Q4 2019 Earnings Call

Greetings and welcome to ever in Corporation fourth quarter 2019 earnings call.

This time all participants are in listen only mode. A question answer session will follow the formal presentation. If anyone's your car operators. This is during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded is now my pleasure to introduce your host and you're correct director of Investor Relations for ever incorporated.

Thank you Mr. Kirk you may begin.

Thank you and good morning on the call with me today, our water Baxter, our chairman President and Chief Executive Officer, Michael Main our executive Vice President and Chief Financial Officer, as well as other members of the ever management team Warner and Michael will discuss our earnings results and guidance as well as provide a business update.

Then we'll open the call for questions before we begin let me cover a few administrative detail. This call contains time sensitive data that is accurate only as of the date of today's live broadcast redistribution of this broadcast is prohibited.

To assist with our call. This morning, we have posted a presentation on the and investors dot com homepage that will be reference buyer speakers.

As noted on page two of the presentation comments made during this conference call may contain statements that are commonly referred to as forward looking statements.

Such statements include those about future expectations beliefs plans strategies objectives events conditions and financial performance. We caution you that various factors could cause actual results to differ materially from that was anticipated.

Additional information concerning these factors. Please read the forward looking statements of section in the news release, we issued today and the forward looking statements and risk factors sections in our filings with the FCC.

Lastly, all per share earnings amounts discussed during today's presentation, including earnings guidance are presented on a diluted basis, unless otherwise noted I, Here's Warner who will start on page four of the presentation. Thanks, Andrew Good morning, everyone and thank you for joining us.

This morning, I'm going to kick off our presentation summarizing our team's strong 2019 financial and operating performance, but also highlight some of our key accomplishments well positioned Cameron for success in the future.

Importantly, I wouldn't look I had missed that's how we plan to continue delivering superior long term value and 2020 M.B. on to our customers communities and shareholders.

I'll, then turn it over to Michael to discuss key drivers of our 2019 earnings results in 2020 earnings guidance as well some key regulatory matters.

As always we'll turn it over to you for Q1 night after our remarks.

Before I jump into the details of our accomplishments and strategic areas of focus.

I want to reiterate that strategy that has been delivering significant long term value to all of our stakeholders.

Typically our strategy is to invest in a robust pipeline right regulated energy infrastructure.

Kunshan actually improving operating performance and advocate for responsible energy policies to deliver superior value to our customers and shareholders.

As always our customers continue to be at the center of our strategy.

As a result, we're focused on meeting our customers' energy needs and exceeding their expectations and in so doing delivering on our shareholders expectations for sustainable and strong long term earnings per share in dividend growth.

Our customers' expectations include providing them with safe reliable and affordable service.

They want new tools products and services to enhance their interactions with us and to better manage their energy usage.

And our customers also wants to continue to be forward thinking when it comes or environmental social and governance matters.

I'm pleased to say that our actions and performance in 2019 as was our strategic areas of focus for the future or aligned with our customers and shareholders expectations.

Which brings me to a discussion about 2019 performance.

I said earlier, we delivered strong financial and operational performance in 2019.

Earlier today, we announced 2019 earnings $3 from 35 cents per share.

Compared to core earnings of 3037 cents for sure earned in 2018.

Excluding the impact from whether 2019 normalized earnings increased to $3.32 per share or approximately 9% from 2018 normalize base, a 3005 cents per share.

But our customers and shareholders expectations in mind, we made to $4.4 billion remember structure investments in 2019, the resulted in a more reliable Brazilian secure and cleaner energy grid as wells contributed to strong rate base growth at all of our business segments.

Consistent with these objectives, we successfully completed several important projects in 2019.

I'm sure that you're familiar with some of the more notable projects on this line as we've discussed with you throughout 2019.

I also want to congratulate our Callaway energy center for receiving an exemplary writing in the World Association of nuclear operators in 2019.

It was a great team effort that demonstrates our focus on operational excellence.

In 2019, we also achieved constructive outcomes and several regulatory proceedings that will help drive additional infrastructure investments well benefit customers and shareholders, while keeping our customer rates affordable.

Those constructive regulatory outcomes are outlined on this slide.

We're also able to obtain regulatory approvals in 2019, our planned acquisition of 700 megawatts of wind generation along with several other innovative programs such as charge ahead and community solar what drives incremental investments and electric vehicle charging stations and renewable energy.

Further we continue to deliver robust energy efficiency programs for our customers. All of these programs are consistent with our yes, she initiatives to bring cleaner energy and innovative solutions to the grid and our customers.

The bottom line is that we successfully executed our strategy in 2019, which drives significant long term value for all of our stakeholders.

Turning to page five as you can see on this page are laser focused on executing this strategy for the last several years has delivered strong results.

From a customer standpoint, our investments in infrastructure have improved reliability.

The same time, our disciplined management of costs have kept our electric rates among the lowest in the country.

Not surprisingly these factors have also driven higher customer satisfaction scores.

We've also deliver superior outdoor shareholders as you can see on slide six.

Our weather normalized core earnings per share has written 60% or at approximately 8% compound annual growth rate since 2013, while our dividend has increased 20% over the same time period.

This has resulted in a significant reduction in our weather normalized dividend payout ratio from over 77% in 2013% to 58% in 2019, yeah. The bottom up our 55% to 70% targeted dividend payout range position us well for continued strong infrastructure and best.

And there may pace growth as well as future dividend growth.

I want to express my appreciation to all of our coworkers webdam relentlessly focused on executing our strategy over the last several years.

Fractures are clearly consistent with our mission to power the quality of life.

Well I'm very pleased with that performance over the last several years, we're not sitting back and taking a deep breath.

We remain focused on accelerating and enhancing our performance in 2020 in the years ahead.

Which brings me to slide seven.

Earlier. This morning, we also announced that we expect our 2020 earnings to be in a range of 3040 cents $3, a 60 cents per share.

Mike will provide you with more details on our 2020 guidance a bit later.

Building on our robust earnings growth over the past several years I'm pleased to say, we continue to expect to deliver long term earnings growth that is among the best in the industry.

Today, we affirm our expected 68% compound annual earnings per share growth rate in 2018 through 2023 issued last February.

In addition, we expect to deliver 6% to 8% compound annual earnings per share growth from 2020 grew 2024, using the midpoint of our 2020 guidance $3.50 per share as the base.

Our long term earnings growth will be driven by continued execution of our strategy, including investing in infrastructure for the benefit of our customers well keeping rates affordable.

This outlook accommodates several factors, including the range of treasury rates sales growth spending levels and regulatory developments.

And of course furnished growth in individual year will be impacted by the timing of capital expenditures regulatory reviews and weather among other factors.

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Turning to page during the first pillar rush Reggie stresses investing and an operating now utilities in a manner consistent with existing regulatory frameworks.

The strong earnings growth I, just discussed is primarily driven by a rate base growth outlook.

Today, we are rolling forward, our five year investment plan and as you can see we expect to grow our rate base and approximately 9% compound annual rate for the 2019 through 2024 period.

This growth is driven by a robust capital plan of $16 billion or the next five years that will deliver significant value to our customers and the communities we serve.

Our plan also includes strategically allocating significant capital all four of our business segments.

Finally, we remain relentlessly focused on disciplined cost management to earn its cost were allowed returns as possible and all of our businesses.

Moving now to page nine this morning, everyone, Missouri filed its updated smart energy plan, what the Missouri Public Service Commission, which includes a status update for 2019 and a capital investment plan for 2022 2024.

Evan Missouri's, making significant investments to modernize the energy grid and enhance how customers receive and consume energy.

In 2019, Ameren, Missouri invested $1 billion under the plan a more than 900 projects that are already delivering value to our customers.

Some examples are the important projects undertaken in 2019 are shown on this line.

Our work in 2019 was just the beginning in the pipeline for investment remains robust.

7.6 billion dollar updated smart energy plan filing today includes investments focused on improvements and upgrades modernize the energy grid droughts are approximately 1.2 billion dollar wind generation investment.

In 2020, we will also begin to deployment of 1 million smart meters over the next five years, which will provide more visibility and choices for our customers to control their energy usage.

We look forward to working with the Missouri, PSC and other key stakeholders as we implement the second near the Smart energy plan.

T to provide benefits to customers Oh, we transformed energy grid of today to build a brighter energy future for generations to come as wells creates significant jobs.

Moving to page 10 for an update on M. Missouri's pending electric rate review.

I'm pleased to report that as a result of extensive collaboration all the major parties participating in this rate we view.

Mmm, Missouri staff at the Missouri, PSC, the opposite public Council industrial consumer groups and others recently reached an agreement in principle nearly all the issues in this case.

As a result, we expect non unanimous stipulation and agreement to be filed with the Missouri PSC. This week with requested the agreement be approved by the Commission.

At this point the terms any agreement in principle are confidential.

This page outlines the remaining open items, which we take into hearings in early March.

Specifically, we will defend the current Sherman ratio for the fuel adjustment clause, which we have successfully defended since 2009.

In addition, we will strongly defend the recovery of all her affiliate transaction costs and investments and expenses related to our coal fired energy centers.

Look forward to presenting our abuse in Missouri PSC.

Turning now to page 11 next I want to cover the second pillar of our strategy enhancing regulatory frameworks and advocating for responsible energy and economic policies.

Beginning with damage, Illinois electric distribution Downstate clean energy Affordability Act legislation was filed recently.

It's important legislation would allow ameren, illinois to make significant investments and lower cost solar energy and battery storage to improve reliability walls, and transportation electrification, nor to the benefit customers and the economy across central and southern Illinois.

The downstate clean energy affordability, and what else folks in electric Formula Ratemaking through 2032, and builds on Amazon, Illinois efforts to modernize the energy grid under a transparent and stable regulatory framework that supported significant investment tomorrow, and I see energy grid, while improving reliability and create an approximately.

1400 jobs, all while keeping rates well below the Midwest and national averages.

In addition, this legislation to modify the allowed return on equity formula to increase the basis points at or to the average 30 year Treasury rate I'm Fiveeighty to Sixeighty set in our we kept at no more than 50 basis points above the national average for electric utility are always.

This is bill would move the state of Illinois closer to reaching its goal of 100% clean energy by 2050, and it's a great example of how Amarin, Illinois supporting our he or she initiatives to bring cleaner energy to our customers.

With all these benefits in mine, we're focused on working with key stakeholders to get this important legislation passed this year.

Turning to page 12 earlier this month, the Missouri PSC approved a unanimous stipulation and agreement that allows the expenses for Callaway Energy center refueling and maintenance outages deferred and amortized over approximately 18 months beginning with our fall 2020 outage.

This change will allow the timing of expense recognition associated with these outages to more closely in line with attainment of related revenue recognition center with our fall outage this year.

Moving on the FERC regulatory matters Amarin, along with other MISO transmission owners <unk> and many other parties requested rehearing of Fercs November 2019 order related to the MISO or are we complain cases.

From an overall policy perspective, we believe first order is inconsistent with its longstanding policy to incentivize transmission investment, particularly at a time when meaningful investments are needed for reliability and to enable the nation to continues transition to cleaner and more diverse generation sources.

Strong arguments were presented by several parties and we're pleased that the FERC issued an order extending the time to consider the rehearing request.

I look forward to addressing this important matter with the FERC in the months ahead.

Should be noted that FERC has no set timeline to address this matter and of course, we can't predict the timing and ultimate outcome of these proceedings.

Moving now to page 13 for an update on our wind generation investment plans to achieve compliance with Missouri's renewable energy standard and continue to transition our generation portfolio to benefit our customers the communities, we serve and the environment.

As I discussed earlier, we received regulatory approvals from the Missouri PSC in 2019 to acquire 700 megawatts of new wind generation at two sites in Missouri.

We expect our investment in these projects to be approximately $1.2 billion, which is included in the five year capital expenditure and rate base growth plans, we laid out today.

Both facilities will be significant additions to our renewable energy portfolio, and importantly, well past continue our transition to a cleaner and more diverse generation portfolio in a responsible fashion.

Construction is well underway at both sites.

Of course, we continue to work closely with the developers for both projects to monitor the time, the manufacturing and shipment of certain facility components coming from China due to the potential for issues associated with the current virus.

At this time both projects remain on schedule to be in service by the end of 2020, and we expect to see meaningful contributions to earnings in 2021 from these investments.

I'd now like to provide an update there were no choice program.

As you May recall renewable choice program enables ameren, Missouri to provide certain commercial industrial and municipal customers without the 400 megawatts of wind generation to meet their energy needs.

Under this program, we can on 200 megawatts of this wind generation.

Over the last several months, we've been working to meet our customers top priorities for that program.

Cutting prices competitive with existing mates long term price predictability and for renewable power generated in Missouri.

Today, we have not been able to put together a project that effectively meets the needs of our customers who have expressed an interest in this program.

Given that our customers are at the center of our strategy. We remain focused on finding solutions to best meet their needs and expectations for.

For example, we're exploring the possibility of allowing solar projects to qualify under this program given our success with similar programs for our residential customers.

This and certain other modifications to the program could require Missouri PSC approval.

The bottom line is that we will continue to relentlessly work, but our customers and the Missouri PSC as needed to design and developed projects to best serve our customers needs. You'll keep you posted on developments associated with this program.

Finally, consistent with our goal to meet our customers long term energy needs, we will assess additional renewable generation opportunities and the context of our next comprehensive integrated resource plan, which is expected to be filed in September of this year.

This comprehensive stakeholder process is well underway to evaluate our future customer demand as well as existing and new generation needs over the next 20 years and beyond.

We are excited about working with key stakeholders in this process and are committed to transition ameren Missouri's generation to a cleaner more diverse portfolio in a responsible fashion with the environment.

Customers and our shareholders.

Turning now to page 14, as we look to the future successful execution of our five year plan is not only focused on delivering strong results that through 2024.

But it's also designed to position amarin for success over the next decade and beyond.

We believe that is safe reliable resilient and secure energy grid will be increasingly important break even greater value to our customers our communities and shareholders.

Well this long term view in mind, we are making investments that will position amarin to meet our customers future energy needs and rising expectations support increased electrification of the transportation sector and other industrial processes and provide safe reliable natural gas services.

The right side of this page shows that our allocation of capital is expected to grow our energy delivery investments to nearly 80% of our rate base by the end of 2024.

As a result of Ameren, Missouri's investment and 700 megawatts of wind.

Combined with the schedule retirement, the Meramec coal fired energy center in 2022.

We expect coal fired generation two declined to just 8% of rate base by year end 2024.

These steps are consistent with our goal is to reduce carbon emissions by at least 80% low 2005 levels by 2015.

These actions are just some more examples are the actions, we're taking to address our customers and shareholders focus on U.S.G. matters.

Bottom line is that we're taking steps today across the board to position Ehrman for success in 2020 and beyond.

Moving to page 15, looking ahead through the end of this decade, we will remain focused on delivering superior long term value to our customers.

In addition to our robust $16 billion five year capital plan in years 2025 to 2029, we foresee a strong pipeline of additional investment opportunities of at least $20 billion that will deliver significant value to all of our stakeholders.

These projects will be consistent with the Missouri Smart energy plan as well, Illinois modernization action plan, both of which were designed to make our energy grid stronger smarter and cleaner.

We also plan to continue to bolster our nation's transmission infrastructure to enhance reliability and support greater levels renewable generation on the grid.

And speaking of renewable generation or comp plan reflects 700 megawatts of wind generation and 100 megawatts of solar generation over the next decade.

As I noted previously we will be fine our integrated resource plan in Missouri in September.

And that plan, we will taking a closer look at additional renewable generation opportunities that would help us transition to an even cleaner and more diverse portfolio in a responsible fashion and deliver significant long term benefits to our customers.

Of course, these investments from not only create a stronger and cleaner energy grid to meet our customers' needs and exceeded their expectations, but they will also create thousands of jobs for our local economies.

Our ability to make these critical infrastructure investments has been facilitated by constructive state and federal energy policies across all of our businesses.

Maintaining constructive energy policies, which support robust investment and energy infrastructure will be critical to meeting our customers' future energy needs and delivering on our customers' expectations.

Moving to page 16 to sum up our value proposition, we remain firmly convinced that the execution of our strategy in 2020 and over the next decade will deliver superior value to our customers shareholders and the environment.

We believe the expectation of a 6% to 8% earnings per share compound annual growth rate from 2020 through 2024, driven by strong rate base broke compares very favorably with our regulated utility peers I.

I am confident in our ability to execute our investment plans and strategies across all four of our business segments. As we have an experience and dedicated team to get it done.

That fact, coupled with our sustained past execution of our strategy on many fronts.

The decision that's well for future success.

Further our shares continue to offer investors a solid dividend.

In the fourth quarter of last year Amarins Board of directors expressed his confidence now long term growth plan by increasing the dividend by approximately 4% six consecutive year with the dividend increase.

Our strong earnings growth expectations outlined today positions us well for future dividend growth.

Of course, but your dividend decisions will be driven by earnings growth. In addition to cash flows and other business conditions together, we believe our strong earnings growth outlook combined with our shallow dividend results in a very attractive total return opportunity for shareholders.

Again, thank you all for joining us today I'll now turn the call over to Michael Michael.

Thanks, Warner and good morning, everyone. Turning now to page 18 of our presentation. Today, We reported 2019 core earnings of $3.35 per share compared to core earnings of $3.37 per share in 2018 [noise].

Ameren, Missouri, our largest segment experienced a decrease of 24 cents per share from $1.98 per share in 2018 to $1.74 per share in 2019.

This decrease is largely due to lower electric retail sales driven by weather, which reduced earnings by approximately 26 cents per share.

In 2019, we experienced near normal summer and winter temperatures compared a warmer summer and colder winter temperatures in the year ago period.

And reserves results also reflect the this year's scheduled refueling outage in our Callaway Energy center, which reduced earnings by nine cents per share compared to 2018, when there was no refueling outage.

The next Callaway refueling is scheduled for the fall 2020.

Higher property taxes also reduced earnings by five cents per share in 2019, when compared to 2018.

These items were partially offset by the positive comparative impacts related to meet our performance incentives, which contributed eight cents per share. In addition to lower other operation and maintenance expenses.

Turning to the other segments Ameren transmission earnings were up eight cents, which reflected increased infrastructure investments.

Earnings for Ameren, Illinois, natural gas were up five cents, which reflected higher rates effective in November 2018, and increased infrastructure investments.

In addition, Ameren, Illinois electric distribution earnings were up two cents due to increased investments, mostly offset by lower allowed return equity under formulaic ratemaking of 8.4% compared to 8.9% for the prior year.

The 2019 allowed or are we it's based on a 2019 averaged 30 year treasury yield of approximately 2.6% down from the 2018 average of 3.1%.

Amarin parent and other results reflected higher tax benefits, primarily associated with share based compensation and charitable donations returned to more normal levels.

Before moving on let me briefly cover electric sales trends for in Missouri, and Ameren, Illinois Electric distribution for 2019 compare to 2018.

Weather normalized kilowatt hour sales to Missouri residential and commercial customers on a combined basis were up a little over a half percent excluding the effects of the Missouri energy efficiency plan under Mia.

Sales to low margin, Missouri industrial customers it decreased about 4% excluding the effects are in energy efficiency plan.

We excluding the FX because the plan provides rate recovery to ensure that earnings are not affected by reduced electric sales, resulting from energy efficiency efforts.

Weather normalized kilowatt hour sales to resident, Illinois, residential and commercial customers on a combined basis decreased 1.5% and sales to industrial customers decreased 2%.

Recall that changes electric sales in Illinois, no matter that caused do not affect earnings since we are full revenue decoupling.

Moving to page 19 of the presentation here, we provide an overview of our $16 billion a planned capital expenditures for the 2023 2024 period by business segment. The underlines the approximately 9% projected rate base growth Warner discussed earlier.

This plan includes an incremental $2.7 billion compared to the 13.3 billion dollar five year plan for 2019, 320, 23 that was laid out last February.

Turning to page 20, we outlined here the expected funding sources or the infrastructure investments noted on prior page.

We expect continued growth in cash from operations as investments are reflected in customer rates.

We also expect to generate significant tax deferrals. The tax proposals are driven primarily by timing difference between financial statement depreciation reflecting customer rates.

Accelerated depreciation for tax purposes under makers.

I should note that over the five year time horizon of her plan, we expect to make income tax and payments totaling $150 million to $200 million over our five year plan.

In addition to the benefits of accelerated tax depreciation as a result of our expected 1.2 billion dollar investment in 700 megawatts of wind generation, we expect to begin generating production tax credits or the spirit.

From a financing perspective, we expect to continue as you long term debt and Cameron parent Ameren, Missouri, and Ameren, Illinois to refinance the maturing obligations in different a portion of our cash requirements.

We also plan to continue do use newly issued shares from our dividend reinvestment employee benefit plans over the five year guidance period.

We expect this summer REIT equity funding of approximately $100 million annually.

Our plan also includes a settlement of the forward equity contract in 20, Tony generate between 540 and $550 million to fund impart Amarins Aries wind generation investment by the end of that year.

In order for this.

Nor for us to maintaining strong balance sheet, what we found a robust infrastructure plan, we expect the incremental equity issuances or approximately $150 million year starting in 2021.

All of these actions are expected to enable us to maintain a consolidated capitalization target of approximately 45% equity.

Moving to page 21 of our presentation I would now like to discuss key drivers impacting our 2020 earnings guidance.

As Warner stated, we expect 2020 diluted earnings per share to be in the range of $3.40 to $3.60 per share.

On this page in the next we have lifted key earnings drivers of and assumptions behind our 2020 earnings guidance broken down by segment and compared to the 2019 results.

Beginning with Air Missouri earnings are expected arise in 2020.

Earnings are expected to be favorably affected by the electric service rates are expected to be effective as of April as early as April 1st.

In addition, we also expect deferral of expenses for the fall 2020, scheduled Callaway refueling and maintenance outage to increase earnings by approximately eight cents per share compared to the spring 2019 outage.

Outage expenses will be deferred and amortized over approximately 18 months after completion.

Partially offsetting these favorable earnings drivers, we expect lower energy efficiency performance incentives in 2020 of approximately nine cents.

Finally in Amarins very we expect to 700 megawatt wind generation investment by the ended 2020 to not have a material impact on 2020 earnings.

Ameren transmission earnings are expected to benefit from additional investments narrowing, Illinois, and eight dxi projects main under Fercs Formula Ratemaking.

Our guidance assumes the current 10.38% FERC allowed or are we for the full year at 2020, which includes a 50 basis point at or for the MISO participation, except for the Mark Twain project, which is assumes and allowed our or we have 10.8%.

Turning to page 22.

For Ameren, Illinois Electric distribution, we anticipate increased earnings in 2020 compared to 2019 from additional infrastructure investments made under Illinois formula rate, making.

Our guidance incorporates a formula based our or we have 8% using a forecasted 2.2% 2020 average yield for the 30 year Treasury bond.

Which is lower than the allowed our we have 8.4% in 2019.

For Ameren, Illinois natural gas distribution earnings we expected benefit from a qualified investments that are included in rates on a timely basis under the state's gas infrastructure writer.

Moving now to hammer and why drivers in assumptions, we expect lower tax benefits associated with share based compensation in 2020 compared to 2019.

In addition, the increased number of shares outstanding as a result of issuance under our dividend reinvestment employee benefits plans are expected to unfavorably impact earnings by two cents per share.

I would also I can take a moment to discuss our electric sales outlook, we expect to weather normalized Missouri kilowatt hour sales to customers be up approximately half percent compounded annually over a five year plan, excluding the effects of our EMEA energy efficiency fine.

Again, we exclude me a effects because the plan provides rate recovery to ensure that earnings are not affected by reduced electric sales, resulting from an energy efficiency efforts.

Turning to Illinois, we expect our weather normalized kilowatt hour sales to customers, including energy efficiency to be flat to down slightly over our five year plan.

Turning the page 23, and Ameren, Illinois regulatory matters in December the I see see approved then electric distribution rate change consistent with our filing and our annual rate update proceeding with new rates effective at the beginning of this year.

And Ameren, Illinois to get natural gas regulatory matters last week, we filed a request for $102 million annual increase in gas distribution rights using a 2021 future test year with the ITC.

As hundred and 2 million included in an estimated 46 million of annual revenues that would otherwise recovered in 2021 under Ameren, Illinois qualifying infrastructure plant and other writers.

The details of this gas rate case filing our noted on this page.

And I I see see decision as required by January 2021, with new rates expected to be effective in February 2021.

Finally, turning to page 24, we delivered strong earnings growth in 2019, and we expect to again deliver strong earnings growth in 2020, as we continue to successfully execute our strategy.

As we look ahead, we expect strong 6% to 8% compound earnings per share growth from 20, 20% 2024, driven by robust rate base growth and disciplined cost management.

Further we believe this growth will compare favorably with the growth of our regulated utility peers.

And amarin shares continue to offer investors an attractive dividend.

In total we have an attractive total shareholder return story that compares very favorably to our peers that concludes our prepared remarks, we now and by your questions.

Thank you know at this time will be conducted a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad.

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One moment, well we poll for questions.

Our first question is from.

And demo and Smith with Bank of America. Please proceed.

Good morning Julia.

Good morning, Congratulations what an update here I appreciate high thanks, Joanne bad Thanks appreciate it.

Absolutely well, so perhaps just a kick it off your first I want to turn it back to Illinois in some of the Legislative efforts. You described here can you perhaps at least begin to allude to what the opportunity would be a under the downstate element here, specifically I think you highlighted the transcript solar easy.

And further distribution investments, but I just want to try to.

Put of at least at initial number around what that totality could be and I presume that's largely not reflected in your outlook as you just updated and I got follow up as well.

That said the survey to you know look a couple of things number one we're excited about this legislation.

I think it really has some really important elements in terms of trying to move Illinois to the cleaner energy future that they've been talking about but also doing the things that we had been doing for the past eight years and that's modernizing the grid. So so number one one of the things in terms of trying to put out.

Some perspective on it clearly the grid modernization efforts.

We we talk a lot about those and those are in some respects reflected back in the slide that we showed in terms of our 10 year outlook. Some of those dollars are certainly amir.

I think in right now it's premature for us to put a specific number on the solar and energy storage opportunities or electrification I think clearly as you've seen us do in Missouri, We see these solar plus battery storage projects and they've been really important to help reliability.

Richard and his team in Illinois, certainly see those same types of opportunities I look I've electrification I think across the country. We're just scratching the surface in terms what those opportunities can be so I'd like to put something around that for you, but I think it's a slow early for us to do that but clearly we see this is an important opportunity for the state of Illinois.

And especially downstate, Illinois.

Excellent and just wanted to clarify a little bit more in your financing plan here to further points, one you talked and perhaps emphasize that point points throughout the transcript dividend growth and obviously your broadly at the lower end of your contemplate a payout ratio you also increased a little bit the equity funding plan to the <unk> through the outlook.

How do you think about dividend growth given the pace of Capex that you have do you think that ultimately we're still looking at a lower trending towards the lower end of that payout just through at least the bulk of this high growth period.

Oh, yes, so thanks, thanks Joanne.

It's a great question. So you know look we've talked a lot about the Devon and no doubt, it's an important area of focus for our board of directors I think what we did today, we pointed out the obvious no our execution of our strategy over the last several years has driven our dividend payout ratio down meaningfully to the lowering of our 55% to 70% and so.

As a result, known as you look ahead. There is no doubt that we have been allocating a great deal capital to rate base growth and as you see in this plan. We continue to do that and we've had a solid dividend and so you know as we look as I had I think the fact that we've been able to bring a dividend payout ratio down it just gives us greater flexibility with respect to capital Alec.

Patient, including from my perspective position us well for future dividend growth.

Excellent. Thank you I'll leave it there.

Thanks, Joe I appreciate the time.

Our next question is from Steve Fleishman with Wolfe Research. Please proceed.

Morning, Steve how are you doing.

Hey, good morning, Warner So I guess first question just on the the Illinois Law proposal could you just maybe give us a little color I'll see.

Kind of who's up supporting that in.

How that how if at all that this proposal by interacts with the clean air clean jobs.

Sure Bill that's also going on.

And you know look that a couple of things that the start there you know the the below sponsored by Senator Hastings in Center Hunter I know the center sign on and on the how side. It's a it. It is sponsors are representative of Greenwood and represent of Hoffman.

So you know when you step back and you look at the fundamental elements of this bill. This legislation number one it's very consistent with things that that have been talked about in Illinois really for the past 12 months in terms of trying to put greater levels of investment for solar for battery storage electrification. These were all things which are consistent.

With the Governor's package. So we think as we've talked around with key stakeholders. These are these are important elements of any forward thinking legislation and so that's in this bill.

Secondly, I think overtime, you have seen and the modernization of the grid and the legislation associated with that how that is perceived widespread support for all the right reasons.

For reliability purposes for customer affordability purposes for job creation, all those things are really spelled robust support for that.

When you put these two things together, we think this legislation has really the opportunity to gain broad based support having said that no. It's early in the session here and so a richer and his team has done a fantastic job of of educating key stakeholders talking with many folks that are at the table, including those that are looking at other.

Pieces of legislation and so we're not done doing that and so I would say that you know a lot of these elements of this legislation or very consistent a much in line with like Q stockholders, who want to see but there's still more work to do but we're pleased with where things rats today look forward to engage with these folks in the future.

Okay.

Great. One other question just have to ask that.

There's there's I guess noise going on with your neighboring utility and.

Begs the question you know kind of whether you would be interested or your policy on M&A activity.

Sure sure of course, Steve and we we don't comment on now rumors are certainly speculate on any M&A transaction, but let's just be clear.

Our team remains very focused on executing our strategic plan as you heard me just talk about a little barrel or that plan is based on strong organic growth across all of our regulated businesses and.

As you've seen in our in our presentation is certainly delivered strong returns in the past through the execution that strategy and that is absolutely our focus going forward. Because we believe is going to continue to deliver superior value not just to our shareholders, but especially to our to our customers and so.

So we're going to continue to stay focused on that plan, because we think thats going to deliver superior value in the long term for all of our stakeholders.

Okay.

Great. Thank you.

Thanks, Steve.

As a reminder, that star one and your telephone keypad. If you like to ask your question, we will pause for a brief moment for final questions.

Okay.

My question answer session I would like to turn the call back over to Andrew Clark for closing remarks.

Thank you for participating in the call. This call a replay of this call will be available for one year on our website. If you have questions. You may call. The contacts listed on our earnings release financial analysts inquiry should be directed to me Andrew Kirk Media should go up call. Aaron Davis again, Thank you for your interest and everyone have a great day.

[laughter].

Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Yeah.