Operator
Hello, and welcome to the Xcel Energy 3rd Quarter 2025 Earnings Conference Call. My name is George, and I'll be a coordinator for today's event. Please note, this conference is being recorded, and for the duration of the call, your lines will be in the listen-only mode. A question-answer session will follow the prepared remarks and questions will only be taken from institutional investors and analysts. reporters can contact media relations with inquiries and invite i call you over now to rupesh agarwal vice president investor relations to begin today's conference please go ahead sir thank you george and good morning welcome to excel energy's third quarter 2025 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 third quarter 2025 results and highlights, share recent business and regulatory updates, update our five-year capital and financing plan, and provide updated 2025 assumptions and 2026 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. In the third quarter of 2025, Xcel Energy recorded a charge of 290 million dollars or 36 cents per share reflecting the settlement in principle reached with plaintiffs in the marshall wildfire given the non-recurring nature of this item it has been excluded from third quarter and year-to-date ongoing earnings as a result our gap earnings for the third quarter of 2025 were 88 cents per share while our ongoing earnings which exclude this non-recurring charge, or $1.24 per share. All further references to earnings, drivers, and variances in our discussion today will refer to ongoing earnings. For more information on this, please see the disclosure in our earnings release. I will now turn the call over to Bob.
Thank you, Rupesh, and good morning, everybody. In the third quarter of 2025, Xcel Energy continued our commitment to our customers, our investors, and our communities, to make energy work better. During the quarter, we delivered solid earnings of $1.24 per share. We invested over $3 billion and $8 billion year-to-date in resilient and reliable energy infrastructure, comprehensive and constructive settlement with plaintiffs in the Marshall Wildfire that helped our customers and our communities to move forward, protect our communities from volatile weather. Based on our results through the third quarter, we are reaffirming our earnings guidance for 2025 and remain confident in our ability to deliver on earnings guidance for the 21st year in a row, one of the best track records in the industry. 2-3 Rhythm, today we are introducing our updated five-year infrastructure investment plan designed to serve increased energy demand, make needed investments to strengthen our transmission and distribution systems, cleaner and more sustainable energy portfolio, and to keep energy safe, 2,500 megawatts of zero carbon renewable generation, 3,000 megawatts of natural gas fire generation and almost 2,000 megawatts of energy storage to ensure system reliability. 1,500 new high-voltage transmission line miles to support demand growth and regional delivery. And approximately $5 billion of investment in our distribution and transmission systems to improve resiliency and reduce future risk from wildfires. We're able to accomplish this plan because we have one of the best utility development and supply chain teams in the industry. And in combination with our strong balance sheet, we can deliver infrastructure timely and affordably for our customers. In connection with this forecast, we have safe harbored all renewable and storage projects in our base capital plan and expect the same for the projects in our incremental plan to ensure that we can capture available tax credits and help keep customers' bills low. We also have 19 natural gas CTs on order, which will provide over 4 gigawatts of natural gas generation to help ensure reliability and affordability. Our ability to deliver infrastructure with excellence and our strategic geographic advantage allows our customers to benefit from some of the lowest energy bills in the country. And natural gas bills have been 28 and 12 percent below the natural average respectively. Our residential electric customers in Colorado have the lowest share of wallet out of all 50 states, and the average residential bills in our other states occupy five of the next 11 spots. 2014, our residential electric and natural gas bit of inflation. In fact, a typical residential Xcel Energy Electric and Natural Gas bill is 14 and 20 percent lower than it was in 2014 when adjusted for inflation. Our Steel for Fuel program has saved customers nearly $6 billion through 2025, and our 1XL Energy Way Continuous Improvement Program has realized over a billion dollars in cumulative savings since 2020, while improving customer and operating outcomes. Our industry-leading demand-side management programs have saved enough energy to avoid building 30 average-sized power plants. And as customers continue to electrify transportation in other parts of their lives, they can further reduce their overall monthly energy costs with low electric rates. We also continue to support critical programs to help our customers who may need assistance with their energy bills. Since 2024, Xcel Energy has connected over 200,000 customers with almost $300 million in financial resources. We're also exploring new opportunities to help even more customers across our jurisdictions, including proposals in our current Minnesota, Wisconsin, and upcoming Colorado rate cases. Moving to the topic of artificial intelligence, opportunities for XL Energy go well beyond our ability to power data centers. Our load interconnection queue continues to grow, even as we move some of our backlog into the contract. But across XL Energy, we are in early stages of using AI in the business to bend the cost curve and to provide improvements in both customer satisfaction and operational outcomes. We're harnessing AI to empower our people, accelerate innovation, and build a smarter, more resilient energy future for our customers and communities. Automated analysis across our diverse enterprise data sources is delivering actionable insights that strengthen security, improve operations and planning, and drive process improvement. We're bridging knowledge gaps and empowering faster, more informed decision-making across the organization. And we're leveraging AI built by others to advance our business, including high-resolution imagery to transform how we inspect and maintain our distribution infrastructure. Through drone-based data collection and automated image analysis, AI-enabled processes can identify defects and assess risks and enable our teams to prioritize maintenance with greater speed and accuracy. With wildfire mitigation, AI is transforming our risk models. By leveraging internal models and tools like Technosilva, we've significantly improved our model coverage and accuracy, as well as reduced analytical times. This means faster, more reliable risk assessments protecting communities and infrastructure in real time. AI is truly an engine that's driving enterprise-wide innovation and transformation in Xcel Energy, making energy work better for our employees, our customers, and our communities. December 23rd, Xcel Energy, Quest Corporation, and Teleport Communications America reached settlement agreements in principle that resolve all claims asserted by the subrogation insurers, the public entity plaintiffs, and individual plaintiffs. And while Xcel Energy does not admit any fault or wrongdoing in disputes that our equipment caused the second ignition, we believe this provides a positive outcome for our communities and our investors. Looking forward, Xcel Energy continues to make significant progress to mitigate risk from wildfires and extreme weather, with public-facing wildfire mitigation plans in each of our states. This includes investments in situational awareness tools like weather stations and Pano AI cameras, advanced meteorology, fire science, and AI-enabled risk modeling tools, hardening our systems and deploying advanced wildfire safety operations and PSPS capabilities and operational actions including daily stand-ups to address the threat from extreme weather across every part of our system and taking proactive actions. Finally, each September Xcel Energy employees and community members come together to honor the spirit of service. This year marked the 15th annual day of service for Xcel Energy with nearly 3,000 volunteers from across the company and the communities we serve coming together to support local non-profit organizations. Together, volunteers dedicated almost 9,000 hours of service across more than 100 projects. This is one of my favorite days of the year and it exemplifies the spirit and dedication of our employees and partners who show up every day to provide safe, clean, reliable, and affordable energy to our customers and our communities.
With that, I'll turn it over to brian and good morning everyone starting with our financial results things of one dollar and 24 cents per share for the third quarter of 2025 compared to earnings of one dollar and 25 cents per share in the third quarter of 2024. the most significant earnings drivers for the quarter include the following regulatory outcomes in electric and natural gas sales growth increased earnings by 18 cents and higher a fudc increased earnings by eight cents setting these positive earnings by 15 cents, reflecting the funding of our infrastructure investments in our financial discipline of maintaining a strong balance sheet. Decreased earnings by 9 cents, driven by increased system investments. Decreased earnings by 5 cents. Weather normalized and leap year adjusted electricity and I load in SPS and Piasco. Third quarter continued to scale in the coming years. In turn, we continue to forecast 3% weather normalized electric sales. O&M expenses increased $37 million relative to 2024. This increase was largely driven by a $25 million increase in health and benefit costs for the quarter. For full year 2025, we now forecast that O&M expenses will increase 5%, RFP and ray case activity. In Colorado, in partnership with the Colorado Energy Office, UCA, and commission staff, we issued a near-term procurement for 4,000 megawatts of renewable resources and 500 megawatts of thermal and firm dispatchable resources this RFP is intended to accelerate the deployment of a portion of our Colorado IRP to capture production tax credits before they sunset bids were received this month and we expect to file a recommendation December 2025 with the Commission decision by February of 2020 in SPS we issued an all-source RFP to meet an 870 megawatt accredited capacity need. This represents 1,500 to 3,000 megawatts of nameplate capacity that will be online by 2032. Bids are due in January 2026 with an expected portfolio announcement by June 2026. In October, the Wisconsin Commission verbally approved NSPW's $725 million acquisition of the 375 megawatt Elk Creek Solar Plus storage. Expect to file a natural gas rate case in Minnesota requesting a $63 million total revenue increase based on a 10.65 ROE and a 52.5% equity ratio. Interim rates of $51 million will also be requested effective January 1, 2026. Regarding future cases, we expect to file a Colorado electric and natural gas and New Mexico electric rate case later this year. Moving to data centers, we remain on track to contract the remainder of our original 2 gigawatt base plan by the end of the year. In addition, we have updated our total base plan to include approximately 3 gigawatts of data center capacity. Additional projects include in the base case we consider high probability and expected contracted by 2026. We have 3% of the 5% assumed annual sales growth in our 2026-2030 capital plan. We also continue to make strong progress on the Small Coast Creek wildfire claims process. we've resolved 212 of the 254 submitted claims and we have settled or dismissed 21 of 34 lawsuits we've updated the low end of our estimated liability to 410 million dollars we have made significant progress in the third quarter with the resolution of the three largest claims by acreage we have committed 360 million dollars in settlement agreements considering the low end estimated liability of 410 million dollars we're estimating approximately 50 million more on the top on top of the 360 million dollars that has been committed based on our current information as a reminder we have approximately 500 million dollars of insurance coverage an updated 60 billion five-year capital expenditure forecast which reflects annualized rate-based growth of approximately 11 these investments are critical to serving growing electric demand meet clean energy goals, and ensure safety and reliability of our system. We have an additional pipeline of investments to our $60 billion plan, specifically from our recent RFPs across jurisdictions, incremental data center load, and transmission projects from future MISO and SPP tranches. We're excited about our growth opportunities and will continue to finance accretive growth in a balanced manner. This year, we have issued or contracted approximately $3 billion of equity and equity-like content between our ATM program and our 2025 hybrid financing. Our updated 26 through 2030 capital plan reflects an additional $23 billion of debt and $7 billion of equity content. We anticipate that any incremental capital investments would be funded by approximately 40% equity content and 60% debt. We continue to maintain a balanced financing strategy, which includes a mix of debt and equity to fund accretive growth while maintaining a strong balance sheet and credit metrics. Moving to earnings, we're reaffirming our 2025 ongoing earnings guidance range of $3.75 to $3.00. Also initiating our 2026 earnings guidance range of $4.04 to $4.00, which reflects approximately a midpoint of 8% growth from the midpoint of our 2025 guidance. Key assumptions are detailed in our earnings release. Using our long-term EPS growth objective to 6 to 8 plus percent with expectations to deliver 9% growth on average through 2030. This update reflects our significant investment needs to serve our customers and drive state policies along with confidence in our financial outlook. We are maintaining our dividend growth objective of 4% to 6% with the expectation to be at the low end of the range. Our 26 to 2030 forecast period, we expect our dividend payout ratio will trend toward the bottom end of our updated payout ratio range of 45% to 55%. which allows greater financial flexibility and drive powder for the future. With that, I'll wrap up with a quick summary. We continue to lead the clean energy transition, ensuring safe, clean, and reliable service, and keeping customer bills as low as possible. We announced an updated five-year capital investment program that provides strong, transparent rate-based growth and significant customer value. We went in the Marshall Wildfire and continue to make investments to reduce risk to our system and communities from extreme weather. We'll continue to enjoy some of the lowest bills in the country with our investment plan. On balance sheet and credit metrics, using a balance of debt and equity to fund accretive growth. We reaffirm our 2025 EPS guidance of $3.75 to $3.85, and have initiated 2026 EPS guidance of $4.04 to $4.16, which reflects a midpoint of 8% growth from the midpoint of our 2025 guidance. And finally, we expect to deliver 9% EPS growth on average through 2030. This concludes our prepared remarks. Operator, we will now take questions.
Operator
Thank you very much, sir. Once again, for analysts to register for questions, please press star 1 on your temple keypad. And our first question is coming from Nicholas Campanella from Barclays. Please go ahead. The light is open.
Hey, good morning. Thanks for all the updates. Morning, Nick. just morning just just wanted to be clear 26 at the midpoint you did about eight and you know i hear you on the uh the nine percent through 2030 is that start beyond 26 or is that is that how you're kind of viewing this year thank you hey nick i'll take that no that's that's that includes 2026 so nine percent over the next five years inclusive of 26 guidance so that nine percent would be based off the midpoint of this year.
Okay, great. I appreciate that. And then just one other clarification, 7 billion of equity in the plan. I know you talked about 1.3 billion already priced forward. Is that kind of net against that 7 billion or is it still 7 billion from here on out? Thank you.
No, I think of it as we do as kind of 7 billion from here on out with our new 26 to 2030 plan. So if you kind of look what we did this year relative to last year's plan which had four and a half billion dollars in it and kind of take those those two pieces were right online with kind of what we've been messaging or on incremental capital drives about 40% incremental equity content so and feel really good about kind of our equity content plans and where and where we are in terms of manning our credit metrics and executing on a 60 billion dollar investment plan great well thanks so much we'll see you at EI absolutely thank Thank you.
Operator
Our next question is coming from Stephen Fleischman calling from Wolf Research. Please go ahead.
Yeah. Hi. Good morning. Thanks for the updates. So I guess first on just kind of the profile of the growth rate or growth, when you look at the CapEx plan and the rate-based growth, it's very heavily front-end loaded. and then capex actually falls right now 29 30 a decent amount a lot of the other companies are kind of the opposite where it's lower now and it's like ramping up could you maybe just kind of talk to that and is a lot of that just we just don't know some of the some of these rfps and other factors out in 29 30 yeah steve i can take that that one i think you're exactly right in terms of, you know, we're always conservative of what we put in the capital plan, and our
SPS portfolio is in there, approved by our Minnesota Commission in Q1 of this year, but it really gets to, at 29 and 30, it's, you know, we're launched RFPs with Colorado SPS RFPs that were pretty early in the process, and that's just in kind of our additional pipeline bucket that is, you know, as we move through that process kind of into next year and even beyond that we expect there will be opportunities to fill in there, both generation to serve load growth for our customers, but also transmission that we expect to see out of SPP in the near term here. The next tranche of SPP should be a Q4 event that we get visibility in, but then also longer term on MISO tranche too.
Okay. Okay. And I know just maybe related, at times you've given kind of some rough idea of the range of spending on the upside cases and those different things that you mentioned there. Is there anything you can share on the potential capital and the upside case, things not in here?
Yeah, I would say the slide we have in our deck here for today, you know, that's going to be a range of 6,000 to 9,000 total megawatts. We think out of those RFPs plus some transmission. We've always guided people to, you know, being competitive in our generation processes and winning about half of that plus that transmission. So I see, you know, $10 billion plus sitting in that pipeline. Now, not all will be in 2030. Some of those generation processes run through 31, 32, but really good opportunity as we look at the low growth and the transmission needs in our system.
Yeah, Steve, I think this is Bob. I think you're right in terms of shape. You know, the earnings generally will follow the capital investment plan with some amount of lag in financing costs, and then we look to fill in the back part of our plan with some of the incremental opportunities that Brian had.
Okay. Great. Thanks for the update. Thank you, sir.
Operator
Next question will be coming from Jeremy Tunnett of JPMorgan. Please go ahead.
Operator
Good morning, Jeremy. it appears that he's just moved Jeremy please press star 1 again and we'll put you back in the queue we'll go to Carly Davenport please go ahead Carly same thing we'll go to Julian Dumoulin of Jeffries please ask your question can you guys hear me yes sir alright there we go third time's a charm I say alright awesome guys well done Seriously, look, if I can, just going back to where you left off with Steve, I'll just
see it up this way. Of those different points that you raised here, what are the more substantive pieces? I mean, it seems like the SPP element could be more substantive. That seems more front loaded, A. And then B, the acceleration of some of these renewable procurements in light of tax credit expiration could be more substantive and lumpy and don't seem to be in there. But again, you tell me, what are the bigger pieces that are not yet in that 60? Again, you've laid out a whole bunch of them. I'm just curious which one moves the needle more.
As best you see it initially, Julian, I'll start and Brian can chime in. So, a large piece of the SPP RFP is embedded into our base capital plan. There's a second RFP for SPP capacity and energy that is not included in the plan. And then when I think about Colorado generation, we have really two RFPs sitting in front of the commission out there. We have a near-term procurement portfolio that's designed to accelerate and take advantage of renewable credits, and that looks like a four-and-a-half gigawatt plan. And then there's the just transition solicitation that's been in progress with the commission for a while, which we expect some amount of adjudication later this year or early next, which had somewhere between 4 and 15 gigs of generation needs in it. There's a bit of overlap between the NTP and the JTS in terms of what's needed in timing, so I wouldn't count those as additive, but there's a big piece of Colorado generation that's likely to come in the 28, 29, 30 timeframe that's not included in our base capital plan. And then there's a handful of smaller RFPs in the upper Midwest for generation that are not included in our base plan as well. Secondly, with regard to transmission, you know, we have ITP and MISO 2.1 embedded in there, although they're longer-dated capital plans and longer-dated in-service spends that will result in stuff drifting through this time period and into, you know, later into the early 2030s. And then there are subsequent ITPs and MISO LRTPs that are coming that are not also in bed in this plan. So I think about Colorado Gen being probably the biggest driver of back-end investment in this five-year plan. And transmission that's not announced out of the SPP ITP process is sort of the second biggest. Brian, you got anything to add to that?
Yeah, no, and I think just absolutely on the Colorado side, you know, we're working through that process. There's a really good engagement with our stakeholders to accelerate procurement for these renewable resources, given that we have the tax credit cliff in 2030. So we should get visibility into that portfolio in December with a commission decision in Q1. We've got the bids in, robust bid pool, working through that. And so that's one of the big drivers. But also, as we work through, you know, as we think about longer term is incremental data center opportunities and working with our stakeholders in our states in terms of driving economic development and low growth, that can drive longer term generation and transmission needs, which wouldn't be incorporated. But that's just a longer term opportunity that I know the industry is seeing.
Excellent, guys. Thank you very much. And I don't mean to, but let me ask you this way. The 6% to 8% plus versus the 9% that you guys have out there, is the idea that the 9% is sort of at this point in time and the 6% to 8% plus is designed to be for any eventual roll forwards where the large numbers kind of drive some deviation from the 9% if you roll forward a couple years?
Yeah, Julian, we think about it this way, is that 68% is what we think about our long-term view on EPS growth. When you balance the investment needs of our system, the low growth we're seeing on opportunities, and also affordability. But when we look at our current five-year plan and the $60 billion infrastructure projects for our customers serving the low growth and the needs of our system, de-risk in our communities, that plus really represents the 9% that we see over the next five years, if that helps us differentiate in terms of how we're thinking about it.
All right, guys, I'll leave it there.
Operator
Thank you very much, sir. Next question will be coming with Carly Davenport of Goldman Sachs. Please go ahead.
Good morning. Thanks for taking the questions.
Thank you. Glad to be back. Maybe just on the load growth outlook, looks like continued strength in SPS, which is great to see. And then a couple of the other OPCOs shifting a bit lower from the prior plan. So could you just talk a little bit what's driving those moving pieces on load growth across the regions?
Yeah, I think, you know, when we look at it, really SPS continues to be strengthened in our oil and gas sector. We've seen that for years. This year out in New Mexico, we're going to see teens type of growth at this large C&I sector. And we continue to see that with electrification out of that industry in New Mexico. So strong growth there. Also, you know, Fermi America is down in Texas, New Mexico. There's certainly opportunities there that we've talked about. And so we're seeing that. The other one's more just kind of shifting around and potentially a timing of data centers as we think about it when they're coming in. But when you look at our sales growth across all opcos, all are in the, call it 4%, roughly 4% to 5% with SPS at 8% when we look at it. So we're pretty excited when we see our data center opportunities really mixed across our service territory. Strong opportunities in Minnesota, working through some really good opportunities in Colorado. And then we talked about some opportunities in Texas and New Mexico. The one other thing I'd like to say is, you know, that 5% sales growth that we talk about, having the diversification, it's not all data centers. Only three of that 5% is data centers. So we also have, you know, 1.5% of that 5% is driven by the SPS, oil and gas electrification. Then we just have customer growth, residential customer growth. We're starting to see some electrification on the residential side. So that's about half a percent. So really kind of diversified growth, which I think is important as we look forward.
Great. That's really clear. Thank you for that. And then maybe just to follow up on kind of the financing and the balance sheet, it seems like you're targeting kind of now 16% to 17% FFO to debt targets. I guess, can you just talk about sort of comfort level there with the cushion versus downgrade threshold levels and how confident you are in the path to kind of squarely getting back to that 17% level on a longer term basis?
Yeah, Carly, the way I think about it is, no, we have not changed our long-term view on our credit metrics in that 17% level. That has not changed. It's important to maintain a strong balance sheet and healthy credit metrics. Just when you look at our spending over the next few years, we kind of grow into that 17%. And so it's really just, you know, we designed our equity plan your equity content plan to get back to that 17% in the latter part of this forecast, which, you know, that is our long-term view, so that has not fundamentally changed from a credit perspective, maintaining our balance sheet, protecting our metrics. Just when you have this type of elevated capex over the next few years, there is some pressure there.
Makes a ton of sense. Thank you so much for the time.
Operator
Thanks for your questions, ma'am. Next question will be coming from Jeremy Connett of JPMorgan. Please go ahead.
Second time's a charm, Jeremy.
Thank you for the color today. I just wanted to step into equipment availability a little bit more, if I could, such as transformers, transmission, 2CGTs and components there. Just wondering if you could frame for us how long the queues are there and, I guess, how you see aligning that with new data center interest or contracts.
Yeah, great question. Very timely and very strategic. You know, I said in my prepared remarks, I'm really proud of the team here at Xcel Energy. I think we have the best team working on this. We have been very, very progressive in terms of securing the assets that we need to build the infrastructure that sits in front of us. you're absolutely right. Lead times have elongated, and I'll let Brian comment on any particular components. But, you know, we think that given our scale, our scope, and our approach to our major vendors, that we have access to inventory and supplies, you know, maybe that others don't have. We've taken a very progressive shift in how we work with our vendors, making sure that they see that our entirety of our capital plan, they can plan for the work that they do with us. We find out who's, you know, best able to serve us both on the services side as well as the equipment side, and we backward integrate them into our capital plan in a way that is both we protect ourselves from pricing side as well as we get certainty of equipment and certainty of labor in a pretty tight market. That's been the strategic focus for the team for a year or two as we saw the market start to tighten, particularly with data center build. Maybe I'll let Brian just comment on what we're seeing in turbines and transformers and things like that.
Yeah, I mean, I think it's absolutely no secret in terms of where the turbine market is, call it, four years out. As Bob mentioned, though, we've gotten ahead of it in terms of having those 19 turbines on order. And that's one of the benefits of scale is we can order a significant amount of equipment knowing that we'll use it somewhere in our system and being able to deploy it throughout our system with the low growth we're seeing. Maine Power Transformers is another one that's taken, you know, that's these large-scale transformers, 345 kV, you're out there a few years. So it's really how do you get ahead of it and make sure that you have the right supply relationships, working through all the potential tariffs and supply chain challenges that currently exist there. But we feel really good about where we are. And also I think about that also within the context of our safe harbor strategy in terms of having all the equipment for both our base plan and any incremental projects coming out of our incremental plan and ensuring that not only are they safe harbor, but we're fiat compliant. So we feel really good about our overall place from a supply chain perspective. If that's on the equipment side, there's also a labor side of it, too, from an EPC perspective, ensuring that we have top-tier EPC firms lined up, not only for this year and next year, but for our five-year plan and beyond. And having those key partnerships is really, really important, and I think a differentiator as we go to market here in terms of executing on our plan.
Got it. Very thoughtful process there. And I was just wondering, you might be able to align that a little bit more with demand growth. It seems like the data center pipeline, as you described in the slides, stepped up quite nicely versus before. And just wondering what you see on, you know, the type of discussions and the speed-to-market world and how this all fits together.
Obviously, very strategic and timely, you know, as we watch our industry work very progressively to bring speed to power here and making sure that we energize this very critical national asset in terms of artificial intelligence and data center development. Not surprising, we've got great interest, and our pipeline continues to build, and we continue to move stuff from highly probable into the contracted categories. We have some of the most affordable energy in the country, as I mentioned in my prepared remarks. We have an incredibly good, strong development team. We're working through either ESAs or large load tariffs in all of our states and making sure that we protect our existing customers from the addition of new large loads. And we've laid out in the past our principles around this in terms of cost causation and who's funding. And if we trigger a transmission investment, new generation investments, making sure that we protect our customers along the way, there's net benefit for the entirety of the system when you bring on some of these new large loads. I think that it should also be noted that, you know, I mentioned sort of strategic geographic advantage. In addition to low energy bills, we have enormous high clean energy content in our systems already. That's a very attractive component to these data center developers as well as their end use customers. So I think that between our sustainability portfolio and where we're trending as a company across all of our states and making sure that we can deliver a a cleaner energy product as well as a highly reliable and highly affordable product is very strategic as we approach economic development with data center developers.
Got it. Helpful. Thank you.
Operator
Thank you very much, sir. Next question will be coming from Anthony Crudwell of Missouri Hall. Please go ahead. Your line is open.
Hey, good morning, team. I just have, I guess, two super quick cleanups. I think to Steve's question, I think you mentioned about $10 billion of incremental capbacks. That is an addition or would be on top of the current 9% EPS growth. Is that accurate?
Great. And then this one, and I probably should wait for EEI, but just, you know, the time is ripe. Currently talking 9% growth, but you've kept the guidance at 6% to 8% plus. Just curious on why not readjusting the 6% messaging that It shows all the potential upside that you have. Like, it doesn't even seem likely that you hit six or even seven. Like, I'm just curious on the thought process of keeping it six to eight percent plus.
Yeah, Anthony, look, you know, we balance a lot of perspectives as we think through this in terms of, you know, what is the right long term. And when I say long term, six to eight, it's beyond the five years about balancing affordability and everything else that goes into that. And so we thought the plus was the way to message that we do have a lot of infrastructure needs on behalf of our customers here in the next five years. But longer term, you know, when you start to roll beyond 2030, you know, we'll continue to evaluate that. And then just quick on your first question, we said $10 billion plus, but some of that could fall outside of this five-year when you think about some of the generation procurement and some of the, particularly the MISO transmission will be longer dated. but really excited about our overall five-year opportunity and beyond that.
Great. Thanks for taking the question. See you in Hollywood.
Operator
Thank you, Mr. Next question will be coming from Sophie Karp calling from KeyBank. Please go ahead.
Hi, good morning. Congrats on the strong, I guess, guidance revision, guys. A couple of questions for me. So maybe if you could talk a little bit about the trends in SPS. I know you continue to flag the electrification of Permian as one of the drivers of the volume growth there. With the oil prices, I've been kind of where they are. Is there any reason to be concerned about that trend at all at this point?
Hey, Sophie, it's Bob. I think the growth you see in the Permian is probably a function of two things. One is, you know, continued strength in mining in the Permian Basin. So just more wells, more infrastructure, more fields being open. The second is the trend towards electrification of those fields and of existing fields. So I think if there's two big drivers out there, you know, when I talk to our largest customers down in the Permian and the Delaware Basins, this continues to be their lowest cost resource around the globe. And so I think even when you start to see oil and gas prices fluctuate, I think these properties in the southwest are still very in the money for them, and they'll continue to see mining and mining growth down the southwest. So I don't have a lot of concern about that load growth profile. And then as we talked about the data centers, you know, that load growth profile we feel very confident in and see opportunity to add to it.
Got it. Thank you. That's pretty clear. And then on the renewables versus gas, right, you guys are clearly stepping into more, like, accelerating renewables to harvest the tax credits. At the same time, a lot of your peers are actually going more towards gas, and they are, you know, flagging that they need – we will need to build more gas to firm up the system for data center demand. And so I guess my question is, will we see this same trend play out in your service territories at some point? Or is it just the renewables are so attractive that you feel good by, I guess, still going full speed on renewables as opposed to more dispatchable generation?
Yeah, a couple of themes in there for sure. One, as I said in my prepared remarks, we sit in one of the most geographically attractive areas for both wind and solar assets. And so we see real customer benefits from continuing down a trend of investing and taking advantage of those natural resources, particularly while tax credits help make them affordable for our customers. But you also see us adding, you know, we've got four and a half gigs of natural gas capability coming into the plan in the next five years, as well as I think probably north of five gigs of energy storage as well. So we are firming the system, backing the wind and the solar with, you know, attractively priced backup energy and making sure that we are both reliable, affordable, and sustainable for our customers, which is sort of the holy, you know, trinity of our business.
All right. Thank you so much.
Operator
Thank you. That's your question, Sophie. Next question will be coming from Stephen DeBriese, calling from RBC Capital Markets. Please go ahead.
Hi, Bob and Brian. thanks very much for taking my question um i just had a quick one thanks very much uh it's good to be back um just had a quick one you know and i appreciate the color on the nine percent because one of the things i guess um i was scratching my head about and i was hoping to get a little color on was clearly 29 rate based moves up something on the order of 20 plus percent and so if you run you know the midpoint of your eps guidance out now at nine percent versus where you were previously in the plan, it implies a pretty significant compression in earned ROEs, implied earned ROEs. Now, obviously, you're spending a lot more capital and spending it quicker, so that kind of makes sense to me, but you do have pretty good mechanisms. So can you talk about any embedded conservatism that's in the plan around, you know, assumed earned ROEs that you would get given the significant increase in rate base?
Hey, Steve, yeah, I can answer that question for you. And I think that's really why I wanted to provide some color with 11% rate-based growth that we expect 9% rate-based growth or 9% earnings growth over the next five years to really highlight that we don't expect significant compression in ROEs by any means. If you think where we are, we've talked about some of the rate cases that we have coming up in terms of driving some ROE improvement because we've delayed some rate cases for some reasons. And so when I think about it, it's really we've always talked about when you get to this kind of high growth, You know, we're at 11% rate-based growth, significant CapEx comes with financing needs that you would see about a 200 basis points delta between your rate-based growth and your earnings growth over a five-year period. And so I think we want to just highlight that, that it's, you know, as we move through the next few years, our financing is lined up with kind of our CapEx spend. And we're working through some regulatory proceedings over the next couple years, you start to catch up on that rate-based versus EPS growth. But over the five-year period, we feel really good about where we are, that the long-term EPS growth, coupled with our financing plan and maintaining a strong balance sheet, is we feel good about that and don't see ROE compression at all. We certainly have conservative ROEs in our plan, but don't see ROE compression as we sit here today and look at where we are today.
Okay. That's all I had. Really appreciate it. Great result, guys. Thanks very much. Thank you.
Thank you, sir. next question will be coming from travis miller clay from morningstar please go ahead sir good morning thank you morning travis uh questions around the transmission spend obviously this has been a big thing for you for many years but as you ramp that up and think about these large customers how easy or difficult is it to identify specific customers who might pay for some of this transmission spend? I see contracts between generation and data centers. Can you take some of this transmission spend essentially off of residential commercial customer bills and identify specific customers to pay for it?
Yeah, great question. First, thanks for recognizing leadership in transmission. I like to say that we have been the leading builder of new transmission line miles over the last 15 years. When you come from the state of hockey, you've got to skate to where the puck is, and we feel like we've built a grid and an infrastructure system that is enabling us to energize this new data class. When I think about people willing to spend incremental money on transmission, I think our first principle with regard to hooking up data centers is if they require a new transmission line, particularly a lateral, usually they're paying for that 100%, and we put that into sort of a kayak bucket as opposed to net rate-based spend, and it's going to be attributable directly to that customer. And when you talk about can you identify those customers, those customers are knocking on our door freely and willingly to spend the money, particularly on the transmission interconnection, to make sure that they can get service as quickly as possible. So this is really a management of the inbounds as opposed to us having to go find people that are willing to do it. I think that's a pretty common approach that the data center developers and the hyperscalers are willing and able to do. We're protecting our customers from the transmission build, and then when you think about the net benefit, if you're taking the entirety of our system cost and adding more megawatts to it, that's a net benefit on a per kilowatt hour rate on the transmission system in totality and a benefit for all customers.
Okay. Okay. So not all of that transmission spend then would go on commercial residential bills.
Well, the transmission spend that we highlight in our plan is regional, super regional. You know, we have stuff that's connecting MISO and SPP markets. We have big regional transmission coming out of the long-range transmission planning out of the MISO process that is regionally allocated, not necessarily coming directly onto our customers. Same with our STP build-out. A lot of that is regional cost allocated, not coming directly 100% into retail rates.
Okay, great. And then how much – you talked about that lateral, just to follow up on that. Do you have a scale or kind of share of how much that specific lateral type of demand you're getting relative to, like, what you just talked about, the regional type of transition?
Yeah. Travis, those are really customer-specific. You do system impact studies to just, you know, wherever that customer is locating on the transmission system, the size of that customer, the ramp of that customer. And so those are really specific, hard to put a number on it in general, in a general sense.
Okay. That's fair, and I appreciate all the thoughts.
Operator
Thank you very much, sir. Next question will be coming from Alexia Kania, calling from BTIG. Please go ahead.
Good morning. Thanks for taking my question. Maybe just a question on the regulatory side. Obviously, it's great to see all this CapEx and also the transmission as well, but I'm just thinking about also your comments about relative share of wallet and rates, but I'm just wondering the nature of communications that you're having with regulators just on kind of expectations for where rate trends may be going over the next five years within this. within this window. Maybe there's kind of a balance between revenue requirements and volume growth or whatnot, but I'm just kind of curious about what the reception is to those types of conversations.
Yeah, great. I think it's really fundamental and foundational for our team here to make sure that we keep our bills for our product as affordable as possible for our customers. We wake up every day thinking about that. We have to balance that with other desires, reliability, sustainability, resiliency, and safety across our system to make sure that we can meet those needs of our customers as well. I mean, you don't have to look any further than Jamaica or Cuba to realize the devastating effect that communities have when our system and our product isn't available. So we are spending time and energy, as you say, with our regulators, with our legislators, making sure that we recognize all of the things that we're bringing to the system, and that while affordability is a hugely important piece, we think we, A, we start from a very good spot. We think we've been a very good steward of our customers' money over the last decade. We'll continue to be very prudent, very focused on making sure that we can deliver the system that they need and want with the policy objectives that they need and want at a price that is as affordable as possible. So we work through that with each state and each class of customer in making sure that we keep our product very affordable and attractive.
Operator
And thank you very much for your questions, Alex. As we have no further questions, for closing remarks, I'll turn to call back over to CFO Brian Van Aple for closing remarks. Thank you.
Thank you all for participating in our earnings call this morning. Please contact our investor relations team with any follow-up questions.
Operator
Thank you much, sir. Ladies and gentlemen, that concludes today's conference. We wish you a very good day. You may not disconnect. Have a good day.
