side of, I don't remember the slide number. I think it's slide five there, but I think it's one of the things that's most underestimated prior investors, that ability to grow FCM over time, and we're showing that in that graph, the ability to grow up to 20, 31 and beyond to 125 million dollars, and then even to 20, 40 to 100 and 90 million dollars.

And Marcela, you won't know it's about being my mom was a math teacher. And she would always say to me, like, show your work, like she drilled that into me in junior high. And that's what we're doing right here in the context of this FCM. You can see in that slide, in slide five that it's highlighted, right? There's goes from darker blue to light blue. That's the show of the progress we've made. In 2031, over 70% of those contracts are already signed or online, and so that creates the visibility and clarity. And for me, confidence of our ability to deliver on that.

And so I just want to highlight that in the context of this, because again, I think it's a differentiator in our story. I want to make sure I bring attention to that. In terms of the MPSC, the commission, in their words, in their letter to the governor, recognized the value of the FCM, and particularly third party solutions that come at a lower cost. And so this is about the discussion around the entire FCM. This is about refinement, particularly around perfect contracts and assets that are fully depreciated. And so I really do this as refinement of the FCM, not eliminated in the context of affordability. And that's why it came out strongly and said, we don't see the FCM going away.

In fact, it's one thing that we want to highlight during this call, just the potential upside there.

Yeah, and the only thing I'd note to Derek's comments were the depreciated assets, largely talking about river hydros. We didn't include that into our projection of the FCM. In fact, we asked to use those proceeds to de-risk future safety at those funds. So the FCM that we have here contemplated is within the law and really isn't reflected by the contract, the commission highlighted.

The short answer is strong. I mean, across both candidates and our current governor, but let me offer, let me offer some more context around this. Politics, she says this, I love it when he says is politics, do not equal policy. And some of the spin that you see leading up to election does not equal reality. And what we know, and we show it in that slide, it's the last slide in my prepared remarks, that regardless of CEO, CFO, governor, legislature, MPSC and weather, we deliver. And it's based on the principle we work with everyone. And that's easy to say, harder to do, but that's what we do. We do it year after year by finding common ground.

There's common ground on affordability, and there's common ground on data centers, right? And we see this with both candidates that are running our support of those investments in Michigan and the jobs that come with it and the property tax value. No one said no data centers. In fact, they've talked about responsible data centers. And we're for that as well. In fact, our electric tariff for data centers, our large load agreement does just that. It's responsible. And for, again, who pays? And so our residential customers aren't burdened with the data center. And so we need to do more of that in terms of water and wastewater and noise and land as a state. And that's the important work that to be done.

And I expect the data centers will continue to move forward after the elections here. But again, just back to my beginning remarks, I see a strong environment for data center growth across Michigan. Appreciate that. Thanks, Gary.

Good morning, Jeremy. Look forward to seeing you soon in the EI. Yeah, see you soon. Looking forward to it.

Well, to be super clear, we heard that feedback this morning. We didn't include the slide. Look, we like, we can provide the slide. That's not, it's a little bit like watching Michigan play football. You know, you can spend a lot of time looking at the plays, but you've got to get it across the end zone. You got to get it across the goal line. And so we provide in this deck, really along the lines of economic development. We're showing our, showing our work, again, going back to my mom, show your work, 745 megawatts. It's been signed. 450 is already energized. A lot of that's in the manufacturing space. You've heard me talk before about the benefits and value of that.

So we're showing that, we're showing that important work and what that means for this day, what that means for jobs, what that means for, and confirming our sales growth that's in our, and our financial plan of 2 to 3%. Now, we can talk data centers and we're happy to talk data centers. Multiple data centers continue in the state. That's the pipeline. We find one in Q2, and we shared that in the Q2 orings call. That's continued to progress in multiple locations across the state. From a zoning perspective, one of the areas where they're located, they just released their draft zoning ordinance. And so the companies, in fact, reviewing that right now and providing feedback. So I see that as a, again, as a positive step.

In another data center, actually a couple data centers are acquiring more land within the state. So again, we continue to see positive progress along those lines. And again, I see more progress after we get through the elections here shortly.

Got it. That's helpful. Thank you for that. And then just want to pick up, I guess, in the past, you talked about, you know, one gigawatt could drive 2 to 5 billion in CapEx, and just wondering if we should still think about, you know, that that relationship and, you know, specifically as it relates to the IRP and the 27 billion the long-term CapEx, you know, how you think this could enter the plan, you know, over time, forward thoughts there.

Yeah, Jeremy, I think that's still a good way to look at it, 2 to 5 billion dollars, and that really just bifurcated between just the capacity needed and then the clean energy that's needed over time. As it relates to that the IRP will incorporate that into our into our annual process. Keep in mind, our current plan doesn't really contemplate having a data center in it. So our future plans will incorporate the IRP capital, which largely isn't data center related nor is the SCM. So we'll incorporate that in as we as we roll forward.

I think Shree will now tag team this one, but I'm very pleased with the progress from where we stand in the in the 35% of the assets that are either purchased, sale, agreement or closed. And so that's trending well. And then in the context of exclusivity with the buyers that that's well underway. So we're not just at the beginning of that. And so closing in on purchase and sales agreement. And that's why we're again, offer the commentary that restructuring will be complete by by year on and we're on target from that perspective. But Shree, please.

Yeah, I would go ahead. As you're noted, we're on track in the and the use of funding. We noted in the Q two call at least 500 million. Like I said here, I mean, just one if we're above that. And so trending positively relative to that all of that will help parent funding needs, which will roll into our Q four financing plan along with our capital programs.

Yeah, they're just from an investment community. There appears to be a lot of noise on Michigan and I will tell you right here on the ground. I'm confident our ability to navigate. And frankly, we've got we've built good relationships with all the governor candidates, among many of the legislature and as a result of just doing business here in Michigan for a long time. And as I shared here, we've delivered for 23 years by finding common ground by this principle, we work with everyone. When it comes to common ground, particularly around affordability, whether you're a Republican, independent or Democrat, people can align around that. And I've talked about it on a number of these calls and investor meetings of the two-pager I run around with and talk about affordability and look for common ground.

And I think there's a lot of ways to do that. One is in the context of multi-array plans that provide predictability for customers. One, two, we've talked about in terms of personal property tax and hundreds of millions of savings for customers and that pass through that shows up. We've talked about in state permitting reform. I know we're talking about federal right now, but also state permitting reform, but it helps from a cost perspective. Chair scripts within the corner set a letter to the governor.

And if you go through that letter like I have, you can say, yes, yes, yes, we should be doing a number of those things, particularly in terms of low to moderate income. That's right now in the state, there's all kinds of policy improvement that can be done in the context of low to moderate income customers. And so what I'm laying out, Rich, is like, here's the place for common ground. And how do we work for an affordability? And so again, we see that as important steps as we go into 2027 and further and beyond that to be able to continue to find and continue our position as 15 lowest bills from a nation perspective in terms of electric and just continue to position with utility in the right way and make the important investments for all stakeholders.

And so hopefully that offers some good context for you. So that's great. Appreciate the flavor for all of that. Thanks, Eric.

Yeah, thanks, James, for the questions. Couple things on North Star related to guidance. Obviously realizing benefits as we've brought some of those projects to COD. So let's having North Star over performing our planned guidance for the year. Some of that will reverse. Some of that's just timing on taxes. So when we book kind of effective tax rates, you kind of do it evenly and some of that will reverse in the fourth quarter. In terms of kind of rolling into 27, we've already incorporated the fact that we're selling some of the assets. So that's already in our 27 guide. And then some of the tax equity pieces will roll off into 27. So already baked in.

We'll share kind of segment guidance as we go through the fourth quarter.

You're kind of mixing with 26 and 27, so I'll see if I can parse that out for a second. Some of what you have on the to go is just conservative planning, right? We plan conservatively for storms, so make sure we have enough there for that. But then that number is net of reinvestments that we're going to be making here over the course of the fourth quarter. So significant flexibility there to kind of reinvest into the business. That all de-risk is 27. Some of that will be pulled forward and we'll continue to have those options as we go through the year. But yeah, keep in mind we're not decoupled, so we're also making sure that we have enough contingency as we look forward to the year for sales as well.

Let me offer some context and she may want to also join in some context on this. So what we've framed, there's 745 megawatts that does not include the large load agreement data center. So that's just I call it singles and doubles. We're just stacking up semiconductor manufacturing food processing. There's one medium sized data center in that mix, but much of that is already online. And so again, that's that built into the plan. It's built into IRP. We're showing again the two to three percent low growth that we have in our current five-year plan.

The capital investments that will come with this new data center are not yet incorporated into our plan. We'll see that through from a zoning perspective. And again, I have optimism as I see that plan out from in multiple jurisdictions.

But Sri, please. Yeah, no, like Gary said, the two to three percent sales goes already baked into our five-year plan. Adding a data center would push us above that as well as the capital above that. So that would get incorporated as we execute on that. So this is already incorporated into our plan. It's just executing against it. And we continue to see strong momentum in that space as we sign up, customers across a number of industries.

Yep.

Let me start with 2026. I think because everything builds off of 2026. And so just again, framing for everyone here. So as we said, on the call, six to eight percent toward the high end. And again, that's 7 percent or better. And we've offered common barrier here that we'll reinvest into the benefit of customers, particularly in terms of reliability and our gas bid and digital, which improves productivity. And then overall, de-risking 2027, which is beneficial for all stakeholders. And so here, when I say this, I have a great deal of confidence or ability to deliver in our guidance range for 2026 as we've framed up here in this call. And I would suggest we're well positioned for 2027 as well.

But as we normally do in Q4, we update our capital plan, we update our financial plan, we update our earnings guidance. That's our consistent from a process perspective. And we'll do that. But I remind everybody on this call, and we've shared it in the materials and in our speaking, in our prepared remarks is our long term guidance continues to be six to eight percent toward the high end, which we've framed up as 7 percent or better.

Yeah, Michael, I'll take it. So that's not a customer keep in mind. These are suppliers that we're with the FCM. So it's people who are we are contracting with. And that is one individual supplier that we're contracting with. And we're making progress as we bring that into our portfolio starting in 2031. So we feel pretty confident about that. There's some more work we have to do on the ground to move that forward. But I'd expect that we incorporate those benefits as we roll forward the plan here in fourth quarter.

Yeah, I can't speak to what DTE's approach is. I'll leave that for DTE and their call. But again, one of the benefits we see is an annual rate case file or bringing back the savings to our customers. Whether that shows up in the CE way and digital and where we see savings, we bring that back. Whether that's in our client service plan and other tax benefits, we bring that savings back. Whether that's in the context of low growth and we see that both in our gas and electric business, we bring back both that savings opportunity for customers and sharing some of those fixed costs across the system.

By annual rate cases, we're bringing that back, which creates the important headroom to make the needed investments in the system. When customers have an outage, there's a real cost to that. We need to be able to make those investments in our electric system. We're unsure as safe natural gas system without events. We want to make sure we're on the path to clean energy and compliance. So those aren't at odds with one another. In fact, the commission's been very supportive. And throughout these annual rate case processes, we've been able to achieve constructive outcomes. We've been pleased with the outcomes and we continue to work hard to make sure that that's going to happen. But again, the current system works for us and we continue to get the outcomes we need for all stakeholders.

Now, I've been on the record since early in 2026 to talk about the potential for multi-year rate plans, which offer predictability for customers. I think there's a right way to do that and assuming we can do that in the right way and build it into law, I think provides a much more durable means of providing some benefit for customers and other stakeholders. And so rather than just a stay-out provision, which to me doesn't provide the durability for the long term.

The only thing I'm just going to add is a good example that Garrett gave in there was just ASP. That was about $90 million benefit. We could have just passed that on in one year. We didn't. We actually smoothed that in over three years. So just gives a more consistency experience both to the customers as well as as we execute our own plan.

Kind of as you noted, Anthony, the outlook is actually at the utility. And so a lot of that is just going to be dependent on actions at the utility. We've noted in our kind of cases, and the first time the commission is really going to have an opportunity to look at that when it's on the direct record, isn't the electric case? Or we're looking for a 51.75% equity ratio. So I'd expect that Moody's will look at that as they kind of both on a qualitative and on a dated perspective, but the quantitative aspect being rate recovery and specifically equity ratio.

Morning, Andrew.

Well, first of all, let me just answer the short answer and then I'll hand it over to Shree here as it's required. When we cite a contract, it's required to include it in the integrated resource plan. And so, and again, we model a variety of different scenarios. And again, there's real, as we've shown throughout this call, real low growth in terms of manufacturing, industrial, and mid-sized data centers as part of the mix. And then we layer in the signed contracts as well. And so, that's just, you know, within the policy, within the work of the integrated resource plan, we need to include that.

But Shree talked a little bit more about the capital. Yeah, just keep in mind, Andrew, when we rolled the five-year plan out, we hadn't actually had a contract signed with, or an agreement signed with that large center. So, nowadays, it's in the IRP. As we roll it forward, we, you know, we make sure we take care of all the conditions precedent, which includes siting, right? So, making sure those are in before we include that capital. Now, just remind you, that customer doesn't come on, Ryan, really, and energize into the back after the plan to begin with. So, it's a slow ramp, even if it was included, out into that early 2030 timeframe. So, we'll take a look at that.

If we make more progress between now and the end of the year to incorporate some of that in, but in terms of actually incorporating the IRP, it's required. So, when we roll things into our plan, we're a little bit more conservative than that.

Well, we don't build speculatively, just to be super clear about that. But one of the things the FCM does, and allows us all greater flexibility, because we can leverage developers, we can leverage existing assets to bring energy and capacity. And so, in the context, yeah, we can build ourselves too. So, again, that offers a lot of ability to be able to, as we secure additional data centers, to be able to adapt to their needs. And again, they have a ramp up schedule, which we've talked about in the context lead match. We work to match as well.

The other thing I would add is, we have in the IRP, there is a combined cycle plan out in 2040, but that would, you know, if we continue to add load there, and who would likely have to bring that forward and pulling it in closer than 2040.

Gary, you talked about policy improvement around the low and moderate income customers and affordability. Where were some other ideas that maybe caught your interest? It's just as important what's not in the letter. I mean, you see some states that are going after ROE and equity thickness. That's not in the letter, right? And they acknowledge where we are from a bill perspective, 15th lowest bills in the nation, right? They acknowledge that we've stayed below the rate of inflation. And so I think in the context of that letter, people want to point to the potential negative of it. I saw it as a lot of positive, just those four things alone. But if you're going to walk through that letter, what's the number one thing out there?

Multi-year rate plans and the predictability. Again, done in the right way. I mean, I think that's the important piece. You talk about the balance of that and both sides of it. Andrew, it is doing the right way. And so that all stakeholders benefit from that. And so we're working on that, right? And we'll see how that plays out here in 2027. There's a lot of great things in there in the low to moderate income space. It is difficult for a customer that struggles to be able to get assistance in the state. And you have to go from organization to organization. You have to fill out a lot of paperwork multiple times versus one way, one means, one source of data that is shared to be able to streamline that process.

We make it very difficult for those in need within the state of Michigan to get service. We all fix that. There's in that letter, like the bottom half of that letter is just that, the low to moderate income space. Like we should say yes to all those, right? And figure out those from a policy perspective. And so again, there's always pluses and minuses to everything. But from my perspective, there's a lot of great things in that letter that we can do from a affordability perspective. It gets back to common ground. And I think you can find common ground affordability. And that's how we're approaching things through this election period up to the election and after the election, and which gives me confidence, right?

Regardless of who's governor, who's in the legislature that will be successful.

You cut off, but I think you said 10 and a half. I think you said five and our rate base career is 10 and a half. That's still supported by our capital plan. So, yeah, yeah, 10 and a half percent.

Yeah, exactly right. So that's still supported by our capital plan. And we're going to update our capital plan here in the fourth quarter. And as Garic noted, we've got a lot of opportunity from that. What that doesn't include, Sophie, just keep in mind, is any of the growth that we get out of the SCM. So that's added to that.

I wouldn't read much into itself, other than you got third quarter and we got a brief call. So, we'll continue to update our plans, but I wouldn't read anything into it on that basis.

Let me just reiterate that there should be enough and you should read it. There should nothing you should read into this. This is just being efficient with the number of slides. And when we get to EEI, we have that rich, full many-page deck. We'll certainly include, you know, the funnel and some other components that people are used to seeing. It's just about being efficient for the for the quarter call.

Thanks, Piercy. I'd like to thank you for joining us today and we look forward to seeing many of you at the EEI conference. Take care and stay safe.