American Electric Power Company, Inc. (AEP) Earnings Call Transcript & Summary

Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Electric Power Second Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the call over to Andy Gurgol, Vice President of Investor Relations. You may go ahead.

Good morning, and welcome to American Electric Power's Second Quarter 2026 Earnings Call. A live webcast of this teleconference and slide presentation are available on our website under the Events and Presentations section. Joining me today are Bill Fehrman, Chairman, President and Chief Executive Officer; and Trevor Mihalik, Chief Financial Officer. In addition, we have other members of our management team in the room, including Kate Dixon, Senior Vice President, Controller and Chief Accounting Officer; and Darcy Reese, Vice President, Investor Relations. We will be making forward-looking statements during the call. Actual results may differ materially from those projected in any forward-looking statements we make today. Factors that could cause our actual results to differ materially are discussed in the company's most recent SEC filings. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We will take your questions following opening remarks. Please start on Slides 4 and 5 as I hand the call over to Bill.

Good morning, and thank you for joining us for our second quarter 2026 earnings call. As we close out the first half of 2026 in my first 2 years at AEP, I'm very pleased with the progress we've made and the positive momentum we continue to build across the business. Four main themes are key to this progress, as shown on Slide 7, enhancing our financial performance, driving affordability, capturing significant growth across our portfolio and improving regulatory and operational outcomes. We are executing exceptionally well across each of these areas and strengthening our platform for outsized growth and long-term shareholder value creation. Turning to Slide 8. I will start with our focus on enhancing AEP's financial performance. We delivered operating earnings of $1.36 per share or $742 million for the second quarter. While I recognize our operating earnings are below last year at this stage, due to the 2025 transmission minority interest sale and timing-related tax items, I am highly confident in our business performance so much so that we are raising our 2026 full year guidance to a range of $6.25 to $6.55 per share from our previous range of $6.15 to $6.45 per share. I also remain committed to supporting strong investment-grade credit metrics, including our targeted FFO to debt ratio of 14% to 15% as we move through this incredible period of growth that's expected to last well into the next decade. Trevor will go into more detail around the financial performance later on in the call. AEP's size, scale and attractive geographic footprint continue to provide differential advantages as we drive affordability, all while executing on our robust growth strategy. As one of the largest utility holding companies in the country, we benefit from economies of scale that enhance our ability to procure, build, operate and finance infrastructure in a highly efficient way. Combined with the tremendous strides we have made improving regulatory outcomes and cost recovery mechanisms, these advantages help us deliver safe, reliable and affordable energy service for customers while generating increasing value for our shareholders. Over the past 2 years, we have seen significant customer demand across our footprint, and AEP's focus on execution positions us to be one of the best to capture that growth. Just during the second quarter, AEP contracted an additional 6 gigawatts of load, primarily driven by fully executed LOAs in Texas. Trevor will also provide more details on our incremental large load pipeline later on in the call. But to be clear, our future is extremely bright as it pertains to growth, exceptional counterparties and incredibly supportive strategic partnerships that will allow us to deliver for our customers and our shareholders. As shared on our first quarter call, AEP's 5-year capital plan from 2026 through 2030 is $78 billion, which is expected to result in nearly 11% rate base CAGR. To put this growth into perspective, AEP's 5-year capital plan stood at just $38 billion only 4 years ago. This significant step change underscores the strength of our portfolio and differentiated organic growth seen across our expansive footprint. In summary, we intend to deliver and our customers know it. That is why we have such a significant backlog of growth, which creates long-term upside for AEP over the next decade. We also shared on the first quarter call that we have line of sight to over $10 billion of incremental investments that are not included in the $78 billion, consisting of the fuel cells for the Wyoming project the Piketon transmission opportunity and incremental power generation. We continue to work with the hyperscaler on the Wyoming fuel cell initiative and remain highly optimistic about the project's advancement. Based on a contractual June 30 deadline, we reached an amendment to the agreement with the offtaker, which modified some key protection terms so that AEP is adequately compensated for their requested timing accommodations. Under the original December 2026 milestone, which remains intact, the hyperscaler has the ability to choose to deploy the fuel cells at an alternate location if the Cheyenne, Wyoming site does not advance. If the December 2026 milestone is not met or if there are additional requests to change the agreement terms, AEP retains financial protections for our shareholders. Separately, we continue to advance the Piketon transmission opportunity in Ohio and are working towards definitive agreements with the prospective offtaker, SB Energy. Following execution of definitive agreements, the projects would proceed through the required regulatory review and approval process. This project further highlights the strength of AEP's transmission franchise and in particular, our industry-leading expertise in developing and operating 765 kV transmission infrastructure. As we have discussed previously, AEP has taken a very proactive approach over the past 2 years to secure critical gas-fired turbine generators, leveraging our scale as one of the nation's largest owner operators of electric generation, industry expertise and long-standing supplier relationships. Just over this past quarter, we have secured an additional 3 gigawatts of turbines. This increases our total secured turbine capacity to approximately 13 gigawatts for deployment through 2031. These strategic procurements position us to meet the growing energy needs of our customers while providing greater certainty around future resource deployment in AEP's footprint. When we introduce a new 5-year plan for 2027 through 2031, during our third quarter earnings call, these generation investments are expected to be an important driver of our long-term growth outlook. In addition, we are leveraging our sizable market position and strategic manufacturer relationships to secure up to 10 gigawatts of incremental turbine capacity through 2035. This level of access to critical equipment underscores a key competitive advantage for AEP and enhances our ability to support customer growth, strengthen reliability and create long-term value for shareholders. Regarding nuclear, we continue to advance an early-stage nuclear generation strategy. This is being driven by demand from potential customers who value alternative forms of long-term baseload generation to support the rapidly growing demand. While we want to be proactive and work with customers to jointly develop their projects on a fee-based arrangement that limits risk for AEP, we will remain highly disciplined to ensure that we are protecting our existing customers, shareholders and balance sheet. Please turn to Slide 9. Affordability remains a core tenet of our customer strategy as new large load comes online, it enables a shift to fixed costs currently borne by existing customers to new data centers and hyperscalers. As we noted on our first quarter call in May, we are projecting fixed cost offsets for residential customers of up to $16 billion in our Vertically Integrated Utilities as a result of new large load interconnections that are supported by fully executed take-or-pay electric service agreements. The benefits of this changing customer mix are already being realized. Together with our disciplined focus on operational efficiency, these offsets have supported planned base rate reductions in select AEP operating companies. For example, an order has been received in Ohio and Indiana, Michigan Power plans to submit a base rate reduction filing later this summer, reinforcing our commitment to delivering safe, reliable and affordable service while supporting economic growth. We are also continuing to access sources of lower cost capital, including federal grants and U.S. Department of Energy loan guarantees to further drive customer savings. Earlier this month, AEP Texas secured a DOE loan guarantee for up to $3.3 billion to finance a portfolio of transmission projects spanning approximately 2,800 miles, which is expected to deliver an estimated $685 million in customer savings over the life of the loan through lower financing costs. With this financing, AEP has now secured approximately $5 billion in DOE loans across our portfolio, supporting an expected $1 billion in projected customer savings. This, combined with almost $400 million in awarded DOE grants are expected to deliver nearly $1.4 billion in estimated customer benefits over the life of the loans and grants. Turning to Slide 10. We continue to obtain constructive regulatory outcomes across our portfolio, with notable progress achieved this past quarter, which should improve cost recovery and our earned ROEs over time. In Ohio, we secured commission approval of the distribution base case settlement, which includes an affordability measure featuring a base rate decrease driven by the timing of regulatory liabilities being passed back to customers. AEP Ohio also secured a 9.84% ROE, up from 9.7%. This, coupled with the forward-looking test year in the next rate case will improve cost recovery and their earned ROE. In Texas, SWEPCO reached a base rate case settlement in principle with key stakeholders in late April, which positions us well to advance our growth plans and enhance safe, reliable and affordable electric service for customers. In Oklahoma, PSO filed a base rate case settlement with several key intervenors, while the proposed authorized ROE decreases slightly from 9.5% to 9.375%. The settlement includes an enhanced transmission cost rider, which we expect to result in a meaningful improvement in PSO's earned ROE. PSO also received a separate order in May approving its request to procure 1.3 gigawatts of generation resources, supporting reliable and affordable service for our customers. Taken together, these outcomes support continued investment in Oklahoma while keeping customer affordability front and center. In Virginia, we completed a $1.4 billion securitization in May enabling APCo to file its lowest increase in the base rate request in nearly 30 years, driving further customer affordability measures. Additionally, in June, we received approval in Virginia for our proposed large load tariff, bringing the total number of approved tariffs across the portfolio to 5. We have 3 additional filings pending for proposed large load tariffs and our teams are working closely with key stakeholders to advance them through the approval process. Collectively, the constructive regulatory outcomes we have achieved this quarter and over the last couple of years, reflect a more focused engagement strategy across our footprint by listening to what our customers, regulators and states want. That approach is helping us achieve balanced outcomes that create value for our shareholders and certainly for our customers. In summary, AEP is entering the second half of the year with extremely strong momentum, building on the significant progress we have achieved since I joined 2 years ago. We are serving growing customer demand, investing in critical infrastructure, keeping affordability central to our approach and maintaining the financial discipline needed to create long-term value for our customers and shareholders. Let me be very clear, AEP now has significant management and leadership depth. Our Board is highly supportive and with our new board additions, growing in their expertise that is directly tied to our long-term strategic plan. This team is second to none and well suited to deliver this impressive plan that will drive significant long-term value for investors. Our future is all about growth well into the next decade. That is what is expected of me and that is what I intend to deliver with this team. I will now turn the call over to Trevor, who will review our second quarter performance drivers and additional financial and business updates.

Thanks, Bill. I will begin with our financial results and then turn to load growth the capital plan and our financing strategy before I conclude with some final thoughts. Starting on Slide 12 of the presentation. As Bill mentioned, for the second quarter of AEP delivered operating earnings of $1.36 per share compared to $1.43 per share in the second quarter of 2025. At a high level, our second quarter results were primarily impacted by several timing-related items, most notably transmission holdco performance and income taxes. Transmission Holdco earnings reflect the impact of 2025 minority interest sale, which closed in June of last year. While this timing affected year-over-year comparability in the second quarter, we expect Transmission Holdco earnings to provide a favorable year-over-year contribution by the end of 2026, driven by the continued investment in infrastructure. In addition, the Corporate and Other segment includes some income tax timing items related to the consolidated impact of the effective tax rate, which are expected to reverse by the end of the year. The same transmission sale and timing-related tax items are reflected in our year-to-date performance on Slide 13. Year-to-date operating earnings were $3.01 per share compared to $2.98 per share during the same period last year. Overall, our underlying results continue to demonstrate the strength of the business. Earnings benefited from constructive regulatory outcomes, higher normalized sales and growth in transmission revenues. These drivers were partially offset by prior year's favorable weather and this year's increased O&M spend to enhance system reliability as we continue to execute on our commitment to provide safe and reliable service to our customers. As Bill discussed, we continue to make material progress across a number of regulatory proceedings throughout our footprint. Our regulated earned ROE for the quarter was 9.2%, consistent with our forecasted expectations for the year-end 2026. Through continued execution of our regulatory strategy centered on customer affordability and along with structural ratemaking improvements such as the UTM in Texas, [ SB998 ] in Oklahoma and a forward-looking test year in Ohio starting in 2028. We believe there is a strong path for regulated earned ROE to improve to 9.5% by 2030. The progress we are seeing across our regulatory initiatives continued growth across our footprint and strong execution year-to-date have increased our confidence in delivering strong 2026 financial performance. As a result, we raised our 2026 operating earnings guidance range to $6.25 to $6.55 per share. We're also reaffirming our annual operating earnings growth rate of 7% to 9% and continue to expect an operating EPS CAGR of greater than 9% through 2030, based off of our 2025 guidance midpoint and supported by the $78 billion capital plan. Turning to Slide 14. One of the most important drivers of our sustained long-term growth outlook continues to be large load demand. We now have 69 gigawatts of contracted load additions through 2030. And up 6 gigawatts from the 63 disclosed last quarter, all supported by a combination of fully executed ESAs and LOAs. This represents another meaningful increase in customer commitments and further reinforces our confidence in the strength and durability of demand across our diverse high-growth service territory. From a geographic perspective, Texas continues to represent our largest opportunity with 45 gigawatts of contracted load through 2030. Ohio accounts for 12 gigawatts, followed by Oklahoma, Indiana, Kentucky, Louisiana and Virginia, which combined make up the remaining 12 gigawatts. While the scale of this opportunity is significant, it is equally important to highlight the protections embedded within our growth strategy. Our large load tariffs require customers to make long-term commitments and support the investments necessary to serve their demand. That structure helps ensure that this growth drives value creation for shareholders while also supporting affordability for existing customers by bringing new load onto the system and expanding the base over which costs can be shared. These tariff frameworks also provide strong protections against project delays and changing development time lines, giving us confidence that we can capture this growth while appropriately managing potential risk. The quality of the customer base is another important differentiator for AEP. The vast majority of these projects are being advanced by well-capitalized hyperscalers and large industrial customers with significant financial resources and long-term infrastructure needs. As we have previously emphasized, our focus is not simply on the volume of the contracted load, but also on the quality, durability and creditworthiness of the customers who are driving that growth. Turning to Slide 15. As I previously mentioned, ERCOT continues to represent the largest source of incremental demand across the footprint with 45 gigawatts of Senate Bill 6 compliant contracted load additions in AEP Texas through 2030. As a reminder, our approach to forecasting load, including ERCOT load is both rigorous and conservative and is supported by fully executed LOAs in Texas. These agreements require customers to secure land, complete interconnection studies, provide detailed load forecasts and fund the associated infrastructure investments. As a result, the projects reflected in our incremental contracted load have progressed through a disciplined filtration process and represent credible customer commitments with a high degree of confidence. Additionally, we view the recent approval of ERCOT's batch framework as a meaningful step forward. The new framework is designed to better distinguish committed projects for more speculative requests and provide greater visibility into the timing of large load opportunities. A key milestone occurred last week when we submitted 45 gigawatts of projects into ERCOT's Batch Zero process forecasted between now and 2032. ERCOT is currently reviewing those submissions and is expected to determine eligibility for inclusion in the Batch Zero study on August 7. Based on the quality of the projects we submitted and the work completed with our customers, we believe that the projects are well positioned and qualify for inclusion in a Batch Zero category. In fact, just over the past month, we have collected nearly $2 billion in cash or collateral for loan commitments in ERCOT, which represents all the required credit support for the full 45 gigawatts included in AEP Texas' Batch Zero filing. The 45 gigawatts of Batch Zero load submitted by AEP Texas all backed by fully executed LOAs and meaningful credit support underscores the strength and credibility of demand in Texas. Importantly, our $78 billion capital plan does not anticipate this magnitude of load growth. While ERCOT's review process available generation and the time line for transmission development may impact the timing of certain interconnections, these customers remain committed to connecting to our system. And if some of the projects are pushed out, that does not diminish the investment opportunity. In fact, it provides greater confidence that AEP Texas' growth story will continue well into the next decade. The bottom line is that the demand fundamentals in Texas remain exceptionally strong and the additional visibility we are gaining continues to reinforce the robust long-term growth projected there. Turning to Slide 16. Let me conclude with a few brief summary remarks regarding our significant progress achieved across the 4 key themes that reinforce our positive outlook and position us for continued success. First, enhancing financial performance. We continue to execute on our financial plan and remain focused on delivering consistent results for our stakeholders. Based on our year-to-date performance and the trends we're seeing across the business, we raised our 2026 operating earnings guidance by $0.10 per share. We have reaffirmed our annual operating earnings growth rate of 7% to 9% and continue to expect an operating EPS CAGR of greater than 9% through 2030 based on the $78 billion capital plan. During the second quarter, we also substantially derisked our financing plan through the successful execution of our $3 billion marketed equity transaction, which is expected to be settled under forward contracts by May 2028. With this transaction, we have addressed all the anticipated marketed equity needs to support the $78 billion 5-year capital plan. We are now well positioned to focus on the robust growth we are seeing across our footprint. As we evaluate incremental investment opportunities, we will continue to assess a broad set of financing tools with a focus on shareholder value. We remain committed to supporting strong investment-grade credit metrics, including our targeted FFO to debt ratio of 14% to 15%. Second, driving customer affordability remains a key priority. The large load frameworks we have established across our jurisdictions support rapid growth while creating meaningful benefits for existing customers, including up to $16 billion of projected cost offset. In addition, our DOE financing initiatives are expected to generate significant customer savings of $1.4 billion, while supporting needed infrastructure investment; third, capturing system-wide growth. Customer demand continues to accelerate as we now have 69 gigawatts of contracted load additions to 2030, supported by high-quality, well-capitalized customers. This demand continues to provide a significant runway for future investment and growth across our service territory. We also look forward to obtaining additional clarity on the timing of ERCOT load as the batch process review continues. We continue to advance our $78 billion base capital plan and the $10 billion of opportunities beyond the base plan, including the fuel cells for the Wyoming project, the Piketon transmission opportunity, and incremental power generation. We look forward to providing a more comprehensive update on our capital plan, financing strategy and growth trajectory as part of our regular third quarter financing plan update. Finally, we remain focused on improving regulatory and operational outcomes, whether it's securing a significant amount of generation resources, advancing critical transmission investments, strengthening regulatory outcomes and relationships or preparing the grid for unprecedented load growth, our teams are committed to delivering results for our customers and our shareholders while maintaining operational excellence. Taken all together, we believe AEP is one of the best positioned utilities to capitalize on the generational growth occurring across the electric sector, which is supported by a robust capital investment pipeline, a disciplined financing strategy, diverse footprint and strong execution across the business. With that, I will now ask the operator to please open the line for questions.

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

Bill, just in West Virginia, I know one of your peers is seeing obviously a lot of growth from hyperscalers and potentially looking at a [ Genco ] structure. Just I guess given the governor's goals around new gas, I guess how are you thinking about potential opportunities to serve hyperscalers in the state using maybe an alternative financing structure as we're kind of thinking about speed to market like bypassing the CPCN process. Is the Genco structure like a potential opportunity you see down the road in West Virginia and maybe some of the other states?

Yes. Thanks for that question, Shahriar. And we are clearly looking into the Genco structure. We're finding it very intriguing, and I think it will obviously be something we're closely analyzing and at a broader point with regards to West Virginia, really love where we're at in that state. I think you probably saw we already announced one project in West Virginia for about 1.2 gigs, and we've got a number of other projects that are heading on the pathway to support the governor's goals of this 50 by 50 targets. And so I like -- I really like where we're at in West Virginia. We've made a tremendous change in atmosphere there. We're very aligned with all of the stakeholders. And I think as the next several months go on, you'll see some pretty significant opportunities come to life there.

Got it. Okay. That's perfect. And then just maybe around the guidance and disclosures. I mean, obviously, you guys have Batch Zero that goes beyond, some of that goes beyond 2030, a Batch One you have 195 gigawatt figure out there. I guess, is there a point where you would think about maybe enhancing your disclosures? I mean some of your peers talk about like EPS ranges for every gigawatt of new large load that comes on. I mean, I guess, is there a point where you move away from the 7% to 9% longer-term number out there? I mean clearly, Bill, what you're displaying as you guys are doing plus and a huge amount of CapEx. I mean, I guess, -- is there a way you can provide a little bit more visibility beyond 2030 longer term, just to give investors some more confidence that this isn't sort of a short-term phenomenon.

Yes. I appreciate that viewpoint. I'll let Trevor hop in here to finish up on this question. But there's a number of folks who have been quizzing us sort of like how much -- what's our cost per line mile of transmission or cost per kilowatt of plant. And I've sort of kept our team from looking at it in that way because there are so many different variables across these projects. that trying to put a number in place like that on some metric, I don't think is really all that accurate and meaningful. And so I'm really keeping our team focused on these things at a project-by-project basis. And as far as sort of additional disclosures, Trevor, maybe give your viewpoint on that.

Sure, Bill. Shahriar, so with regards to the growth rate and beyond 2030, we really are looking forward to laying out our 2027 to 2031 plan. But as you say, we've got that 195 gigs of folks trying to actively interconnect to the queue. And I think what this really does is it shows that we have a pretty long runway of continued outsized CapEx growth well into the next decade. And so from that perspective, we will continue to generally talk about what the 5-year growth rate is, and then we will contemplate as to what we want to do in the third quarter when we roll out the new revised plan to maybe give some line of sight into anything beyond that. But again, I think right now, what we remain very committed to is this greater than 9% growth rate over that 5-year period. And again, seeing the amount of CapEx around generation, transmission and distribution extending well into the next decade.

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

So just on the -- maybe a little bit on the Batch Zero disclosure. Thanks for that. Is there any way to get to tie what's actually in the current capital plan for expected growth for AEP Texas to that?

Yes. So Steve, what we've done is, historically, we've said that generally, the $78 billion 5-year capital plan was disclosed that it really was based on a 13 gigs of interconnection in Texas, and we have raised that now as you've seen to the 45 gigs. Again, what we don't want to assume is that, that's dollar-for-dollar increase. But what it is doing is giving us line of sight to an increasing capital plan as we lay out what's going on in Texas. And from that perspective, again, I think what's more meaningful is if you look beyond the 45,-- we also have -- I think it's almost 100 gigawatts in Texas behind that 45 gigs and again, we know not all of that will come on. But I think what that really does is it shows a line of sight beyond the 5-year plan with continued transmission build-out in Texas in support of these large loads interconnecting.

Okay. No, that's helpful. But I guess the 13 gigs in the current plan still below even what's in the base?

That's right. That's right.

Okay. And maybe just one clarification...

Again, I would say, I would put that as a multiple of 13, so it's going to be 3x bigger on the CapEx plan prospectively. But we do think there is going to be some increased CapEx in Texas associated with this.

Understood. And then just both you and CenterPoint have given these disclosures, which are helpful. Do you have any idea, just the likelihood that these are -- that ERCOT is going to change them when they finalize, like was this pretty explicit how they were set? Or could there still -- is there likely to be some adjustments...

I think if you take a look at what even ERCOT published recently, I think on July 28 on their preliminary overview of the Batch Zero eligibility and what they were putting out there, what I would draw your attention to is within the 205 gigs that they had in the Batch Zero that were eligible we're roughly, call it, 1/4 of that. Whether that gets pushed between base or allocated, I really look at those as probably pretty firm amounts. And maybe if it is a slip between base and allocated, it could slip 1 year. But what that really does is gives us, again, confidence that you've got a longer-term line of sight to deploy the capital, and we feel very good about the 45 gigs. And again, as we said in the prepared remarks, the filtration process that we go through, we are pretty rigorous in what we put forward on that. And again, we've gotten all the financial commitments in $2 billion of cash and other forms of collateral in support of those 45 gig. So we're pretty confident in the 45 gigs and then however, ERCOT tries to move that around, I think that's pretty set. It just may move from Batch Zero to Batch One in worst-case scenario.

Okay. And then 1 other just follow-up to the question on West Virginia. The -- one of the things that FirstEnergy mentioned yesterday was also looking at kind of bridging opportunities for some of the new load there. Is that something that you think you could do for customers there as well?

Absolutely, and that's something that I would say we actually pioneered early on with our deal with Bloom Energy. In fact, as we started deploying bridging strategies, obviously, we noticed others sort of picking up on that on that idea. And so as we communicate with customers, we're giving them a very clear line of sight to how much capacity they can get immediately, which in West Virginia, we do have some reasonable opportunities there in that regard and then also how we can supply them energy as we build out the transmission to go get them and/or the generation. And so I would say the customers we're talking with right now have been very pleased with the optionality we provided them, and we have a number of active discussions in progress. So super excited about what's happening in West Virginia.

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

I appreciate it. Nicely done again. If I can take a further focus on PJM here. One, I would love to hear your latest thoughts on how you think about just engaging in nonutility avenues, right? You just alluded to BTM, for instance, is behind the meter bridging. Just when you think about segments reporting, when you think about where some of this shows up and your flexibility in helping customers in a restructured geography, how do you think about participating? Or for instance, would you engage in acquiring existing generation to rate base and effectively flow that through your traditional tariffs. Just curious of the permutations both in West Virginia and in your other PJM properties, especially Ohio.

Yes. Thanks, Julien. I think we've proven that we're willing to go out and procure generation in our regulated utilities. And in PJM, we've got a number of projects that we've announced in the past that have been purchased for, for instance, for Indiana Michigan Power, and so we're always on hunt for good quality assets that we can use to really supplement what we have in these Vertically Integrated Utilities, and I also think that the benefit of PJM, obviously, is that we can have these assets in other locations and get that power delivered to where we need it. And so the benefits of the way we look at the system more broadly is that the footprint really offers us significant advantages in this market because of the fact that a number of hyperscalers now want to be in more rural areas. Our ability to find generation sort of wherever and get it delivered, again, is a pretty significant key advantage for us as we go forward.

Got it. Okay. And then just as you think about other novel avenues here to bring generation in, how do you think about new nuclear in the context of a genco? Or how do you think about the new nuclear construct as it's evolving here with the rating agencies and other parties here. Just ultimately, how is that coming together? You guys have been particularly spoken on this.

Well, I think just on the broader topic of a genco, it's clearly something that we're doing significant evaluation of as we think it provides some pretty significant advantages to us as we go forward and look to serve these customers on a very significant size on the new nuclear front, as we evaluate these new nuclear opportunities, whether they're in a Genco or whether they're tied directly to a specific customer. Just to reiterate, we're continuing to remain extremely prudent in the capital allocation and near-term spending on this to make sure that we're aligned with our broader financial strategy and as we've said in the prepared remarks, we're going to continue to require robust capital protection measures around this, some very strong balance sheet and credit safeguards and clear regulatory and policy support in order to move forward with anything. And so while the structures are interesting, we continue to look at other opportunities and trying to find a way to serve these customers in a manner that gives them the timing that they want.

Sorry, just a quick one, just to clarify the response to Shahriar earlier. You said you're committed to this greater than 9% growth rate over the 5-year period. Just we've seen your peers kind of say, look, we're not going to be overly prescriptive we're going to leave it as a kind of a 9-plus and you can do the math, if you will. Is that the construct that you're thinking about here? Or do you think -- obviously, given what you're even alluding to here, there's more latitude than what 9 would suggest. I'm just curious how you would think about communicating that? Or do you just leave the plus with maybe another plus?