Xcel Energy Inc. (XEL) Earnings Call Transcript & Summary

Hello, and welcome to the Xcel Energy 2026 Third Quarter Earnings Call. My name is Tracy, and I'll be your moderator for today's event. Please note, this conference is being recorded. [Operator Instructions] Reporters contact Media Relations with inquiries, and individual investors and others can reach out to our Investor Relations. I'll now turn the call over to your host today, Mr. Roopesh Aggarwal, Vice President, Investor Relations, to begin the conference. Please go ahead, sir.

Thank you, Tracy. Good morning, and welcome to Xcel Energy's 2026 third quarter earnings call. Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer; and Brian Van Abel, Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer your questions if needed. This morning, we will review our 2026 third quarter results and highlights, share recent business and regulatory updates, update our 5-year capital and financing plan, and provide updated 2026 assumptions and 2027 guidance. Slides that accompany today's call are available on our website. Some comments during today's call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and SEC filings. Today, we will discuss certain metrics that are non-GAAP measures. Information on the comparable GAAP measures and reconciliations are included in our earnings release. I will now turn the call over to Bob.

Thank you, Roopesh, and good morning, everybody. The build-out and modernization of our U.S. energy system is well underway. The utilities across the country are investing substantial time and money to upgrade, fortify and modernize the U.S.' critical grid infrastructure. Power developers are working to build more than 80 gigawatts of new utility scale generating capacity in the United States this year, eclipsing last year's record build of 53 gigawatts. And this growth is fueled by a number of factors, including meeting the growing and evolving power and resiliency demands of existing and new residential and business customers, serving the growing demand for power by technology companies as they build data infrastructure for cloud and AI compute needs and advancing nation's generation fleet to newer, more sustainable energy sources. It's one of the nation's largest builders of new generation and high-voltage transmission Xcel Energy is meeting this extraordinary moment in our nation's history in helping lead America's energy renaissance. We're investing in the infrastructure that our customers and our communities need while staying focused on what's always mattered the most, safety, reliability, affordability and disciplined execution. We've made considerable progress on our priorities this quarter, resulting in ongoing earnings of $1.52 per share for our investors to remain on track for a strong 2026. Our updated 5-year investment plan that we're sharing today gives us a clear path to extend our growth cycle and continue to deliver the affordable and reliable energy that our customers need well into the next decade. Let's start with our accomplishments. We invested $3.5 billion this quarter, $10 billion year-to-date and are on track for over $14 billion of critical infrastructure investment for our customers this year. This month, we place in a service of 335-megawatt Arroyo II solar facility, which will be the largest solar facility in the state of Colorado. We started construction of over 1,500 megawatts of new renewable and natural gas generation and battery storage projects in the Upper Midwest. We reached constructive decisions or settlements across rate cases representing 90% of our rate base. We were selected for another Department of Energy Grant. This time, it's a $250 million award under the Spark program that supports a $1-plus billion investment to modernize the critical interconnection between the western and the eastern grids. And we continue to see steady improvements in customer satisfaction as measured by J.D. Power with third quarter performance going well within the first quartile while we maintain a strong focus on reliability and commitment to keeping bills as low as possible. Based on our results through the third quarter, we're narrowing our 2026 ongoing earnings guidance range to $4.10 to $4.16 per share and remain on track to deliver on full year guidance for the 22nd year in a row. In addition, we're initiating our 2027 earnings guidance range of $4.48 to $4.62 per share. Today, we're introducing an updated $70 billion 5-year investment plan designed to serve increasing energy demand to make needed investments to strengthen and modernize our transition and distribution systems to provide a cleaner and more sustainable energy portfolio and to keep energy safe, reliable and affordable for all of our customers. In total, we expect this plan will deliver more than 9 gigawatts of renewable generation, more than 3 gigawatts of natural gas-fired generation and more than 2 gigawatts of energy storage to ensure system reliability. 2,400 new high-voltage transmission line miles to support demand growth and regional delivery needs and approximately $4 billion of investments in our distribution and transition systems to improve resiliency and reduce future risk of wildfires. In addition to our base capital plan, we have a robust pipeline of additional investment opportunities that exceed $10 billion and extends into the early 2030s. We see additional investments driven by multi-gigawatt RFPs in all three of our regions. Future high-voltage transmission projects in each of our regions and infrastructure needed deserve new data centers that we expect to contract before the end of next year. Our confidence in delivering this portfolio on budget on time and on scope is rooted in our track record as one of the nation's leading builders of energy infrastructure. Xcel Energy is the #1 builder of new transmission line miles since 2008 and the #2 builder of renewable and natural gas generation since 2015. Our approach to project execution, which combines strategic partnerships with key EPCs and OEMs, standardized project management, integrated system planning and a dedicated major projects group is a differentiator in the industry. And our ability to deliver infrastructure with excellence, combined with the access to some of the country's best wind and solar resources allows our customers to benefit from some of the lowest energy bills in the country. Over the past 5 years, our residential electric and natural gas bills have been 29% and 11% below the national average, respectively. Our residential electric customers in Colorado continue to have the lowest share of wallet out of all 50 states and average bills in our other states occupy 5 of the next 11 spots. Typical residential Xcel Energy electric and natural gas bill when adjusted for inflation is 14% and 20% lower than it was in 2014. Our innovative steel-for-fuel program that was started in 2017 is on pace to save customers a total of approximately $18 billion from PTCs and avoided fuel costs by 2031. And since starting our RED Truck initiative in Colorado in 2023, we have more than doubled our energy assistance adoption rate. In fact, the RED Truck has been so effective, we're expanding it to the upper Midwest, Texas and New Mexico. Importantly, our updated '27 through '31 investment plan does not depend on contracting any new data center customers. It's largely anchored in investments required to serve our existing customer base, including continued oil and gas growth in SPS and broader beneficial electrification, building new and improving the resiliency of our network assets and modernizing our generation fleet with cleaner, more sustainable energy sources. Looking forward, we remain on track to sign ESAs for an additional 1 gigawatt of data centers by the end of 2026 and another 3 gigawatts by the end of infrastructure required to serve these new data centers is not in our base $70 billion plan and is considered part of our more than $10 billion of incremental opportunities that I described earlier. In addition, the large campus scale projects, we're seeing a significant interest in a more localized data center and advanced manufacturing projects, which add diversity to our sales mix and provide speed to market for an emerging customer class. For example, in the Upper Midwest, an existing office building has been repurposed to support a 20-megawatt data center with the potential to expand over time. This opportunity is distribution connected customers which can leverage existing infrastructure, brings meaningful new load onto the system, improves utilization and importantly creates benefits for our existing customers. As we think about future data center growth, our contracting principles are based on our long-standing commitment to ensure that the needs of our customers and our communities are met. We believe in responsible development. We believe that existing customers should not subsidize new large loads. We have filed large low tariffs that include incremental cost tests, long-term commitments, minimum bills, credit support and exit protections. As you've seen in our recent contract with Google and Minnesota, we believe that data centers can be an asset to our communities and customers as they bring jobs, support local investment, provide substantial tax revenues, commit to clean energy and provide substantial customer bill benefits. We believe that we can, in fact, protect the planet while we simultaneously propel our economies. And finally, our performance and our commitment to the communities we serve always starts with our people. This past summer made that clearer than ever. The record-breaking temperatures across our service territory, our teams worked around the clock, keeping the lights on and energy flowing for millions of customers who depend on us. This commitment to service does not stop when the Workday in Xcel Energy recently held our 16th Annual Day of Service, which is our company's largest volunteer initiative. Approximately 2,000 employees, retirees and Xcel Energy family members volunteered nearly 7,500 hours to generate a measurable impact to our local nonprofit organizations across our 8 states. This year marks -- also marks the 25th anniversary of our Xcel Energy Foundation. As the charitable arm of Xcel Energy, the foundation supports local nonprofit organizations focused on community vitality, environmental sustainability and STEM career pathways, while empowering employees to give back through volunteering, charitable giving and community engagement. We recently completed our annual employee-led Power Your Purpose campaign. And since 2001 campaign has raised more than $120 million from employees, retirees and partners with matching contributions by the foundation the power positive change across our communities. This industry is demanding and the pace of change is not slowing. The progress we've made and the ambitious goals ahead are only possible because of the termination commitment skills, our teams bring every day to make energy work better for our customers and our communities. With that, I'll turn it over to Brian.

Thanks, Bob, and good morning, everyone. Starting with our financial results. Xcel Energy had strong earnings of $1.52 per share for the third quarter of 2026 compared to ongoing earnings of $1.24 per share in 2025. The most significant earnings drivers for the quarter are as follows: Higher electric revenues increased earnings by $0.32 per share, primarily due to nonfuel riders, regulatory outcomes, sales growth and favorable weather. Higher AADC increased earnings by $0.11 per share and other items combined to increase earnings by $0.16 per share, primarily driven by returns in our venture capital portfolios and lower fuel and purchase power costs. Offsetting these positive drivers, higher interest expense decreased earnings by $0.13 per share and common equity financing decreased earnings by $0.10 per share. These financing costs reflect funding of our infrastructure investments and disciplined to maintain a strong balance sheet. The higher O&M expense, driven by increased generation maintenance, wildfire mitigation and vegetation management that decreased earnings by $0.08 per share. Turning to sales. On a weather-adjusted basis, year-to-date electric sales increased 2.5%, driven by increased activity in the energy sector and in manufacturing across all opcos in addition to higher residential use per customer. For 2026, we remain on track for full year weather-adjusted electric sales to increase 3%. Moving to recent regulatory activity. Throughout the year, we've made considerable progress through a heavy rate case calendar reaching constructive decisions or settlements across most of our active rate cases. These outcomes largely balance timely recovery of critical infrastructure investments for our customers while keeping bills well. Earlier this month in Minnesota, we filed a proposed rate stabilization plan for our electric utility that will keep customer base rates flat in 2027 and 2028, while supporting critical system investments. A commission decision has been requested in January 2027. In the next few months, we expect to make a recommendation filing for our 4,100 megawatt renewable and storage RFP in the Upper Midwest. And in Colorado, generation bids are due in December for our Phase II just transition RFP with the commission decision expected mid next year. Shifting to our updated investment plan. As Bob detailed, today, we are providing a revised $70 billion 5-year capital forecast. This plan extends our current 5-year annualized rate base growth of approximately 11% into 2031. These investments are critical to serve growing electric demand to keep customer bills low to deliver clean energy and to ensure system safety and reliability. We also have more than $10 billion of incremental investment opportunities from ongoing RFPs across jurisdictions, infrastructure to serve 4 gigawatts of additional days on demand and transmission projects across our regions. We're excited about our growth opportunities, and we'll continue to finance accretive growth in a balanced manner. Our updated 2027 to 2031 capital plan reflects an additional approximately $26 billion of debt and $8 billion of equity content. Of the $8 billion of equity, we've already contracted over 40%, which gives us considerable flexibility alongside our strong balance sheet. Moving to earnings. Based on performance of the third quarter, we are narrowing our ongoing earnings guidance range to $4.10 to $4.16 per share. We're also initiating our 2027 earnings guidance range of $4.48 to $4.62 per share. Key assumptions are detailed in our earnings release. Based on our updated forecast, we're extending to 2031, our expectation to deliver, on average, 9-plus percent EPS growth. From '27 to 2030, we expect to deliver, on average, 10-plus percent EPS growth. We are maintaining our dividend growth objective of 4% to 6%, with the expectation to be at the low end of the range. Over our '27 to 2031 forecast period, we expect our dividend payout ratio will trend downward in our payout ratio range of 45% to 55%, which allows greater financial flexibility for the future. With that, I'll wrap up with a quick summary. We continue to lead the clean energy transition, while ensuring safe, affordable and reliable service. We've announced an industry-leading $70 billion 5-year capital investment program that provides strong, transparent rate base growth and significant customer value. Our base capital plan is driven by investments into existing in new grid infrastructure and modernizing and transitioning our generation fleet with new data centers fueling incremental opportunities well into the 2030s. Our customers have and will continue to have some of the lowest energy bills in the country. We have a proven formula for major project execution that will help enable us to deliver projects on budget, on time and on scope well into the 2030s. We maintain a strong balance sheet and credit metrics and have already addressed over 40% of our updated '27 to 2031 equity need. We delivered strong earnings of $1.52 per share in the third quarter and are narrowing our 2026 ongoing earnings guidance range to $4.10 to $4.16 per share. We have initiated our 2027 earnings guidance range of $4.48 to $4.62 per share. And finally, we're extending our expectation to deliver 9-plus percent EPS growth on average since 2031. This concludes our prepared remarks. Operator, we will now take questions.

[Operator Instructions] Your first question comes from the line of Nicholas Campanella with Barclays.

So I was just hoping maybe a little color on what 10-plus percent means in the prepared remarks the next few years, especially in that '27 to '30 time frame, just rate base growth from a shaping perspective actually seems to be substantially above the 11% rate base CAGR in the middle part of this plan. And you did do 11% year-over-year into '27. So just should there be years in this plan that are maybe closer to that? Or how would you frame it, if I'm missing anything there?

Hi, Nick. Good morning. Yes, maybe I'll answer it a little bit this way in terms of you've heard me talk about the rule of thumb of rate base growth versus EPS growth in general, you see 200 to 250 basis points delta between those two. And so if you take our current 5-year plan, we have 11% rate base growth and 9-plus percent EPS growth. So we're on the inside of that rule of thumb. And really, it's a little bit -- it varies from point to point. And if we look at '26 to '30, we have 14% rate base growth and I would say 10-plus percent EPS growth there. As we delivered, as we talked about over this past year on bringing that incremental pipeline into our plan. But when we think about the financing, making sure we maintain a strong balance sheet, you see 14% rate base growth of 10-plus percent EPS growth. We're going to be probably on the outside of that rule of thumb I guess. But then take it a 6-year from '26 to 2031, we have 12% rate base growth and 9-plus percent EPS growth. We're basically right in line with that. So I think that can give you some color on the shaping. Obviously, we're pretty excited about this plan. We're going to deliver over 9,000 megawatts of clean energy for our customers, and we're going to keep customer bills affordable. And so I think that's really important. Longer term, we have incremental opportunity, particularly on the large load, which will continue to help with customer affordability.

And then maybe just this NSP, RFP, which you brought up 4 gigawatts is just a large number of capital even by 2030, even if you win half of this. So just since that falls into your 5-year plan, do we get another revision in fourth quarter or first quarter to this plan? Or do you hold that back to the next third quarter role?

Hi, Nick. It's Bob. I laid out a number of buckets that we think drive what I think is a robust pipeline of incremental opportunities. You hit on one of which is Minnesota RFP, where we expect to understand what that might look like by the end of this year or early next. Historically, this is our sort of annual update. But as we did last year, as we rolled through the years, we were identifying and delivering projects around that our 10 plus last year, you saw us make announcements on generation RFP outcome, transmission outcomes. And you should expect us to do the same thing. And if I think about the three big buckets we have here, in RFPs in all three of our jurisdictions, that's somewhere in the neighborhood of 6 to 8 gigawatts of nameplate generation needs. The data center -- 4 gigawatts of data centers and the infrastructure to deliver on those, which is not included in this is probably somewhere the neighborhood of 10 to 12 gigawatts of generation. So right there, you're at sort of the 15 to 20 gigs of total gen over the next 5 to 6 years. And then with regards to transmission, we probably have, call it, $2 billion to $4 billion of opportunity in all three of our regions, SPP, MISO, Colorado, to add to the incremental transition that's within this plan. I expect a decent bit of that to be in this 5-year period. Some might drift into [indiscernible] because of the time line that transmission takes. But that's a robust pipeline of opportunities that we'll keep this group informed of. And much like last year, I'd expect to meet or exceed that bucket by this time next year. So you should expect that capital trend towards, as Brian said, towards the back end of our financial plan, '30, '31, maybe a little bit in '32, bolstering the back year of capital and bolstering the long-term rate base growth and earnings growth that follows.

Yes. Nick, just expect kind of the key that we gave this year, really delivering line of sight into it, but this is as Bob said, this is our normal cadence, 5-year roll forward a capital plan, sales forecast, customer portability, all of that rolls into our normal Q3 plan.

Your next question comes from the line of Carly Davenport with Goldman Sachs.

Maybe just to pick up on some of the earlier comments on the data center side, recognizing this is still an upside driver to the plan. Could you talk a little bit about your confidence level in signing another gigawatt by the end of this year and then how you're kind of tracking in conversations on the 3 gigawatt 2027 target?

Yes. Thanks, Carly. Obviously, we're an active ESA negotiations right now with a large counterparty and certainly focused on delivering that a significant amount of generation, but also a significant amount of customer affordability benefits with that project. So that's kind of focused through balance of the year. When I look at our pipeline, where we are in the stage gate of each of our kind of think about our different high-probability loads, really kind of the biggest opportunities right now in the upper Midwest and SPS, as we talked about, when I look at project counts and gigawatts that we're actively working on. Colorado, as we've always said, is going to be a little bit later cycle. We're in the large low tariff hearings right now in Colorado. And so that's probably a little bit of a longer term, but really excited about our opportunity in the upper Midwest in SPS. And so I -- we are on track, and I feel good about what we call a total of 4 gigawatts over the -- through the end of 2027. And that's really didn't have, I think, would help extend into the 2030s and you think about when they would actually energize when we'd be building the projects into. So really help extend the growth opportunity, but also help drive customer affordability into the 2030s. I would just said 1 part that we probably don't talk enough about is you're asking about on the large load. The load side, what we talked about -- we focus on our generation development team. And we have, I would argue, the best regulated generation development team in the business. We have 15 gigawatts of projects in our base plan between renewables, storage, some natural gas generation. We're working on about 25 gigawatts in our pipeline of generation in terms of how do we ensure we have the project that we need to deliver, not only to these large load customers but also all the RFPs that we're working on, ensure we can bring low-cost projects to our current customers. And so it's a big focus there. Some of our partnerships on the developer side, the partnerships on the EPC side and OEM side, all play into an overall strategy in terms of how do we deliver?

Got it. That's super helpful. And then maybe, Brian, just going off of those comments on the development side. You've talked about some of the development partnerships A little bit of a shift, it seems in disclosure on the NextEra JDA this quarter. Anything shifting on that front? Or is it just a function of more development partnerships kind of coming into the fold here?

Yes. It's really just a function of what we see as our opportunity and working with additional developers. I mean, for next year, NextEra, we're working on multiple work streams underway looking at the generation side and on the load side. We have multiple gigawatts of projects identified both in the Upper Midwest and in the South and we're working on some specific load sites. So certainly very engaged with NextEra. But also we -- when we see the amount of generation that we need to bring is how do we expand our partnerships and that's what you see.

Your next question comes from the line of Jeremy Tonet with JPMorgan.

Just want to start off on the topic of affordability is very topical across the industry right now. And your materials show a lot of strong metrics there, particularly across wallet share and build directionality from what we see as well, Xcel certainly screens better than most of the industry here. I just wanted to turn to Colorado a little bit more, if we could, a lot of conversation there on what's been, I guess, productive CapEx. I'm just wondering if you could share any thoughts from your point of view on this metric when you think about developing the capital plan for Colorado.

Look, Jeremy, I can start with that and Bob can chime in. I would say all of our CapEx is productive. I would -- so I don't think any of the CapEx we're investing on behalf of our customers is not productive. Focus on safety, reliability, enabling load growth. We see significant penetration of EVs, a lot of focus on capacity. And then also our investments in wildfire mitigation programs in Colorado to keep our customers and communities safe. So we -- our business areas do a whole capital prioritization exercise to ensure we're putting the money in the places where it's going to benefit our customers. So we not only do that at the functional area, but also the operating company area. So in terms of CapEx, I think we feel really good about how we focus where we need to invest our capital.

And Jeremy, it's Bob. I commented in my prepared remarks, but I think it's worth re-mentioning, our steel-for-fuel program is expected to deliver over $18 billion across the enterprise from production tax credits. And that's a -- that's been part of a backward-looking and a part of a forward-looking. And so as we continue to deploy renewables, we continue to drive real benefit for our customers. As I think about large loads, I think about these people help -- these hyperscaler customers can help bring down predominantly on the transmission costs across all of our service territories, a lower transmission rate for all customers. When you think about the grid, it's one big fixed asset, if you put more units of production through it, you're going to see a lower rate for all people across the same fixed asset. That holds true for the distribution side as we start to see distribution level data centers, helping bring down the cost of the distribution grid to customers. And EVs are the same. We know and there are some studies out that show that every electric vehicle that's added to the grid helps bring down the cost of the distribution grid to all customers. I think all of that is sort of cost-enhancing productive capital? I know what you meant by that, but I agree with Brian wholeheartedly that everything we do is for the benefit of our customers, whether it's resiliency related, it's risk reduction, it enhanced production, decarbonization, all that stuff very valuable to our customers and to our states. And so Colorado starts as the -- literally the lowest share of wallet in the country. So we feel like we have a great starting point, and we've made great investments there to help our customers.

Got it. That makes a lot of sense. We figured a very thoughtful coach to capital deployment here. And I just want to, I guess, pivot real quick, I guess, to the asset sales, Michigan there. And figure it's small overall, but just wondering if you could share any thoughts there if that could reduce equity yields a bit or anything else?

Jeremy, I can take that one. I've been CFO for 7 years ago. And I think this is the first question I've had on Michigan. It is 0.2% of the overall Xcel company from a rate base perspective. And this is like we're going to test of our portfolio is that Michigan is a very small part of our rate base. And these two strategic buyers that already operate in the upper peninsula and are good buyers and will be good stewards of the 9,000 electric customers and 6,000 gas customers that we're selling. And look, the price is confidential. We haven't disclosed anything but expect that it's comparable to present transactions. We're working through the regulatory process. We'll be making filings with FERC, the Wisconsin Commission Michigan Commission expected to close by end of the year next year and just assume anything from a sale proceeds that is incorporated into our numbers.

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

Can you guys here me?

Yes.

I just wanted to come back to where Nick started earlier. Just can you rehash just real quickly on the 200, 250 basis points on equity lag there? You want to just make that a little bit clear. Are you still expecting that? Or is it wider here just given the uptick here? I just want to make sure I heard you right there. And then related the FFO to debt uptick in the outlook here. You've added about, I don't know, or so to a point to each year, give or take. Just what's going on there in terms of the outlook getting better on FFO to debt metrics? Just does any nuance or subtlety and customer deposits or something else going on there? I know you guys caveat that doesn't really include the data center uplift per se. So does the mean anything else?

Julien, I think I understood the first question, so just make -- if I don't answer it, just please clarify. I didn't say anything in terms of changing the rule of thumb of that out. What I'm saying is there's a rule of thumb, and it can be point sensitive when you pick a certain year. And so I was giving you a couple of examples of -- because our current 5-year, we're inside of that rule of thumb when we look at the rate base to EPS delta in the last year's planned update of these capital numbers will be a little bit outside of it, given the equity financings are more front-loaded our capital plan. But if you pick the 6-year period, we're right inside that rule of thumb. So that's all I'm saying is a little -- it's just any time you do kind of like that analysis, it can be point-to-point sensitive. So that's the only point I was making. I think it's intact as a rule of thumb, absolutely. On your second question, we have improving credit metrics, particularly if you look at our asset to debt in '30, '31 hits 18%. Our debt-to-EBITDA improves over the 5-year period. And so we think about that gives us some additional financial flexibility. It's absolutely important to maintain a strong balance sheet. But when I have always talked about that, we've always targeted a 17% FFO to that metric. So that gives us some additional flexibility for potential capital we could add in 2030 and 2031, relative to that kind of rule of thumb 40% equity that we've given for every dollar of incremental capital. So good question there in terms of -- it's really important to maintain a strong balance sheet. We think we have one of the best balance is in the industry, and we're going to keep it that way, but we also have some financial flexibility as we look in the part of our plan.

Awesome. And then not to nitpick too much, but how are you looking at the data center opportunity as much as some of the states may be pulling back here on sales and use tax exemptions, making maybe Colorado more competitive, a? And then b, I heard your comment about distribution level data center activity. Does that help your 75 to 100 basis points earned ROE lag you talked about in Colorado and/or for that matter, your other jurisdictions on the margin? Or is it just too small stuff?

So I think I'll take your last question first. I assume some of the distribution level opportunities are built into our plan, but they're developing, right? It's newer term. We do think it's a good opportunity, a really good opportunity from a utilization perspective as you think about where these can be located. And so I think that's a developing opportunity. We've seen the most interest in the Upper Midwest so far. I think Colorado, if we see it, it could be a little bit longer term. And so -- but it's really -- and it's not just distribution level, advanced manufacturing in terms of what we're seeing is some other, call it, significant loan opportunities. back to your first question around sales tax exemptions, we have that in 3 of our states, but I don't think it's necessary to be competitive by any means when we see the opportunities spread across our states not only in terms of [indiscernible] and SPS, but also PSCO. PSCO the focus is get through the large loan tariff filing. Now we think about our diversity of geography as being beneficial operating in a number of states, whereas if you have challenges in a single state from a large load perspective, you can focus your time and attention on the other states that are looking for that economic development and also customer benefit from these large loads. So overall, I think we continue to be very competitive given our low-cost renewable resources, our geographic diversity. So we're excited about the opportunity, and we'll keep you updated on them.

Right. And by the way, to rehash that earlier point about the equity dilution, you're basically implying if we do the math, 10.5% to 11% EPS for that '28 to '30 time period, right, that the elevated period.

Do your math, Julien.

Your next question comes from the line of Richard Sunderland with Truist Securities.

I want to pick up a couple of these different threads here around the upside CapEx and the growth. Just thinking about some of the component pieces in the near term across, I guess, a 1 gigawatt data center ESA by year-end and that NSP RFP update in December alone, those two components seem like using your $6 billion to $8 billion for 1 gig of load and different instruction cost and generation. You're talking already sort of above $10 billion plus. Could you assume that a little bit and speak maybe even more to the bigger quantum of what may come into the plan on a line of sight basis over the next 12 months and what that could do for your rate base growth versus the [ 11% ] CAGR you outlined now?

Yes, I can. I think what's helpful is we give this I guess we give a lot of rule of thumbs, but every $1 billion of CapEx, at least in this 5-year plan, is 15 to 20 basis points on our rate base CAGR. So that's a really good way to think about it. And you're right, when we look at the near-term opportunity is significant. I think that's one of the -- maybe not -- we should -- one of the opportunities we have relative to our peers is every gigawatt of data center, we have more investment opportunity from a generation perspective because we bring a clean energy portfolio to serve them. So more nameplate capacity, more investment upfront from a capital perspective, but lower operating costs for our large loan customers in terms of no cost fuel for -- from the wind and solar side. So I think as we think about our opportunity, 4 gigawatts through 2027, you're right, we've given you that kind of rule of thumb on what the investment opportunity is. So it's also -- we talked about it, it's filling in the back part of the 5-year plan, but it's also bringing visibility into '32, '33, '34. If you think about these data centers and how long some of them can wrap, we ramp over time to build the assets in over time. So it's not necessarily how do we driving over the next 5 as how do we continue to provide visibility into the longer term. And I also think I talked about the capital investment side of it, but there's also -- these data centers are paying for all of these assets, and we're ensuring that they pay for these assets that we won't bring the data center board if it does not provide benefits to other customers. So I think as much as we're talking about the capital investment opportunity, I think the affordability aspect that this brings is super important as we think about how do we do data center development, right?