Q1 2020 Earnings Call
Welcome to capital powers first quarter 2020 results conference call.
At this time, all participants are in listen only mode.
Following the presentation. The conference call will be open for questions. This call is being recorded today may fortune 2020.
I'll now turn the call over to Mr., Randy not the director of Investor Relations. Please go ahead.
Good morning, Thank you for joining us today to review counterparts first quarter, 2020 result, which we released earlier. This morning, our first quarter report and the presentation for this conference call with our website a capital par dot com.
To help that's spread of Colgan 19, with physical disgusting I, Brian <unk>, President and CEO and Brian <unk> Senior Vice President and CFO, joining me on the call from their home.
We will start with the opening comments and then open the lines take your question before we start I would like to remind everyone that certain statements about future events meat on the call afford lucky in nature and are based on certain assumptions and analysis made by the company.
Actual results could differ materially from the company's expectations due to various risks and uncertainties associated with our business. Please refer to the cautionary statement on forward looking at fresh on slide number two.
In today's discussion, we will be you're referring to various non-GAAP financial measures I'd note on slide number three these measures are not to find financial measures. According to GAAP and do not have standardized meanings prescribed by gap and therefore are unlikely to be comparable to similar measures used by other enterprises.
These measures are provided to complement the GAAP measures, which are provided an analysis of the company's result from management's perspective.
Reconciliations of these non-GAAP financial measures can be found in our first quarter 2020, Mdna I'll now turn the call over to Brian Paschal for his remarks, starting on slide four.
Thanks, Randy and good morning, I'll start off with high level comments on that first quarter results and our 2020 outlook.
Overall, our first quarter results were solid and were in line with our expectations with no material changes to our outlook, we're maintaining our financial and dividend guidance for 2020.
We have a very strong financial position and liquidity that Brian will speak to shortly.
That's capital power, we implemented various measures to manage their risks from coal that 19.
It's a primary goal of keeping employee safe and healthy reducing risks and keeping our plants operating.
I also would view the progress made on a renewable and girls strategy, which has been good so far this year.
Turning to slide five in response to call that night team, we've implemented a business continuity in risk management plans to ensure we continued safety and health of our employees.
This includes working from home for office and all non essential plant employees in the plants, we have implemented numerous hygiene and social dispensing protocols, well delivering reliable power overall the company is functioning very well.
He also managing our operational risk by completing planned maintenance and enhancement outages itself port Roxboro Arlington the catering Gore.
With the help of Barclays. Please and contractors in line, we've modified did to cater outreach and have delayed the genesee to outreach to 2021.
We have also use technology to enable us to operate our three simple cycle platts from a laptop.
Overall, we are managing very effectively through this cold at 19 pandemic.
On slide six I'll touch on the recent progress we've made on our girls and renewable strategy. This year. We've added 251 megawatts in renewables to our fleet. This includes the completion of Cardinal point.
When project in Illinois that was completed on schedule and on budget and U.S. dollars in April we acquired 101 megawatt Boxboard wind facility in Texas that is contracted with 15 years, a weighted average remaining contract life.
We have signed an agreement with best S that separate terms for a 10 year extension.
Our long term service agreements the extension cupboards fleet wide maintenance for all of our best this equipment when facilities. The L. T. S. Eight covers and expanded scope of services within expected, 26% cost reduction compared to current service and maintenance agreements.
On an annual basis, the new L. T assays are expected to increase EBITDA and FFO by 8 million and 6 million respectively. Once they all take effect between 2021 2023.
All agreements have been.
An agreement has been reached with baseness to supply turbine well good luck to which will start commercial operations next year.
I'll now turn the call over to Brian Denise.
Thanks, Brian I'll review, the financial highlights starting on slide seven.
Overall first quarter financial results were in line with our expectations.
The first quarter was the busiest quarter of the year for planned outages as reflected in the 91% avail average availability.
Therefore, we expect to generate positive net cash flows for the remainder of the year.
As Brian mentioned, the major planned outage for Genesee too has been deferred to 2021 due to colder 19.
In the first quarter, we've had discussions with ENMAX the JV partner for the Genesee four or five project and have determined that we would no longer be proceeding with that project Accordingly, 13 million relating to the development of Genesee four or five has been recorded in the first quarter as a write off within depreciation in there.
Hi, Jason.
Looking now with the Alberta power market.
The average spot price averaged $67 a megawatt hours in the first quarter, which was slightly lower than the $69 in the first quarter of last year.
Most quarters included one month of higher pricing as a result to cold temperatures and Baseload facility outage as well the other two months settled at moderate pricing was stable base old supply.
In the first quarter, our trading desk captured in Africa realized price $62 per megawatt hour that was 7% lower and the average spot price.
Moving to slide eight.
The news in other income in the first quarter were 533 million.
Up 34% compared to the first quarter of 2019, mainly due to the acquisition of core way in the second quarter of 2019.
Adjusted EBITDA was 234 million up 16% year over year that was largely driven by the acquisition of go our way and the addition of Whit love when one.
Normalized earnings of 27 cents per share were slightly down compared to 29 cents per share in the first quarter of 2019th we.
We generated 118 million an asset so that was consistent with 117 million from the first quarter of last year.
They AFFO per share was $1.12 down 3% for the first quarter of 29 team.
Turning to slide nine I'll provide an update on our commercial portfolio positions.
For the remainder of 2020 are Baseload generation this 91% hedged at an average price in the mid $50 per megawatt hour. This compares to the curve forward prices a $48 per megawatt hour.
The ended the quarter were 7% hedged for 2021 at an average contract prices below $60 per megawatt hour range for 22, and 23 with 15 and 9% hedged at an average contract price in the low $50 per megawatt hour range from both years. This.
Compares to card forward prices, a $53 a megawatt hour for 2021 in 2022 in $51 made what our for 2023.
I'll conclude my remarks by comments you'd on her strong financial position is liquidity on slide 10.
Capital towers generating strong cash flows, including over 300 million in discretionary cash flow in 2020.
The Pie chart on the slide shows our adjusted EBITDA forecast for the remaining nine months 2020.
As you can see 83% of adjusted EBITDA or under contract with an average PPH her remaining of 10 years.
The P.P. ace are largely with investment grade Counterparties.
The remaining 17% of adjusted EBITDA is from Alberta merchant business and 13% of that is hedged. So our merchant exposure is only 4% for the balance of 2020.
For our commercial industrial customer base in Alberta, one third our investment grade one third of posting collateral and the balance have some default risk that has been recognized in a 200000 dollar provision.
In terms of liquidity, we have 900 million of available capacity.
On the 1 billion of committed credit facilities that mature in 2024.
Currently we do not anticipate the need to access the capital markets other than to potentially refinancing 250 million in debt maturing in November.
And the April DBRS confirmed our triple B low credit rating was stable trends that was supported by relatively stable long term business risk in financial profile.
With our expectations for 2020 unchanged, we are reaffirming our 2020 financial and dividend growth guidance I'll now turn the call back to bright.
Brian you have to our new your color.
Thanks, Brian I'll review, our first quarter performance versus our 2020 annual targets and shell as shown on slide 11.
As mentioned the first quarter was a busy quarter of planned outages, resulting in an average facility availability of 91% compared to the 93% annual target.
Sustaining capex were 16 million in the first quarter.
Well, it's a default other genesee two planned outage to 2021, we expect sustaining capex will be below that 90 to 100 million dollar annual target.
We reported 234 million in adjusted EBITDA in the first quarter versus that 935 million to 985 million target.
And we generated 118 million up at that fall into first quarter compared to the 500 550 million.
Target range based on our current forecast we're on track to be near the midpoint of the FFO range, while continuing to monitor the impacts from coal that 19.
Slide 12 outlined started development and construction targets for 2020.
This includes the construction that to win projects as mentioned earlier, we completed.
Our card know when project on schedule and within the U.S. dollar.
Budget range. Following the start up commercial operations, we will see 221 million and net tax equity financing some true to U.S. financial institutions. So I know point is now operating under a 12 year P. P for 85% I mean its output.
The other one project under construction as wed like to would just currently tracking on budget and on schedule for Cod in 2021.
We have an annual target of 500 million up committed capital for growth our performance against that target includes the recent acquisition a Buck Horne the wind in Texas, where the 15 year weighted average contract life remaining.
To wrap up I wanted to highlight capital powers investment thesis and reiterate how the long term drivers of our business continue to be resilient.
Foundation of our young fleet, averaging 14 years and average.
Life.
Oh, well, we continue to beat them to demonstrate strong operational performance, while continuing to operate optimize our assets to enhance operations and efficiency.
A highly contracted and diversified portfolio by geography and buy fuel mix.
Our business generates strong cash flows, including more than 300 million and discretionary cash flow for 2020.
We are committed to maintaining our investment grade credit rating with our two credit rating agencies S&P and DBRS. Our girls is focused on investing in emission free renewables critical and critical natural gas generation.
Staying ability goals involved the transitioning of Genesee to natural gas and investing in carbon capture and utilization overall, our aspiration is to be carbon neutral on or before 20 safety.
I'll now turn the call back over to Randy.
Okay. Thanks, Brian anesthesia, we're ready to start the question answer session.
Thank you well now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad you. Most your tone acknowledge your cost if you are using a speakerphone. Please pick up your handset before pricing any keys to withdraw your question. Please press star.
Then too well pause for a moment as colors join the queue.
Our first question comes from Murray's choice with RBC capital markets. Please go ahead.
Thank you and good morning, My first question relates to a the GE fourg five.
Fishing.
I guess my question is why make that decision right now and I suppose to just wait and see.
But depending on what's changing your underlying usage.
So I mean, obviously you know there's two partners involved in a g. for energy by ourselves and then Max and you know the status of it as ban and you know as we characterize it it's been on that show a and permitted and in the event that there was an.
Very rapid immediate need for generation in the problems it would be available and art timeframe for implementing it was being pushed out further and further with the outlook for power and the province.
Other department has that plays into it is that you know as Lee we eat has evolved into market has evolved.
It's turned out that for Capco popcorn better choice for us at this point and deploying capital in Alberta market would actually be re powering our existing units as opposed to building additional yeah. So again a lot. It's happened, saying you know the initiation of a J C four and five answers.
Solution that no longer fits the market.
And I guess is there a tie in to how you now if you would love to which obviously, we're being so much in project as it stands.
Oh, no no unrelated to a two project.
Okay and my second question relates to the cater.
Obviously the loss update we've had was that negotiations were ongoing any update on that.
Well it could you actually elaborate on the modified outage happened on the pump.
So in terms of the where discussions are on dictator.
Wow, what's happened is that the covert 19 has significantly impacted on the responsiveness I'm the counterparty given.
The level of activities that that they would have had.
So it slowed down the process, but I'm happy to say that we know where we are today is minor legal issues are going back and forth, but you know the frequency of going back and forth has definitely slowed down we are well continue to be.
A very hopeful and expecting something to be coming to resolution within a relatively near future.
And the respective Decatur because of the.
The issue of.
Utilization of sometimes are for an expertise or Ah.
Not in North America, but also a the fact that we may have had to move the the road or Ah two facility to a different facility as opposed to doing it on site. We did end up making that decision that that was too risky at this point in time it could be easily deferred.
And still go ahead with the bulk of the outage. So that's what we have done and ER and the outage is has gone very well and as and as Mary.
Completion as we speak.
Great. Thank you very much.
Our next question comes from David cause either with Raymond James. Please go ahead.
Thanks morning, everyone. My first question here, just maybe some thoughts around your hedging strategy for 2021, I know in the past youth.
Commented that your competent in the fundamentals for the market not that prompted the lower hedge position wondering if your thoughts there have evolved at all.
Oh.
Yes.
Certainly given the.
The reduction in oil prices.
We have revised our outlook for 2021.
Prior prior to the <unk> a reduction in oil prices we were seen.
We're projecting Alberta power prices would be north of $60 per megawatt hour in 2021, what is that driven by the fact that there's a large number of outages as companies look to move to additional gas fired generation capability at their units.
With ER the reduction in oil demand and a a slower recovery projected up over 21 in 22.
We do.
Look at 2021 as a approximately four to 500 megawatts of less demand in the Alberta market, which has reduced our projections by approximately $7 per megawatt hour for the year.
What that's done is brought us now more or less in line with a current forward prices for the Alberta markets. So to the extent opportunities arise we would see ourselves increase in our position hatched in that year.
Okay, great. Thank you that's very helpful. And then just my only other question on your on your 500 million of committed growth capital or are you still comfortably on track there with the investment buckthorn and maybe just some some general commentary I don't know how your opportunity set is looking today if possible.
Sure I you know certainly Oh, we continue to have opportunities that we are pursuing or a the development of the renewables side.
And well continue to be optimistic that a they'll be.
He has developed through the year on that front, so see further investment from that perspective.
In terms of the.
Midlife natural gas side basically called at night team.
Stopped a that transactional market pretty much overnight.
We do here rumblings that but so ER opportunities, we'll open up again had no actually probably be a significant number of opportunities that are in the in the market and again you know.
No, we're not compelled to having to make an investment and ER will only a pull the trigger on those assets and those opportunities that continue to make sense for capital power.
Okay, Great I appreciate the color I'll get back into queue.
Our next question comes from Patrick Kennedy with National Bank Financial. Please go ahead.
Hey, good morning, guys I appreciate the financial guidance on the buckets or an acquisition, but I'm. Just wondering if you could confirm your internal I or our expectations for the deal maybe both on a unlevered and Levered basis, and then just how these returns might compare to say Cardinal and wed love.
One.
Yeah, the the returns a under levered basis, and anticipated for buckthorn would be in the 10% to 11% range on a levered basis.
And that would be consistent with our expectations for Cardinal point and we'll have one.
Oh.
Okay great.
Then just on the turnaround for GE to being pushed into 2021.
Just the seven impact on the timing for reaching 100% dual fuel capabilities across.
All three Genesee units and.
And any impact on the increase in AFFO, which I believe was 20 million or so for 2021.
[noise], so I'll speak to the they are the.
Moving Genesee to into 2021 still leads our statement of.
Being a natural gas capable look across the three units by 2021 now just a Brian can can comment on the full impact.
Yes, certainly.
You know the lift we were going to see on a EFO side has is slightly lower now and that's been driven by a increase in natural gas prices in western Canada. So.
With the decline in oil production, that's had an related effect of putting upward pressure on April prices. So certainly.
I'd had where we're not forecasting to burn as much natural gas than 2021 is we were previously.
But on the flip side, we do do those higher natural gas prices do help us in other areas such as putting some upward pressure on on a power prices in Alberta.
But your specific question Pat certainly on there there will be some downward pressure on that 20 million figure stated previously.
Okay got it thanks, and then also Brian So you mentioned a DBRS reaffirm the credit rating.
Just wondering if we can get an update on any discussions you may have had recently with S&P.
Well, they're not the stable outlook is currently under review given Albert as economic condition.
And in light of your upcoming debt maturity in the fall maybe.
Just how you're thinking about keeping some dry powder into the back half the 2020 and.
2021, given the open position there.
Just maybe a general comment on how you're thinking about allocating free cash flow for the remainder of the year between M&A debt repayment and see I'd be activity and so on.
Yes so.
In terms of that SMP, we typically a touch base with them a in the June timeframe, a we'd be looking to do so again this year.
There's been no indication from their end that their concerns a.
Live with our financial position vis-a-vis are investment grade credit rating I can't tell you pass that.
Our projections for the balance of this year next year is that we will continue to meet those credit metrics.
That S&P is lucky for us to sustain for investment grade. So we don't have concerns.
On that front as far as our capital allocation as I mentioned, a we're still projecting ah to generate over 300 million and discretionary cash flow.
For 2020 now part of that of course did go towards.
The some of that growth activity, we've we've been doing and and continued development of Ah Ah with law or sorry, the Cardinal point project will be starting to look at.
Capital costs a lot to.
As always we look over the balance of the year.
At this point not sure will lead to go to the debt market just given the are positive cash flow position, that's something we'll monitor and evaluate as we move through the year.
Uh huh.
No I in terms of allocation to M&A activity certainly.
If the right opportunity came along a strong fit.
That was very it was helpful from a cash will position it would be something we would consider but certainly we do have.
Development expands your shares still ongoing with a with the construction of Whitlock too.
Okay. That's great last one from me your guys didn't see much of an update on C C and D. Maybe I missed it but.
Can you comment on what impact. This pandemic has had on on the progress over at sea to CNG and.
Ah if any but also maybe what milestones we could watch for you know through the back half the 2020 as it relates to the ER the Genesee carbon conversion center.
Sure, what's happened or see to see and T. A as as you recall, it's part of the carbon ex fries and as a group of interests that are.
Working with a the emissions from the Shepherd facility.
And one of the.
First closures that happened in the province, and obviously being run by a potential entity you know that site was totally shut down and.
Oh, the he is the C. <unk> C. C N P group were able to move.
Oh fair amount of their activities to a warehouse continue on more though they are some fabrication and we're working on some of that technology side, but it certainly has created a.
Pediment for them to continue to moving at the same pace consistent with that the ex price timing has moved out as well so I would characterize what so essentially happened as it is a bit about pause.
Although you know still significant developments, taking place, but in the overall timeframe.
I would say at the end as a day that pandemic, who will probably has cost is about a quarter in relation to timings. So where do you. All continue to expect that will continue to move forward on a the genesee carbon conversion center.
Oh, I do expect that it'll be built and reach.
Cod sometime next year, but again, probably the whole schedules been moved by about a quarter and don't expect any further delays at this point.
All right appreciate the update so I'll leave it there thanks guys.
Our next question comes from March Darby.
Do you see capital markets. Please go ahead.
Good morning, I Wonder.
We'll go back to the a capital allocation, especially this me fine tune so responses there in terms of.
Use of cash.
On a little bit higher quite anyway, now going to answer any of our four than what's the willingness to the active on the buyback at current levels right now.
[noise] [noise], so I'm generally the excess cash at this point in time is being used to a pay down debt.
And of course on some development spend on with lot too.
As I mentioned, we're in good shape relative to our credit metrics, but certainly.
Want to want to be mindful of maintaining that so we wouldn't see doing any share buybacks in the in the near term, we would see that positive cash flow to ER to paying down a the credit lines and funding development activity. Okay.
That makes sense.
And then just the comments on the hedges in terms of anything is your expectation for were higher prices should had opened 2021.
The fact that you didn't add that much more care 2021 hedges that just a function of they're not being liquidity in the four market.
Yeah currently the there there hasn't been are there hasn't been a recently a lot of liquidity in the forward market.
However, we do expect that liquidity will start to ramp up in particular as we get true towards sort of the August September timeframe at that point, the railing regulated rate auction the providers to that service start to enter the market looking for for hedging. So that's.
Where we'll expect <unk> liquidity increase but also I think as we come out of a cool that 19 in reopening in the Alberta market.
That will also support liquidity so.
Given we see it alignment now between forward prices in our expectations, a we would see that hedging percentage increases we moved through the year.
Okay.
And then you made your comment about where you thought maybe demand come off here, what do I think it's going to ultimately happen.
Other People's plans for new supply like the Cascade project, there's quite a large or some of the cogen stuff. Thank all that's been delayed or pushed out or are there any concerns from your part that people will continue to go forward with adding new capacity here.
Oh, you know certainly Oh, we leaves a we saw the announcement from Suncor, which was at a minimum they've pushed out that project up by two years.
Which takes it to at least the under 2025, if not beyond.
You know we would expect die.
Other development projects will definitely get deferred delayed or if not outright just cancelled or.
Given the environment you know the one thing that we see as a real positive.
For the elsewhere to market as we move into the lower demand as compared to what we saw happened in 2015 as a the supply side will be a lot more responsive.
So yeah to those growth projects, we see those we expect will be deferred if not cancelled but also.
All of the PPS will have expired at the end of this year. So all of the output the Alberta market will be in the hands of commercial entities or which.
It will result in supply side response.
To a much greater degree than what we would have seen in 2015, a which will support a power prices in there in the face of other lower demand were seeing.
Okay and just one last question just on that long term service agreement for investors and turbines how does that all <unk> talks between 2021, and 2023 that standing rolled out of a incremental pick up every year or any other color you can give on how those savings timing.
Yeah, you know it is a reasonable assumption is that it would it would phase out evenly over those years sows <unk> generally.
We have a staggered renewal dates going through and that the profile would be more or less linear.
Okay. That's great. Thanks, guys.
Our next question comes from Robert Hope with Scotiabank. Please go ahead.
Lever on just one question for me I'm, just gonna get a sense of how you're looking at the balance of 2020 in a world, where we could see oil sands curtailments. How do you think the the behind the fence generation will respond to to that could we see that as an area, which could help balance the market there.
Ah, Yes, we believe so I'm certainly we've seen some cogen units at that have pulled back some of that due to maintenance up but we believe some that due to reduce production.
So yeah, we do believe that's another element supporting the market pricing as we move forward.
And then maybe you Didnt mention where are you saw a your view of 2021 pricing based on the forward curve how to 2020 left for the rest of New York.
Yeah, 2020 has come off so slightly below $50 per megawatt hour, but for us of course, not much of an impact given over 90% of our Baseload generation is hedged.
The one thing I will comment on in this goes back to a a previous question as.
When we look beyond 2021 into 22 and 23, we do see Alberta power prices are continuing to strengthen and of course, that's related to the fact that the suncor cogen has been pushed out but but we believe other supply additions will also be deferred so.
Although we've seen a softening of power prices for 21, we do see a strong outlook for 22 and 23.
I appreciate the color. Thank you.
Our next question comes from Ben Pham with BMO capital markets. Please go ahead.
Hi, Thanks, Good morning on your comment around him apart price as Frank and 20 to 23.
Could you comment on.
Your expectation on on where do you think the long term, Alberta power price could be has that has that changed from your investor day commentary.
No it would be similar if not slightly higher.
So with the with the strengthening in natural gas prices that does put upward pressure on our view of what a long run or.
A price should be in the Alberta power market, but yeah, not significantly different than what we would have talked about at Investor day.
Okay and.
And if that's the case scenario it sounds like some of it as a supply driven as well where some of your competition.
When you think on Gen 405 that.
Seems like your burn costs and that was probably pretty low.
So I'll, let a surprise.
50 earlier commentary from a rate that you're you're not going forward. So it sounds like it if he wants to honor the capex.
And there's no upfront payment near term then it sounds like that's more driven by your partner then that's driving this decision.
I would say, it's probably more driven by the fact as burnt values you mentioned.
There's a different configuration that makes more sense and standalone combined cycle facilities, which is.
The technology, we were lucky not forget to see four and five.
So we've done a lot more work around repowering and what that could look like and so at that site doing repowering of one of the existing units, which of course would utilize it is that existing steam turbine and I'm glad you utilize the existing generators.
That is configuration that we believe makes more sense now then a standalone combined cycle units.
Okay, Okay and you.
Do you think ENMAX could potentially come back as as a buyer coming up that par potentially are you comfortable we've gone spot to where to bring it back and then some different form.
I'll turn that question over to Brian.
So you know certainly HM.
If we crossed the bridge in terms of deciding to Repower O one of the units.
I mean, we would definitely be looking for off takers.
Would suggest that that would be unlikely other than what what you find in the market normally wouldn't believe that and Max would necessarily want to participate in the pro Jack.
And move in that direction.
And again that's.
That's maybe a good question Ben better to be asked of Oh van Max but.
But it is definitely a better technical solution.
Market response of solution today for capital power to Repower one of its units. So I'm just became a fact that that the answer that was on the shelf and sort of that no cost option to carry it came to a point, where if there was needed it wouldn't.
Makes sense I pull the trigger on that project anyway.
Okay, and and Europe popping your long term service agreements or was there process you guys walk that.
I'm, bringing some at stuff.
In house.
Yes, so are we.
Oh, we did quite a bit of work up behind the scenes understanding.
And alternative where we would.
Self managed your self perform on our renewable facilities.
And.
Right.
We have seen new entrance into North America that are willing to provide those services as an alternative to the original equipment manufacturers. So.
And we were looking closely at at those other alternatives and actually had.
Developed a price points that we thought.
We could move to in perform what we saw happened was a vast this actually was able to meet those price points.
Well continue to provide a full service so.
For us it became you know we we had a good view of that but we vast this was able to step up and and matches perspective. So we're really happy where we landed with fastest in that regard.
Alright sounds like you're not going good yeah got it thanks everybody.
Our next question comes from Andrew Kuske, you with Credit Suisse. Please go ahead.
Thank you. Good morning, obviously was a volatile quarter in Q1, but maybe you could give us some color in context on how your optimization strategies evolved over the quarter.
And how you're really positioning yourself for the remainder of the year.
[noise] show in terms of our optimization a lot of what was what we're doing was through outages you know through the Genesee to outage.
Through all we're doing a decatur in Arlington at Arlington spend completed and a very happy with with the work that took place there as I mentioned earlier, we had modified the Decatur outage just from a risk management perspective.
But you know will be will be picking up that element. A later so not really it's a significant impact there the largest one of course paying the movement of Oh, Genesee two which.
So given a they'll work there was a therefore upfront work that needs to be taking place at the plant in the fact that would be.
Our utilizing a foreign expertise there would have to come to Canada and so on.
My one point with moved that you know into Oh everywhere, we're we're working towards potentially moving into the fall ended up moving it into next year because it. It continued to just not be practical and not being a a risk score. So we're taking so in terms of the.
Overall program continue to be moving forward at a nothing's been been changed they in actual fact.
What's happened because of cobot 19, and I'm looking at.
From parts of the business, we've actually accelerated or some other developments that would that we had planned on moving forward. So for example, you know I commented that that you know we can now operate our Ah.
Or a simple cycle units Oh.
Oh from laptops, which is something that we were working towards and wed actually had worked out in the technology and made some choice, but that would have been taking place over you know a couple of years, we've just accelerating in it. So there's a number of things like that from a development perspective that yeah and optimization.
That we just moved ahead very quickly not only on the on the facility side, but.
On the Oh, Oh say on the the.
Support services side as well.
Okay. That's helpful. And then I I think the number that was given earlier on what your expectations and your projections are for 450 megawatt hours is effectively demand destruction and the current environment.
For 2020.
So how do you think about just coal setting the marginal price and the market now into the future years like what percentage of time, because that really changed in your modeling forecasts.
Yes, it a fair for the balance of this year, we would see they OCC coal units on the margin more often.
Not able to provider.
Specific percentage, but I'm certainly that that would be the case now as we move into 2021 of course, a those units.
We'll be moving to dual fuel or or conversion, 100% and natural gas.
So certainly see a bit different dynamic.
In terms of how those units responded will really depend on you know what happens with carbon pricing and natural gas prices.
And then find like I mean, you see no change to carbon pricing as it's been laid up by the federal government at this stage.
No we don't.
Okay. That's great. Thank you.
Our next question comes from John Malt with TD Securities. Please go ahead.
Good morning, So couple of questions on the Genesee dual fuel timing, so with with the GE to adage moved to 2021 can you can you clarify when each outage, enabling 100% dual fuel operations is now plan for each of the units and can you confirm where your dual fuel capability levels expected to be for the balance to 2020 with did you address deferred but.
Following the completion of the Pembina Quito's pipeline.
Yes, so for 2020 we've.
Continue to of course with the interconnection of higher gas capacity.
At a at the Genesee sites, so that that line has been completed or.
So.
With some upgrades, we've made we actually see a bit higher percentage gas fired capability for the balance of 2020, Israel's towards the 40% range from 30%.
The for for 2021, and all those conversions would be but still plan to take their units to be able to do 100% firing on natural gas.
Oh.
Okay and are those spread out over the balance of the year rather than wait at all towards the normal Q2 kind of outage shoulder season.
Yeah, I think if you check the outage schedule you can kind of glean that.
We do have a couple of units in Q2 and in one of them is scheduled for the fall.
2021.
Okay. All my other questions have been answered thanks very much.
Once again, if you have a question. Please press Star then one.
Our next question comes from Nike Biden with Industrial Alliance Securities. Please go ahead.
Hi, Good morning, just a one quick question for me can you give us your latest thoughts.
Thoughts and expectations I'm on the <unk> So's review process in Ontario, and how that might impact a your portfolio a in the problem it's going forward.
Yes so.
The you know it the government is there is put on hold their review of Oh, I see market design, certainly there's still looking at.
Bilateral contracting a approaches but of course, our thermal assets in Ontario, or all hedged through to the end of the next decade. So you know near term tweaks to that market are generally won't affect our financial position on those units.
Longer term, if it's something we'll be engaging in monitoring as a discussion on Ontario market design continues but again, it's not something that really affects us financially until the end of the next decade or they ended this decade I guess.
Thank you.
Yeah.
This concludes the question and answer session.
I'd like to turn the conference back over to Mr., Randy Meier for any closing remarks.
Okay. There no more further questions. We will conclude our call. Thanks again for joining us today and for your interest in capital power stay healthy and have good day everyone.
Today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
HM.
Mm mm.
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