NI: Braun Won’t Kill Indiana’s Golden Goose: Parsing Through Rhetoric and Focusing on Realities

研报英文原文证据摘录

NI: Braun Won’t Kill Indiana’s Golden Goose: Parsing Through Rhetoric and Focusing on Realities

Natural Gas LDCs Equity Research

For new GenCo customers, NI looks for counterparties with an investment grade credit rating, and

engages with their credit rating agencies to ensure that their risk profile remains utility-like and

their downgrade thresholds stay in place. NI has moved to a pooled asset model to increase speed

to market as batteries and solar to support a data center’s initial ramp can be quickly built and

with the remaining required capacity backfilled by longer lead gas generation. The pooled asset model

also allows for the flexibility to meet customer preferences when it comes to the green attributes of

the generation. The special contracts enabled by the GenCo divorces returns from rate base and

allows capital light solutions for customers and the shaping of cash flows to minimize the equity

contribution required from NI. The upfront cash flows are structured similar to CWIP rather than

CIAC (Contribution in Aid of Construction) as the former is more tax and earnings efficient than the

latter. The special contracts are designed to ensure full recovery and a return on assets over the life of

the contract regardless of the risk scenarios that could be encountered.

As a reminder, the estimated EPS accretion-first 3GW deal between Amazon and GenCo was

$0.25-0.45. The second tranche of deals included both Amazon and Alphabet and represented an

incremental 1GW and brought the total GenCo capacity to 4GW and EPS accretion to $0.40-$0.60.

Notice the second deal added $0.15 to both the top and bottom end of the EPS estimates; we think

that’s because the company has better line of sight on the economics of the deal and there is little