Q4 2019 Earnings Call
Good day and welcome to the fourth quarter earnings call. It did these confidence is being recorded.
At this time I would like to turn to confidence over to Faisel Khan.
Please go ahead.
Good morning, and welcome to Stepper Energys fourth quarter 2019 earnings call. A live webcast of this teleconference is my presentation is available on our website under the Investor section.
Sure in San Diego or several members of our management team, including Yes, Martin Chairman and Chief Executive Officer, Dennis Arriola Executive Vice President and group President George Blissett, President and Chief Legal Officer cover Mahalik Executive Vice President and Chief Financial Officer, and Peter Wall, Vice President controller.
Chief Accounting officer.
Before starting I like to remind everyone that we'll be discussing forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 actual results may differ materially from those discuss today the factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K filed with the FCC.
It's important to note all of our earnings per share amounts in our presentation are shown on a diluted basis and it'll be discussing certain non-GAAP financial measures. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures.
I'd also like dimension to the forward looking statements contained in this presentation speak only as of today.
Every 27th 2020 had a copy does not assume any obligation to update or revise any of these forward looking statements in the future.
That please turn to slide four let me hand, the call over to Jeff.
Thanks, a lot. So I wouldn't think you all for joining us today in 2018, we laid out a strategic plan notice vision 2022, which centered on our goal of becoming North America's Premier Energy infrastructure company over the past few years, we've made significant progress towards that goal, notably we've sharpened our focus.
Well the most attractive growth markets right here in North America simplified our business model and strengthened our balance sheet.
We've executed on this strategy by divesting noncore assets and reinvesting the proceeds into higher growth markets, namely, California, Texas, Mexico, and the liquefied natural gas export market. These markets now enable us to focus on the delivery of cleaner and more secure forms of energy to consumers right here in.
North America as well as a bold in addition within energy value chain, we're focused on transmission and distribution investments that provide attractive risk adjusted returns and offer higher value for our stakeholders.
This improved focusing capital discipline is paying dividends and our full year 2019 financial results our direct reflection of these efforts.
Earlier. This morning, we reported full year 2019, adjusted earnings of $6.78 per share the highest in our company's history also point out that these strong 2019 financial results.
It's above our full year 2019, adjusted EPS guidance range and highlight our company's continued execution of our mission to become North America's Premier Energy infrastructure company.
In line with this positive momentum, we're affirming our 2020 adjusted EPS guidance range and issuing our 2021 EPS guidance range.
Additionally, our board of Directors recently approved an 8% increase to our annualized dividend on average we've grown our dividend by over 10% annually for the last decade, which is one of the highest dividend growth rates in utility industry tends to be clear. This represents our continued commitment to returning value to our share.
Holders. Please turn to the next slide where I'll provide an update on our strategic business review.
As you'll recall, we continue to review each of our businesses with a view toward continuing to optimize our capital allocation. This includes taking steps to integrate our overarching strategy not just financially, but also operationally with a focus on people priorities and culture. All of you through the lens of keeping our employees and communities.
Yes.
Based on our ongoing business review, we believe our sharpened geographic focus favorable position energy value chain in high performance culture combine to offer unique visibility into our overall growth profile. Moreover, the continued execution of our strategy offers the opportunity to have a smaller geographic footprint focused right.
Here in North America, with a bigger impact.
Please turn to the next lot while recap some of our notable accomplishments from 2019.
In 2019, our company realize significant operational financial regulatory and legislative progress I won't discuss everything that's referenced on the fly, but I did want to highlight a few key takeaways, let's start with our California utilities in 2019, we circle three opportunities that we thought could improve our California.
Businesses first securing critical wildfire legislation.
Second completing the 2019 GRC and third advancing our 2020 cost of capital filings I'm happy to report that we reached a constructive outcomes on each of these three items.
At Sdd, specifically I wanted to highlight that we also announced the fire save 3.0 program. This forward looking initiative as a continuation of STG knees industry, leading wildfire mitigation program that has been built over the last decade, we're very excited about this initiative, which demonstrates our ability to innovate and.
Prove how we deliver safe and reliable energy to our customers.
In addition, we continue to work with the state and others to help to mitigate the risk of wildfires all across California.
Turning to our Texas utilities Encore completed its acquisition of infer read and rolled out a new five year capital plan of approximately $11.9 billion. This plan reflects the continued growth is occurring across encore service territory.
Moving onto our LNG business in 2019, we made progress on Cameron LNG, putting train one into service and starting production at train. Two we also continue to advance commercial discussions with potential partners and off takers for LNG development projects, most notably signing and HR way with.
Aramco services company for our proposed Port Arthur LNG project, we look forward to providing you with an updated view on the global LNG market as well as our four development projects at our upcoming Investor Day in March.
Lastly, at Sempra, Mexico, we announce contractual agreements with Mexico's CSC and established a constructive relationship with that New administration.
Additionally, we placed the marine pipeline into service increase in Mexico's capacity to import affordable reliable U.S. natural gas, which is displacing oil fired electric generation and feeling their economy. This is yet again. Another example of how we're helping to enable the energy transition in every market we serve.
We look forward to completing the other projects that are investment pipeline to further increase energy accessibility and reliability for the people in Mexico.
Next please turn to slide seven then I'll turn the call over to Trevor who will review our business updates and financial results.
Thanks, Jeff Let me start off by reviewing some key developments at our businesses. So far this year.
As Jeff mentioned earlier last year, we received a final decision on our California utilities GRC filings have a period 2019 through 2021.
And in mid January the CPC approved an extension of the GRC cycle as a transitional step to migrate to utilities to a staggered four year GRC period, the decision directs SDG any and somehow gas to request to additional years.
This results in a onetime five year GRC cycle covering the years 2019 through 2023.
STG any and so Cal gas will soon filed petitions for modification to adjust their 20 nicely and GRC decision, but this extension.
Sequentially 2023, STG any and some Cal guess will revert to the new four year GRC cycle.
We believe the extension of the GRC cycle is a very constructive development. This decision increases that utilities visibility into the future and should benefit all stakeholders as we implement a robust capital program around safety and reliability.
Additionally, STG any recently received CPVC approval for its line 1600 pipeline project.
Work on this project has started and will be completed in phases ending in 2024.
Safety and reliability related project involves testing and replacing high consequence pipeline infrastructure that was originally constructed in 1949.
The line 1600 project is included in our base capital plan.
The GRC outcome and this investment further demonstrate the states ongoing commitment to the safety and reliability of the gas and electric systems.
STG any also filed its wildfire mitigation plan in early February this filing exemplifies the company's continued commitment to safety and reliability over.
Over the past decade, STG any has established itself as an industry leader in wildfire risk mitigation and plans to continue innovating and utilizing cutting edge technologies to keep our customers and community say.
Moving to Texas, We recently acquired Hans 1% indirect interest in TTR.
This brings our total indirect interest in encore to 80.4 or 5%.
We continue to be impressed by the rapid growth in Encore service territory, and the overall macro and business environment.
We look forward to encore, providing additional updates on their business and the growth that you're seeing at our Investor day in March.
Shifting to Sempra LNG.
Cameron LNG recently completed refinancing $3 billion of its over $7 billion project level debt, resulting in improved near term cash flows and an overall increase in the projects net present value.
Additionally, we recently achieved substantial completion for train two and expect the startup commercial operation in the coming days.
Ill highlight that Cameron LNG facility is approximately 99% complete and the progress to date gives us confidence in the project timeline.
At our proposed Port Arthur LNG project, We recently signed an interim project participation agreement with Aramco services company, which is another great step forward for the project.
We continue to engage in commercial discussions with other potential customers and partners and are targeting a final investment decision in the third quarter of 2020.
For our proposed LNG phase one project, we have selected Technip FMC as our APC contractor and expect to sign a lump sum turnkey EGPC contract in the coming days, notably we continue to expect a final investment decision later this quarter.
Lastly, we continue to advance the sales of our South American businesses and expect to close the divestitures within the next four to eight weeks.
Please turn to the next slide and I'll review, our financial results.
Earlier. This morning, we reported fourth quarter, 2019, GAAP earnings of $447 million or $1.55 cents per share.
This compares to fourth quarter, 2018, GAAP earnings of $864 million or $3.03 per share.
On an adjusted basis fourth quarter, 2019 earnings were $447 million or $1.55 cents per share. This comparison, our fourth quarter 2018, adjusted earnings of $431 million or $1.56 cents per share.
Full year 2019, GAAP earnings were $2.055 billion or $7.29 per share. This compares to 2018 GAAP earnings of $924 million or $3.42 per share.
On an adjusted basis full year 2019 earnings were $1.911 billion or $6.78 per share.
This compares favorably to our full year 2018, adjusted earnings of $1 billion $503 million or $5.57 per share. Please turn to slide nine.
I'll reiterate that our full year 2019 adjusted earnings are the strongest in the history of our company year over year, our adjusted earnings and adjusted earnings per share grew by 27% and 22% respectively.
The variance in full year 2019, adjusted earnings when compared to last year was affected by the following key items.
$287 million of higher earnings at the California utilities from higher CPC based operating margin authorized in 2019 predominantly driven by the timing of the GRC final decision and its corresponding impact on earnings recognition versus timing of spend.
$157 million of higher equity earnings at the Sempra, Texas utility segment due to a full year of earnings from Encore Encores acquisition of Infrareit and higher revenues due to rate updates to reflect increases in investor transmission capital offset by higher operating costs.
38, and $31 million at so Cal gas and SDG any respectively related to the January 2019, CPC decision allocating certain accumulated deferred income tax balances to shareholders. This benefit was included in our 2019 adjusted guidance.
And $36 million of higher equity earnings at Cempra LNG from Cameron LNG train one commencing commercial operations in August of 2019.
These items were offset by $92 million of lower earnings at Cempra renewables related to the assets sold in December of 18 and April of 90.
$90 million of lower equity earnings at Cempra LNG due to the write off of unamortized debt issue costs and associated fees to Cameron LNG debt refinancing and $10 million at SPG any from the amortization of its wildfire fund assets.
While we're not adjusting out the earnings impact of the annual wildfire amortization, we anticipate an impact to earnings of approximately $21 million per year on a go forward basis.
Please turn to the next slide.
As most of your where this March we will be hosting our 2020 Investor day at our headquarters here in San Diego.
We're excited to provide you with an update on our business, which will include a review of our strategic vision a discussion of our more focused portfolio an update on each operating company and greater visibility into our long term financial plan.
Please turn to the next slide where I'll provide a brief preview of our investor day that highlights our robust capital plan and visibility into future earnings growth.
Given the 2019 GRC at our California utilities, the updated Encore capital plan and recent feedback we've received from many of you. We wanted to preview some of the highlights of our on upcoming Investor day.
First our five year capital plan has increased from 25 billion to approximately $32 billion the highest in our company's history.
This capital plan is predominantly driven by our three us utilities.
Second given the robust capital plan, we project and approximately 9% rate base Cagar, resulting in a projected combined rate base of over $50 billion by 2024, and lastly, we plan to fund this robust capital program with a portion of the proceeds from the sale of our South American businesses.
As cash flows from operations and other sources, we will evaluate potential sources of financing based on the timing of our investments as well as of you towards maintaining a strong balance sheet.
This really as an exciting time for our company and we look forward to sharing more details about our businesses and the overarching strategy at our Investor Day, Please turn to the last slide.
In summary, 2019 was another excellent year for our company, both operationally and financially the 8% increase to our dividend affirmation of full year 2020, adjusted EPS guidance, which includes the sale of South America and the issuance of our full year 2021.
EPS guidance of $7.50 to $8.10 is a continuation of this positive momentum.
As we shift our focus to the next several years, we remain committed to executing our financial plan strengthening our balance sheet and maximizing value for all of our stakeholders. Our priority continues to be positioning our company for sustained growth are connecting people to the cleaner and more affordable energy they need to power their lives.
With that will conclude our prepared remarks and stop to take your questions.
Thank you.
I would like to ask a question please signal by pressing star.
Keith.
If you're using the speakerphone. Please make sure legitimate assumption is turned off your line is signals the return of listen.
Again.
One.
Question.
First question from Julien Dumoulin Smith from Bank of America.
Hi, good morning him.
Hey, Joe United.
Great. Thank you congratulations.
So maybe just a truly impressive.
Maybe to turn to turn it back to you on this financing and listen I bet. Every question Youre going to get here is going to be somewhat of an ask around this analyst day, but when you think about the financing around this plan to 32 billion plus some of the conversation that of the agency how do you think about that.
Alongside also this half I'd with ACA et cetera, I mean, there's so many different moving pieces here again, it's a leading indicator as to why you're having and allocate to begin with that at least initially how are you thinking about dealing with the the questions on the rating along with the yet higher capex and along with funding.
So if I'd.
Angie.
Thank you for that question I think the key takeaway Julian is that we've got a lot of options to fund the expected growth I would start with the expected sale proceeds from South America. Those two transactions continue to go well all we expect to close Chile next month, we could close next month, but it may slip into April and but.
All indications we're in good shape on both of those we expect to use those proceeds which we talked about our prepared remarks of roughly 4.5 billion to 4.8 billion in Asia after tax numbers to repay debt and also some gross we've targeted debt to cap by year end at 50% and Thats consistent with the committee.
As we made for the rating agencies back when we did the encore deal also that they were pretty excited about is phase one of the camera and continues to be quite well well actually expecting at commercial operations on train two and a couple days and we will all three three trains role.
We expect that $400 million to $450 million of earnings from that project and more importantly about $12 billion of after debt service cash over the projects like that I think yes to your larger point as you've seen us due in the past, particularly in 2018 19.
We'll always evaluate all available sources of financing with a view toward financing our growth as efficiently as possible and maintaining a strong balance sheet.
That makes sense and Jeff why have you talked a quick follow up here when you think about active strategic options here.
Obviously, you're very focused on execution at the core businesses that you alluded to potential.
Strategic opportunities if you call. The go you guys executed on what is it pretty small piece here with the encore.
Pick any latest thoughts about expansion in Texas in a bigger more holistic. Thanks.
Thank you believe it or fish.
Which asking that we don't want obviously.
Communicate anything around mergers or acquisitions can say the we have.
Laid out a pretty.
Important campaign to enter Texas, obviously that started the encore transaction.
Led to the every transaction we continue to develop relationships, which we think are important in Texas.
Situation and you may have seen we opened.
East in office.
Made that announcement in the last month or two and that's where we'll have a center of excellence both for a simpler energy office as well as the office some of our engineering and construction folks who will be supported Cameron Cameron expansion in Port Arthur and obviously Julian Port Arthur surprising to us So just as a market opportunity.
Thats is a top priority for our company and we look forward to continuing to execute the straight line there.
Well I'll turn it over thank you very much the 40 seeing you guys.
Appreciate Julian.
Thank you next question is from Greg Gordon from Evercore ISI.
Ladies open. Please go ahead.
Thanks, Good morning.
Hi, Greg.
So looking I'm, just going all the way back to the analyst day disclosures.
Looking at the.
The expected rate base.
The capex in rate base numbers, you've obviously had a.
Significant increase in both.
It looks to me I just wanted to confirm that this is correct that.
Looking at 2022 rate base from Analyst day, which was 41 of a half billion.
Analyst day from SPG needs, So Cal Das and the Texas utilities.
It's now.
10% higher.
$45.7 billion 22 am I reading that correctly that through a combination of the acquiring shahriar lads the increase in the Texas opportunity plus the rate case outcome that that you're looking at a 10% higher rate base in 22 than you were looking at in March of last year.
I think thats correct for 22, and I think it's also a change of about $7 billion across the five year period as a comparison.
Oh and.
I think Julien tried to ask this question maybe it was a bit too broadly presented to you. So I'll try again at a little bit more of a narrow perspective.
Before we think about any other growth opportunities associated with the large capital expenditures you might need for EDA or port Arthur or Cameron expansion.
With all we were looking at was the funding of this growth opportunity of utility businesses.
Did you just articulate that you thought you could do that organically or or did I, Miss readout, and you're going to give us the equity needs analyst day.
No I think you should that gets you a lot more detail at the analyst day, but I think if you think about how we've executed in the past we've tried to be very very efficient in terms of how we've accessed lowest cost forms of capital.
Clearly, we're looking at our growth through the lens and maintained strong balance sheet.
Thank you, obviously, we don't want to forecast capital market activities that we feel very good about the options in front of us and look we have a great problem here right. We've got a great Big capital program.
We had better visibility in fact, we are having conversations in the last few days that.
We've taken a lot of risk off the table of speech and 54, having both rate cases get finished in California is a big deal and now is the first time, whether we'll have a three year rate case can California, Greg. We're looking at five year numbers that were discussed on the phone we had a five year rate case, we still got to make some petitions for modifications there. So.
So I think there in a position where we have unique visibility into the earnings power the company and how much of it will be driven by rate base in this.
Capital program that we're discussing it's about 88% geared toward us based utility so we feel very good about it.
One more question before I hop off.
No.
My sense is that some of the reason why the stock is performing less wells are that it probably would if.
Just all you were telling people was how great. The utility story has evolved is because of trepidation over the growth opportunity. It LNG.
Given the the contraction we're seeing in global economic.
Activity because of Corona virus.
What can you tell us about how that's affecting your negotiations because at this point I think people are just presuming that.
I'd on Port Arthur at a minimum is off the table for the foreseeable future given market conditions.
I appreciate you asking that question now, let's start by going back Reagan talking this briefly about our strategy, we're very focused on a long term investment.
As you've been talking about we do that through our California, Texas utilities and outside of our utilities. Obviously, we're focused on long term contracts with good counterparties today, there are any investments in our portfolio zero, where we're allocating dollars of things, which are exposed to commodity driven businesses or based on short term fundamentals.
As you turn to LNG, we have a deal in the marketplace right. I mean, there's a lot of people out there today that believes that the LNG marketplace will grow at four or 5%.
We're talking with some counterparties. Thank you will grow at a 10% CAGR across the next decade, and our view is by the middle of the decade there'll be a shortage in available capacity to meet LNG demand.
So even though growth rates very people have different views on that we as you know thats what creates a market.
We think we are probably best position when you think about the backdrop in North America. This is the market has the lowest priced national DAF has the lowest price volatility, it's got certainty of supply and execution and deep capital markets and you take that backdrop gradually overlay with four of our projects.
Brownfield, which creates a cost advantage and we got access those to the west coast in the Gulf Coast, our confidence level and LNG remains the same right. It's a long term focus we expect to take up I'd on E. In the next 30 to 45 days.
Port Arthur remains on track, we believe that take us I'd in the third quarter. We had teams on the ground today in Saudi Arabia, we have folks in Western Europe. Our conversations we remain focused on long term opportunities and maybe as one final data point.
Phase one of our execution program from Cameron to Port Arthur to Eco one calls for 24 million tons per annum. We have 21 signed up for 20 year contracts. So we're working on the last 12% currently and we remain optimistic.
Thank you very detailed answer or have a great. Thank you Greg.
He said.
Next question.
Steve.
From Citi Sir.
Please go ahead, Sir your line is open.
Yes. Thank you.
Just to maybe one follow up I would assume that the.
Whatever your Derrida financing plans are would already be incorporated in the 2021.
Its range that you provided some first time.
But I would say is we've we were laid out our capital program for five years 40, which is kind of front running the analyst conference. We would expect to fully provide details on each of the business unit guidance going forward and we're going to source financings as we think is necessary to meet that growth.
Steve.
Okay.
Okay, but it would have.
I don't know, what it's going to be there I assume it would be.
In there already.
Yes, so rate base is in there so that the financing okay.
Right.
Thanks, and then just.
With respect to.
You mentioned very confident on closing the South America sales.
My recollection is this like very little there's no real way to really get out of those agreements. So just wanted to.
Reconfirm your confidence there and closings shortly.
And just to clarify on your first question. They Essar was yes, just so we're clear of we've laid out guidance ranges that we're prepared to execute on relative to all of us and that financing options, we'll let Pat on the South American question. Those those are progressing quite well, but I've got this aerial here, who is point person per our south American businesses and maybe.
Dennis you could provide some details about our confidence level and closed in those two deal sure. Thank Steve for the question that things are going well, obviously at the end of the year and in January had slowed down a little bit because of the holiday season, but we're progressing well.
With the antitrust bodies, both in Chile, and Peru, and we're we're experiencing really good cooperation from each of the buyers there working through their transition plans.
You know from people from financing from systems and everything so everything is going is on track as Jeff said to close over the next board eight weeks. So we're excited about it.
Okay, great. Thank you.
Thanks losses.
And that would take what next question from Mike BT from Glitter Gordon Goldman Sachs. My apologies. Please go ahead. Your line is open.
Hi, Thanks, everybody appreciate gel taking my question I'm looking at the capital plan Slide I actually want to ask questions about the smaller wedges and there can you give a little detail about what specifically is in the 2.4 billion in the LNG bucket and the 2 billion in Mexico.
Sure I'll just start getting a little bit covered here and then Trevor can address that that will give you full detail Michael's we get closer avail, Els conference, including by the way business unit level earnings ranges, but Trevor due mostly to the capital. So yeah sure Hey, Michael So predominantly an LNG.
Like you've got there is the cost for ACA mid scale. So thats the large uplift there and in Mexico, that's predominantly associated with the build out of that remaining projects around there a fuel storage terminals.
In other projects like that.
Got it in is that accurate number or is that 100% or is that your pro rata share.
That's how pro rata share.
Okay.
Our sense of the err on the LNG side, it's a 100% of the capex associated with ACA.
And then from Mexico, because its consolidated into cost 100%. So you have to take the minority interest out of there.
Got it and also kept thinking of sources of cash.
You have the opportunity to go.
I don't want to club, we capitalized, but refinance the debt structure at Cameron one through three and for many companies Pat you know.
Tax deferrals or or low cash tax payments tend to be a source of cash can you just talk a little bit about that Trevor just where you stand maybe in the in that kind of the debt restructuring or or recapitalization that Cameron one through three and about how big of a cash taxpayer you expect to be.
Yeah sure no problem at all as we mentioned onto the prepared comments, we did a really a refinance.
Comment just under half of the existing debt at $3 billion, and we took a little bit of a charge a in 19 associated with that that really stretched out the tenor of the debt to about 15 years and that's why we're saying it improved the economics, because it's improving the front end cash while on the project.
With regards to the I know well you know roughly we still have argued that I know well position through about 2024.
And that of will kind of roll off over a four or five year period.
Got it. Thank you guys much appreciated what level, obviously see all in late March.
Thank you Michael.
Thank you and obviously couldn't next question from Ryan Levine from Citi.
Your line is open. Please go ahead.
Hi, I wanted to ask one on.
Encore at me, but given that slowdown in commodity prices and any potential slowdown in activity in the Permian and Texas can you speak to how insulated. The capex outlook is another thing your plan and if there is any opportunity to reduce some of that spending.
Hey slot Ryan.
Things are going very well for encore, we've got a $11.9 billion in the capital plan. In fact, we're forecasting continued electricity gross the tick on the west into their system.
On an incremental 40% between now and 2022, so there's a lot of growth taking place both in the Dallas.
Fort worth area as well as West, Texas. So we don't see any slowdown at all in fact, we're continuing to to be strained to meet all the capital needs for growth and that service territory.
If the commodity price, our where to continue to be under pressure is there any capital that's tied to MP activity that could be curtailed baby in that.
Longer duration spending.
Well, we would always fall that particularly in West, Texas law that growth why it's also coming from the fact that that about.
95000 megawatts of wind and solar another generation in the in the interconnection.
You are caught a lot of that solar particular is in west, Texas. So lot of that's a transmission build out this unrelated to the MP activity.
Okay.
Then in terms from the South America sale is there any delay and thats associated with the current a virus in terms of the timing of closing the transaction.
Or is it purely a.
Working curious and are there many tax issues here or other.
I know, causing proceeding.
Yes, I think we feel confident to be very clear that both of those transactions are in good shape.
That's a close Chile as early as the middle of next month and that through will fall a few weeks thereafter, so I think we're in good shape, but those transactions.
Okay. Thank you.
Appreciate it.
And now be Pico next question from Paul Patterson.
Okay.
Go ahead.
Yes.
Hey, good morning.
Good morning, Paul.
Just a follow up on a few things here.
Sure the Corona bars, I know you guys are.
Have long been avoiding commodity risk and what happy but has there been any change given what's going on in terms of potential.
Your valuation of counterparty risk.
Anything.
You see out there as a result of.
But what we're seeing.
I mean, obviously I think you're asking about the virus generally impacts in the markets were focused on or our LNG business and we haven't seen any sign and obviously as you'd expect that we're thoughtful about where people travel we've instituted programs inside the company and make sure thoughtful about protected our employees.
In terms of conversation with Counterparties remember, we have a long term view about supply and demand the middle part of the decade, and we're really deal with people Paul that had a shared view that potential infrastructure shortage.
Buyers tissue hasn't really impacted our negotiations or the customers were talking too.
Okay.
And then.
Just the rate base growth I realize that you guys have different jurisdictions and different things driving the levels of what have you, but I'm. Just wondering if you could give us a senses to sort of the range of of ways impact that you might be seeing because some of it.
Might be socialize differently and also.
We're also testing I think efforts due to lower cost and what have you how should we think about.
Delayed impact.
I think it's a really good question honestly, we're benefiting from a decade long low in commodity prices, which is helpful. On the bill that will start in Texas and you may recall that encore today has the lowest rates for those services in the state of Texas and they are forecasting they will still have the lowest rates in the state of Texas.
When they complete their record capital program, which I referenced earlier at 11.9 billion. When you turn to California, I think that then we feel good about from a rate case was was real attention around the ramp process and making sure that capital is the unallocated specifically around safety and reliability. So as we think about the bill impact.
So Cal Das so Cal das build in the low $30 range. It's a very very affordable service on the gas company, there's probably more pressure on the electricity sat across the state. The good news is always refer focuses as even though the rates have gone higher bill impacts are relatively subdued because we have a pretty modest climate.
So even at STG need today.
Including subsidies for low income housing and others, it's about $100 on the bill and both of those are lower than the national average. So we feel good about the capital program as a way of reducing risk in the operating environment and we feel good that we're benefiting from low commodity prices.
And obviously, a large pools customers that gets better clubs.
Okay, that's what.
Appreciate it Paul.
It appears that I no further questions at this time and now I'd like to turn the call back to Mr., Jeff backing for any additional children Goodnight.
Thanks, a lot I just like to express my gratitude for folks who joined the call today, certainly look forward to see and all the in San Diego at our Investor Day that will be on March 24. If you have any follow up questions. Please do not hesitate to contact and IR team, we wish each of the I. Good day. Thank you.
This concludes today's call. Thank you for your participation you may now disconnect.