Q3 2019 Earnings Call
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2018.
Our parents another segment or a three cents per share a third quarter of 19 compared with nearly flat results last year <unk>.
The improvement was largely due to the assets in a in 2019 of last year's write off of an investment access northeast.
Natural gas transmission project and certain benefits, we recorded in the third quarter of 18 relating to tax reform.
Overall, we are in two dogs and 69 cents per share in the first nine months of year life money in Northern pass charge, we discussed last quarter compared with earnings of $2.52 per share in the first nine months of 2018, excluding that charge, we remain very comfortable with.
Our ability to around the midpoint of our $3.40 to $3.50 per share range that we first announced in February .
While we continue to experience much higher than normal storm expense.
We thus far have been able to offset that impact elsewhere to remain within our guidance, but it's something we'll need to keep an eye on as we close out the year. The midpoint of that guidance range is consistent with our long term earnings growth rate of 5% to 7%.
Moving from our earnings discussion to key operating performance results. Our continued intense focus and emphasis on safety continues to produce strong results our best ever as a company.
Our electric reliability continues to strength to try and very strong with month between interruptions at 22.2 months through September this year versus 17.4 months. During the same nine month period last year, our reliability continues to be at a level that is among the very best in the industry.
Also our ability to respond effectively to weather related emergency conditions on our systems.
Continues to receive favorable reviews from our customers and policymakers.
In late July we responded to an extensive damage on Cape Cod caused by.
Rare set of three tornadoes.
The three weeks ago analgesia with wins of up to 90 miles an hour also impacted Cape cod, causing significant damage not only in southeastern Massachusetts bidding eastern Connecticut, and coastal New Hampshire as well.
Cruise organized quickly around last month storms and with the eight of significant outside resources, we restored power to nearly everyone of about 475000 outages and about two days.
Another storm on Halloween night resulted in significant tree cause outages up and down the east coast.
That storm costs more than 250000 customer outages with the worst damage in Connecticut, and New Hampshire.
Dozens of our employees and outside line in Threeq workers contributed to a very strong restoration efforts.
Turning from operations to some regulatory items, our new Hampshire Electric rate review continues through the discovery process with intervenor testimony due next month and final decision expected in May of next year 2020.
You will recall that on June .
27.
The enhancer regulators approved the settlement, we had reached with the public Utilities Commission staff and the office of consumer advocate to implement an annualized 28.3 million dollar temporary increase in base rates. The temporary increase was effective July 1st and will remain in effect until permanent.
Rigs take effect in the middle of next year.
On the rate reviews, I will turn to slide three and pure as recent decision in Connecticut grid modernization docket.
In early October .
Pure issued an order in which it divided 11 different topics related to grid modernization in two separate dockets and then promptly initiated reviews on six of them. So those six include items, such as advanced metering infrastructure or am I.
Electric storage in zero emissions vehicles.
He will be a second and third routes to this to this docket.
Which will cover five other topics ranging from resiliency standards to new rate designs.
The process for reviewing each topic will include public forms.
Quest for different proposals hearings, leading up to a draft and final decision.
Oh purify on these topics to be potentially very beneficial to customers. It's not yet know when they will result in meaningful investments.
And related to these great technologies.
We will update you on the processes in both Connecticut, and Massachusetts, as we move forward.
While we have not yet included any rig modernization expenditures and our capital forecast for see LMP.
In Massachusetts, we expect Enstar electric to complete the 233 million of investments previously approved by the department of public utilities by the end of next year.
An updated grid modernization proposal covering the years 2021 through 2023 is due to the Massachusetts regulator by the middle of next year.
Many of you has that have asked US recently when will provide a comprehensive update on our capital investment plans.
So I'll just say as we've done in each of the past six years will provide you with the update when we release our yearend results.
Which we expect to do in the second half of February .
Turning to offshore wind and slide four.
Massachusetts announce the results of its second offshore wind solicitation last week in which May Clara win was selected as the winning bidder.
May flowers pricing is expected to become public in January when the contract is due to the files of state.
Hey regulators for approval.
Based on public statements made to date, we believe that May flower bid price that would not have allowed us to earn the returns that we consider adequate had we did at the same level.
In Connecticut bids were submitted at the end of September following up on a 2000 megawatt offshore wind authorization that the legislature approved in June .
Three parties submitted bids for at least 400 megawatts. Each we submitted one bid for 400 megawatts and other bids for other levels of capacity.
Later this month, we expect a decision on this RFP in Connecticut.
In New York, We of course has signed a 25 year contract last month with the New York State Energy Research and development authority relating to the supply of 880 megawatts of offshore wind into the New York market.
The pricing as disclosed in it is $110.37 per megawatt hour flat for 25 years.
It was made public when the contract was signed two weeks ago.
That pricing and the pricing of the other power purchase agreements, we have secured in Connecticut, Rhode Island, and long island, each of which is 20 years will support the mid teen returns on equity that we expect and we have been discussing with you on prior earnings call.
We expect these returns will significantly exceed those of any of our regulated segments.
Several analysts on this call the vast us over the past week or so.
Whether the mid teen returns are still clickable, given more set statement last week that expects that it expects unlevered returns across its global portfolio to be in the 7% to 8% range going forward down 50 basis points from its previous range.
Is that also indicated that for a never which projects is now anticipating an average capacity factor, 48% rather than 40% to 50%.
Due to new understandings of when dynamics around large offshore wind farms.
Additionally on projects that acquired from deepwater ores that indicated that certain transmission cost estimates have increased.
As or stats partner on some of the former deepwater projects, we have been jointly developing some of the us cost estimates or stead cited there are several factors that support our continued expectation that we will be able to earn in the mid teens of these three projects noted on.
Slide in front of view.
First the transmission cost estimates that we've been assuming this year in our discussions with investors has not changed they are consistent with more stats current expectations.
But our more recent vintage and higher than the cost estimates available to of course that shortly after it closes deepwater acquisition last fall.
Also our assumed returns for offshore wind investments are consistent with or Thats, correct, 7% to 8% range. If the takeaway here is our guidance remains in place we expect our offshore wind investments to produce returns on equity in the mid teens.
Our mid teens are we expectations are based on our current enterprise wide capitalization and capacity factors in the 40% to 50% range across our portfolio of wind turbines in the U.S.
We continue to be very encouraged by the VAT skills knowledge and experience of our partner.
And by the interactions that we've all had with federal and state regulators.
Turning to financing and slide five we essentially wrapped up our 2019 financing program in the third quarter with nearly 500 million of long term debt issuances across Connecticut light and power Yankee gas announced our guests we expect to close on a small debt issuance at acquiring Connecticut before year end, but thats the only remaining.
Anything in 2019.
The decline in interest rates this year.
Certainly, resulting in interest savings not only in the long term debt issuances shown on this slide but also on our commercial paper borrowings where rates are down by more than 50 basis points compared with the end of 2018.
Well, we're interest rate benefit our customers and our shareholders.
Are you recall that we sold 1.3 billion of new common shares in June with about 12 million of the 18 million shares subject to a four which sale arrangement that will settle before the end of May 2020.
To date, we've not settled at any of the forward sale arrangement.
Additionally, as we've discussed earlier in the year. We also expect to utilize approximately 100 million of treasuries $200 million of Treasury shares each year through 2023 to meet our dividend reinvestment and employee retirement plan requirements.
Through October of this year, we have distributed approximately 900000 treasury shares to meet those planned requirements.
At a rate of just under 300000 shares of quarter.
Before I turn the call back over to Jeff, We just want to take a minute I'm sure you've heard that lead Olivia recently announced his decision to retire at the end of the year.
I want to extend my thanks, and appreciation to leave for a tremendous amount of work is done for nearly a 50 year utility Korea to make our company and our industry much better arrive.
After a highly successful career as a senior nuclear officer Lee arrived it northeast utilities, nearly two decades ago and led one of the most successful build outs of an electric transmission system anywhere in the country.
You later moved on to position the position of Chief operating Officer at end you and then.
At the merged Eversource before beginning what may be favored position, which is overseeing our enterprise wide strategy and business development efforts.
I'm sure a decade from now I'm convinced Lee will be known as one of the filed as of a thriving us offshore wind business.
Lee and I have worked together for more than 20 years sort of at the front end and backend. He has an outstanding leader in just the wonderful person to work with.
All of us, which lead to a wonderful retirement commencing at the end of next month and I want to thank him for his advice and counsel and joining us on is left that Mr called at par.
Thank you a well thank you very much Phil I really appreciate it I appreciate those remarks, it's great to work with you for all of these years, you're a great leader.
The financial Engineering yourself.
Thanks, Matt will turn the call back over to Jeff Alright, Thank you fell and I'm going to turn the call back to John just to remind you how to answer your question. John . Thank you will now begin the question and answer session. If you do have question Press Star then one on your Touchtone phone.
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Great. Thank you John our first question. This morning is from Mike Weinstein from Credit Suisse. Good morning, Mike.
Hey, good morning.
Lee this is.
You know quite a quite a move congratulations and.
We're going to Miss you I think it's been a long time ever since so news projects.
Kind of the earliest thing I remember you Santa source.
Well, thank you very much but again it thank you Michael.
Okay.
Hey, Mike My question is about the I guess the upcoming.
And star gas filing and what maybe you could shed some light on what thats going to what that's going to entail and also whether you think.
Theres going be any additional works that might be necessary on the gas utilities as a result of the.
Merrimack Valley incident from last year.
Yes, Mike this is Phil.
Well, we notified the department that we would be in soon for filing and we expect to make that that filing shortly here in the next days or weeks, so I'd say the.
There is there are few nuances to the filing that do address some of the issues that we know off and that could potentially come out of additional work efforts and requirements from the Merrimack Valley incidents. So I think you will see when we do a filing there'll be some creative ways that we want to address and get ahead.
Certain cost that would be moving up in terms of safety and engineering professional engineering requirements that are now in effect that weren't necessarily in effect during our during our test year period. So.
I think you're right that.
It will be in some respects sort of a basic filing but there will be some creative.
Ways that we can address some of the issues that have come up thus far and provide placeholders for things to come up in future.
And then maybe just so that same last thought maybe you could just give a broad.
Overview of the categories of updates that might be coming in February .
Not necessarily the number so much.
Well the categories would be the long term long term earnings guidance and as we've done.
For many years now we would adjust that moving forward at add year on to that let's drop year. After year. So we'll be long term earnings guidance, we'll have our our guidance for the current year period, we'll give a capital.
Forecast by category showing.
What capital spending looks like over that five year period will provide as we've talked about a little bit more detail now that the bids will be all in and developed and pricing known and probably all public by that time in a more information sort of on the offshore wind side of things and then any.
Current regulatory or other matters, we see.
Yeah.
Yeah.
Like any other questions.
Yes, sorry, just one last question.
The or said.
I guess the were set guidance it sounds like that was basically what they've been saying is already baked into your mid teens assumption that the that's why there's no change trying to just wanted to just from I understood that correctly.
Yes, I think it's important Mike says to note that I think forced as updates were reconcile back to a capital markets day from about a year ago.
Last November our guidance is really based on current information and all of our disclosed items have already been considered in the guidance and expectation. So we continue to be comfortable and provide forecast the mid teens on our lease.
And we continue to look at those costs and schedule estimates as we go forward.
Great terrific. Thank you.
Thanks, Mike. Our next question is from sharper Asia from Guggenheim Good morning sharp.
Good morning, guys.
Can you hear me, yes, we can area. Okay. Let me just on on on just on the rate cases could just get a quick update on New Hampshire is proceeding is there I guess is there any opportunity to settle appia discovery Howard sort of discussions going on.
We'll take indicators.
Yes sure. This is Phil this is absolutely opportunity to do that.
To settle in fact on the official schedule there is.
There is time allocated for settlement conference. So that is really the way that things proceeds in new Hampshire. So there is an ability to get to that.
Settlement.
And then.
There is a conclusion I mentioned in may that thing that on the docket. So I would expect that once we go through all the discovery and all the data reason that it provides a better basis for having some meaningful settlement discussions.
Right.
So you mentioned, we sold our items and the end Star gas line can you just elaborate on that.
Yes, sure and this is true for some of our other filings to another states, where we might have on approval for a tracker that is approved as part of the rate case, but there how much is in that category, we have to be defined in a future filings. So for example, we have these.
Safety and reliability filings that are approved trackers, how the recovery works what the procedures will be and then periodically we go in with a plan for this is what the spending will be for the next year with the next few years.
We have the same thing like on energy efficiency, we have.
Okay and approved method for collecting it but then we have a plan that goes in each next year. So thats, that's what I'm, referring to is that mechanism wont be established and then as resources come up. So you wouldn't have to go back in for base rate type of filing you'd have the mechanism there.
Got it got and then just last week, while I don't have discussions seem to point to potentially giving a capex up the.
Not necessarily wrong, you plan forward and.
But more of a capex update around your base business right.
The the rationale to not providing update is it a function because of the new Hampshire case is taking longer than maybe you anticipated.
Some kind of curious why not on the base business without having a roll forward good seem like maybe past discussions centered on the potential updating.
Sure I'm not.
I will maybe make a point there show, which Oh we.
We have never really provided a indication that there would be an update we've always pointed to the February year end call as being the time, we would do the update so.
What our statements are what our plans are now we're very consistent with what our thinking has been all along that that.
We plan to and we will do an update in February so not just to be clear we are not changing anything.
As a result of any proceeding it's really thats been our plan all along.
Got it thanks, Lee congratulations you're to death events.
Well really thank you. Thank you very mature spend though has been a lot of and working with you over the years as well.
We will still have to take you out for a nice big dinner, though.
Jack to go Jerry.
Alright.
Thanks, Thanks are.
Our next question. This morning is from Insoo Kim from Goldman Sachs. Good morning, and so.
Good morning.
Starting with the offshore wind given your comments on the recent Massachusetts RFP results and.
Yeah, the point that maybe the pricing did it wouldn't have met your return expectations.
Are you still are the mindset that future current and future bids on future offshore wind projects will try to maintain your 78% unlevered ire ours or machines are we assumptions.
Yes, we are that is.
That is our plan.
Understood and.
Appreciating on the Connecticut grid much side.
Pre probably be a lengthy process of discussing all the various items.
You could potentially in Boston and I think you've talked in the past about.
Pieces of those on how much that could potentially be for example, and my and Connecticut, Massachusetts, being a 1 billion dollar opportunity and electric vehicles as well, but just is there any way to frame what the total opportunity said longer term would be for the Connecticut portion of all these items.
Items I'm, assuming they won't really being a basis point when you roll forward the Capex planning in February .
Yes, that's correct.
Yes, it's something that we have a clear line of sight for it would not be and just to be clear. It's not in our plan now so we've always talked about grid mud in Connecticut as as a potential.
Program that will require investments to modernize the grid into various categories and and am I sort of the we've we've mentioned a number of a billion dollar program and Thats really across Massachusetts, and Connecticut. So.
The number of customers.
Fairly consistent across the two states, but you might have different vintages are meters so but.
It's it's probably 50 50 across the states I think is a good good determination of that.
But again, where we don't know.
What will come out of the proceedings that are going on we feel that we have effective programs that can address all of the 11 categories that the.
Connecticut pure has established and it's good to see sort of in the in the first six of them they are really.
Half of them or more already programs that were working on another state. So we feel good about our ability to deliver effectively there, but the timing and how much bread box will be will be determined going forward.
Understood.
And lead congratulations I know you and I haven't really interacting much given my meaning you to the coverage, but what's your best.
Well. Thank you very much appreciate and good luck to you.
Great. Thanks into next question. This morning is from Steve Fleishman from Wolfe Good morning, Dave.
Hey, good morning, and congratulate wish you the best.
So just you bet and so.
Just maybe a little bit more color on.
The.
BOEM approvals or just the supplemental study and.
Both timing of that as well as just.
Or what are what is the focus that you've seen so far on that.
Study and just how do you feel that overall timeline that if your projects.
Yes, Steve.
Honestly I think the indication that boneless now given that it will have the draft of the supplemental study in first quarter.
Of next year and they're looking at the full array of issues as an example, when.
These leases were let some years ago.
They.
Really did not understand the.
The scale what magnitude of the development across all of these areas in the.
In a time I think it was just.
Probably a bit of an oversight didnt really understand what the fisheries.
Actually how they work how they fish, whether its draggers or.
Crustacean fishermen and so forth and then there were issues that have arisen around the layouts and how America's would be able to access to win from ports in the area and also with the coast Guard in terms of how they do their search and rescue organizations I think all of those are better.
Stood.
Now and those are the kinds of issues that will be.
Factored in.
To their analysis I think we.
The joint venture Eversource sourced and feel very good about that we have.
Consistently in terms of our layouts and arrays.
Met with in got feedback from Fisheries Mariners in the Coast Guard. So I think are really are arrays, we laid out such that we will be minimum issues in the industry.
The offshore wind is street in the northeast.
Were our leases are all collaboratively working together to come up with a.
Common arrays and lay out such it will help facilitate.
The bottom process.
Once they complete their supplemental yes so.
We don't think there was any delays right now that we can forecast.
In any of our projects at this time.
Thank you.
Well there.
Thanks, Dave next question is from problem that up from Citi. Good morning profitable.
Hi, guys and congratulations well.
Thanks, a million profit appreciate it.
So I just wanted to quickly follow up again, Unfortunately offshore wind.
Well if there are delayed right now in the schedule for revenue should when did that get pushed out a little bit.
No. This is pretty much pretty much on track.
I think if there if that was a delay.
Because we have not file we have not filed our.
Or both.
Permit, yes, and we expect to file with them in early 2020, probably into the first quarter.
Boehm.
Which point in time, we'll have a clear understanding where.
BOEM is going to be with their.
Theres supplemental so right now no I think would be premature.
Two.
Too.
Look out a delay in revolution, when so we're still looking odd.
Commercial operation for Revolution wind late 2023.
Got you and you Didnt move out the construction the start of construction.
I know us.
Got pushed out but it's the same as you had before yes, it's pretty much the same as we've had before and we won't be any changes.
We don't feel there's a need to make any changes until we understand if there is any impact with the.
The supplemental simple.
Gotcha.
And then just secondly in terms of all these projects then in the context of board or Stared said is there any incremental revenue that is assumed as a part of these projects to achieve you IR. So for example capacity revenue or ancillary services anything incremental that helps kind of achieve or get to your.
Hi, good returns.
Well in.
In the case of.
Sunrise, when our pricing or $110.37 is predicated both on the energy receiving energy revenue and capacity.
Revenue inside of that market.
And.
So we feel good about being able to achieve that yet so I guess I'd add to that that no. They really in the guidance. We've given it's all based on the pricing thats on the contract. There there is a move afoot here in new England for.
Thirdly.
More.
In summary kinds of services that I said that was proposing but thats right now which is all in the concept mode. So we would have to see what happens there.
Gotcha, and so just to confirm the Sunrise wind has a capacity revenue component or that's already built into the price that you're putting in terms of a final like a lot can price yeah. That's built into the project.
Thanks.
Gotcha. Thanks, so much cash thank you.
Thanks profitable next questions from Paul Patterson from Glenrock Good morning, Paul.
Good morning.
You do it.
Right.
Congratulations.
Yes.
I wanted to follow up on.
Just a few quick things first of all the.
Connecticut grid Mod proceeding.
Oh, it seemed like after a quite a bit of a delay in a lot of time did now come up with a whole bunch of other proceedings as you guys mentioned on your on the prepared remarks.
Any sense as to.
How long haul display pig and is there any proceeding.
Any that the new proceedings that Oh.
Maybe or more of a priority or.
We should focus on more than the other three it just seems like quite a bit to the copper people wouldn't that.
Yes, but I think Paul this is Phil that.
You're right. There is there was lot of time, but recall that.
The Connecticut PURA there was.
A new chair of the of the pure us so certainly.
In that transition.
The chair of anyway.
Authority wants to.
To to set a direction and have some influence over the preceding so probably shouldn't have been unexpected that they would be some modifications or or timeframe schedule that came out with after the new share was appointed but I think the way you can look at it is.
Set up 11 different topics and.
If it were me you know I look at the first six that they've done right. So the first the first six focus on a my storage.
Vehicles some technologies.
Does any change needed and interconnections et cetera. So.
The first ones I would think of the most critical in the most priority to that so that to the chair and.
We have done work in every one of those areas in multiple states. So we think we already have good good plans and good proposals that we'd be ready to move forward with.
So at Bath kicking off right now in terms of what the exact schedule will be that that is still to be determined but what happens next in the first half of 2020. This is another set of three and then there is two more fit to happen. So after that so I just sort of.
This the staging of the topics I think give some indication of which ones would be the most important but how those what the timeframe will be for conclusion I don't expect that we have any meaningful if there was investments to be made I think you'd be.
Beyond 2020, probably.
Yes, how hot for a set.
Pleaded in 2020 with decisions made and then program set out for possibly some spending in 2020 and then beyond that so I think thats the timeframe we're looking at.
Okay.
And then.
There's also been some some press coverage of.
I guess some proceeding.
In Connecticut on affordability answers terminations or what have you.
And for what I can see it seems like this is mostly associated sort of identifying people at risk.
For first service cut off but is there anything else, we should be thinking about with respect to this mean orders or is that sort of what the focus is there any other.
Element of that.
Or is there anything you'd like to add about in terms of how that is unfolding I guess.
No I think.
What you're referring to is.
You know six separate from this proceeding will for pure.
That is going on.
I mean suggested as part of the Oh stuff, Yes, no I don't know there's no bigger.
You know agenda here for affordability I think just affordability is on Everybodys radar screen and we want to make sure that we deliver quality product at a price that is.
Affordable for customers and Thats, what we Wes we do that's how we design our rate. So there's really no specific agenda for that category, yet and that will be.
Decided as we move through.
Okay awesome. Thanks, so much.
Thank you for all our next question is from Julian from Bank of America. Good morning Joanne.
Hey, good morning team. Thank you.
So perhaps the when could you file the proposed on Connecticut, just a follow up on Paul's question here.
Can you eat well I'll leave it open ended just with respect to again just the timeline you guys have articulated here.
Yes, I say for the.
The first quarter made by April would be a timeframe for.
The first set of items.
Got it and then still sort of broadly thinking the same timeline to start and spend in kind of a year plus.
Yeah, as I said I would expect that you'd have some decision in 2020 and you could have some spending in later 2020 for any of these programs into 2021 and beyond.
Right, Okay excellent and then perhaps cleanup here a.
A positive I missed the commentary about how you're thinking about expansion on gas and.
Acquisitions on that platform more broadly acquisition strategy I know that theres been some degree of media attention on this perhaps its died down but just want to come back to sort of the core thought process.
Specifically in mass.
Yeah, No. We did not we had met you didn't mention I think they didnt you Didnt Miss anything Julian I think that.
You know we are focused on our core business and running our core business in an effective way, we've been able to deliver that core business.
Growth.
And affordability and performance in a way that that meets our customers and regulatory requirements.
We've been able to do that and deliver in the middle of the 5% to 7% growth rate out of our core business. So we're focused on managing those core assets in an effective way and working effectively on offshore wind business. So that's what we're focused on we certainly have.
Enough on a plate to two to work on there so.
And that that would be our continued focus going forward.
Got it then sorry, one more cleanup item as you know my with respect to earnings recognition of tax credits, obviously, another quarter or getting a little bit closer to hopefully getting some clarity here how do you think about that contributing especially given the.
Very specific timeline you articulated we're ready for the in service of all these different projects. How do you think about the cadence of that and how you think about that contributing to the long term earnings CAGR or the consistency of long term earnings sort of expertise. These these credits.
I think our long term earnings will continue to be primarily driven by our core business and I think you'll.
You will see and.
Our core business really is the driver for the 5% to 7% growth rate and as we've said that when these projects come in to service.
The offshore wind projects come into service in 2024 in terms of are contributing to earnings and beyond that that growth rate will improve and increase.
Okay fair enough I'll leave it there. Thank you guys alright, Thanks, Julien next questions from Sophie Karp from Keybanc Good morning Sophie.
Good morning right.
Congrats on the corner.
Good question I wanted to follow up on Connecticut. It just seems to me from looking at just slides that they are kinda due in a mizen oldest fun stuff first and then re design later after all of that so.
That is actually the accurate tradeoff the sequence of events here and if so.
Is there any re design changes that should the critical for the proposals that that considering can exist and redesign accommodate all of it or do you need any changes like what is your wish list there.
No I think you're reading that correctly, Sophie that sort of the later topics for some future period of time would include.
Great designs et cetera. So we we don't feel that there's any specific.
Major changes in terms of rate design.
That would.
Be impacted by any of the other categories that were working on the certainly would be no no earnings impact.
For that but.
Yes, I think we were able to the Navy's on my mind or they may have to be a a tracker or there may be some other category, but in terms of major rate design.
Right the anything on that front would be later topic, but the discussion.
But just any color you wouldn't be deploying any incremental cabot, though until you a clear on their great design and may be additional trackers or.
No no I that's.
Not clear I, we were able to with our current rates in our current design be able to implement.
Any of the categories that is currently under under review so.
We do have trackers, we do have sort of placeholders for future growth.
Grid modernization items to slide in there. So no we would not need to go through a week design proceeding to be able to implement these items from the first way.
Got it alright, thank him until we had.
Alright, Thanks, Sophie next questions from Travis Miller from Morningstar, Good morning Travis.
Good morning, Thank you.
I just wonder if you could give a quick update on the water business developments or what you're looking out over the next going to nine to 12 months and then related to that acquisition roll up small acquisition opportunities.
I'll start hydroxide doing this is Phil I will start off by saying, we're very pleased with the performance of our water business.
It's ahead of where we thought it would be at this time when when aquarium was brought into the Eversource family. We continue to look for opportunities to.
Learn from each other and implement best practices, our integration efforts there to improve operations on both sides of the ledger.
We're looking at and continue to look at opportunities to grow that business in a in a financially disciplined way and as opportunities present themselves. We will take a look at them. So there's nothing.
Nothing different.
To that strategy, we continue to look for opportunities whether it be.
You know a larger opportunity that has.
More customers are these smaller acquisitions of.
Roll ups will continue to evaluate though.
Okay any regulatory made regulatory.
Its user or.
So if you see going down long here in the next again kind of nine to 12 months.
Are you referring to in the in the water and water water no yeah, no nothing that we see.
On the horizon in that time period, that's correct.
Okay, and then just real quick answer most my offshore wind questions, but wondering on those contracts and even in New York, one or the other once you've had how much flexibility if any isn't that pricing and are there any clauses in terms of buyouts or adjustments or contract cancellations or anything along those lines.
Commitments in terms of Ah getting projects and service, but they're certainly opportunities within a reasonable range.
Range, if there's changes in in dates and all that that's all that's all provided for already in the contracts.
Okay, great. Thanks, a lot.
Thank you Travis next questions from Andrew Wise out from Scotia.
Morning, Andrew.
Hey, your morning, everyone I am basically all set I just want one follow up I guess since you you have me in here. The comment you made about lower returns and you would be comfortable with an a and b. answered to acquire a question for offer when that is how would you think going forward about that trade off you know if pricing continues to decline.
Perhaps faster than your car.
Would you be will more willing to sacrifice a little bit of the returns or a little bit of the volume of projects. One how do you think of that tradeoffs.
I think some of the some of it is speculation of what might happen in the future, but I would say that Iran. Surveys that we want to maintain a return levels you know going forward in that business. So look for opportunities to maintain and participate in options are are peas in a way that we.
You can compete effectively and that's that competition allows us to maintain a good teams level of of returns for our shareholders.
Okay. So it would need to be mid teens. It wouldn't mean <unk> it has to be more than a certain level above your regulated distribution returns right.
<unk>.
Yeah that is correct.
Okay. Thank you.
Alright. Thank you Andrew that's the end of the queue for today. So we want a thank you all for joining US we look forward to seeing most of the folks on the call at T.E.I. conference starting on Sunday daycare.
Thank you ladies and gentlemen that concludes today's conference. Thank you for participating and you may not disconnect.
Pretty huh.