Jan 25, 2024
Operator
Hello, and welcome to the Xcel Energy 2023 Year End Earnings Conference Call. My name is Melissa and I would be your coordinator for today's events.
Please note this conference is being recorded and for the duration of the call, your lines will be in a listen-only mode. [Operator Instructions] Questions will only be taken from institutional investors.
Reporters can contact Media Relations with inquiries and individual investors and others can reach out to Investor Relations. I’ll now turn the call over to Paul Johnson Vice President, Treasurer and Investor Relations.
Please go ahead.
Paul Johnson
Good morning. Welcome to Xcel Energy's 2023 fourth quarter earnings call.
Joining me today are Bob Frenzel, Chairman, President, 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 questions if needed.
This morning we will review our 2023 results and highlights, share recent business and regulatory updates and provide updates on our long-term growth plans. Slides that accompany today's call are available on our website.
As a reminder some of the 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 our SEC filings.
Today we'll discuss certain metrics that are non-GAAP measures. Information on the comparable GAAP measures and reconciliations are included in our earnings release.
In the fourth quarter Xcel implemented several work force actions to streamline the organization, ensure resources that align the business and customer needs to ensure our long-term success. Xcel initiated a voluntary retirement program under which 400 non-bargaining employees retired.
In addition we eliminated 150 non-bargaining positions. As a result, we recorded a workforce reduction expense of $72 million or $0.09 per share in the fourth quarter of 2023.
Also in 2023, we recorded a charge of $35 million or $0.05 per share related to a legal dispute between CORE and Xcel Energy regarding prior year operations at the Comanche 3 coal plant. Given the non-recurring nature of these items, both have been excluded from ongoing earnings.
As a result, our GAAP earnings were $3.21 per share, while ongoing earnings which exclude these non-recurring charges were $3.35 per share. All further discussion in this earnings call will focus on ongoing earnings.
For more information on this please view disclosures on our earnings release. With that, I will turn the call over to Bob.
Bob Frenzel
Thanks Paul and good morning everybody. We had another successful year at Xcel Energy continuing to provide our customers with safe, clean, reliable and affordable energy while delivering operational and financial performance.
In 2023, we executed on the larger capital program in Xcel Energy history investing approximately $6 billion to improve resiliency and enabling clean energy for our customers, while delivering economic growth and vitality for our communities. Our investments and operations enabled ongoing earnings of $3.35 per share representing the 19th consecutive year of meeting or exceeding our earnings guidance.
Meeting our financial commitments is critical to maintaining a competitive cost of capital which benefits our customers as we access the capital markets to fund our operations. In December, we received approval for our groundbreaking clean energy portfolio with over 5800 megawatts of new generation resources.
This $4.8 billion of new generation which when coupled with the necessary transmission represents almost an $8 billion worth of commitments in Colorado to deliver a cleaner energy economy. I am proud of how our team is partnered with so many stakeholders to deliver on these achievements and as I would back on the year, we accomplished so many other great outcomes.
While the final values are – and our sales force improved and we believe we will be in the top quartile of US utilities for delivering reliable electricity to our customers. Across our wind fleet, we continue to deliver strong net capacity performance and exceeded our corporate availability target for the third consecutive year.
We navigated a very busy regulatory calendar resolving multiple rate cases and reached a pending settlement in our Texas Electric Rate Case. We fought our clean heat plan in Colorado and natural gas innovation plan in Minnesota providing a framework in both of those cases to achieve net zero greenhouse gas emissions for our natural gas customers.
We’ve approved transportation electrification programs in the Mexico and in Wisconsin along with updated transportation plans pending commission approval in both Minnesota and Colorado. We have partners in over $1.5 billion of awards by the Department of Energy to support the Heartland Hydrogen Hub, while all fire and extreme weather resiliency, form energy long duration energy storage pilots and additional transmission as part of the MISO SPPC’s projects.
These trends will lower the cost of these clean energy and resiliency projects for our customers. In 2023 we signed agreements for datacenters with Meta in Minnesota and QTS in Colorado.
Datacenter and AI-driven demand continue to be a load driver on our system with several gigawatts in the pipeline across our footprint. In Minnesota, we received approvals for an additional 215 megawatts of solar and our 10 megawatt 100 hour form energy battery pilot both in our retiring Sherco coal facility.
We have active RFPs for over 2000 megawatts of renewable resources across our operating companies which we expect resolution on later this year. And we have also filed resource plans in our SPS company which could add an additional 5000 to 10,000 megawatts to our systems by 2030.
In December, we retired unit 2 at our Sherco coal facility while continuing the trend of no personnel layoffs at our retiring coal facilities over the past 15 years. We reduced carbon emissions for the electric utility by 53% as compared to a 2005 baseline on track with our goals for 2030 and 2050.
All the while our customer bills remains amongst the lowest in the country. Over the past five years, the average Xcel Energy residential, electric and natural gas bills are 28% and 14% below the national average respective.
In the over the last ten years, we kept our annual residential electric and natural gas bill increases to 1.8% and 1.1% respectively, well below the rate of inflation. We are actively involved in our communities, as our employees, contractors and retirees provided more than $11 million and volunteered over 40,000 hours to support shareable organizations across our footprint.
We initiated 18 economic development projects for our communities which are projected to create more than $2.4 billion in capital investments and 1400 jobs. For the seventh consecutive year, we received the top score from the Human Rights Campaign Foundation’s Corporate Equality Index, the nation’s four most benchmarking survey measuring corporate policies and practices related to LGBTG plus workplace equality.
And finally, we received several other recognitions including being named a top military employer by multiple organizations and one of the world’s most admired companies by Fortune Magazine. We are proud of these achievements which reflect operational excellence and strong policy alignment allowing Xcel Energy to provide a valuable product with significant benefits to our customers, our communities, our employees and our shareholders.
With that, I’ll turn it over to Brian.
Brian Van Abel
Thanks, Bob and good morning everyone. For the full year 2023, we had ongoing earnings of $3.35 per share compared to $3.17 per share in 2022.
The most significant earnings drivers for the quarter include the following. Higher electric and natural gas margins increased earnings by $0.10 per share which reflects $0.10 of unfavorable weather as compared to last year.
Lower O&M expenses increased earnings by $0.06 per share which reflects the impact of cost containment actions. Lower conservation and DSM expenses increased earnings by $0.06 per share, which is largely offset in lower margins.
Higher other income increased earnings by $0.05 per share, primarily due to rabbi trust performance, which is largely offset in O&M expenses. Lower other taxes primarily property taxes increased earnings by $0.04 per share.
In addition other items combined to increase earnings by $0.06 per share. Offsetting these positive drivers, higher interest charges, which decreased earnings by $0.14 per share driven by rising interest rates and increased debt levels to fund capital investments and higher depreciation and amortization expense which has increased earnings by $0.05 per share reflecting our capital investment program.
Turning to sales. Full year weather-adjusted electric sales increased by 1%, consistent with our guidance assumptions.
For 2024, expect electric sales to increase by 2% to 3%. Shifting to expenses, O&M decreased $47 million or approximately 2% for the year.
This is consistent with our annual guidance and reflects management actions to offset inflation and other challenges we faced during the year. During the fourth quarter, we also made constructive progress in several rate case proceedings.
In December, we filed the settlement in our Texas Electric Rate Case, which reflects a rate increase of $65 million in acceleration of the Tolk depreciation life to 2028 and an ROE of 9.995% and equity ratio of 54.5% for AFUDC purposes. The commission decision is anticipated in the first quarter of 2024.
In November, Wisconsin Commission approved an electric rate increase of $1 million and a natural gas increase of $5 million based on an ROE of 9.8% in the equity ratio of 52.5%. The decision reflects adjustments for our Residential Affordability Program, updated fuel and purchase power cost and other items, which are earnings neutral.
Rates are effective January 2024. In November, we filed the Minnesota natural gas rate case requesting a $59 million rate increase based on an ROE of 10.2%, an equity ratio of 52.5% in forecast test year.
In December, the Commission approved our requests for interim rates of $51 million subject to refund starting this January. Final decision is expected later this year.
As far as future filings, we plan to file a Colorado Natural Gas case in the next week or so. In addition, we also anticipate filing a revised wildfire mitigation plan in Colorado in the first half of 2024.
Updating our progress on production tax for transferability we executed multiple contracts in 2023 totaling $400 million. We anticipate executing $500 million of PPC sales in 2024.
Transferability reduces near term funding needs and most importantly lowers the cost of our renewable energy projects to our customers. Moving to our capital forecast, we’ve updated our five year capital plans for the decision in the Colorado Resource Plan, which now reflects an investment of $39 billion.
This base capital plan supports investments to renewable generation, transmission to deliver the clean energy and customer-facing investments for a reliable and resilient advanced grid. The base plan results in an annual rate base growth of approximately 9%.
Not included in our base plan is approximately $5 billion for renewable and firm capacity associated with RFPs and NSP, and SPS and future filings in Colorado. We’ve updated our base financing plans which reflects the incremental debt and equity financing needs for these investments.
Please note that the guidance assumptions in our earnings release have also been updated to reflect changes to the capital forecast for this year. As a reminder, we anticipate any incremental capital investment will be funded by approximately 4% equity.
It is important to recognize that we’ve always maintained 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. Maintaining solid credit metrics and favorable access to capital markers are critical to fund our clean energy transition, maintain a competitive cost of capital and keep customer bills low especially in a higher interest rate environment.
Finally, we remain committed to our long-term EPS growth objective of 5% to 7%, which we believe is conservative. We now expect to deliver earnings at or above the top end of the range in 2025 starting in 2025.
In addition we will rebase future annual guidance of actual results. As a result of the significant capital investment opportunities and equity funding needs we now expect to grow the divided at the low end of our current 5% to 7% dividend growth range with a target payout ratio of 50% to 60%.
This will reduce our equity financing needs over time, lower financing risk and give us even more dry powder and financial flexibility in the future. Now I will conclude with a brief update on the Marshall Wildfire Litigation.
This statutory limitation’s ended in December and as expected we saw a significant increases in the number of claims. As of now, we are aware of 298 lawsuits with approximately 4,000 claims.
In early February, there will be a hearing at which time a schedule maybe determined. We believe the trial will likely begin in 2025.
With that, I will wrap up with a quick summary. We are executing on an ambitious investment plan for our customers to deliver clean, reliable energy.
That investment enable Xcel Energy to deliver 2023 ongoing earnings within our guidance range for 19th year in a row. For the 20th consecutive year, we increased our dividend to investors.
We resolved multiple rate cases and filed foundational plans for our natural gas utility to reach its net zero goals. We retired our Sherco Unit 2 coal plant early and reduced carbon emissions by 53% from 2005 levels.
We received approval for our groundbreaking portfolio of clean energy resources in Colorado. We’ve upgraded our base five year capital plan to $39 billion, which reflects 9% rate base growth and give additional capital backlog in all the jurisdictions, give us strong line of sight to achieving – to achieve earnings at or above the top end of our 5% to 7% long term EPS growth rate.
And finally, our electric and natural gas customers have some of the lowest bills in the country while continuing the safe and reliable service they expect from Xcel Energy. This concludes our prepared remarks.
Operator, we will now take questions.
Operator
Thank you. Our first question comes from Julien Dumoulin-Smith from Bank of America.
Please go ahead.
Julien Dumoulin-Smith
Hey guys. Nicely done.
Congratulations on a variety of different metrics here. But you guys have been already tracking above the midpoint of your five to seven and give the mid – rate base growing up, say 1.5% even with kind of incremental dilution, how do you think about that adding up, right?
I mean, I am going to put a back feel of it, how do you think about doing the math there if you will? And just setting expectations, obviously, every year might be slightly different year.
Bob Frenzel
Hey Julien. Good morning.
I would like to phrase doing the math. I think I might have heard that before.
Look, we are really excited about our investment profile over the next five years across our eight states, multiple asset categories, clean generation transmission, advanced grid, electric vehicles, everything in support of our customers. Obviously, the EPS growth rate follows the rate base growth with some amount of dilution for financing cost at the parent level.
The new updated capital plan is accretive. We expect during this five year period to be at or above the top end of our 5% to 7% range.
But we think 5 to 7 is a good long term growth rate for the company and so that’s our guidance right now.
Brian Van Abel
Yeah, Julien, I would just add that and that we do expect that’s a conservative growth rate and as I noted in my remarks, going forward, we will rebase off of actual earnings. So, important thing is note in our script and overall as Bob said, we are really excited about it.
We are excited about our opportunities and still for fuel in the clean energy transition. And I think we are one of the fastest transitioning utilities in the country and our electric bills are 28% below the national average.
So I think we are in a great place for our investors and our customers.
Julien Dumoulin-Smith
Yeah, I appreciate being able to rebase of the actions that certainly a sign of strength as you say. Now, maybe just to come back to the signing of equity here.
How do you think about that vis-à-vis the updated plan and updated needs and perhaps just to clarify this, this is the time being at least this year, no change in that 5% to 7% at least for the current plan here?
Bob Frenzel
Yes, Julien, no change and our guidance assumptions for this year is still 3.50 to 3.60. Now there is an increase in CapEx if you look kind of plan over plan this year.
But that is really back end loaded as we work through some of the regulatory approval processes. From an equity perspective, look we have said, we’ve been – we have talked about doing at least $500 million annually through our ATM and expect that ratable over the five years and that we do have some drip.
The amount is above the $1.5 billion above that and we will be opportunistic and we’ll look at if you think it kind of follows with how our incremental capital follows.
Julien Dumoulin-Smith
Got it. Excellent.
And then this commissioner, what’s your relationship? And maybe a little bit of a comment here on where we stand in Minnesota, if you will?
Bob Frenzel
Yeah, no, we’ve our longstanding relationship with the new commissioner comes out of the department and we’ve been working with him very proactively over years. So, we expect a continued strong relationship with the Minnesota commission.
Julien Dumoulin-Smith
Excellent. All right.
I leave it there guys. Thank you.
Bob Frenzel
Thanks.
Operator
Thank you very much. Our next question is from Jeremy Tonet with JPMorgan.
Please go ahead.
Bob Frenzel
Morning, Jeremy.
Unidentified Analyst
Hi, good morning. [Indiscernible] on for Jeremey.
Can you hear me?
Bob Frenzel
Yes we can.
Unidentified Analyst
Great. Thank you.
Just to hear the last point on equity purchase opportunistic in terms of timing, could you speak a little bit more in terms of format of how you might address that, I guess the gap from the ATM to the total needs? Anything on the table at this point or any guardrail for that?
Bob Frenzel
No the we are a very plain vanilla way we finance our company. So kind of the base case to be is a block issuance.
So you can obviously look at doing a four something we would look at mandatory diverts with our base case is just doing blocks above the level that we feel comfortable within the ATM.
Unidentified Analyst
Understood. Very helpful.
And then, look at high level in terms of the O&M outlook and then, parsing that relative to the workforce reduction announcements. Could you speak a little bit more to the savings there over the near to medium term?
How that factors into your overall O&M trajectory? And how you are speaking up out that O&M outlook I guess over the long-term as well relative to the work you’ve accomplished over the past few years?
Bob Frenzel
Yeah, let me hit the workforce reduction question first and I’ll transition to the longer term O&M outlook for us. I think from a workforce reduction perspective, us like everyone else faced some significant cost challenges and pressures over the past few years and so, as Paul said, we undertook that to streamline the organization.
And in terms of some of our resources aligned with our customer needs are in our growth opportunity. So, as Paul said, approximately 400 employees through that workforce voluntary retirement program and another 150 positions were eliminated.
So that we look forward that generates approximately 2% O&M savings on a runrate basis. But we will look to reinvest some of that as I said into the growth areas of the company as we look to support our customer needs.
So, but overall, sets us up into 2024 that that is included and incorporated into our 2024 guidance. Now as I think about 2024 guidance is we are up 1% to 2% relative to 2023 but it’s really flat to 2022 when you look what happened in 2023.
Now, longer term, you asked about kind of what our longer term expectations are. We’ve been managing our O&M with a laser focus on operational efficiency.
I think you could look in our IR deck from Q4, one of three utilities that have O&M flatter down since 2015 on the electric operation side. So, somewhat we are really proud of and while we look longer term we have some tailwinds of coal plant shutdowns.
We are shutting down a coal plant roughly a coal unit roughly a year. We spend a lot of time on technology and looking at how we can leverage technology in our operations in the corporate areas.
And then, I think most importantly, we haven’t talked about this that much as we launched something that we call One Xcel Energy Lay which is our continuous improvement engine. We deployed it last year.
So we are in the year two of it really focused on the lean principles being a transformation engine that is working at waste reduction and waste elimination and so that’s something we are putting a lot of effort and focus on. That team reports directly to me.
So I am very involved in it. So, we think longer term, our goal is to absorb inflation.
Absorb the – call it, areas we need to invest in from a growth perspective and maintain O&M roughly flat and then through that we could keep our customer bills low for the long term. So we are pretty excited about it.
Obviously, it’s not easy but something which we are spending a lot of time on. So I appreciate the question.
Unidentified Analyst
Great. Thanks for the color.
Operator
Thank you. Our next question is from Durgesh Chopra with Evercore ISI.
Please go ahead.
Durgesh Chopra
Hi good morning. Congrats.
Bob Frenzel
Hey.
Durgesh Chopra
Hey, good morning, Bob. Congrats on a solid quarter here to you as well as Brian and the rest of the team.
Hey, just I thought that dividend trajectory change was interesting. You are announcing the low end of the 5% to 7%, because you have high growth rate.
Maybe just talk through your thinking there. You are kind of going faster so that gives you more flexibility in the financing side.
Just a little bit more color there would be helpful.
Brian Van Abel
Yeah, absolutely and good morning, Durgesh. No, as we look at it, given our significant growth in our base plan how we just added the $5 billion of capital to it.
And the fact that we are guiding to the top end or above our conservative 5% to 7% EPS growth. We thought it was prudent and the right decision to lower our dividend growth still within our dividend growth of 5% to 7%.
But as we think over the long term, that helped us to reduce the equity we needed for this $5 billion of capital. But even longer term when you look at the compounding impact of our lower dividend with significantly high capital needs that it’s feels like the prudent decision.
It gives us longer term financial flexibility and dry powder and reduces financing risk over the long term. So, we feel really good about.
We feel really good. But we have a very good total shareholder current proposition for our investors and we’ll continue to – we expect to deliver here in the newer form.
Durgesh Chopra
Got it. And Brian, just, as you - there is obviously a ton of CapEx opportunity.
You outlined $5 billion additional CapEx. Do you expect is that 5% the floor or could you – could the dividend go before they are lowered and in case you have – you are adding more capital to the plan?
Brian Van Abel
No, Durgesh, I think we will assess that every time that we have a significant chunk of capital or update our plans as we do regularly. We obviously evaluate all parts of our total shareholder return.
Durgesh Chopra
That’s fair. Okay.
And then just one last one for me is just thank you for the color on Marshall fire the additional complaints and other things. And maybe just what are the key steps for us to watch there and when could we expect updates?
Bob Frenzel
Hey this is actually, Bob. Thanks for the support as always.
With the fire, I think the next sort of milestone I’d say is we have a sort of trial planning period – meeting first week of February given the change in cases and plaintiffs. That schedule got moved back a little bit to give new claimants more time.
We’ll get a better trial calendar as Brian said, we expect the trial some time in 2025. After that we go into discovery.
There is not much to do past that. So we will update everybody when we know more.
But there is not much to say other than the facts remain the same on the case and while calendar probably early next month.
Durgesh Chopra
Thank you so much.
Operator
Thank you. Our next question is from Steve Fleishman with Wolfe Research.
Please go ahead.
Steve Fleishman
Yeah, hi. Good morning everyone.
So, I just wanted to clarify the closure growth rate commentary is, is that based on the base plan – the updated base plan?
Bob Frenzel
Yes, Steve, the updated $39 billion plan. Yes.
Steve Fleishman
Okay. And on the – could you just talk to the PIMs in Colorado and just how you are feeling about being able to manage any – I guess, it could be good or bad, but just any risks exposure from that?
Bob Frenzel
Yes certainly, Steve and further folks had haven’t been close to that proceeding. We really have two PIMs which the commission asked to propose a couple PIMs.
So we have a cost to construct PIM think of that just as a capital, what’s our budget for the project has been. And we’ve operated under those types of PIMs for a long time whether at Minnesota, Texas, New Mexico, we’d had those in Colorado.
So we propose the PIM. The commission modified it a little bit.
So it’s a plus or minus 5% in dead band. And then customers sharing savings and sharings was a penalty or incentive of above that 5%.
Overall work and flow was managing within that PIM. We feel like we put forward good budgets for our projects and then going in there.
We would be held to what we propose given those competitive process. So feel comfortable with that.
On the operational PIM, again it’s – the commission modified it. So we would generally adopted what we proposed.
That’s an overall – think of it LC OE PIM on a rolling three year average with a plus or minus 5% dead band and the first 5% to 10% above it’s – 80% of the cost are the savings to the customers, the company bears 20%. So when we look at it we view that’s very manageable and appreciative that the commission adopted the PIMs that we are the – our structure of the PIMs look forward.
So we look forward to working through the CPCS with the commission and then we have adjust transition planning coming up which is additional opportunities as we think about transitioning our generation fleet in Colorado.
Steve Fleishman
Okay. Great.
And then, lastly, just from Washington question. I guess, timeline if any on the nuclear PTC?
Your thoughts on the proposed hydrogen rules and what that means to your project and if you want to take up any thoughts on electing risk to your IRA?
Bob Frenzel
Steve, it’s Bob. The last one seems like a lot of time to talk about.
But I’ll probably pass on that fast. On the Washington in particular, the hydrogen perhaps in tax credit, we were very active.
We’ve been very stalwart in our position that we believe that clean fuels and clean molecules are going to eat it as part of a broader cleaner energy economy. We felt that hydrogen was probably the most attractive molecule that we could produce in a clean and green way.
We are really proud that we are considered for a hydrogen hub in our upper Midwest proposal to Heartland hub. But I can tell you the 45, cash credit draft guidance out of the treasury was disappointing.
It doesn’t feel as if we are trying to support a hydrogen economy in the United States. It’s going to make it more expensive for our customers harder to develop a electrolyzer industry and an industrial basis in the country.
And we will slow or stall clean field deployments in the United States. We expect to make comments within the comment period.
We DEI to make comments. We expect that their customer to make comments.
So I think the treasury is going to have a lot to balance here. I mean restrict additionality in how are we matching.
It’s just going to make it more challenging to produce hydrogen at a cost competitive basis with other fuels. So, that’s kind of where we are on hydrogen and I think you asked about nuclear.
Our math, go ahead Brian.
Brian Van Abel
Yeah, I can just chime in on nuclear, right. So we said guidance here in Q2 is our current thinking.
Obviously the guidance for what’s important is how do you calculate the gross receipts meaning how do you calculate the value. We advocated for these L&Ps.
Obviously given that we are in RTO. Certainly if you look at our earnings guidance we have not incorporated that into our ETR.
But when we look at kind of the forward curve, we would expect north of $100 million benefit for our customers. So, something that we have provided our comments and hopeful that treasury comes out in favor because it’s a great benefit for our customers.
So, looking for that in Q2. Just to follow-up on Bob’s comments about hydrogen, I mean, disappointing.
The analysis I’ve seen is green hydrogen now structurally more expensive than blue hydrogen for the next decade. And so it’s significantly more expensive than grey hydrogen and so it will depress the development of the green hydrogen market.
And so hopeful we get some changes through the final rules.
Steve Fleishman
Thanks. Thank you.
Operator
Thank you. Our next question is from Anthony Crowdell with Mizuho.
Please go ahead.
Anthony Crowdell
Good morning, Bob. Good morning, Brian, just hopefully two quick ones if I could follow-up on Steve and Julien’s math class question.
When you think of the 5% to 7% you are at or above the high end and that’s all on the base capital, what would you cost you to get to 6% growth?
Brian Van Abel
I mean, at or above the high end implies that we are above 6% growth rate now. But I think your question, what will cost us to go to 6% to 8% if I can interpret it like we evaluated, we feel 5% to 7% is the right long-term growth rate.
It’s conservative and rebasing off of actual and so we are going to be at the top end or above is the right place to be long-term.
Anthony Crowdell
Great. And then, I think you mentioned your filing on Colorado wildfire mitigation plan later this year I believe.
Just could you give us a look into that? I mean is that also potential for additional capital – CapEx and then – or any changes in operation you are thinking once you make that filing.
Bob Frenzel
Hey Anthony, it’s Bob. Good to hear you this morning and thanks for the questions.
We are operating under an existing wildfire mitigation program in Colorado right now. And then I’d say that that plan includes asset hardening and replacement.
It’s got pilots for various technology solutions and risk modeling embedded within that. I think the updated plan that we are anticipating for Colorado would be a continuation of a lot of those existing programs and maybe moving from more pilot to more scale deployments of everything from coatings on post to cover conductor analysis, deployment to enhanced recloser settings and recloser installations across the business potential for incremental undergrounding in various areas and probably some operational opportunities around enhanced powerline settings and PFGS mechanisms.
Still working on finals. So, I don’t think it’s going to be material driver in terms of our capital deployments.
But I do think it will be a enhancement to our risk reduction in the Colorado company.
Anthony Crowdell
And Bob, just last thing, do you – does that plan have to get approved or just accepted? Just the procedure that goes on in Colorado on the wildfire mitigation plan.
Bob Frenzel
Yeah, it goes through a regular way proceeding with intervener testimony and our testimony both approved by the TUC.
Anthony Crowdell
Great. Thanks for taking my questions.
Appreciate it.
Bob Frenzel
You bet. Thank you.
Operator
Thank you. Our next question is from Carly Davenport with Goldman Sachs.
Please go ahead.
Carly Davenport
Hey, good morning. Thanks so much for taking the questions.
Just two quick ones from me on some of the resource plan opportunities that you have highlighted. So, first on Colorado, obviously strong results on that plan in 2023.
How should we think about just the next milestones to what’s in Colorado whether that’s around the CPCN process for transmission or the just transmission filing? And then just second on SPS.
We saw a lot of growth coming close to 5% overall in 2023 so just in that context can you talk a little bit about the SPS opportunity around the future RFP there to sort of accommodate that level of potential growth going forward?
Brian Van Abel
Yeah, absolutely, Carly and good morning. Related to Colorado, we will begin, so the marker will begin to file CPCNs for all of our projects in transmission starting in likely late February and then you’ll just see them kind of filter in probably over Q2.
And then those will be regular way CPCNs I think probably 8 to 9 month type approval processes on each of those filings. So those are the next markers at least on the projects coming out of the Colorado resource that just now approved.
And then we are working on filing our just transmission plan in June and that was originally focused on the replacement of the Comanche 3 assets with a little bit of the commission approving the rest portfolio in this December. I this opportunity brings the incremental resources.
We do think we need additional resources that we propose and even the commission acknowledge that there may be an opportunity that we believe that we may need those resources. So, they will be all part of the just transition plan filing and again that follows the typical Colorado timeline in terms of the nine months or so to work through that proceeding.
So it pushes that into 2025. But overall excited those are kind of looking at 2028 to 2030 type of clean generation opportunities and how we transition our fleet in Colorado as it will be completely out of coal by the end of 20230 in Colorado.
On SPS, really great low growth opportunities in SPS. And you noted our RF sales growth there in 2023.
We expect to continue to see significant sales growth in that region. I think that is really the driver of our SPS resource plan.
We provided a range from 5000 megawatts up to 10,000 megawatts. And that 10,000 megawatts is really working with our large customers around electrification forecast.
So I think it’s a significant opportunity. We do not have that anywhere in our capital plans.
So we will make – we will work through that filing. The New Mexico Commission will – they don’t officially approve it, but they accepted the resource plan.
And then we will look to launch the RFP in the summer time. And then we will get our results later in 2024 and likely start working on selection early in 2025.
So pretty excited about that plan. Excited about supporting the benefits of electrification down in SPS and ensure that they can ensure our customers.
So overall, like I said, really great steel for fuel, low growth, steel for fuel opportunities in serving the low growth in our territories.
Bob Frenzel
Hey Carly, it’s Bob. I just thought under what Brian said is probably remised.
We didn’t comment on the Minnesota and the Wisconsin RFPs that are in the SPS RFP that’s in sight right now, which represents 2000 megawatts of new clean energy in the upper Midwest and in the Southwest. We expect resolution as I said in my prepared remarks this year and they are included in our incremental capital opportunities in our investor deck.
Brian Van Abel
And just one more thing to add, we’ll be filing a resource plan in Minnesota in February 1st which is a continuation of the transition of our generation fleet as we shut down our coal plants in Minnesota by 2030. I am pretty excited about just all the opportunities across the service territories.
Carly Davenport
Awesome. Thanks for that detail.
And congrats on the updates.
Brian Van Abel
Thank you.
Operator
Thank you. Our next question is from Sophie Karp with KeyBanc.
Please go ahead.
Sophie Karp
Hi, good morning guys. Thank you for taking my question.
So, I have a couple of questions here. So I noticed that you showed the Colorado I guess ROE at sub 8%.
So I am reading this correctly. Just given how much capital you are going to be investing in the state?
Do you see a path to improve that and what is that?
Brian Van Abel
Hey, Sophie. Thanks for the question, yeah.
Certainly in Colorado, we’ve had a pretty significant gap between our off price versus earned ROE. As we think of all the capital that we are deploying on the clean energy transition that will flow through timing and coverage from a rider perspective also all the transmission that we need to invest to be able to deliver that clean energy to our customers will flow through the TCA.
So the incremental capital should get more time to recovery. I mean it’s important as we think about longer term to ensure that we have a financially healthy utility because it allows us to have a competitive cost of capital which in the long term is that most beneficial to our customers as it delivers the lowest cost of customers, lowest cost to our customers.
So, something that we are certainly aware of and working on our stakeholders and policy makers around ensuring that we are aligned with the clean energy policy in Colorado and how we can ensure that we keep that alignment and improve it over time.
Sophie Karp
So the problem – so to speak there is it just a timing lag with capital which you expect to improve with more contemporary mechanisms. Am I guessing this right?
Brian Van Abel
Yeah. And as we mentioned, yes, it is the regulatory lag, the capital lag.
We had a historic test year in Colorado gas and as we mentioned in my opening remarks that we are filing a Colorado natural gas case here in the next week or so. And so we will be working through that.
Sophie Karp
Okay. And my other question was, your volume growth overall for the company was something like 1% or above in 2023 and you are baking your guidance on 2% to 3% growth in 2024.
So, I am wondering where do you expect to see this acceleration and or it’s flipped an underwriting assumption there?
Bob Frenzel
So, as we think about it, our guidance here is 2% to 3% in 2024. The biggest driver continues to be in SPS and the electrification and growth we are hearing from our customers obviously working very closely with our large industrial customers down there.
So I have a good sense of what their low growth forecasts are in 2024 and even beyond. We are starting to see some large C&I growth in Colorado with the datacenter coming online and couple other large customers coming online.
So really driven by C&I low growth in 2024. If you continue to have customer – residential customer growth of roughly 1%, so that contributes some, but overall it’s driven by our C&I growth particularly in SPS.
Sophie Karp
Awesome. Thank you so much.
That’s all for me.
Operator
Thank you. Our next question is from David Arcaro with Morgan Stanley.
Please go ahead.
David Arcaro
Hey good morning. Thanks so much.
I had a quick question just on tax credit transfers. Let’s see, are you changing kind of the anticipated level over the course of the plan given the increased CapEx here?
And did that contribute I saw that the cash flow from ops increased versus the prior slide deck. I am wondering if that was part of it.
Bob Frenzel
Hey, Dave. So we incorporate the transferability into the cash from operations.
But for us transferability isn’t really in cash flow driver and go look plan over plans. We’ve incorporated all the transfer of cash credits in previous plans the transfer of tax credits in this new plan.
Certainly cash flow from ops increased by about $1.5 billion when you look at it from the $34 billion to $39 billion plan. Really the projects – there is net income to driver book depreciation and some deferred taxes, it’s a combination of all three.
Some of these projects do go and service in the middle of ops and so they are good cash flowing assets as we think about it. And so that’s why you see that there.
From a transferability perspective, we do include that now in our five year forecast. I think prior I talked to, we are at somewhere around $2.5 billion of transferability.
Now we are approaching about $3 billion of transferred tax credits over the five years $500 million, that’s roughtly $500 million this year growing to about $700 million at the end of the five year forecast. So we see the demand and have – actually have much more demand than our supply.
David Arcaro
Got it. Great.
That all makes sense. That’s all I had.
Thanks so much. I appreciate it.
Operator
Thank you. Our next question is from Travis Miller with Morningstar.
Please go ahead.
Travis Miller
Good morning, everyone.
Bob Frenzel
Hi, Travis.
Travis Miller
I am disappointed we don’t get to hear your election thoughts. But aside from that, one of you talk a little bit more after you’ve added this capital and the impact that’s going to have obviously on financing needs and the impact on the dividend growth.
How do you go into these next set of RFPs and any kind of other capital investment opportunities? Did that change you thinking in terms of pursuing some of those projects?
Bob Frenzel
Hey Travis. It’s Bob.
Thanks for the question. We really want to own and operate the infrastructure that serves our customers I think since core skills out of the company.
We think we are competitive we think we are priced competitively for our customers. I think we’ve proven that over the last five or six years.
And delivering value from our customers from our clean energy investments I think wasn’t in our original pro forma estimates, but I think our total over the last five years, just close to $5 billion worth of tax credits and fuel costs for our install of wind into our system for the benefit of our customers. This is never included in our forecast when we put those wind farms in.
So there is real customer benefit for us owning and passing that stuff through our customers. As we look to the future, obviously we want to own and operate the infrastructure.
It’s important in the regulatory mechanisms as you said, making sure that we get timely recovery of the new investment assets is really important for us as we think about installing new generation into our areas. But I think our position would be that we continue to want to own and operate generation assets recognizing that that they are going to be likely competitive processes we have to prove value to our customers.
But we’ve been good at that and I think our plan would be to continue to target ownership of some amounts of those generation assets.
Brian Van Abel
Yeah. And Travis, just to add to that, Bob is actually right.
We have to demonstrate our competitive with our commissions and we have been and we expect to continue to be so going forward. And so we can continue to deliver low cost electricity to our customers.
But I think just from a purely financial standpoint, we’ve been very open about – we will fund accretive capital growth and we will fund that with a balanced mix of equity and cash flow from operations. So overall, we are very comfortable with it and think we are in a great place to be both to deliver for our customers and our shareholders for the longer term.
Travis Miller
Okay. Great.
That makes sense. And then one other different subject.
Assuming you get the Tolk accelerated depreciation approval in Texas. Are there any remaining steps either regulatory, other procedural steps necessary to hit that 2030 goals closing your entire coal fleet?
Bob Frenzel
No, that was the last one outstanding. So, we are pretty excited about our assuming we get PUCT approval of the settlement.
That’s the last one.
Travis Miller
Okay. No transmission operator and agreement necessary and anything like that?
Bob Frenzel
No.
Travis Miller
Okay. Great.
Thanks so much.
Operator
Thank you. Our next question is from Ryan Levine with Citi.
Please go ahead.
Ryan Levine
Hi. Couple quick questions in terms of the Marshall fire, I appreciate the clarifications and updates.
Is there any opportunity for settlement there outside of the formal core process?
Bob Frenzel
Hey, Ryan. No.
But I guess very early in the process, but as we’ve said from the beginning, we strongly disagree with the conclusion of the shares report. We tend to vigorously defend ourselves sitting here today.
Ryan Levine
Okay. And given the balance sheet operator challenges and needs to raise capital over the coming years, are there any M&A opportunities in terms of asset sales that you would contemplate to derisk your funding plans?
Brian Van Abel
Yes. First, I guess I would disagree with the balance sheet challenges.
I think have one of the stronger balance sheets in the industry. So I don’t necessarily agree with that characterization.
But no, from an M&A standpoint, no we are comfortable with where we sit in the assets that we owned. Obviously, we are aware of everything that is going on in the industry.
Ryan Levine
Okay. Appreciate the color.
Thanks.
Operator
Thank you. Our next question is from Paul Fremont with Ladenburg.
Please go ahead.
Paul Fremont
Thank you very much. Just got a quick question on the Marshall fire.
Is there any update on the dollar amount that of the claims at this point?
Bob Frenzel
Hey, Paul. It’s Bob.
Thanks for the question. No, no updates.
I mean, the insurance commission has said that the property damage is in excess of $2 billion. But as far as the total amount suits they haven’t claimed any liability in the suits or from the plaintiffs.
Paul Fremont
Right. That’s it for me.
Thank you.
Operator
Thank you. Our last question is from Paul Patterson with Glenrock Associates.
Please go ahead.
Paul Patterson
Hey, good morning. Can you hear me?
Brian Van Abel
Hey, good morning, Paul.
Paul Patterson
Just one of my questions have been asked, but on the follow-up on Steve’s question on the PIMs, it seem like meeting the order and stuff that there was a greater, that they basically anticipate looking at additional PIMs and sort of what intrigued with sort of PDR in general. And I was wondering just sort of how you – I know it’s early to say and it depends obviously what the PIMs are, but given that they seem to be sort of more performance-based PBR contractually driven, how you think you are positioned to do to deal with that.
And do you see perhaps not only sticks but also carrots. These are potential perhaps that you could do well under PBR if you follow me.
Bob Frenzel
Hey Paul. You were breaking up a little bit.
But let me see why I understand the question given the recent PIMs in Colorado, how do you feel broadly about performance-based rate making and things like that. I think that it’s natural.
As Brian indicated earlier that we’ve had capital cost, cabs on various projects broadly throughout the portfolio. I think the set of PIMs that we work through with interveners and stakeholders and the commission as part of the CET in Colorado.
I think the process was productive. We have the opportunity to propose, I think they appreciated our proposal.
I don’t think it’s a material move in a certain direction. I think it’s probably appropriate and on a project basis.
Probably less so for an entity-wide basis. So I don’t read a lot into where we’ve been with Colorado or other jurisdictions in terms of incentive mechanisms around capital deployment.
Brian Van Abel
Yeah. Paul, in the written order certainly there is a discussion.
We will work with the staff as we work on the just transition plan in terms of looking at well designed PIMs and there is also a PIM around potential kind of the emissions achievement. So, we look forward to working with staff on that as we move through time.
Paul Patterson
Okay. Thanks a lot guys.
Operator
Thank you very much. I would like to hand it back over to CFO Brian Van Abel for any closing remarks.
Brian Van Abel
Thank you all for participating in our earnings call this morning. Please contact our investor relations team with any follow-up questions.
Have a great day.