Greg Jackson, senior vice president and chief financial officer of Citizens Energy Group, told the board Feb. 19 that the company’s preliminary financial projection for 2025 is modestly ahead of budget but faces risks from possible new federal tariffs and supply-chain pressures.

Jackson said overall net income in the company’s projection was about $4.3 million higher than budget, and EBITDA was projected to be roughly $1.6 million above budget. He attributed parts of the favorable variance to colder weather raising gas margins and to an adjustment to the lead service line tracker that increased recoverable amounts. Offsetting items include lower residential and multifamily wastewater volumes and reduced interest income due to an assumed 50-basis-point reduction in yields on cash and restricted bond funds.

Jackson warned the board that administration-level tariffs announced earlier this year could raise prices for electrical equipment, instrumentation and plant equipment that use steel, aluminum or semiconductors. “Our suppliers are likely gonna do a direct pass through to us,” Jackson said, and some suppliers have quoted potential price increases “upwards of close to 10%,” with pass-through timing ranging from immediate to 60–90 days. He said the company is monitoring lead times and maintaining diversified supplier relationships to mitigate risk.

On capital markets, Jackson said Citizens expects to issue new money for its thermal business in the second quarter of 2025, targeting about $40 million, and that market conditions may allow a concurrent refunding. He also said the company’s capitalization and debt-service coverage ratios showed no issues.

Jackson and other speakers reported confusion in recent weeks about executive orders and federal funding availability. That uncertainty touched the Indiana Finance Authority (IFA) funds that had been allocated for lead service line replacements. Jackson said the utility had planned a financing package that included $10 million of new money composed of a $5 million grant and a $5 million zero-interest loan, with a planned closing in May. For a short period the company was told access would be delayed, but Jackson said late-breaking developments restored access and the closing remains scheduled for May.

Jackson and President and CEO Jeffrey Harrison also reported operational progress on the lead service line replacement program: Citizens has replaced more than 2,600 customer-owned lead service lines to date and plans to replace about 2,000 in 2025 and another 2,000 in 2026.

No formal board action was recorded on the tariff or issuance items during the meeting; Jackson said the company will evaluate cost impacts and pursue any needed rate actions through a future rate case with the Indiana Utility Regulatory Commission.

Jackson’s full demonstration and the variance tables were posted in the board portal at page 87 of the materials.