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Good morning, and welcome to CenterPoint Energy's Fourth Quarter and Full Year 2025 Earnings Conference Call with Senior Management. [Operator Instructions] I will now turn the call over to Ben Vallejo, Vice President of Investor Relations. Mr. Vallejo?

Good morning, and welcome to CenterPoint's Q4 2025 Earnings Conference Call. Jason Wells, our Chair and CEO; and Chris Foster, our CFO, will discuss the company's fourth quarter and full year 2025 results. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are based on management's beliefs, assumptions, and information currently available to management. These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially based on various factors, as noted in our Form 10-K, other SEC filings and our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statements other than as required under applicable securities laws. We reported $1.60 per diluted share and $0.40 per diluted share for the full year and fourth quarter of 2025, respectively, on a GAAP basis. Management will be discussing certain non-GAAP measures on today's call. When providing guidance, we use the non-GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non-GAAP EPS. For information on our guidance methodology and reconciliation of the non-GAAP measures used in providing guidance, please refer to our earnings news release and presentation on our website. We use our website to announce material information. This call is being recorded. Information on how to access the replay can be found on our website. Now I'd like to turn it over to Jason.

Thank you, Ben, and good morning, everyone. I'd like to begin by extending my sincere appreciation to all frontline team members who continue to work tirelessly to deliver better outcomes for our customers. Whether it's responding to severe weather like we experienced in January, or executing on the reliability and resiliency work that resulted in a reduction of more than 100 million outage minutes across the Greater Houston region last year. Our dedicated workforce executes for our customers and communities each and every day. On today's call, I'd like to address 3 key areas of focus. First, I'll touch on the strong and consistent execution over the fourth quarter and throughout 2025. Our continued performance is reflected in our delivery of 9% EPS growth for the fourth time in the last 5 years. Second, I will discuss the increased acceleration of the significant growth in our Houston Electric business. We are now forecasting peak load demand to increase by 50% or an additional 10 gigawatts by 2029. This is 2 years earlier than previously planned. More importantly, this growth continues to be positive news for the region as it drives jobs, increases tax base and helps keep our portion of the bills essentially flat, benefiting our customers and communities. And lastly, separate and apart from this accelerated growth, we are adding $500 million of incremental capital to our 10-year $65 billion capital investment plan to fund an additional 765 kV import line. We continue to see CapEx upside in excess of $10 billion to further support economic development throughout our region. Let's start with our fourth quarter and full year financial results. This morning, we announced non-GAAP EPS of $0.45 for the fourth quarter and $1.76 for the full year 2025. In addition to delivering this 9% EPS growth, we also delivered 9% dividend per share growth last year. I am proud of this track record of consistent execution for our stakeholders. Chris will provide additional details around these strong results and consistent delivery of industry-leading performance in his section. As a reminder, we continue to rebase our long-term growth targets from our actual performance as we seek to deliver value for our investors each and every year. Consistent with this approach, Today, we are reaffirming our 2026 non-GAAP earnings guidance of $1.89 to $1.91, an 8% increase at the midpoint from our 2025 delivered results. Over the long term, we continue to expect to grow non-GAAP EPS at the mid- to high end of our 7% to 9% long-term annual guidance range through 2028 and 7% to 9% annually thereafter through 2035. I'd now like to touch on the increased acceleration of growth in our Houston Electric business, which is fueled by a diverse set of drivers. We are fortunate to have a proven track record of serving large loads and rapid growth across our region. Our diverse growth and a substantial increase in our interconnection queues continue to accelerate at an unprecedented pace, driven primarily by reshoring of advanced manufacturing facilities and new data center demand. As a reflection of that, we are now expecting peak load to grow by 50%, 2 years earlier than originally planned. Looking further ahead, this continued growth and significant acceleration of pace gives us even greater confidence in our forecast that load demand will more than double by the middle of the next decade. However, it also suggests the continued reporting of an unconstrained interconnection queue does not offer meaningful insight into the level of expected growth, which will largely be driven by existing system capacity and ability to scale and execute quickly. Instead, we believe that the most meaningful measure of current growth projections is the pipeline of large load requests that are either already under construction or large projects that are firmly committed. To provide context for the 50% increase in peak load today, we have already 2.5 gigawatts of projects that are in the construction phase with another 5 gigawatts of firmly committed projects that we expect will be energized by 2028. This is in addition to the 3 gigawatts of ordinary course growth that our region is already expected to experience. We are confident that we can execute on this near-term demand as it will be met with existing system capacity and manageable system upgrades. Outside of these projects, we will continue working on converting the remaining interconnection requests, which could further add to this projected growth. The rapid acceleration of pace of this large load growth combined with the ordinary population of growth across the Greater Houston region will have positive impacts for our customers and communities and help keep our portion of the bills essentially flat. To illustrate the potential benefit of energizing data center customers, we believe that 5 gigawatts of existing hosting capacity were utilized. We estimate it could reduce average residential delivery charges by over 2% based on the 2025 average bill. This continues a trend that has allowed us to keep customer charges nearly flat over the last decade. To be ready for the incremental growth that we continue to see beyond the near term, we are updating our transmission planning study that will likely lead to incremental transmission projects to keep pace with our region's explosive growth. Outside of the potential for additional transmission projects from this accelerating growth, I want to briefly touch on some recent updates on ERCOT and the incremental capital investments we will be making to support our previously planned growth. In response to feedback from ERCOT indicating the need for additional infrastructure to support the continued growth of the Greater Houston region, we have filed for an additional 765 kV transmission line in January. This will be the third 765 kV import line providing enhanced resiliency and reliability to our region as it continues to grow. Today, we are incorporating this needed project into our outlook, and we are increasing our capital investment plan by approximately $500 million, bringing our 10-year total to more than $65 billion. Beyond this increase announced today, we continue to see over $10 billion of incremental opportunities. We will fold these incremental opportunities into our 10-year investment plan when we are confident we can execute the work for the benefit of our customers. These additional investments will provide further upside to our over 11% rate base growth through 2030. Before I hand it over to Chris, I want to thank our teams for continuing to execute for our customers and communities and delivering on our strong 2025. With that commitment to consistent execution, and the rapid acceleration of firmly committed growth opportunities, we are well positioned to continue our track record of delivering for our stakeholders. With that, Chris will walk through the financials in more detail.

Thanks, Jason. This morning, I will cover 4 areas of focus. First, the details of our fourth quarter and full year financial results; second, I'll provide a brief regulatory update. Third, I'll touch on our capital deployment execution, including the $500 million positive revision of our 10-year capital investment plan. And finally, I'll provide an update on where we stand with respect to the balance sheet and our financing plan. Let's now move to the financial results, beginning on Slide 5. On a GAAP EPS basis, we reported $0.40 for the fourth quarter and $1.60 for the full year 2025. $1.60 includes $0.11 related to the disposition of goodwill allocated to Louisiana and Mississippi natural gas businesses in addition to $0.07 of depreciation, related to our large temporary generation units. As a reminder, we expect to start marketing those units for either a sublease or sale later this year in anticipation of getting those units back no later than spring of next year. We continue to believe that the sublease revenue over the remaining years of our lease will equal at least the lost revenue from the period they were donated to San Antonio. On a non-GAAP basis, we reported $0.45 for the fourth quarter and $1.76 for the full year 2025. Our 2025 results reflect 9% growth compared to 2024 results. These strong results give us confidence in meeting our 2026 non-GAAP EPS guidance of $1.89 to $1.91. As a reminder, our 2025 year-over-year rate recovery reflected the delayed timing of several interim recovery mechanisms until the second half of the year. As we move into 2026, we expect to return to a more typical and timely filing cadence, which should support stronger and more consistent recovery throughout the year. Now taking a closer look at the drivers of our fourth quarter earnings. Growth in rate recovery contributed $0.12 when compared to the same quarter last year which was driven by the implementation of constructive rate case and interim filing mechanism outcomes throughout the year. Weather and usage were $0.01 favorable when compared to the comparable quarter last year driven by higher customer usage as temperatures across our service territory were largely in line with historical norms. O&M was $0.02 unfavorable for the fourth quarter as we accelerated certain work, including reliability and resiliency work originally planned for 2026. Additionally, higher interest expense was $0.05 unfavorable from an incremental approximately $3.3 billion in debt issuances. I'd now like to touch on our recent regulatory activity. During the quarter, we received a final order in our Ohio gas LDC rate case, which continues our track record of constructive outcomes. The order made slight modifications to the settlement agreement, approving a modestly lower revenue requirement of $53.1 million and ROE of 9.79% with no change to the agreed-upon 52.9% equity ratio. As a reminder, we anticipate closing on the sale of this business in the fourth quarter of this year. I want to highlight that we have limited regulatory activity over the next few years. We anticipate filing rate cases in the latter part of this year in Minnesota and Indiana, which, in the aggregate, represent less than 20% of the earnings power in our consolidated base. We will provide more color with respect to those cases, the closer we get to their respective filing dates. Outside of those 2 rate cases, we will continue to file our interim capital trackers across our various service territories. And as a reminder, we anticipate recovering approximately 85% of our capital investments through our various capital trackers. We expect to file within the next month, both our TCOS and DCRF mechanisms, which support recovery of ongoing investments and help reduce regulatory lag. Next, I'll touch on our capital investment execution for 2025 and our increased 10-year capital plan, as shown on Slide 9. Through the end of the fourth quarter, we invested $5.4 billion for the benefit of our customers and communities. This exceeded our already positively revised 2025 plan of $5.3 billion which incorporated a $500 million increase over our initial capital investment profile as we accelerated certain investments related to our system resiliency plan. This increased level of investment should allow us to partially offset the loss of Ohio investments upon the close of the sale later in the fourth quarter of this year. For 2026, we are reaffirming our capital plan outlined in our 10-year plan at $6.8 billion for the benefit of our customers, and we expect continued execution across electric and gas infrastructure, resiliency and system modernization. As Jason highlighted earlier, increased visibility into incremental transmission needs supports a $500 million increase to our long-term capital investment plan, bringing the total to over $65 billion through 2035. Knowing the time lines on these electric transmission projects, we anticipate the CapEx to be added towards the end of the decade. This reflects opportunities that we now have greater confidence in moving forward consistent with our disciplined approach of formally incorporating incremental capital as clarity and approvals are achieved. Finally, I want to touch on our credit metrics and balance sheet. As of the end of the year, our adjusted FFO to debt ratio based on Moody's rating methodology was 13.8%, slightly below our targeted cushion of 100 to 150 basis points. We believe we are well positioned to be within our target cushion, in particular, given the updated rulemaking provided by the U.S. Treasury Department just yesterday that I'll provide more color on shortly. We see further improvement in our metrics through the remainder of the plan as well as we've signaled previously, given we anticipate significant cash proceeds from the issuance of securitization bonds related to Hurricane Beryl and the closing of our Ohio gas LDC sale later this year. Our execution remains on track as just yesterday, we priced roughly $1.2 billion in securitization bonds. With these proceeds, we will look to extinguish a $500 million term loan at Houston Electric and reduced commercial paper. In addition, we expect to receive cash proceeds net of tax of $800 million in the fourth quarter from the closing of the Ohio transaction, which will provide additional balance sheet support and further enhance our financial flexibility. I would now like to briefly touch on draft guidance issued by the U.S. Treasury Department with respect to computation of the corporate alternative minimum tax that will add additional financing flexibility to our existing plan. As some of you may have seen, yesterday, the U.S. Treasury issued guidance that modifies how this tax is computed and now clarifies that eligible utilities like CenterPoint should reduce their tax liabilities for the repairs deduction. As a reminder, when the corporate alternative minimum tax was first enacted under the Inflation Reduction Act, we conservatively estimated our annual cash tax liability to be approximately $150 million. And while we're still analyzing the impacts of the notice, we now believe that our annual federal income tax cash tax liability should be near 0 through 2035. With this new cash tax profile, we anticipate a 60 to 70 basis point improvement to our credit metrics in the near term. This is a great outcome for our customers as the reduction in cash taxes should flow through to reduce customer charges. In addition, it could allow us to incorporate an incremental $1 billion of customer-driven capital investments into our now over $65 billion plan without the need for incremental equity. Lastly, we could potentially see guidance related to the use of the tax repairs deduction to reduce cash tax liability associated with the corporate alternative minimum tax. As a reminder, we estimate approximately $150 million of annual cash taxes from the corporate alternative minimum tax. The removal of this cash tax impact would result in a 60 to 70 basis point increase in our FFO to debt metrics over the next few years. In summary, we believe we are well positioned to execute in 2026 and beyond given the derisked and conservative nature of our plan. We are also reiterating our 2026 non-GAAP earnings guidance targeting at least the midpoint of $1.89 to $1.91. At the midpoint, this would represent an 8% increase over 2025 delivered results. Looking ahead, we expect to grow non-GAAP EPS at the mid- to high end of our 7% to 9% range from 2026 through 2028, and over the long term, we expect to grow non-GAAP EPS at 7% to 9% annually through 2035. We remain committed to delivering continued improvements in customer experience and look forward to executing our plan that delivers on the most diverse growth drivers in the country, propelling economic development for years to come. And with that, I'll now turn the call over to Jason.

Thank you, Chris. In closing, our executable growth is now coming at an even faster pace and more significant scale than before, helping to bring economic growth for our region in supporting customer affordability. As Chris covered, we are also fortunate to have achieved regulatory clarity through 2029 on approximately 80% of our rate base, supported by approved final orders. I continue to have full confidence that with our exceptional load growth fundamentals, constructive jurisdictions and derisk financing plan, we continue to have 1 of the most tangible and executable growth plans in the industry.

Thanks, Jason. Operator, I'd like to turn it over for Q&A.

[Operator Instructions] And our first question comes from David Arcaro with Morgan Stanley.

Jason, I think you mentioned updating the transmission planning study. Was that something that was already done and reflecting the 765 kV line that you added to the plan here? Or is that yet to come. Wondering if you could give timing and just thoughts on what the upside potential would be if it's still ahead.

Yes. Thanks, David, for the question. I would separate the $500 million of additional capital we announced related to that 765 kV line this quarter from the incremental transmission work that will be needed as a result of the acceleration of the large loads that I mentioned. The third 765 KV line that we introduced this quarter had been in the works and been part of ERCOT's planning for a while. We had just gotten to the point though where we confirm the need on our system and have filed for it at ERCOT, which is why we included it as an update to the 10-year CapEx guidance. Separate from that, as we're seeing this large load accelerate, we have internally accelerated our annual transmission planning. I expect we'll be able to provide an update in the second half of the year of incremental transmission projects that will be needed to accommodate this new load. What we're seeing with respect to these new large loads, as I said, they're coming faster and also importantly, they're coming to different geographies, different areas within the Greater Houston region. So it will likely result in incremental import capacity for our Houston system as well as incremental intra-regional transmission projects to make sure that we have capacity where we need it within the Houston region. As I said, we'll likely be able to provide an update on what that means from a CapEx standpoint in the second half of the year.

Got it. Okay. That makes sense. That's helpful. And then Chris, apologies if I missed it, but just as you reflect on the repairs adjustment now in the AMT, does that could that potentially formally reduce the equity needs in the plan versus what you've got baked in there? When might we learn more in terms of how the balance sheet impacts might flow through.

Sure thing, David. And again, as you may have seen, it just came out actually yesterday afternoon. So I think ultimately, it is in line with where our expectations were and it will have a couple of benefits. First, remember that the general profile we talked about, it was about $150 million per year. So what this will do is really 2 things as we think about it. First, definitely have near-term balance sheet benefit of 60 to 70 basis points. And we think about it as unlocking an incremental roughly $1 billion of CapEx that we could also add to the plan without adding any incremental equity.

Our next question comes from Shar Pourreza with Wells Fargo Securities.

Good morning. I just wanted to tease out a little bit of David's question that he had on sort of the growth and stuff. I mean just the 2 years ahead of schedule, that's just massive amount of growth, it could be sizable, obviously, to the current guide. Can you just help us frame just maybe a little bit with more specitivity just what this means in terms of timing and scale of CapEx and maybe how we should think about year 7 to 9, especially since you're already near the top end of that trajectory. I guess, how do we sort of think about what this could mean to the ultimate trajectory?

Ultimately, I just think this is another very strong tailwind for the company on an already great industry-leading plan. But let me try to provide a little bit more color. We are able to accelerate this, these large load interconnections because we have existing capacity in our system. I think that, that is a unique asset for us. Many of these companies, whether advanced manufacturing data centers are looking for power over the next 2 years, and we're uniquely positioned to connect them over that period of time. Those projects don't require significant incremental capital. It's effectively building a new substation off our existing transmission lines. What this will do, though, is it will create, as I mentioned to David, incremental need for more import capacity into Houston as well as more intra-regional transmission ties to make sure we're moving the power to where we need it here in Houston. So if you think about the timing of those projects, those are going to likely be projects that, well, impact sort of CapEx guidance I would estimate at this point towards the tail end of this decade into next. I wouldn't look at it as a near-term opportunity as much as, as I said, towards the tail end of the decade. But again, this just provides an exceptional -- exceptionally strong tailwind to an already great plan.

Got it. Okay. That's perfect. And then just lastly, on ERCOT's batching and study process changes, there's kind of a view out there that it can affect queue timing and certainly for new interconnections and upgrades. Do you sort of expect any approval slowdowns or delays within service dates, especially with this accelerated load you're targeting? Or is the impact kind of manageable?

I definitely think it's manageable. We support the overall direction of batching I think it will help provide relief in the overall ERCOT market. But as a quick reminder, we're pretty unique here in Houston. We've been very disciplined in what we've put in the ERCOT queue. And our large load interconnection applications have been processed within 70 days. So we don't see the backlog that many regions have. And as ERCOT transitions to this batching process, we're still operating under those current rules that exist today when we've been, as I said, achieving reviews and approvals within 70 days. Many of these firm projects will follow that time line. And again, I think it will -- whether they are approved under the current rules that are in effect or as part of [ Wave

Our next question comes from Steve Fleishman with Wolfe Research.

Just following up on the low growth in transmission capacity. Jason, how would you kind of think about the -- how much excess do you have left, if at all? Are you kind of filling that up with these 2 buckets that you laid out?

Good morning, Steve, we're certainly making a pretty big dent in the excess capacity we have today, but not fully exhausting it. As you recall from the investor update this past fall when we rolled out the $65 billion 10-year CapEx plan, included in that plan were a little more than 200 transmission projects that were geared at keeping pace with the growth. What we're seeing here with an acceleration is it's here at a higher quantum sooner and in different geographies, which will likely lead to even more transmission projects. But that base plan that we had proposed allowed us to make sure that we stay in front of these capacity needs. And so today, we're estimating we have roughly a little shy of 10 gigs of existing capacity, but we're already working on the transmission projects that will unlock more capacity as we bring these large loads on. And so I don't see -- foresee at this point a challenge with not only accommodating these projects, but additional large loads that we're working with.

Okay. And then just from the standpoint of like pricing to your customers, I assume this growth helps with your customer bills long term? Or should we think about that?

That's it. This is a phenomenal opportunity for our customers and communities. Because the existing capacity is there today, we're going to be spreading those fixed costs out over a wider base, driving down customer bills. We've been connecting large loads since before it was cool for the industry. This is what has kept kind of our rates flat over the last decade here in Houston, and this is just a continuation of that trend. The more that we bring these large projects into our region, more they not only help with the tax base in this region, but back to the point that you're making, they help us keep our rates affordable. So we continue to project that we'll now keep rates flat through 2028 as a result of this incremental load.

Okay. And then 2 more quick ones, I guess. Just on the -- one last one on the data center opportunity. You have mentioned in the past potentially looking at something in Indiana. Is there any update on that?

We continue to have very active conversations up there. I remain very optimistic that we'll be able to finalize those opportunities that we're pursuing. But right now, where we see the trend in the data center market is really looking at available capacity. Many of the hyperscalers have needs for power. Really, they're trying to optimize over the next 2 years. And Texas is one of the few areas of the country where we have capacity at scale that can move quickly, which is why we've seen such a fundamental shift to the Houston region. Again, I remain optimistic about our ability to land and secure at least one large data center opportunity for Southwest Indiana. But what we're seeing today is really this pursuit of existing capacity in Texas.

Okay. And then lastly, just on the balance sheet with the CAMT benefit and then you mentioned Beryl and the LDC sale. So if you don't change your capital plan, where would FFO to debt be by, I don't know, end of '26 or '27?

I think you probably -- sure, Steve. I think if you just kind of hold everything constant, we'd probably be on the order of roughly 15% directionally is the way to think about that. So it's definitely a good outcome in terms of the new regulation coming out.

Our next question comes Julien Dumoulin-Smith from Jefferies.

Team, thank you very much. I appreciate the time. Maybe just to come back to a couple of subjects. First, a little bit of detail, but we've seen ONE Gas update their guidance here on the Texas legislation from last year. Can you comment a little bit about the deferrals and any opportunities there? How are you leveraging that versus your peers? We see Atmos also reflected pretty meaningfully. Just would love to hear your latest updated thoughts on that and to what extent it's perhaps just within the range of guidance? Or is that something that's perhaps not fully utilized thus far?

Julien, thanks for the question. It is in the guidance that we've currently issued thus far. As you know, we were out in kind of front of this issue. I really think it makes sense from the standpoint of helping reduce regulatory lag, which is both helpful for our customers and our shareholders. We pursued this because we -- again, we thought it was in the best interest of all of our stakeholders. As a result of pursuing it, we had line of sight to it, I think, earlier than a number of our peers. And as a result, reflected in the guidance that exists.

Got it. Yes. I know you guys did it last year. I just wanted to make sure that it was more fully utilized. And then separately, if I can come back to this batch process conversation, I know it's gotten a lot of attention here. Can you comment a little bit about just when it kicks back off here later this -- in June or whenever they ultimately move. Is there any risk that you perceive on timing here ultimately? Or is the intent by moving into June or later here to really sidestep some of the delays that you could conceivably or at least are perceived to be to be pushed out?

Thanks again for the question. I mean I think we're all waiting kind of for the revised timing. But backing up from what has been signaled as sort of a summer adoption. We are advising our customers on is that they complete their load studies as quickly as possible so that we can finalize our work and submit them to ERCOT here this spring. The large load numbers that we put in the firmly committed column are -- those customers that we've been working with that have already fully completed their large load requests inclusive of the timing of the ramps. So I don't see any challenge with getting those requests into the ERCOT queue and getting them moving again, either under the existing rules as part of Batch

Awesome. And then the last little nuance here. This is, as you say, I think the third 765 project thus far. Can you comment a little bit about -- just should we expect sort of incremental cadence in coming quarters again? Or would it rather be at some point having a bigger 765 update just based on the ERCOT process, right, in identifying transmission needs? Or is it going to continue to be sort of one-off and two-off?

We think it makes sense to be conservative. We've identified a number of 765 kV opportunities that are included in the $10 billion plus of CapEx upside. We think it makes sense, though, to identify it as upside and then work with ERCOT and others to ensure that these lines are needed and are in the best support kind of the growth of the Greater Houston region. And that's what occurred here. ERCOT proposed this third line. We needed to assess it. We agreed with the assessment. We filed for it, and that's why we're incorporating it. So I would expect a track record similar to this where there is just a serial set of updates as we get more comfortable with each individual project as opposed to one comprehensive 765 update.

Our next question comes from Nicholas Campanella with Barclays.

I like the tagline connecting large loads before it was cool. I appreciate that. So just one for me. A lot of good questions have been answered, but just you guys have a track record for consistently kind of raising CapEx every quarter here, it seems, and it's great to see the $500 million increase to the 10-year plan. Just when you think about like executability, supply chain, labor constraints, like what is the ability to bring more into the 5-year plan? Or is that kind of fully baked at this point? I know you have a bunch of items kind of listed on the slide that are incremental, and it does seem like some of these transmission connections are in the '27, '28 and beyond time frame. But just maybe kind of frame how much capital you can actually facilitate bringing into the next 5 years versus the 10 years?

Yes. Given the fact that some of these large loads are in new regions in the Greater Houston area. So historically, we've connected a lot of these large loads near the ship channel, the petrochem complex. We're now seeing kind of different areas within Houston, really target accommodating kind of these large load requests. We are going to need more intra-regional transmission capacity. That is work that will need to be done in the first 5 years of the plan. Import lines generally take a little longer. I'd expect those to kind of really be hitting sort of towards the tail end of the decade, early part of next. But we undoubtedly will need more transmission in their Greater Houston area in the first 5 years. We have capacity to accommodate that. Again, since we've been connecting large loads for such a long time, we have had purchasing spots and all of the critical equipment, high voltage breakers and transformers. We've had relationships with third parties. We can move quickly, the pace of our customers to connect these loads. So I don't see materials being a constraint. I don't see labor being a constraint. I think really, what we need to do is continue to finalize the details of our power flow study, propose these projects. and begin working on them. I think some of that's going to come in the first 5 years, and some of it will be a tailwind into the next decade.

Our next question comes from Jeremy Tonet with JPMorgan Securities.

I just wanted to dive in a little bit more on smart meters and undergrounding in Houston, if I could. Just wondering if you might be able to provide a little bit more detail on what the time line can look there and what the size of the opportunity as you see it now?

Sure. Jeremy, the short of it is, I think there's opportunity here, maybe bridging off the last question, too, maybe even in 5-year plan as well. So the short of it is on the new smart meter program, we're probably going to be looking to file in Q4 at the PUCT, that's a natural time. We'll be able to give you insight there for the more potential CapEx upside to the plan. I think the other one maybe to touch on, which makes sense is a really important project again for the city of Houston is this downtown revitalization effort, as we've talked about. Here, we're going to be in a position to update probably second half of this year due to the fact that at that stage, we're spending the time now to work with the city to talk about where -- what locations make the most sense to relocate and site our new substations. So those will be meaningful decisions, and that will certainly drive the cost profile and potential upside to plan there as well. Finally, on the system resiliency plan. There, we are starting some of the strategic undergrounding work as early as this year. The natural timing of filing the next system resiliency plan is probably going to be 2028. So the -- excuse me, yes, 2028. So really, it's about feeding the back half of the plan, early 2029, 2030 and 2031, for potential upside there as well.

Got it. That's helpful. And just one more, if I could. You talked about keeping bills flat through 2028 and I think O&M reduction has been a meaningful part of the story over time and it looks like it continues to be. Just wondering how deep do you see that well at this point, given how much has been accomplished.

I think we're still in early innings. I'm really proud about the progress the team has made driving efficiency. But when we continue to look at the system, I think we've got further opportunity. Just sort of case in point, I highlighted in my prepared remarks the fact that we saved 100 million outage minutes last year through our Greater Houston resiliency initiative. We are just getting started on that work. And as we continue to have another year of investment under our belt, we're going to drive down outage levels in a way that will be a significant tailwind for O&M. Just to put this in context, we achieved reliability numbers that we haven't seen here in Houston since 2014. And since 2014, we've added north of 1 million metered homes and businesses. And so as I said, we're just getting started. So as we continue to drive down outages, improve and increase the automation in our system, we're going to reduce the amount of trouble work. And it's just an example of another, I think, tailwind with respect to O&M for the company.

Our next question comes from Anthony Crowdell with Mizuho.

Just one quick question. I think earlier, Chris, you talked about the additional balance sheet capacity you guys had with change in the recent decision? Just other items. I think you talked about maybe 15% FFO to debt. You've also been pretty opportunistic on selling some gas assets over the last couple of years to help fund a lot of the growth you have. Does now this additional balance sheet capacity maybe delay future divestitures of the gas business and given you also have this substantial growth still in front of you?

Anthony, we're going to constantly look at what makes the most sense. The capital recycling we've done has been highly efficient in feeding growth that's primarily been occurring here in the Greater Houston area. Ultimately, we're going to stay very open-minded to what makes sense. What Jason was getting at earlier is certainly, there's balance sheet help here in the next few years from really multiple things. The Ohio gas LDC sale we've referenced was $400 million better than planned. The outcome here on the corporate alternative minimum tax certainly provides additional cushion. But at the same time, Jason, I think you can certainly hear us saying at the back end of the decade, right, we could have substantial CapEx opportunities, which were required to have us again look at the most efficient way to finance that growth. So we're always going to stay open-minded on that front.

And our last question comes from Andrew Weisel with Scotiabank.

Two quick ones, please. First, on the fourth quarter, electric volumes, I noticed that the total throughput was down modestly. Residential was up 4%, and we've seen positive C&I trends in the last few quarters. Just wondering if there's any noise in the data or anything to call out? Obviously, you're bullish on the long-term trends. Just wondering what's going on in the near term.

Sure, Andrew. I think what the takeaway there is we continue to see more of a weighting towards the commercial and industrial growth among our overall base. I'll think I'll put it that way. If you just look across all of 2025, we're talking about roughly 7% industrial growth. It's pretty dramatic. I think what you're also hearing us allude to is we're highly confident in the long-term growth potential, including because these opportunities we've talked about from a customer standpoint are going to create material new jobs to our communities. Two examples being maybe most recently, the over $15 billion investment that Eli Lilly has referenced for the Greater Houston area is pretty incredible. That will represent thousands of jobs to come with it as well as the loads that we're talking about actually include the ecosystem associated with data centers, which is the advanced manufacturing category that we talk about. The benefit there is that is really about production and manufacturing of the components that go in the data centers, that means same situation there. It comes with a large number of permanent jobs as well. So it gives us a lot of confidence for years to come on both that excellent dynamic we have had of both residential growth as well as accelerating industrial growth.

Okay. So not to worry about the 4Q number then, in other words?

No, sir.

Okay. Very good. And then lastly, in terms of the CapEx update, you're increasing the overall plan, thanks to the 765 kV line. It looks like, if I'm getting the numbers right, that was an increase of $800 million, and then you lowered the gas spending by about $300 million or so, I believe. Can you walk us through what drove that? Was that about preserving the balance sheet? Or were there specific projects on the gas side that you chose to remove for fundamental reasons?

You've got the puts and takes there, right? I mean, largely, the increase is driven by the 765 kV line, as you mentioned. We're always constantly looking at the execution of our integrity management work. We were able to pull forward some of that here into 2025, gave us a little bit of an opportunity to be flexible on the gas side. And in the outer years. We'll always tune the portfolio based on kind of executability, kind of where we're seeing demand. I wouldn't look at that as a signal of a long-term trend.