Good morning, and welcome to CenterPoint Energy's Second Quarter 2025 Earnings Conference Call with senior management. [Operator Instructions] There will be a question-and-answer session after management's remarks. [Operator Instructions] I will now turn the call over to Ben Vallejo, Director of Investor Relations. Mr. Vallejo? Ben Vall

Good morning, and welcome to CenterPoint's Q2 2025 Earnings Conference Call. Jason Wells, our CEO; and Chris Foster, our CFO, will discuss the company's second quarter results. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are currently 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-Q and other SEC filings as well as our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statement. We reported diluted earnings per share of $0.30 for the second quarter of 2025 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 the call over to Jason.

Thank you, Ben, and good morning, everyone. On today's call, I'd like to address 4 key areas of focus. First, I will touch on our second quarter financial results. Second, I'll provide an update on the strong growth that our Houston Electric Service territory continues to experience fueled by a diverse set of economic drivers. Third, I'll touch on our recent announcement to efficiently recycle proceeds through the proposed sale of our Ohio gas LDC. And lastly, I'll discuss today's announced $500 million increase to our capital investment plan, which will be deployed this year. Today's added customer-driven investments represent our third capital increase this year, now totaling $5.5 billion. Importantly, these increases to our capital investment plans will be funded without the issuance of incremental common equity. Now starting with our second quarter financial results. This morning, we announced non-GAAP EPS of $0.29 for the second quarter. Combined with our reported first quarter non-GAAP EPS, we are approximately 46% of the weight of the midpoint of our full year earnings guidance range of $1.74 to $1.76. This quarter's earnings are in line with our expectations for the first half of 2025. As we discussed on our first quarter call, we anticipated earning 40% to 50% of the full year 2025 non-GAAP EPS guidance in the first half of this year. In short, we are right on track. As such, we are reaffirming our 2025 non-GAAP EPS guidance range of $1.74 to $1.76 which equates to 8% earnings growth at the midpoint from our delivered 2024 non-GAAP EPS of $1.62. Over the long term, we continue to expect a non-GAAP EPS at the mid- to high end of our 6% to 8% range annually through 2030. We also expect to grow dividends per share in line with the earnings growth over the same period. Now I want to provide an update on our strong load growth outlook for the Houston Electric service territory, which continues to be catalyzed by a discrete and diverse set of economic drivers. Over the previous 2 quarters, we have shared the drivers of the substantial growth opportunities ahead. By 2031 alone, we expect a forecasted peak load increase of 10 gigawatts which represents a nearly 50% increase in peak demand on our system over the next 6 years. We have strong conviction in this forecast as we've made conservative assumptions related to the projects and our low interconnection queue. Notably, since our first quarter call, our load interconnection queue has grown by 6 gigawatts or more than 12%. What differentiates this potential increase is that it continues to be propelled by a diverse set of drivers, including data centers, advanced manufacturing, energy development and energy exports. Together with the 7 gigawatt increase we discussed in our first quarter call, this additional 6 gigawatts of growth results in a cumulative increase of over 30% to what we included in our ERCOT load filing we made earlier this year. At this time, we are not formally increasing our load forecast above the nearly 50% growth target by the end of the decade. However, these positive trends in customer demand only serve to reinforce our confidence in our growth forecasts. Most importantly, this growth is already beginning to materialize when observing year-over-year sales trends. Through the first half of this year, weather-normalized commercial and industrial sales were up 8% when compared to the first half of 2024. The growth we're currently experiencing in addition to the significant growth we are forecasting requires the construction and regional build-out of our electric transmission system that we will begin executing on in the near term. To fund this exponential growth in our Houston Electric service territory, we have continued to evaluate the most efficient forms of financing. This, along with the timing needs for growth-driven capital ultimately led to our announcement of our Ohio Gas LDC sales process kick off during the quarter. I would like to share some additional color around our decision to efficiently recycle capital through the proposed sale of our Ohio Gas LDC. I want to begin by saying that these decisions are never easy. We value this constructive jurisdiction and our great employees that execute and deliver for our Ohio gas customers every day. However, as our Houston Electric and Texas Gas jurisdictions continue to experience increased and accelerated growth, we have decided to shift our strategic focus even more towards Texas. In connection with the shift, we believe the proposed sale of our Ohio Gas business makes sense at this time, principally for 3 reasons. First, the sale will allow us to efficiently recycle cash proceeds to support our continually increasing investment programs. We have previously demonstrated our ability to monetize assets above book value and efficiently reinvest those funds back into our regulated business. This transaction is yet another opportunity that we believe we can execute to finance our increasing capital needs efficiently. Second, we anticipate that the sale of the Ohio Gas business will allow us to reprioritize nearly $1 billion of capital expenditures through 2030 to support our Texas jurisdictions. This reprioritization of $1 billion will help support the ongoing set of customer and community needs in Texas. In addition, we anticipate that the investing of these proceeds will result in a higher consolidated cash return in the future. We believe its improved cash flow profile will allow us to more efficiently self-fund our future investments and potentially allow us to rely less on common equity issuances. Third is we look to optimize our portfolio, it makes sense for us to focus our time and resources in jurisdictions where we have both gas and electric service or we have a larger customer presence. We anticipate that the recycling of cash proceeds from the sale of our Ohio Gas business. In addition to this reallocation of capital will result in Texas constituting over 70% of our portfolio after the close of the sale. The proposed sale of our Ohio Gas business and our derisked equity needs through 2027, which Chris will touch on in his section, has allowed us to increase our capital investment plan by $5.5 billion since the beginning of this year. All of these increases are anticipated to be funding without incremental common equity. In addition, we believe any further increases to our capital plan this year can be achieved without the need for additional common equity. I now want to discuss the $500 million increase to our 2025 capital investment plan, which, as I mentioned, is on top of the $5 billion of increases already announced this year. The $500 million increase announced today will be invested in 2025 as we continue to make targeted system enhancements for the benefit of our customers. This increased capital investment will also help partially offset the loss of Ohio investments upon the closing of the sale. As I discussed earlier, our forecasted low growth will necessitate significant investments in our transmission system in both the near and longer term. To address these forecasted needs, we are taking a leading role with peer utilities in ERCOT to advance the key planning studies and proposed projects that will help us enable the tremendous economic development in the eastern part of Texas. Through our own work with ERCOT's regional planning group, in addition to our own internal work, we have identified approximately 200 projects that we will look to execute over the next 10 years. We believe we are well positioned to execute these projects over this relatively short period of time. Unlike many other transmission systems, we have a significant number of brownfield opportunities where existing transmission structures are already in place reducing construction costs and increasing speed to energization. Although we've already significantly increased our capital investment plan this year with our plan now at $53 billion through 2030. We have 3 significant investment drivers outside of electric transmission that continue to reinforce an upward bias to our capital investment plan. The first of these opportunities is related to furthering our resiliency-based work as we aspire to be the most resilient coastal grid in the country. Over the last 12 months, we've made targeted assist improvements through our Greater Houston Resiliency initiative, which have already yielded improved outcomes for our customers. Notably, through May of this year, the average duration of outages, our Houston Electric customers experience has gone down nearly half as compared to the comparable period in 2024. This is a significant improvement and we are proud of our teams and our field crews focus on executing on our system automation strategy and pole replacement program at such an accelerated pace. However, we know there's still more work to be done. With this in mind, we still see incremental resiliency capital investment opportunities through the end of the decade that go well beyond our current system resiliency plan, which will likely run through 2028. Chris will discuss the progress we've made on our current related regulatory filings in this section. The second driver of incremental capital investments I want to highlight is related to the revitalization of downtown Houston, which our plan does not currently include. This work will require substantial investments to support both growth and modernization of our underground electric system and our substations that support the downtown area as the city is in the process of undertaking a very exciting set of infrastructure plans to dramatically change the downtown landscape. The third driver of potential incremental investments is in our Texas Gas service territory. that we've previously mentioned on our first quarter call. This relates to the opportunity to build a high-pressure distribution system in our Texas gas business, which currently relies on a series of contracts that are more costly for customers to move our owned gas throughout the greater Houston region. We're excited to share more about these capital investment opportunities later in the third quarter when we plan to provide a new comprehensive 10-year plan. We continue to believe that we have one of the most tangible long-term growth plans in the industry. The growth of our businesses have continued to experience has resulted in $5.5 billion of increased capital investment so far this year, including the $500 million increase we announced this quarter. Even with these announced increases, we believe there is still further upside to our capital investment plan that runs through 2030. Our ability to efficiently fund our plan has allowed us to take our capital investment plan from $47.5 billion at the end of 2024 to $53 billion without introducing additional common equity. In addition, we have derisked our modest common equity needs through 2027 through executing a forward sale of our common equity earlier in the second quarter. We believe we are well positioned with tailwinds exceeding headwinds, and we are excited to share a refreshed comprehensive 10-year plan by the end of the third quarter of this year. And with that, I'll hand it over to Chris.

Thanks, Jason. This morning, I plan to cover 4 areas of focus. First, the details of our second quarter results Second, I'll touch on our regulatory progress through the first half of this year, including our recently announced proposed settlement in our Ohio gas rate case. Third, I'll discuss our progress on the execution of our 2025 capital investment plan, including our $500 million increase, bringing our 10-year plan to $53 billion, which we will fund without issuing incremental common equity. And finally, I'll provide an update on where we ended the second quarter with respect to the balance sheet and how we're thinking about the future financing of our capital investments in light of the proposed sale of our Ohio Gas LDC. Let's now move to the financial results shown on Slide 8. On a GAAP EPS basis, we reported $0.30 for the second quarter of 2025. On a non-GAAP basis, we reported $0.29 for the second quarter of 2025 compared to $0.36 in the second quarter of 2024. Our non- GAAP EPS results for the second quarter removed the impacts from the sale of the Louisiana and Mississippi Gas LDCs. As Jason alluded to and as we discussed on our first quarter earnings call, we anticipated a more back-weighted shape to our 2025 earnings profile this year. As a reminder, this earnings profile is primarily driven by the different cadence of capital recovery as we were unable to access certain interim capital recovery mechanisms during our various rate case proceedings in the first half of the year. Slide 9 depicts our expectations for the remainder of the year. Now taking a closer look at the quarter. Growth in rate recovery when netted with depreciation and other taxes was an unfavorable variance of $0.01 when compared to the same quarter last year. Again, this is largely driven by the off cadence filings of our interim capital tracker mechanisms. Weather and usage were a favorable $0.01 when compared to the comparable quarter of 2024. The largest impact here was from our Houston Electric service territory, which has experienced a warmer start to 2025, and as compared to slightly milder weather in the second quarter of 2024. O&M was $0.03 unfavorable when compared to the second quarter of 2024. Like the first quarter, this unfavorable variance was largely driven by timing of vegetation management and other activities, which we accelerated to be ready ahead of the official start of the 2025 hurricane season. With much of this work moved into the first half of the year as compared to a more ratable work schedule in prior years, we anticipate this unfavorability to reverse over the second half of the year. In addition, interest expense and financing costs were $0.03 unfavorable when compared to the second quarter of 2024. These $0.03 were primarily driven by the increased debt issuances since the second quarter of last year, some of which were slightly higher coupon junior subordinated notes, given our focus on the balance sheet and emphasis on credit supportive instruments. Lastly, as you may recall, last year, we issued $500 million of common equity. $250 million of these issuances were a pull forward from 2025 as we sought to strengthen our balance sheet after our storm restoration. These equity issuances resulted in an unfavorable variance of $0.01 quarter-over-quarter. Next, I'll briefly touch on our regulatory progress, starting with our Ohio Gas rate case settlement. As many of you may have seen 2 weeks ago, we reached a proposed settlement in our Ohio gas rate case. The settlement agreement includes a revenue requirement increase of $59.6 million based on an equity ratio of 52.9% and return on equity of 9.85%. We began hearing earlier this week and anticipate those hearings continuing through the end of next week. We look forward to continuing to work with stakeholders in this case to reach a reasonable outcome for all parties. Moving now to Houston Electric. I'll begin with our system resiliency plan filing where we recently reached an all-party settlement. The proposed settlement includes distribution system resiliency investments and spend of approximately $3.2 billion over the next 3 years. There are 3 key categories of investment included in this figure, an acceleration of our polar placement program, undergrounding with vulnerable areas of our system and automation and increased resiliency of distribution circuits and substations. In addition to those investments, the proposed settlement also includes certain non-investment activities for which we will receive a deferral related to the spend. Most notably, the proposed settlement provides for $140 million of vegetation management, which will allow us to defer costs associated with our industry-leading plan to reduce our trim cycle from 5 years to 3 years for the benefit of our customers. The proposed $3.2 billion included in the settlement represents a reduction of approximately $2.5 billion from the $5.75 billion included in our January filing. The primary driver of this reduction is the removal of transmission-related investments we included in our filing. We thought it was important to include these investments in our initial filing to present a comprehensive picture of how we're approaching resiliency investments to improve outcomes for our customers. However, in settlement discussions, we agreed with stakeholders that these investments are better considered outside of the system residency plan process. To be clear, we still intend on executing this important transmission system hardening work. Over the last few years, we've made many investments to improve the backbone of the system by investing approximately $1 billion. With much of that work already completed, we anticipate fully achieving our initial hardening targets on our transmission system within the next 10 years. We want to thank all stakeholders for engaging in constructive discussions about the resiliency investments that will help improve outcomes for customers in the Greater Houston area. We anticipate the PUCT to vote on this proposed settlement agreement by the end of the third quarter. Next, I'll move to our 2 storm cost recovery filings starting with the Hurricane Beryl filing. Just this week, we started a set of mediated discussions with all parties to the case, and they are currently hearing scheduled on the cost recovery request at the end of this month. Moving to our process to recover costs associated with last year's May storms. As a reminder, we have fully settled this request and now have received an approved financing order. Our next step is we will seek to issue these bonds in the third quarter of this year. We will continue to work with all stakeholders in connection with the storm cost recovery filings in advance of the securitization of these costs, which is beneficial for our customers. Next, I'll touch on our capital investment plan execution through the second quarter and our positively revised capital plan through 2030, as shown here on Slide 10. As Jason mentioned, today, we are increasing our 2025 and 10-year capital investment plan by $500 million without anticipating any need for additional common equity. This represents our third capital plan increase this year. bringing our total 2025 increases to $5.5 billion with our total plan through 2030 now at $53 billion. And as Jason indicated, cumulatively, the $5.5 billion comes without any anticipated increases to our common equity guidance through 2030. As a reminder, our equity needs still stand at $2.75 billion through the end of the decade, of which over 1/3 has been derisked through our forward equity sales. Today's announced investment increase will help further support the accelerated economic growth investments that we continue to execute in our Texas Gas and electric service territories to move at pace for our customers. I want to be clear that even with the increases or announced this year, we continue to see strong tailwinds to support further enhancements to our capital investment plans. We are excited to aggregate all of these updates as well as provide others to give everyone a comprehensive update, a new 10-year plan later third quarter of this year. For the quarter, we are right on track to meet our positively revised 2025 capital investment target of $5.3 billion. Through the first half of 2025, we invested $2.4 billion of base work for the benefit of our customers and communities. Finally, I want to provide an overview of how we're thinking about the financing of our $5.5 billion of capital investment increases and touch on where our credit metrics are currently tracking. We continue to explore the most efficient forms of financing to fund the incredible growth our businesses continue to experience. During the quarter, we made significant strides towards both addressing and derisking our future equity financing plans. We did this by announcing the proposed sale of our Ohio gas LDC with the intent of recycling the proceeds back into our Texas businesses, executing additional forward sales under our ATM program, which totaled $165 million for the first half of the year and executing $920 million of a forward sale of common equity to be settled by the end of February 2027. As Jason highlighted, we have made a strategic decision to allocate more capital to our high-growth businesses in Texas and recycle capital through the proposed sale of our Ohio Gas LDC business. The proceeds from this transaction are intended to support the funding of the $5.5 billion increases we have already announced this year. With additional progress in our Ohio rate case proceeding, we anticipate having a transaction signed by the end of the year with the closing expected by the end of next year. I want to be clear that we view this transaction similarly to the others we have executed. This sale will not result in making a downward revision in our earnings guidance. Today's announced $500 million increase to the 2025 capital plan will help partially offset the investments we have made previously in our Ohio Gas business. In addition to the announcement related to our Ohio Gas business, we were able to derisk our planned equity issuances for 2026 and 2027 through forward sales of our common equity and with the execution of $165 million of forward sales under our ATM program and $920 million through our block transaction we have been able to satisfy our anticipated commodity equity needs for both '26 and 2027. Now moving to an update on our credit metrics. As of the end of the quarter, our trailing 12 adjusted FFO to debt ratio based on the Moody's rating methodology was 14.1%. And when removing transitory storm-related costs. Much like our historical profile, we anticipate our credit metrics to strengthen throughout the remainder of the year. As a reminder, we anticipate receiving nearly $400 million in securitization proceeds related to the May storms in the third quarter of this year. In addition, in light of the progress in the Hurricane Beryl storm securitization process I highlighted a moment ago, we expect to receive nearly $1.3 billion of proceeds by the end of the year or early next year. Also, as we mentioned on our first quarter call, with the bulk of our rate cases now complete, we anticipate a 5% improvement to our operating cash flow beginning next year. We expect this cash flow to allow us to more efficiently self-fund capital investments for the bit of customers. This same operating cash flow improvement helps fund today's $500 million announced increase without any anticipated need for incremental common equity. And although we are not formally changing our guide regarding incremental investments requiring funding with 50% equity and 50% debt. This new operating cash flow profile may provide financing flexibility to reduce that ratio in the future. With the anticipated receipt of the combined $1.7 billion of securitization proceeds, in addition to improved operating cash flow, we remain confident that we will exit 2025 with a 100 to 150 basis point cushion above our downgrade threshold without the need for common equity issuances. With the first half of 2025 in the books, we are right on plan to deliver our full year results. We are reaffirming our 2025 non-GAAP EPS guidance range of $1.74 to $1.76 which equates to 8% growth at the midpoint from our delivered 2024 non-GAAP EPS of $1.62. Over the long term, we continue to expect to grow non-GAAP EPS at the mid- to high end of the 6% to 8% range annually through 2030. We also expect to grow dividends per share in line with earnings growth over the same period of time. We look forward to the second half of 2025 and executing for the benefit of all stakeholders. And with that, I'll now turn the call over back to Jason.

Thank you, Chris. I'm proud of our team's continued execution over the past quarter and the results that put us firmly on track to deliver on our financial guidance this year. We are looking forward to sharing our 10-year plan refresh later this quarter. I believe that this refresh plan will reflect our confidence in our exciting growth prospects ahead and why we have such strong conviction that we have one of the most tangible long-term growth plans in the industry.

At this time, we will begin taking questions. [Operator Instructions] Our first question comes from Julien Dumoulin Smith from Jefferies.

Nicely done again. Maybe just kicking it off here. Just with Beryl, can you go back a little bit on just time line and expectations to close that out here? I mean it seems like you're coming to some finality here. And then secondly, just on the 6 gigawatts, the updated number. I mean, it's just not a trivial number to kind of update quarter-over- quarter here. Can you elaborate and elucidate a little bit further what exactly comprises and especially the time line, mean how front- end loaded can that be at this point, just especially as you continue to compound these kinds of numbers? And then I got a quick follow-up, if you don't mind.

Julian, how about I take the first piece with respect to the Beryl related cost recovery proceeding. We are on track at this point. In fact, this week, we had some mediated sessions with parties to see if we could seek potentially the potential for a settlement framework. The hearings are currently actually set publicly for next Thursday. So as you can imagine, we'd love to be able to make progress and ideally be in a situation where we could ideally push out those hearings if possible, reflecting progress in those discussions. So quite a bit of activity here in the near term.

Julien, this is Jason. Thanks for the other question on the interconnection load growth. The 6 gigawatts we referenced this quarter, as you said, is not trivial at all. What I think is really unique and what we try to highlight is the diverse set of drivers that are driving that increase. What I would say is probably about 2/3 of that increase relates to data center activity. The other 1/3, I would put more in the camp of advanced manufacturing, energy exports and life sciences. In terms of the demand or the timing of that demand, these customers are really looking for interconnections sort of wait '26, '27 and '28. So this is sort of relatively near term. I think thankfully, we've got excess capacity on our system. We've built our transmission system, our substations, where we can move quickly address these interconnection requests. And I think that is just creating a great set of conditions where we continue to see increases in the interconnection queue quarter after quarter. So we're looking to move quickly to address these new demands.

Excellent. And then if I may, just a quick question here on the adjustment for the quarter with the mobile gen here. How long do you expect that to remain a drag there? Just given the dynamics here on those assets over time? Just to understand the drag that you're currently booking here. How long is that going to remain the case in terms of a drag?

Yes. This is a reflection of the transaction we announced where we've effectively contributed these assets to San Antonio for free through no later than spring of '27, could be as early as fall of '26. And so we see a drag in earnings over that period of time. And then as we talked about, the market for these assets has doubled and we intend to remarket them as soon as they free up. So again, as early as fall of '26, no later than the spring of '27, these will flip to be a tailwind for the company.

Our next question comes from Nick Campanella from Barclays.

Question for the updates. Just a question on the capital. It seems like you're well positioned on the system to connect the 6 gigs right away. But you're highlighting a lot of other tailwinds that are not in the plan. And is this going to be more skewed towards the 10-year kind of plan? Or do you see a lot of this kind of falling into the 5-year plan? And then I just wanted to kind of clarify the comment of Chris at the end with the 50-50 funding. Do you still see the ability in the 5- year plan to fund with less equity?

Nick, and I appreciate the questions. Look, from a capital standpoint, I really think we were trying to emphasize 2 points here. I think there is an upward bias towards CapEx through the remainder of this decade. There is still opportunity based on the capital investment opportunities I outlined in our prepared remarks. The second point that we are trying to highlight and we'll be much clearer as we roll out our new 10-year plan is the longevity of the spend. We continue to see this capital investment opportunity drive significant capital investment well into the next decade. And so they're still ensured more opportunity here through the remainder of this decade and then extending well into the next.

Maybe if I could build on the second one, Nick, in short, what I was pointing to was that as we look to the third quarter update that we'd be providing in particular. And again, that's a third quarter update that would not be on our third quarter call, delinked from that in the calendar third quarter. We would be providing an update on how to think about how we're going to be funding growth CapEx going forward. I think what you saw today is that maybe a little preview of some improvements we've had in our focus on improving operating cash flows through legislative proposals and our rate cases. And so I think you can envision a situation we're able to update and improve from the current 50-50 equity debt profile that we provide. And with something to keep in mind, right, as we look at the $500 million that we rolled into the 2025 plan, we were still able to report today voted debt at 14.1%. So pleased with that outcome given historically, Q2 has been really our lowest quarter from a recovery pattern standpoint.

And Nick, if I could wrap kind of our 2 answers. In my prepared remarks, I alluded to one, sort of an upward bias in CapEx remainder of the decade and two, I do think we have the ability to fund incremental CapEx this decade without any additional common equity.

Okay. I appreciate that. And then just as we're getting into the later innings of this Beryl proceeding, the agencies are still on negative outlook. And just is there anything else that they're kind of communicating to you that looking for now that your metrics are starting to get back into that range?

I appreciate the question. It's certainly key. And I can't speak certainly on exactly on their behalf, but the nature of our conversations have been really around 2 areas of focus. The first have been the ability to effectively execute the underlying rates themselves. And so as you've seen in both of our Texas cases as well as Minnesota and Indiana, we've completed all of those. The second key area of focus has been the cost recovery filings themselves, both for the May storms or Derecho event as well as Beryl. We've now fully completed, as I mentioned, the Derecho related or may storms process. We'll be in a position to execute that securitization during the calendar third quarter. So we're definitely on track there. And I do believe that they are closely watching the Beryl outcome. And again, as I mentioned, I think where we are at this point is a place where we do see a path to have very constructive conversations here in the coming days. And so I think that could ideally position us well for their agencies -- agencies to revisit that time frame because really, the key step in the process is the cost recovery prudency step. After that, it's a very straightforward process for executing the financing order and then the securitization itself later this year.

Our next question comes from Jeremy Tonet from JPMorgan Securities.

Just a couple of quick ones for me. Has the finalization of [ SV6 ] impacted inbound interconnection interest in any fashion at this point?

No, I wouldn't say it's changed at all. The velocity of the interconnection requests, I do think that there are questions around where the cost allocation potential changes may go. But I think there are many other drivers that continue to support these load interconnection requests, so they continue at an accelerated pace.

Got it. And then was just wondering you talked a little bit about Houston revitalization work. And just wondering if you could expand a bit more, I guess, on how this aligns with city efforts, priorities here going forward?

Yes. No, thanks for the question. This is an exciting time for downtown Houston. This has been a project that's been in the works for decades. We've received the federal funding to effectively bury the interstate system that circles the effectively circles, the downtown area and isolate it from the rest of the Greater Houston region. By doing so, it frees up a significant portion of land that would be used to redevelop parks, more mixed-use space. It's just an incredibly exciting time. But with all of that construction work, it gives us an opportunity as the roads are torn up to replace the underground network here in the downtown -- there are a couple of substations that we've alluded to that will need to be moved to help facilitate some of this redevelopment effort. We will build those to a modern -- into our gas insulated substation design standard and so I just think it's an incredible time to be a partner with the city to help with what will be an exciting transformation of the downtown here in Houston.

Got it. Just a last quick one, if I could. If I think about all this CapEx coming into plan without equity, it seems like that will drive upward pressure to the CAGR here? Or are there any other components to the equation that I'm not appreciating at this point?

Yes, I'll take that question. And look, as we continue to reiterate, there's more tailwinds than headwinds here. We've constructive really resolved these rate cases. We've had thankfully some legislation that's helped reduce regulatory lag, which helps us more efficiently invest for the benefit of our customers. And look, we'll update what that means from an earnings guidance standpoint here later in this calendar quarter, but certainly more tailwinds than we have headwinds.

Our next question comes from Andrew Weisel from Scotiabank.

My first question, I just want to further elaborate on the Houston downtown project. I know it's a really big one that's been talked about for a long time. Seems like you're talking about it a bit more detailed and a bit more confidently today. Is there any reason for that? has it been progressing a bit more? And can you maybe talk a little bit more about timing and potential magnitude of when the spending might show up in the capital plan?

It is an exciting project that is continuing to come into greater focus and clarity. We -- the city made some commitments as it relates to some of the modifications to our convention center here. that has jumped started this project in terms of work that we need to do with 1 of the 2 substations. And so what I would say is work is beginning as we speak under this project. This is something that is going to be a multiyear effort. I think the bulk of this spend is really going to be through the remainder of this decade, some of that kind of early part of next, but think about this as a driver over, call it, the next 5, 6 years. The larger infrastructure project to bear this interstate system, is going to be much longer in nature, a multi-decade investment project for this region. But the work that we had to do upfront helps kind of enable the early part of that. So think of our work is sort of front- end loaded and over the next 5 years or so.

Okay. Great. That's helpful. Next question. You've mentioned this a couple of times we're saying additional increases to CapEx this year wouldn't need additional equity. Can you -- I mean, how high can that go? I know you're going to give the more detailed update later this quarter. But I mean, are you talking magnitude of $500 million like you did this quarter? Or are you talking $4 billion like you did a few months ago? I mean, can you give us some sizing of what is the comment like that's supposed to me?

I appreciate the question. Look, I think we were working hard to improve our operating cash flow profile, we feel confident, as Chris said, in some of the other activities underway, including the sale of the Ohio Gas business. And so that does give us flexibility, order of magnitude more than what we increased today. But maybe I'll just leave it at that. And we look forward to discussing it more later here in the third quarter.

Okay. Fair enough. We'll try our best to be patient. Last one. Apologies if I missed it, but what exactly was in the $500 million increase today? What is that spending going towards?

Sure, Andrew. You should think about it as dominated by us stepping into our electric transmission work starting this year, a little bit of system resiliency related investments and then a small amount of Texas Gas-related investments. Recall that we've also talked about over the long term, some potential opportunities there in the Texas Gas business for some stable infrastructure work here in the Greater Houston area.

Okay. So kind of more of the same?

Correct.

Our next question comes from Steve Fleishman from Wolfe Research.

I guess, just could you give us a sense of any timing on the gas LDC sale process and closing?

Sure, Steve. Generally speaking, we'd like to be in a position to be able to announce towards the end of this calendar year. putting us in a position to ideally if you just look at history of about a year later in a position to close. And so where we are at this point is we've just recently kicked off the process. As you know, our focus philosophically has been on, and we'll continue to have the focus here of not rebasing our earnings through any kind of capital asset recycling like this. We've had a strong amount of interest even in kicking off the process so far, which is a good thing. And maybe just one other thing I'd want to emphasize is flexibility. We want to be flexible for counter parties in terms of where their interest lies relative to where the expertise is they bring to kind of an operating a management team as we go. And so good progress so far, but all putting ourselves in a position to be able to announce more toward the end of this year.

Okay. And then one other area that you've talked in the past about as opportunities as data centers in Indiana. Is there anything to kind of update there?

Steve, we continue to have, I think, very productive conversations up in Indiana around a potential new data center demand. Look, as we stressed in previous calls, I think it's a really unique situation up there that is candidly, I think, very compelling for a number of these data centers, it's abundant, land, good access to water on our system, in particular, we have excess capacity available today, we're commissioning, as we speak, a simple cycle plant that has been designed and built to be converted to CCGT if needed. And so there's a clear pathway to significant electric capacity. So it continues to be a series of active discussions in that region as well.

Our next question comes from Bill Appicelli from UBS.

Just one question for me to clarify on the equity again. So the base plan, the $2.75 billion of equity or equity-like then plus the Ohio asset sale that you've highlighted, right? And then I think what you're communicating here is that additional capital beyond that the target would be then to not have to issue additional equity. Is that correct?

You've got it right, Bill. Maybe if I could just kind of step through it briefly. The simple way to think about it is that $2.75 billion of what we've indicated is we were front-footed on equity, and so we've already derisked 1/3 of that, right? So you can go ahead and reduce by that amount. And then what Jason was emphasizing is we do see even in the period now between now and the end of the decade, an additional upward bias CapEx that we could fund without incremental common equity.

Okay. And would that contemplate additional asset sales beyond Ohio?

It would not. And so maybe if I can touch on that for you. If you look at the Ohio Gas LDC sale, it was specifically intended to help us fund what is now a $5.5 billion total update we provided this year. So you combine that with the operating cash flow improvement which really came through the mix of legislative and regulatory outcomes, and it certainly helps our operating cash flow focus. Maybe just one simple example of that is if you looked at some -- Indiana, for example, as you know, we have to basically hold back about 20% of our CapEx while we're out of our rate case. While we were out of a rate case for nearly 15 years there, right? So you can imagine now we've been able to catch up there. And maybe that's just one discrete example to help you see kind of how the operating cash flows have improved here.

Our next question comes from Anthony Crowdell from Mizuho.

Maybe a third cracker, I want to jump on Bill's question. Have you quantified what that like optionality is for how much more additional CapEx you could absorb without having to either do like Bill mentioned, an asset sale or additional equity like by the end of the decade. What's that balance sheet capacity that you have there?

Anthony, it's Jason. I appreciate the other question. but we're not going to get any more specific. As I indicated, we're talking about something north of the CapEx increase that we announced today. It's north of $500 million. After that, we haven't quantified the capacity and so it's just part of the excitement that's building for the planned refresh that we intend to provide here later in the quarter.

Great. And then, I guess, on operating cash flow, you just mentioned there's a 5%, I missed my question, is it a 5% growth of operating cash flow or it's a 5% improvement that the total operating cash flow growth is greater than the earnings per share growth?

It's a 5% improvement in operating cash flows. So the actual operating cash flows increased by 300 basis points. which equates to a 5% increase in operating cash flows.

Great. And then just lastly, you guys are very clear on the tough decision of selling Ohio and focusing where you have greater customers or also maybe greater growth. But how do you balance that with maybe sicker equity layers and better ROEs. Like -- and I guess it's a hard balance. I'm wondering if you maybe could shed some light on that? Ohio did provide maybe thicker equity layers I think I forgot the settled return, I think it was like [ 97 ] or something like for other jurisdictions maybe greater growth, but lower equity ratios?

We take a number of factors into it. From a financial standpoint, as we stressed here, it's an incredible business, but we see the recycling of these proceeds to enhance the earned cash returns the consolidated enterprise. So you might look at just the earned or the allowed returns or the authorized equity ratios. But importantly, it's as much an interest to improve kind of earn cash returns, and we see the opportunity of recycling fees, the proceeds from this asset sale and improving the overall consolidated earned cash return profile. So a number of different financial metrics we're looking at and then it comes down to focus as well. It's an incredible jurisdiction. We have the privilege to serve up there, but with so much growth here, it helps focusing management's attention on this exponential growth that we've been talking about in the Greater Houston region. So a number of different factors financially, though, I wouldn't just concentrate on a difference between the authorized return on equity or equity layer.

Great. And will we see September? Are we going to be virtual in September? Any clarity on like early September, late anything like that?

Anthony, we're still working on exactly how to do it. I think at this stage, we would intend to come to the East Coast.

Our last question comes from Paul Fremont from Ladenburg Thalmann & Co.

Congratulations on a really strong quarter. I guess my first question really is a follow-up of Jeremy's earlier question. With all of the spending your plan is to update your EPS guidance later in the year? Is that the takeaway there?

We will provide a full plan refresh. So the extension of that 10-year CapEx planned in the middle of the next decade. And then 1 of the resulting obviously, impacts from that will be a discussion around the earnings power of the company. So it will be a comprehensive financial update, CapEx, financing, earnings, all of it here at the end of the calendar third quarter.

And then given sort of the large increases that we've seen in your spending plan between now and the third quarter, would you expect to provide any type of an update of your '25 through '29 spending broken down by Houston Electric, SIGECO and your gas operations?

Yes. As part of this plan refresh, we plan to provide, obviously, an update over the full 10 years, so kind of maybe the -- through the end of this decade plus the initiation of the next 5 years into the 2030s and then to your point, sufficient detail by operating company to help understand sort of the growth in each of those jurisdictions. So yes, we'll provide a pretty significant financial update around all of those elements.

Yes. But I'm talking like between now and the third quarter update that you're talking about any additional breakout of the 5 years under sort of the existing numbers?

I wouldn't anticipate anything between now and the plan refresh.

And then a couple of, I guess, housecleaning questions. The rate base for the Ohio subsidiary that you're selling?

Sure, Paul. That's $1.5 billion as of the end of last year.

And then -- and the tax base of that of the Ohio LDC?

Obviously, at this point, reviewing what the tax implications would be there for any transaction. So up to get into more detail today.

No. I think you should assume that there is opportunity outside the existing plan for the large project that we've referenced in Houston seen from the first quarter, right, in your 10-year plan?

that would allow us to have high-pressure distribution lines that circle the city over a long period of time. So there's only a small amount of that currently in plant at this stage, Paul.

Right. Okay. So that would be incremental and may show up in the next 10-year plan update?

Would anticipate that correct. Operator, with that final question, that will conclude our call for today.

This concludes the CenterPoint Energy's Second Quarter 2025 Earnings Conference Call. Thank you for your participation.