Good morning, and welcome to CenterPoint Energy’s First Quarter 2021 Earnings Conference Call with Senior Management. During the company’s prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management’s remarks. [Operator Instructions] I would now like to turn the call over to Phil Holder, Senior Vice President of Strategic Planning and Investor Relations. Mr. Holder?

Good morning, everyone. Welcome to CenterPoint’s earnings conference call. Dave Lesar, our CEO; Jason Wells, our CFO; and Tom Webb, our Senior Adviser will discuss the company’s first quarter 2021 results. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are based on management’s beliefs, assumptions and information currently available to management. These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially based upon various factors, as noted in our Form 10-Q, other SEC filings and our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statement. We will also discuss earnings guidance and our utility earnings growth target. In providing this guidance, we use a non-GAAP measure of adjusted diluted earnings per share. We previously referred to our earnings guidance as guidance basis, EPS, and will now refer to it as non-GAAP EPS or utility EPS. Similarly, we will refer to our 6% to 8% non-GAAP utility EPS target growth rate as utility EPS growth rate. For information on our guidance methodology and a reconciliation of the non-GAAP measures used in providing guidance, please refer to our earnings news release and presentation, both of which can be found under the Investors section on our website. As a reminder, we may 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 discussion over to Dave?

Good morning, and thank you for joining us for our earnings call. We are observing a sense of normalcy starting to return here in Texas and in many of our other jurisdictions. Just as important to me, is that I look forward to an opportunity to meet you in person and tell you about the amazing things we have accomplished in less than a year in what our strategy entails moving forward. I want to share with everyone, our excitement about the progress CenterPoint is making and our continued belief in the utility assets that we operate. We believe they are premium assets and want you to believe that too. Today, we will provide an update on the continued disciplined execution of our strategy that we outlined during our Investor Day, just five short months ago. I hope you see that we are developing a track record of being consistent and accountable against the goals that we set. As you know, I’d like to lead with headlines and we have some worthy ones to cover this quarter. First, we delivered very strong results for the first quarter of 2021, including $0.47 utility EPS. Because of the higher natural gas prices are pass-through costs for our business, they did not impact this quarter’s utility results. In addition, our first quarter results are in line with recent historical trends in which the first quarter contributed close to 40% of the full year utility EPS. We are, of course, reaffirming our full year utility EPS range for 2021 of $1.24 to $1.26, and our long-term 6% to 8% utility EPS annual growth target. We are off to a great start for the year. So let’s check the utility earnings box as being on track. The second big headline is, of course, the announced…

Thank you, Dave. And thank you to all of you for joining us this morning for our first quarter earnings call. Just to echo Dave’s sentiment, we’re looking forward to seeing more of you in person in 2021. To continue the theme of execution and delivery, I want to start by reviewing our quarterly results with you, as well as provide some incremental details on a few events Dave highlighted. Let me get started with our first quarter earnings. On a GAAP basis, we reported $0.56 for the first quarter of 2021 compared to a loss of $2.44 for the first quarter of 2020. Looking at Slide 4, we reported $0.59 of non-GAAP EPS for the first quarter of 2021 compared to $0.60 for the first quarter 2020. Our utility EPS was $0.47 for the first quarter of 2021, while midstream investments contributed to another $0.12 of EPS. The notable drivers when comparing the quarters are strong customer growth across all of our jurisdictions and rate recovery, which makes up $0.05 of the favorable impact. Our disciplined O&M management contributed another $0.03 of positive variance for the quarter. The growth drivers were partially offset by the $0.09 from share dilution due to the large equity issuance back in May 2020 and $0.03 due to the non-recurring CARES Act benefit we received last year. Turning to Slide 5, we are very pleased with a high level of interest we received for our Arkansas and Oklahoma gas LDCs, as we’ve conveyed through the entire process. As Dave said, there were interested parties across the spectrum, which are the highly competitive auction process. The successful outcome emphasizes the high quality nature and supportive regulatory frameworks that are present in all of our businesses. We’re preparing to commence the regulatory approval process and anticipated…

Thanks, Jason. Five months after our strategy revealing Investor Day CenterPoint, as you just heard is well underway executing its strategy. It’s dispensing with volatile non-core non-utility businesses think enable, implementing efficient financing, think gas LDC sales, introducing clean energy, think coal closures, renewable additions, and much more and improving performance, think continuous improvement, a whole new culture. Dave and Jason already have highlighted details about each of these as strategic changes are nearing completion, our premium utility operation is humming. I hope to see it. I hope you feel it. We really sweat the details, so you don’t have to. We have superior rate base growth delivering needed capital investment. Our growth rate target of 10% outstrips the peer average of about 7%. Our resulting utility EPS growth target at 6% to 8% every year is well above the peer average of 5%. And our customer growth at 2% is something we would celebrate at my old company with top quartile customer satisfaction. We still seek to hold down customer price increases, reducing our O&M costs by 1% to 2% every year. Coupled with customer growth, this creates a lot of headroom for the needed capital investment. On Slide 8, please look at the box on the left. Five months ago, we showed you our five-year plan to reduce costs 1% to 2% each year. We added the detail for 2021 during our last call. And here, you can see our progress in the first quarter. We plan for a fast start with 2021 down 2% to 3% with results in the first quarter faster yet. Please keep in mind, some of this is timing. We still expect to reduce costs by about 2% to 3% for the year. As you know, one of our tools is our continuous…

I want to reemphasize what we consider critical elements as we transform CenterPoint into a premium utility, we believe it can be. We will continue to deliver a sustainable, predictable and consistent 6% to 8% earnings growth year after year. With our industry leading organic customer growth and our disciplined O&M management, we believe we can generate robust CapEx and 10% rate-based growth, while continuing our focus on safety. We also look forward to unveiling our enhanced ESG strategy that will put us as an industry leader for a net zero economy. We will continue to keep our eyes on maintaining and enhancing our balance sheet and credit profile. We have executed on our capital recycling strategy through our announced gas LDC sale at 2.5 times rate base and investing at 1 times rate base. And we will continue to explore opportunities to do more of this. We remain absolutely committed to delivering an economically viable path to minimize the impact of our midstream exposure and eventually eliminate it. And finally, as we work to move towards a fully regulated business model, we continue to stay focused on our utility operations and improving the experience for our customers. I hope you will join us on this path of transitioning CenterPoint into a premium utility. While myself, our team and our employees are only 10 months into this new journey, I could not be more pleased by the momentum we have, what we’ve accomplished in the bright future we see for CenterPoint. What you see is the new CenterPoint, where you can expect consistent and predictable earnings and rate-based growth, world-class operations and growing service territories, and a commitment to delivering on our promises to you, our investors. We sweat the details so you don’t have to.

Thank you, Dave. We will now take questions until 9:00 AM Eastern. If you would, please limit yourself to one question and one follow-up and reenter the queue if you have further follow-ups to allow all callers and opportunities to ask their questions. Operator?

At this time, we will begin taking questions. [Operator Instructions] Thank you. Our first question comes from the line of Insoo Kim with Goldman Sachs. Insoo, your line is open.

Thank you. My first question is in Texas and the pending legislation for securitization there. Thanks for the color there. But could you give a little bit more detail based on your efforts on the ground, what do you think the chances are that getting passed in this session that is coming to a close within the next few weeks? And if it doesn’t pass the session, what are the different pathways from here for the regulatory process?

Yes. I’d say, it’s a question obviously that we expected, number one. Number two, I’m going to let Jason handle it, because he is working hand in hand with Jason Ryan, who is our Regulatory Affairs leader, who is essentially in Austin now every single day. And as I said, they’re working hand in hand on this. Jason, why don’t you answer the question?

Thanks, Dave. And good morning, Insoo. I would say, the – obviously, the legislature here in Texas has a number of priorities in front of it right now. But we continue to remain optimistic that the securitization bill for gas cost recovery will be signed into law. At the end of the day, it’s probably the most constructive outcome for all stakeholders, minimizes or reduces the bill impact for customers by spreading the recovery out over a much longer period of time. And it helps keep the debt off the balance sheet of the gas LDCs. And I think the constructive nature of this tool is sort of well understood by all. And while we’ve remain optimistic that it will be signed into law to your point, it is important to note that the Texas railroad commission has been very constructive signaling that the gas LDCs will be eligible to recovery – sorry, will be eligible to recover carrying costs. As we look to probably recover these costs over about a three-year period of time again in the event that the securitization bill is not signed into law, but we remain optimistic as I mentioned. As an aside, Dave and I will be joining Jason Ryan and our team there in Austin and a little over a week to meet with the new PUC commissioners, the railroad commission and other legislatures to continue to make sure that CenterPoint is supporting the state’s objectives. And as I said, I think we remain optimistic that this bill will be signed into law here at this legislative session.

Got it. That’s a good color. My second question is, perhaps for Dave on the gas utility sale given the color you gave on the number of bidders, the amount of interest and ultimately, the multiple that is generated, just from your standpoint, how do you balance that enthusiasm and what that implied for the potential growth opportunity for gas utilities and the investments there? Looking at your other jurisdictions potential for not just pipe modernization, but perhaps items like RNG or hydrogen, how do you balance the multiple that you’ve seen recently versus potentially, those organic opportunities that you could take advantage of in your other systems longer-term.

Yes. It’s obviously a great set of options to have, because I think one of the things that sale demonstrated is that clearly the value of our gas LDCs that remained behind are worth more than our share price and I think is reflected today. As I said in my comments, I think we do have an obligation to set a look at that price we got and then look at the overall options we have as an organization. But I think as we said, in our Analyst Day, we have significant capital spend opportunities in our remaining gas LDCs. We like those LDCs. We liked the markets that we’re in. But if we find an opportunity to look at monetizing them, as I indicated, we have an obligation to do so, but we would certainly not do that unless we saw an opportunity to reinvest it back in our business, in our regulated business, something that would have to be accretive to our current 6% to 8% growth rate and really have an impact on the balance sheet. So we’re still sort of digesting the level of interest that was there, the price we got. But I can tell you, it is a great place to be right now.

Got it. Thank you so much.

[Operator Instructions] Your next question comes from the line of Shar Pourreza with Guggenheim Partners. Shar, your line is open.

Hey, Shar.

Hey, good morning, guys.

Good morning.

Good morning.

Just David started to hand on this, but let me just follow-up on the prior question that was asked. And maybe a little bit more theoretical. Assuming you do look for further asset optimizations on the LDC side to maybe capitalize on these multiples. Do you believe you can efficiently redeploy that capital quick enough where potential larger transaction could still be earnings accretive? I mean you seem to point out that you clearly have incremental spending opportunities, not really capital constrained, especially as you bring to light further decarbonization plan. So maybe a little bit of more of a theoretical question but just thoughts there as you drill down.

Yes. I mean it’s a – it is a theoretical question. And I think the way to answer it is, first of all, we’re not going to do anything crazy here. We’ve got a great business. The gas LDCs are wonderful businesses to own right now. And I think that we would take a very rational, and I think systematic approach to looking at doing something different. I mean, we clearly, as we’ve signaled, have $1 billion of capital spend on top of the $16 billion we discussed at our Analyst Day. But I always sort of fall back to what is your base strategy. And I said it when I answered the last question, we’re not going to do anything that is not accretive to our 6% to 8% growth rate. So I think that sort of signals the timing that we would want to do. We’re not going to do anything that impacts the fixing up of our balance sheet and getting to the credit metrics that we want. That would signal, I think, the timing. And it has to be consistent with our strategy of becoming more and more regulated. So I think there is a way to thread that needle. But as I said earlier, we’re still digesting the opportunity that has been put in front of us with the price that we got for these LDCs. So give us a chance to digest it, and then we’ll see what – how to take advantage of this great opportunity. It’s either got to show up in the share price or we’ll look at other options.

Fair enough. Fair enough. And then just lastly for me, shifting to the cost cuts and reinvestment, which is near and dear to Mr. Webb’s heart. It looks like you guys – you’re on plan with the 1% to 2% O&M reduction target, and you showed some modest reinvestment from the tail end of 2020. Just looking at that $44 million in cost cuts over the near-term, can you just, Dave, elaborate on your comments you may convert some of that savings into capital? And then theoretically, you could unlock over $700 million or more of capital with your longer-term savings target as a bookend without impacting customer rates. So maybe just some thoughts on O&M versus CapEx ratio.

Sure. Now let me just give a bit of an editorial comment. They’re near and dear to my heart and Jason’s heart and everyone else’s heart, in addition to Tom. But I’ll let Jason answer the specific question.

Yes. Thanks, Shar, and good morning.

Good morning.

Obviously, we’re incredibly pleased with the continued performance of the O&M discipline here. The team has really embraced continuous improvement delivered well last year, and that’s carrying through our first quarter results. In terms of the enhanced capitalization that’s referenced on the slide, I think that’s sort of a natural byproduct of the increase in our capital investment plan that we announced as part of the Analyst Day presentation where we signaled $3 billion of incremental capital over the five-year plan. Effectively, that gives us the opportunity to allocate more overhead to capital than expense just given sort of the ratio of capital to O&M. And so I wouldn’t fundamentally see that category significantly changing. It might modestly change as we fold some of the capital investment opportunities that Dave has been alluding to in. But where our focus really is beginning to look at the execution of our core work really driving first-time quality. And I think that’s where we’ll see beginning of the material opportunities in front of us from a continuous improvement standpoint.

Terrific. Thank you, guys. Congrats on the execution.

Thanks.

Your next question comes from the line of Steve Fleishman with Wolfe Research. Steve, your line is open.

Yes, thanks. Good morning. So just on the gas LDC sales, I’m not sure you can give this color, but just would you say that there was a lot of bidders that were kind of close to the range of the outcome such that this is not kind of like a fluke price, so to speak? That there were several other bidders above the range that you had been targeting?

Yes. I’ll answer it. I’ll let Jason throw anything on. There were a number of bidders that were right on top of each other. And it was a difficult decision for us. But in the end, we thought Summit was the right answer because of price and certainty of close and all the other things you typically would look at in a transaction, but this was clearly not an outlier.

That’s very helpful. Thank you. And then on the – just in thinking of your talk of a future sale, obviously being tied to having something to redeploy the money in, is there – are there some other rate base opportunities beyond that $1 billion kind of increment that are starting to come into any view? Or it would have to be an acquisition or some other – just more maybe extending the plan in the future that would drive that?

No, I don’t ever want to rely on having to do M&A to drive your business and grow your business. It is a way to grow a business in my view because of the premium you typically have to pay. It’s an inefficient way. And I think that we see sufficient capital spend opportunities out there. While you were asking the question, Jason was smiling and nodding his head, so I will let him answer it from here.

Yes. Thanks, Dave. Obviously, we’re pleased with the organic growth opportunities that are present here. We’ve talked a lot about this $1 billion of incremental capital that we have, but there are, to your point, Steve, other opportunities that may materialize, and as I think the state of Texas here looks at different ways to minimize the risk of a future winter storm. There’s been a lot of focus on grid resiliency, things like introducing economic criteria for building incremental electric transmission lines, things like making sure that there’s greater levels of grid control in the event that there are outages and helping minimize the impact of extended outages to communities. I think to the extent that those bills are passed by the state legislature and signed into law, I think that, that could create incremental capital opportunity for us to redeploy in. And then we continue to look at the coal transition in Indiana as a possibility for owning incremental amounts of renewables as opposed to securing that transition through a power purchase agreement. So I think on top of the $1 billion that we’ve been discussing, we do have the potential for increased capital deployment opportunities.

Okay. And then just one more tied to the last comment in Indiana. That directors letter that you got, could you just give a little more color on that and the better visibility you have into doing the renewables program there?

Yes. We were pleased with that recent letter by the director there, the Indiana Commission. The – effectively, we had received some feedback on our original integrated resource plan that had asked us to consider sort of more diversity of fuel sources, sort of more clarity on anticipated electric demand, proposing a smaller percentage of natural gas-fired facilities. And we incorporated that feedback earlier this year, as we mentioned, filed it into the director’s report that you’re alluding to, I think, acknowledged the clear progress that we have made and being responsive both to the commission feedback as well as the broader community and customer feedback in Indiana. And so I think it’s reflective of the fact that we feel that there is strong support for the coal transition plan that we have outlined previously.

Okay, great. Thanks so much.

Your next question comes from the line of Durgesh Chopra with Evercore ISI. Durgesh, your line is open.

Hey thanks. Good morning, team. Thank you for taking my questions.

Hi.

Dave, I was just kind of curious your comments around some sort of – you’re able to reduce the storm costs. I think you said $300 million by audits and some sort of – looking at your records on the gas side of things. Could you just elaborate on that? I’m just wondering if that’s an opportunity for some of your peers to do that as well.

Well, I don’t know what the contracts that our peers have looked like. What we’re doing is we’re focusing on the excess gas cost that we incurred because as I said earlier, they’re past due cost for us, and we have an obligation to our customers to make sure that we’re paying for – per the contract, we’re trying to negotiate. We’re trying to do everything audit, all the things that we listed. But we’re doing them really to make sure that we are getting the best outcome for the customers because, as I said, they’re pass-through costs. Jason, I don’t want to – you can add anything into that, but it probably covers it.

I think it’s definitely contract specific. And as you can imagine, many of the suppliers allege throughout the event force majeure clauses. We challenged some of those. I think also some of the gas suppliers recognize the impact that this storm has had on sort of the broader communities we have the impact to serve. And so I think it was a collective effort of – as we’ve talked about, sort of challenging some of maybe the contractual provisions, how that – how the contract was interpreted as well as sort of working to find a constructive solution, again, for all stakeholders. And I think that we’re happy with the progress we’ve made, and we’ll continue to advocate on behalf of our customers.

That’s great, guys. Excellent. Thank you for the color. Maybe just really quickly to the extent that you can on Enable sort of exit here? Is it sort of a five-year plan or a 10-year plan? Just any color you can share there? Thank you.

I can guarantee you it’s not a five or 10-year plan. It’s much more aggressive than that. But I’ll – Jason is going to execute it for us. I’ll let him answer it specifically. But do not even for a second have in your head, it’s five or 10 years.

Our strategy is to eliminate our exposure to midstream once the Energy Transfer, Enable merger closes. And we’re still not providing a direct time line. We want to be disciplined and efficient – maximize the proceeds from the disposition. But we will aggressively eliminate our exposure to midstream once the deal closes.

All right, guys. Thank you. Appreciate you’re taking my questions. Thanks.

Your next question comes from the line of Julien Dumoulin-Smith with Bank of America. Julien, your line is open.

Hey, good morning, team. Actually, if I can stick with the last conversation to brief. Can you elaborate what other elements you could pursue here? I mean we’ve seen some of your peers valuing litigation, et cetera. What’s your sense of confidence to materially bring up that $300 million in reduced costs and bring down that $2.2 billion as you see it? Have you largely exhausted this? Or is there still a good chunk to go here?

I think we’ve seen probably the largest movement to date. We are continuing to work with a handful of suppliers on what I would consider to be a much more narrow opportunity set. So I wouldn’t look to see probably as significant in a reduction as we reported today, but we’re also at the same time not done with those conversations. As I said, we’ll continue to advocate on behalf of our customers. But I wouldn’t expect it to materially change.

Got it. And then a little bit more of a detail here. You talked about reinvestment of O&M back in the utility assets. You talked about having a little bit more capital on hand. Can you elaborate a little bit more what we should be seeing here in terms of both the financial impact on 2021 and 2022 on a net EPS basis? But more importantly, just timing on when you come back, just given that you’re talking about something that’s just so imminent here?

Yes. I think – let me again start by answering and throw it to Jason. I think it’s – you got to think of sort of excess capital in two buckets here. One is the $300 million plus that we will get from the gas LDC sales. Since we don’t expect that transaction to close until about the end of the year or thereabouts, that’s really capital we can spend in 2022, which will go into rate base and start impacting earnings in 2023. We, of course, have a lot more optionality around the reinvestment of the O&M savings. And I’ll let Jason give a little color on how we’re thinking about that, where we might spend it, how we might spend it.

Yes. I think it’s important to maybe take a quick step back to O&M. I mean, I think we feel like there’s a privilege – we have a privilege to serve some of the most premium jurisdictions here in the U.S. And we have the privilege to have industry-leading rate base growth, top of the industry earnings growth. That said, as we think about a premium valuation for the company, we think that really materializes with consistent delivery on our earnings. And so in years where we maybe accelerate some of the continuous improvement opportunities or we had better-than-expected weather. We will look to reinvest some of that savings back into the business for the benefit of our customers. We think long-term that creates the best possible service for our customers and the path to a premium utility valuation. And so as we make progress on O&M and if we are doing better than expected, we will likely, as I said, reinvest that back in the business. As Dave mentioned, the capital investment opportunities, I really think about that as sort of more of a 2023 earnings impact, just given the time period between executing that capital and then putting it into rates for recovery. So hopefully, that gives you a little bit of sense of how we’re thinking about the O&M and capital opportunity progress.

Awesome indeed. All right. Well, best of luck. Congrats on all the process thus far.

Thanks.

Thank you.

Your next question comes from the line of Michael Weinstein with Credit Suisse. Michael, your line is open.

Hey, good morning, guys.

Good morning.

Good morning.

Hey just to continue the conversation on capital opportunities. As you – especially as you’re trying to go to net carbon zero, maybe you could talk a little bit about opportunities for – with RNG investments and methane reduction, methane leakage reduction? And then also anything on EV charging opportunities that may be emerging and fleshing out the plan. Is this something that – are these things that could become upside to your current plans?

You sound like you’re sitting in our management committee room as we’re discussing the – all the great opportunities we have in front of us to get ahead of things on the journey toward net zero, but also be able to add to our rate base. And again, I’ll let Jason give the details on what our thinking is there.

Yes. I think on the gas side, we’re really fortunate to work in very constructive jurisdictions. We’ve highlighted our green hydrogen pilot up in Minnesota, the work that we’ve done on the renewable natural gas tariff. We clearly see that as a start to what is a long-term focus. We are actively working to develop the next round of pilot projects, to make sure that we can efficiently generate the hydrogen we can – that our system responds well to that introduction. We are working with suppliers on the RNG front, and I think the learnings that we have in Minnesota are certainly experiences that we can utilize more broadly in our gas footprint. And so I think that there is certainly more to come with respect to RNG and green hydrogen for the company. And as you said, we are incredibly excited about the opportunity to play a role in the electrification of the transportation sector. Thinking about here in Houston, it’s obviously the fourth largest city in the U.S., but it is a very commuter-focused city. And so we see the opportunity to help with the build-out of distributed charging networks that will help with the conversion of electric vehicles here in Houston and, for that matter, hopefully up in Evansville. And so I don’t see these as materially changing kind of our rate base profile in the next couple of years, but the work that we’re doing to gain experience, understanding and the support of the regulators, I think, will help support the long-term CapEx plan for the company. So there’s certainly a lot more to come on these two fronts.

Great. And just one follow-up on cost savings, with $44 million identified for this year, how can we expect that to flow in, I guess, the $16 million already flowing in the first quarter? Is that going to be mostly in the summer? Or are we going to see it more evenly distributed throughout all four quarters?

I appreciate the question about time. And I think what’s important to note is the company really embarked on a focus of continuous improvement, starting with the second quarter last year. And as you can imagine, it was sort of ramping up into sort of building that muscle over the course of the year. And so from a quarter-over-quarter standpoint, we probably are seeing the largest variance here in the first quarter. And that will likely reduce each subsequent quarter as we kind of build into what was sort of the ongoing run rate at the end of 2020. So again, this is probably the largest variance you’ll see this year. And then as I’ve mentioned a couple of times here, to the extent that we continue to make incremental progress, I think it’s a really good opportunity to reinvest that savings in the business for the benefit of our customers, and we will look to do so.

Great. Thank you very much.

Your next question comes from the line of Jeremy Tonet with J.P. Morgan. Jeremy, your line is open.

Hi, good morning, Dave.

Good morning.

You’ve got quite the pickup with Jackie joining IR there. So in a point, he is lucky to have there. So I do remiss if I didn’t say there, but let me just…

She is sitting right next to me with a big smile on her face.

Thank you, Jeremy.

We’re thrilled to have her on the team.

Maybe just a quick question here. You talked a bit about the $1 billion CapEx. Wondering if we could drill down a bit more on this and what it could look like. What guardrails do you have here? Or what drivers or milestones could kind of make this real?

Well, I think, first of all, it is real. I think if you go back to how we described it at our Analyst Day, I think that is still sort of the operative strategy. One is to deploy the capital efficiently. And with the capital ramp-up we have ongoing, it really is incumbent on us to make sure that we have the internal engineering resources, the project management resources, all of the sort of internal compliance guardrails you want to have around a fast increase in spend. So that when you spend $1, you’re spending it wisely, you’re spending it on behalf of your customer as you put it into your rate base. Second is finding the sort of capital to spend that $1 billion on. The LDC clearly helps there. The O&M savings help there. With sort of the market reaction on the ET sale, with Enable sale to ET, there could be more proceeds there. So I really just want to reiterate something I said earlier, and I hope you’re getting a flavor for it here today is we have great capital spending opportunities in front of us, which is why as we sort of accumulate capital maybe above and beyond what we thought we would have in our Analyst Day. To grow the company, we’re not forced toward doing M&A. We are going to be able to invest it on a onetime investment basis in our business, in our territories and grow and protect and serve our customers here. So as I said a number of times, this is such a great position for us to be in because you throw organic growth on top of all that, that’s going to create additional capital spending opportunities. So that’s why, in my view, we’re really sitting in the catbird seat here in terms of what we can do with this business going forward. Not sure that answered your question, but…

That is helpful. Thank you for that. Maybe just a quick second one here. Just wondering broadly on tax mitigation strategies, you talked about the LDC here. But just wondering as it relates to Enable ET, if there’s anything you can share there on that side?

That is right into Jason’s wheelhouse. So I’ll let him answer that.

Thanks, Jeremy. One of the things that Dave and I take a look at when we joined was the fact that on a relative basis, we were paying higher taxes than a number of our peers. And I think what has become obvious as we’ve dug into the situation is we have not necessarily availed ourselves of all of the, what I would say, to be common utility deductions. So one classic example would be tax repairs where you have the opportunity to essentially expense or deduct immediately some investments that otherwise would have historically been capitalized. I don’t think we are fully taking advantage of that. We are currently in the process of conducting our study to support what would be a higher level of deductions. I’m confident it will result in an increase in available tax deductions for the company, not yet at the point where we’re ready to quantify it as the study is not complete. But again, just given the progress that we’ve made, we’re confident that, that will meaningfully help reduce some of the tax burden that you mentioned from the ET sales. And so we will likely provide a more fulsome update on that opportunity on future earnings calls this year.

Got it. That’s helpful. I leave it there. Thanks. This concludes our question-and-answer session. I will turn the call back over to Phil Holder for closing remarks.

Thank you. Again, thank you, everyone, for joining us today and for your interest in CenterPoint.

This concludes CenterPoint Energy’s first quarter earnings conference call. Thank you for your participation. You may now disconnect.