Best-in-Class LDC Searching for Fresh Fuel in a Data Center World; Hold

Research evidence excerpt

Best-in-Class LDC Searching for Fresh Fuel in a Data Center World; Hold

other

material rebase or full extrapolation of FY26 upside.

Exhibit 1 - ATO's FY3 P/E Premium/Discount

HB 4384 has shifted from catalyst to framework. Rule 7.7102 still supports FY26/FY27 and timing vs. Electric Peers

could remain conservative, but the largest upside catalyst has occurred and is now embedded in 30.0%

consensus figures. Post-FY27, we expect benefits to flow through normal Texas recovery rather than 25.0%

screen as a distinct earnings catalyst from here. 20.0%15.0%

Affordability is the clearest overhang on Texas premium. Residential bills rising from $80 in FY25 10.0%5.0% 6.3%

0.0%to $121 by FY30 implies 8%+ CAGR, well above inflation and in rare territory. Absolute burden

remains defensible given low wallet share and gas’ relative cost advantage vs electricity. Rate of -5.0%

increase matters for a premium stock, especially as customer bill growth grows outpaces EPS guidance. -10.0%-15.0%

Prem/disc vs. electric peersRRC change adds style risk, not statutory reset. Bo French’s GOP win over Jim Wright does not Julien. Dumoulin-Smith * | Equity Analyst

make Texas anti-gas as French remains pro-energy. Election risk is narrower but indeed relevant +1Source:(281)Jefferies774-2066LLC,| jds@jefferies.comFactSet

with a less tested regulatory style, more headline volatility, and greater sensitivity to affordability in Paul Zimbardo * | Equity Analyst

future proceedings. Key development to watch; ATO’s premium depends on predictability. +1 (212) 778-8497 | pzimbardo@jefferies.com

Brian Russo, CFA * | Equity AnalystMaintain HOLD and lower $173 PT on gas peers multiple retraction. We continue to apply a

+1 (212) 778-8559 | brusso@jefferies.com