Q1 2020 Earnings Call
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I'd now like to turn the conference over to Dennis Puma Director of Investor Relations. Please go ahead.
Oh, Thank you Shirley good morning, everybody welcome to New Jersey resources first quarter fiscal 2014 public school webcast I'm joined here today, Boise West sooner, President and CEO, Pat Migliaccio, or senior Vice President and Chief financial.
As well as other members of our senior management team.
As you know certain statements in today's call contains estimates and other forward looking statements with immediate securities laws.
Who wish to caution listeners on this call.
But the current expectations assumptions and beliefs, forming the basis for forward looking statements include many factors therapy.
And our ability to control or estimate precisely that could cause results to materially differ from our expectations is found on slide one.
These these items can also be fan in are forward looking statements section of today's earnings release first on form 8-K and in our most recent form 10-K into as filed with the SEC we.
Do not by including the statement assume any obligation to review or revise any particular forward looking statement.
Referenced here in light of future events.
We will also be referring to certain non-GAAP financial measures such as net financial earnings are NFC. We believe that NFC provides a more complete understanding of our financial performance over.
And if he is not intended to be a substitute for gap, our non-GAAP financial measures of discuss more fully in the no I'm seven of our form 10-K.
Our agenda is found on slide two Steve will begin today's call with highlights for the quarter, followed by pad, who will review our financial results. Then we'll open the call up to your questions.
The slides to accompany today's presentation are available on our website and more furnished on form 8-K filed this morning.
That said they'd like to turn the call over to our president and CEO, Steve what the season.
Thanks, Dennis and good morning, before we get to our fiscal 2021st quarter results I'd like to talk briefly about new Jersey's energy Master plan, which was.
Release by Governor Murphy last week the plan as a policy document that outlines use management and development of energy in New Jersey. The go to the planner achieved 100% clean energy and to reduce emissions to 80% of 2006 levels by 2050, we support the state's emission reduction goal and recognize the opportunities it.
It's very diversified energy companies like ours in fact at our annual shareholders meeting last month I outlined to sustainability agenda that aligns with the state's 2050 target, including a voluntary reduction of our operational missions in new Jersey to 50% of 2006 levels by 2030.
Importantly, the MP recognizes the.
So our infrastructure plates and meeting 75% of the state home heating needs. It also recognizes the long term value of this infrastructure in delivering decarbonize gas supply to our customers through technologies like renewable natural gas in green hydrogen.
But the policies outlined in the energy Master plan, our planned capital expenditures and our long.
Long term NFI growth rate of 6% to 8% remain unchanged New Jersey resources has the assets expertise in team to capitalize on these opportunities and grow our business, while helping meet the state's climate goals, we have a world class gas distribution system that can be leveraged to deliver clean decarbonize fuel key homes and.
Mrs. We are significant long term investor in New Jersey solar market and we manage one of the state's most successful energy efficiency programs. These strengths together with our own sustainability agenda will be critical unhealthy misstate reaches submission goals and they will allow us to remain focused on growing the company in generating long term results for our shareowners.
Now, let's turn to the quarter.
Turning to slide four you can see the highlights from the first quarter, we reported net financial earnings of 44 cents per share compared with 61 cents per share last year. The difference is primarily due to the timing of aesrx sales and lower results from energy services.
Customer growth continued at New Jersey natural gas, adding nearly.
The 2300, new customers in the first quarter, we're on track to reach our goal of adding 9800, new customers this fiscal year.
Adelphia Gateway received its certificate of public convenience and necessity from FERC and now for the first time in our company's history with the operated a FERC regulated pipeline conversion of the southern end from oil to natural gas to.
Expected to begin upon receipt of our final regulatory approvals and necessary permits during the quarter. We completed the acquisition to the leaf River Energy Center and it performed in line with our expectations clean energy ventures placed 2.9 megawatts commercial solar project in the service and our solar portfolio is now nearly 300 megawatts.
And that's enough energy to power approximately 27000 homes.
On slide five while we are affirming our 2020 NFC guidance of two of five to 215 per share we've adjusted the contributions from certain segments.
First we expect our utility to contribute about 60% to NFI.
That's about a 3% increase from the midpoint of our prior guidance range and is primarily due to reduction you know nm expense.
Second we expect to energy services to contribute between 1% to 5% down from our prior estimate of 5% to 15%. This adjustment reflects the lack of volatility natural gas prices through January.
Through the mild weather in the northeast and third we expect CV to contribute between 25% to 30% up from the prior estimate of 20% to 25%. This is primarily due to additional investment opportunities this year.
On slide six we've summarized the key growth drivers for New Jersey natural.
In the upper left you can see we expect steady customer growth. Thanks, the favorable demographics and our service territory and we are on track to achieve our annual 1.8% customer growth rate.
And the top right, it's an update on the southern reliability link to date, we've completed over 65% of the project and expect it to be in service in 2020.
One.
On the bottom left our infrastructure investment program is currently in the regulatory review process and is expected to conclude this fiscal year and finally on the bottom right at about 37% of the capital. We invested this quarter will provide returns with minimal regulatory lag.
An update on Adelphi Gateway is.
On slide seven during the quarter. The project received its FERC certificate and we subsequently closed on $166 million acquisitions.
These are significant milestones for our midstream business in the company.
The northern ended the pipeline is already in service and supply natural gas to the Martin's Creek and lower amount Bethel generation facilities under a 10 year supply.
Hi agreement.
We will convert the southern portion, which is already in the ground to cleaner natural gas to serve constrained markets in the greater Philadelphia region. Once we receive our final permits and regulatory approvals, we will begin adding compression new laterals and interconnects to the southern portion, which will be the largest driver of cash flow and earnings for the project.
Our capital investment to improve Adelphi gateways expected to be in the range of $180 million to $200 million.
On slide eight I'll take you through the latest developments for pennies on January 28, pennies was granted that 30 day extension to submitted petition for review with the Supreme Court United States.
The filing deadline for this petition.
It is now March 4th of this year.
On January Thirtyth, FERC issued a declaratory order supporting Penn East eminent domain right.
First supported pennies position as significant as the project pursues the U.S Supreme Court review.
Pennies also filed and approved an application to amend its FERC certificate.
Requesting approval to pursue the project through phase in approach, which is supported by shipper demand.
First phase will consist of construction, Pennsylvania with interconnections within the state because Penn East as the majority of approvals and permits needed in Pennsylvania construction is expected to begin soon after FERC approved the amendment.
The.
Second phase includes the remainder of the original route New Jersey in Pennsylvania, and we began after pennies to secure to all the necessary approvals as we said before we remain committed to the project it's important role in our energy future.
Moving to slide nine I'll take you through the operational highlights for CE This quarter, Pat will provide more.
Context around our Q1 financial results in a moment.
At the top you'll note that we placed one commercial solar project into service added about three megawatts of incremental capacity, we plan on placing eight projects into service. This fiscal year added about 55 megawatts. This will bring our total portfolio to about 350 megawatts of capacity.
Yes.
At the bottom left you can see that our capital expenditures through the first quarter totaled $15.7 million than we recognized 4.2 million an investment tax credits the bottom right shows our expected as direct revenue in 2020, which is anticipated to be approximately $80 million.
Turning to slide 10 I'd like.
To provide an update on the solar market New Jersey.
As part of the 2018 clean Energy Act the BP was required to close the existing as direct market when the installed solar capacity in the state reaches 5.1% of retail electric sales.
In December of transitional probe market was approved to bridge the gap between the current abstract.
Market and what will become the successor program the transitional credit will be called a t. rack.
So let me take you through some of the details.
First of all the insult solar investments made to date, we'll continue to generate aesrx and the market will function as it does today.
Projects eligible for T. Rex will receive a 15 year fixed.
Price subsidy.
And as shown in the table the transitional market will incented development of certain types of projects. We believe the transitional plan will allow NJ our to meet its investment targets. The BP was refining successor program with more details to come.
I'll now turn the call over to Pat for details on the financial results.
Thanks, Steve Good morning, everyone Slide 12 shows the main drivers behind our quarterly in a few changes.
Reported that if we have 40.4 million for 44 cents per share compared to 54.1 million or 61 cents per share in 2019.
On the regulated side Ngs utility gross margin increased in the first quarter due primarily to higher rates.
Building from a rate case settlement.
In addition, and if it into our midstream slightly decreased during the first quarter through the recognition of the gain in the first quarter 2019 on equity investment in Dominion that did not recur this year, because we sold to shares.
This decrease was partially offset by contributions from leave river.
Which with operating revenue approximately 9 million.
Performed in line with our expectations.
TV NFI decreased for three reasons first the timing of Aesrx sales in fiscal 2019, a larger portion of our annual Aesrx sales occurred in the first quarter.
Second first quarter 2019 included contributions from the wind portfolio that was subsequently divested.
In February of 2019.
Third we recognized fewer ITC credits in the first quarter compared to last year.
As Steve mentioned NFI at energy services declined due to narrow pricing spread this caused by milder weather in the northeast.
Slide 13 outlines our capital spending for the first quarter. The next three years.
A few points I'd like to.
A highlight.
For the quarter utility spend was up 28% year over year, primarily due to increases in srl from the combined investment in safe to NJ rise.
For fiscal 2020 over 70% of total capital spend will be at NJ, Angie, helping to support a rate base CAGR of approximately 10%.
With pennies pursuing a phased approach to the project, we're reducing our capital expenditure estimates for 2021 and 2022, we now expect to spend between 105 to 115 million to construct phase one in Pennsylvania.
Synergy ventures projected capital spend for the year increased about $10 million due to an additional investment opportunity.
Turning to slide 14, you can see an update on our cash flows and financing projections.
Cash flow from operations. The first quarter was negative 43 million, which reflects the seasonality of our business. As you can see we expect a significant improvement for the full year due to new higher rates. It EMG. As reminder, these rates went into effect on November 15.
Early in fiscal 2020, we acquired the leaf River Energy Center for 367, and a half million, which was initially financed through a $350 million bridge facility.
We've issued the equity needed as part of the acquisitions permanent funding and partially repaid the bridge loan our equity raise result in the issuance of 5.3 million shares of common stock.
With net proceeds of 213 million.
We tend to issue 1.2 million common shares leader in the year as part of the forward sale portion of our equity raise.
The acquisition satisfies our plan needs for fiscal 2020 and 2021, excluding the drip.
The results of our.
Hedging program are highlighted on slide.
Team.
As we approach the bgs auction in February we saw an increase in asset prices for his years 2022 in 2023.
For those years prices have increased 8% of 12% respectively. Since our last earnings call.
With the increase in prices, we've been actively hedging and that has 71% of restaurant revenues hedge.
For 2022, an increase from 50% when we last reported the data.
For 2023 were now 22% hedged and we'll continue to monitor the market to add to our hedge position.
Furnitures 2020 in 2021, we are nearly 100% hedged at these ratios are as our revenues, we largely unaffected by future changes in answering prices.
Let's turn the call back to Steve Steve.
Thanks, Pat before I open the call to questions I want to thank our employees for all their hard work and dedication that drives our performance and I. Appreciate you taking the time to join US today I will now open the call for questions.
We will now begin the question and answer session.
Two.
Last question you May Press Star then one on your Touchtone phone.
You are using a speakerphone please pick up your handset before passing the keys.
To withdraw your question. Please press Star then Tim.
Next time, we'll pause momentarily to assemble our roster.
Our first question comes from Travis Miller with.
Morningstar. Please go ahead.
Monitoring thank you.
Morning Travis.
I would just wondering on technical question here, so that to your earning share from the cleaner energy ventures segment went up a little bit for your projection that assured anything.
There that's notable.
So drove that increase.
John This is Pat Migliaccio, it's really the increase of approximately $10 million in our expected spend on commercial solar projects would drive the good portion of that increase to the range of.
25% to 30%.
Correct is that.
Are those from opportunities.
You are seeing now in the market.
To.
Might not have been us economic before or is it something else going on there.
No just a further a change of the pipeline.
Okay.
And on a higher level question, obviously, there's been a lot to talk about.
The potential.
Opposition residential side natural gas use.
I think Ajay come out with some statements and wonder if you're seeing that either and in any of your.
Neighborhood local towns anything in that policy discussions usually you went through its environmental policy.
Debates on if anything along those lines in terms of.
Going back residential gas use.
Hey, Travis this is Steve and no we havent seen any that to date in fact, our customer growth as we've just said.
Continues on pace, we expect over the next step three years to add 27000 30000, new customers.
To our two.
Our customer base and given the demographics of our service territory in certain the price of natural gas compared to all other ways to heat your home, we expect that to continue.
Okay, great. Thanks, So I had.
Thanks Travis.
Once again, if you have a question. Please press Star then one.
Okay.
At this time there are no further questions I would like Oh pardon me I see we have Richards necessarily from Bank of America. Please go ahead.
Hey, good morning can you guys Harry.
Yes, Hi, Richard.
Hi, I'm just wondering.
What's your guidance try and you just reaffirming.
It seems like a pretty.
They miss relative to expectations, just how do you see yourself trending on within that range.
The average this is Pat Migliaccio, I mean, we reaffirm the guidance range of two of five to 15 at this point it would be premature for us to give any more refined guidance than that.
Yeah.
Okay. So I'm, just reaffirming the guidance but.
Not necessarily trending higher or lower.
Yes, I think that's a fair statement.
Okay. Thanks, a lot.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Dennis pin that for any closing.
Correct.
All right Sarah I want to thank everybody for joining us. This morning as a reminder, recording of this falls available for replay on our website as always we appreciate your interest in investing in New Jersey resources Goodbye.
The conference has now concluded thank you for attending.
This presentation you may now disconnect.
[music].
Good day and welcome to the New Jersey Resources, The school 2021st quarter Earnings Conference call.
All participants will be in listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you might press Star then one on your Touchtone phone.
To withdraw your question. Please press Star then.
Two.
Please note that's about as being recorded.
I'd now like to turn the conference over to data come out director of Investor Relations. Please go ahead.
Thank you showed good morning, everybody welcome to New Jersey resources first quarter fiscal 2020, cough and cold webcast I'm joined here today by Steve Westhoven at present.
Yeah, Pat Migliaccio, or senior Vice President and Chief Financial Officer.
Well, it's other members of our senior management team.
As you know certain statements in today's call contains estimates and other forward looking statements within the meaning of Securities law.
<unk> caution listeners.
Cool.
But the current expectations assumptions I believe.
Forming the basis for forward looking statements include many factors other beyond or ability to control or estimate reflects only this could cause results to materially differ from our expectations is that alone flood waters.
<unk>. These items could also be some forward looking statements section of today's earnings release first on form 8-K and in our most.
So form 10-K into as well with the FCC.
We do not like what's going to stay minutes. So many obligation to review or revise any particular forward looking statement.
Q1 in light of future events.
Well also be referring to certain non-GAAP financial measures such as net financial earnings are and I see we believe that NFC.
It's a more complete understanding of our financial performance over NFC is not intended to be a substitute for GAAP or non-GAAP financial measures will discuss more fully in no I'm seven of our form 10-K.
Our agenda is found on slide two Steve will begin today's call with highlights from the quarter fall by pet who are your.
Financial results then we'll open the call up to your question.
The slides accompanying today's presentation are available on our website and more first on a form 8-K filed this morning that sounded like the turn the call over to our president and CEO, Steve what to see.
Thanks, Dennis and good morning, before we get to our fiscal 2021st quarter results.
I'd like to talk briefly about New Jersey Energy Master plan, which was released by Governor Murphy last week.
The plan is a policy document that outlines use management development of energy in New Jersey. The go to the planner achieved 100% clean energy and to reduce emissions to 80% 2006 levels by 2015, we support the state.
<unk> reduction goal and recognize the opportunities it creates for a diversified energy companies like ours in fact at our annual shareholders meeting last month I outlined to sustainability agenda that aligns with the state's 2050 target, including a voluntary reduction of our operational missions in new Jersey to 50% of 2006 levels by 20.
30.
Importantly, the M.P. recognize the roll our infrastructure plates and meeting 75% of the state's home heating needs. It also recognizes the long term value of this infrastructure and delivering decarbonize gas supply to our customers through technologies like renewable natural gas in green hydrogen.
But the policies outlined in the.
She master plan, our planned capital expenditures and our long term NFI growth rate of 68% remain unchanged.
New Jersey resources has the assets expertise in team to capitalize on these opportunities and grow our business, while helping meet the state's climate goals, we have a world class gas distribution system that can.
Can be leveraged to deliver clean decarbonize fuel he homes and businesses. We are significant long term investor in New Jersey solar market and we manage one of the state's most successful energy efficiency programs. These strengths together with our own sustainability agenda will be critical and helping to state reach a submission goals and they will allow us to remain focused on.
Growing the company in generating long term results for our shareowners.
Let's turn to the quarter.
Turning to slide four you can see the highlights from the first quarter reported net financial earnings of 44 cents per share compared to 61 cents per share last year. The difference is primarily due to the timing of aesrx sales and lower results from energy services.
Customer growth continued at New Jersey natural gas, adding nearly 2300, new customers in the first quarter. We're on track to reach our goal of adding 9800, new customers this fiscal year.
Adelphia Gateway received its certificate of public convenience and necessity from FERC and now for the first time in our company's history with the operate a FERC regulated pipeline.
Conversion to the southern end from oil to natural gas is expected to begin upon receipt of our final regulatory approvals necessary permits during the quarter. We completed the acquisition to the Leap River Energy Center and it performed in line with our expectations clean energy ventures place 2.9 megawatts commercial solar project in the service and our.
Our portfolio is now nearly 300 megawatts and that's enough energy to power approximately 27000 homes.
On slide five while we are affirming our 2020 NFC guidance to a 5% to 15 per share we've adjusted the contributions from certain segments.
First we expect our utility to.
Contribute about 60% to NFI, that's about a 3% increase from the midpoint of our prior guidance range and it's primarily due to reduction in though and I am expense.
Second we expect to energy services to contribute between 1% to 5% down from our prior estimate of 5% to 15%. This adjustment reflects.
The lack of volatility in natural gas prices through January due to mild weather the northeast and third we expect CV to contribute between 25% to 30% up from the prior estimate of 20% to 25%. This is primarily due to additional investment opportunities this year.
On slide six we've summarized.
The key growth drivers for New Jersey natural gas.
In the upper left you can see we expect steady customer growth. Thanks, the favorable demographics and our service territory and we are on track to achieve our annual 1.8% customer growth rate.
And the top right, it's an update on the southern reliability link to date, we've completed over 65.
5% of the project and expect it to be in service in 2021.
On the bottom left our infrastructure investment program is currently in the regulatory review process. It is expected to conclude this fiscal year and finally on the bottom right at about 37% of the capital. We invested this quarter will provide returns with minimal regulatory lag.
An update on Adelphia Gateway is on slide seven during the quarter. The project received its FERC certificate. We subsequently closed on a 166 million dollar acquisition.
These are significant milestones for our midstream business and the company.
The northern ended the pipeline, it's already in service and supply natural gas to the Martin's Creek and lower amount that will generate.
Certain facilities under a 10 year supply agreement.
We will convert the southern portion, which is already in the ground to cleaner natural gas to serve constrained markets in the greater Philadelphia region. Once we receive our final permits and regulatory approvals will begin adding compression new laterals that interconnects to the southern portion, which will be the largest driver of cash flow and.
Earnings for the project, our capital investment to improve Adelphi Gateway is expected to be in the range of $180 million to $200 million.
On slide eight I'll take you through the latest developments for pennies on January 20, Eightth pennies was granted that 30 day extension to submit a petition for review with the Supreme Court of United States.
The filing deadline for this petition is now March 4th of this year.
On January Thirtyth, FERC issued a declaratory order supporting Penn East eminent domain right.
FERC supported pennies position is significant as a project pursues the U.S. Supreme Court review.
Please also filed and approved an application to amend.
It's FERC certificate requesting approval to pursue the project through face and approach, which is supported by shipper demand.
First phase will consist of construction, Pennsylvania with interconnections within the state.
Because pace does the majority of approvals and permits needed in Pennsylvania construction is expected to begin soon after FERC.
The amendment.
The second phase includes the remainder of the original New Jersey in Pennsylvania, and will began after pennies to secured all the necessary approvals as we've said before we remain committed to the project it's important role in our energy future.
Moving to slide nine I'll take you through the operational highlights for CV this quarter.
Pat will provide more context around or Q1 financial results in a moment.
At the top you'll note that we placed one commercial solar project into service added about three megawatts of incremental capacity, we plan on placing eight projects into service. This fiscal year added about 55 megawatts. This will bring our total portfolio to about 350.
Megawatts of capacity.
At the bottom left you can see that our capital expenditures through the first quarter totaled $15.7 million than we recognized 4.2 million in investment tax credits.
The bottom right shows are expected aesrx revenue in 2020, which is anticipated to be approximately $80 million.
Turning to slide 10, I'd like to provide an update on the solar market New Jersey.
As part of the 2018 clean Energy Act the BP was required to close the existing as wrecked market when the installed solar capacity in the state reaches 5.1% of retail electric sales.
In December transitional pro market was approved to bridge the gap between.
During the current abstract market and what will become the successor program. The transitional credit will be called a t. wreck.
So let me take you through some of the details.
First of all the insult solar investments made to date, we'll continue to generate aesrx and the market will function as it does today.
Projects eligible for T. Rex will.
The 15 year fixed price subsidy.
And as shown in the table the transitional market will incentive development of certain types of projects. We believe the transitional plan will allow NCR to meet its investment targets. The BP was refining successor program with more details to come.
I'll now turn the call over to Pat for details on the financial.
Thanks, Steve Good morning, everyone Slide 12 shows the main drivers behind our quarterly in a few changes.
Reported that if we have 40.4 million or 44 cents per share compared to 54.1 million or 61 cents per share 29 team on the regulated side Ngs utility gross margin increased as the first quarter due primarily to higher rates.
Nothing from a Rick is settlement.
In addition benefit into our midstream slightly decreased during the first quarter two the recognition of the gain in the first quarter 2019 on equity investment in Dominion that did not recur this year, because we sold to shares.
This decrease was partially offset by contributions relief River.
Which with operating revenue approximately 9 million.
Performed in line with our expectations.
That CV NFI decreased for three reasons first the timing of Aesrx sales in fiscal 2019, a larger portion of our annual Aesrx sales occurred in the first quarter.
Second first quarter 2019 included contributions from the wind portfolio that was subsequently divested.
In February of 2019.
Third we recognize fewer ITC credits in the first quarter compared to last year.
As Steve mentioned NFI at energy services declined due to narrow pricing spreads caused by milder weather the northeast.
Slide 13 outlines our capital spending for the first quarter. The next three years.
A few points I'd like to.
A highlight.
For the quarter utility spend was up 28% year over year, primarily due to increases in srl for the combined investment in safe to NJ rise.
For fiscal 2020 over 70% of total capital spend will be at Angie Angie, helping to support a rate base CAGR of approximately 10%.
With pennies pursuing a phased approach to the project, we're reducing our capital expenditure estimates for 2021 and 2022, we now expect to spend between 105 to 115 million to construct phase one in Pennsylvania.
Synergy ventures projected capital spend for the year increased about $10 million due to an additional investment opportunity.
Turning to slide 14, you can see an update on our cash flows and financing projections.
Cash flow from operations. The first quarter was negative 43 million, which reflects the seasonality of our business. As you can see we expect a significant improvement for the full year due to new higher rates. It Angie Angie as a reminder, these rates went into effect on November 15.
Early in fiscal 2020, we acquired the leaf River Energy Center for 367, and a half million, which was initially financed through a $350 million bridge facility.
We've issued the equity needed as part of the acquisitions permanent funding and partially repaid the bridge loan.
Our equity raise result in the issuance of 5.3 million shares of common stock.
With net proceeds of $213 million.
We tend to issue 1.2 million common shares leader in the year as part of the forward sale portion of our equity raise.
The acquisition satisfies our plan needs for fiscal 2020 and 2021, excluding the drip.
The results of our.
Hedging program are highlighted on slide.
Team.
As we approach the Bgs auction February we saw an increase in that stock prices for his years 2020 to 2023.
For those years prices have increased 8%, 12%, respectively since our last earnings call.
With the increase in prices, we've been actively hedging and now have 71% of restaurant revenues hedge.
For 2022, an increase from 50% will be last reported the data.
Bridger 2023 were now 22% hedged and we'll continue to monitor the market to add to our hedge position.
Furnitures 2020, and 2021, we are nearly 100% hedged. If these ratios are Soc revenues, we largely unaffected by future changes in western prices.
Let's turn the call back to Steve Steve.
Thanks, Pat before I open the call the questions I want to thank our employees for all their hard work and dedication that drives our performance and I. Appreciate you taking the time to join US today ill now open the call for questions.
We will now begin my question and answer session.
Two.
Ask a question you May press Star then one on your Touchtone phone.
If you're using a speakerphone please pick up your hands that before passing the keys.
To withdraw your question. Please press Star then too.
Next time, we'll pause momentarily to assemble our roster.
Our first question comes from Travis Miller with.
Morningstar. Please go ahead.
Good morning, Thank you.
Good morning Travis.
I'm just wondering.
Technical question here, so that you're earning share from the cleaner energy ventures segment went up a little bit for your projection Fisher anything.
There that's notable.
So drove that increase.
John This is Pat Migliaccio, it's really the increase of approximately $10 million in our expected spend on commercial solar projects would drive the good portion of that increase to the range of.
25% to 30%.
Correct is that.
Are those from opportunities.
You are seeing now in the market.
So.
Might not have been <unk> economic before or is it something else going on there.
No just a further changes that pipeline.
Okay.
No no higher level question, obviously, there's been a lot to talk about.
The potential.
Opposition residential side natural gas use.
I think Ajay come out with some statements and wonder if you're seeing that either and in any of your.
Neighborhood local towns anything in the policy discussions usually you went through its environmental policy.
Debates I mean anything along those lines in terms of.
Going back residential gas use.
Hey, Travis this is Steve and now we havent seen any that to date in fact, our customer growth as we've just said continues on pace. We expect over the next three years to add 27000 30000, new customers.
To our to our.
Our customer base and given the demographics of our service territory in certain the price of natural gas compared to all other waste heat your home, we expect that to continue.
Okay, great. Thanks <unk>.
Thanks Travis.
Once again, if you have a question. Please press Star then one.
At this time there are no further questions I would like Oh pardon me I see we have Richard just Cirelli from Bank of America. Please go ahead.
Hey, Marty and can you guys Harry.
Yes, Hi, Richard Hi, I'm just wondering.
What's your guidance try and you just reaffirmed it it seems like a pretty.
They miss relative to expectations, just how do you see yourself trending within that range.
Average of this is Pat Migliaccio, I mean, we reaffirm the guidance range of two of five to 15 at this point it would be premature for us to give any more refined guidance than that.
Okay. So I'm, just reaffirming the guidance but.
Not necessarily trending higher or lower.
Yes, I think Thats a fair statement.
Okay. Thanks, a lot.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Dennis pin that for any closing.
Good luck.
All right.
I want to thank everybody for joining us. This morning as a reminder, recording of this falls available for replay on our website as always we appreciate your interest in investment in New Jersey resources Goodbye.
The conference has now concluded thank you for attending.
His presentation you may now disconnect.