Q1 2020 Earnings Call
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Thank you for standing by this is the conference.
Later.
Come to be Algonquin power and utilities Corp, 2021st quarter.
Got it always does investor earnings call.
Reminder, all participants are in listen only mode and the conference is being recorded.
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I'd now like to turn the conference over to Christopher Jones, Vice Chair of Algonquin Power and Utilities Corp. Please go ahead Mr. John.
Pardon me.
Hi.
Okay. The presenters line.
[noise].
And it's my pleasure to introduce Mr., Christopher Jones, Vice chair of Algonquin Power Utilities. Please go ahead Mr. Jerry.
Good morning, everyone. Thanks for joining us this morning for our 2021st quarter earnings Conference call Im sorry about the slight delay getting started.
As mentioned my name is Chris Jarratt, I'm, the Vice chair about buying power utilities core and joining me on the call today, our Ian Robertson Chief Executive Officer, David Bronicheski, Our Chief Financial Officer also joining on the call and participating in his first quarterly earnings call is already been Scott, who joined our organizational president and.
February of this year.
To a company earnings call today, we haven't.
Supplement a webcast presentation, which I hope you're able to access.
From our website <unk> power and utilities Dot com, our audited financial statements and management discussion and analysis are also available on the website as well as on SEDAR and Edgar.
Before continuing to call we would like to remind you that our discussion during the call include certain forward looking information, including but not limited to expectations regarding future earnings capital expenditure as well as potential impacts a Cody 19, we will also refer to certain non-GAAP financial measures and at the end of this call <unk>.
Yeah, well read a legal notice regarding forward looking.
Information and non-GAAP financial measures. Please also refer to our most recent mdna for additional.
Commission.
On this call Tomorrow. This morning ill start with a summary of the strategic achievements for Q1, 2020, and Iran will speak about the impacts of coded 19 on our operations.
David will follow up with the Q1 financial highlights and then he will conclude with them.
[laughter] strategic outlook.
Business and some concluding remarks, we then open the lines up the question and then as usual I'd ask you to restrict your questions to too and then reoccupied have additional questions and with that I will turn things already Ian.
<unk> talk about Q1, thanks, Chris and.
Going back to old school, I'm gonna be referencing slide four in that slide deck, we I welcome everyone who's been able to take the time to to join US today, but before I begin my formal remarks.
Regarding the quarter I did want to touch on whats likely on everyone's mind, which is how we're navigating through the impact of this code at 19 pandemic and so hoping to slide five I I point out that utilities, such as we provide our ineffectual service and they do play a unique role and maintaining the fabric of our society people.
Need to like Heath care homes, a need drinking and sewer water services.
And we provide these services to over 800000 customer. It's a commitment we take incredibly seriously we recognized that people are counting on us more than ever right now.
Well the majority of our customers continue to regularly pay their bills in a moved to help less it any potential financial hardship.
That show that the covert 19 pandemic is causing for our customers. We temporarily wave late payment charges suspended collection activities and delayed service conduction disconnections for non payment of deals across our service territories.
We've also recently made a 500000 dollar donation to support our communities during the cold at 19 pandemic, including our low income individuals food banks and first responders.
Additionally, we're helping our local cobot heroes by donating excess personal protective equipment or P is its referred.
By donating already 5000 mass and we have plans for providing an additional 20000 masks in the next few weeks.
I was gratified to see how quickly are pre existing business continuity plants were updated to address coated specific issues.
And then rapidly executed in each of our key business units.
The team swung into action as we seamlessly transition to work from home model.
The safety of our employees in customer remains our top priority and grateful for how our employees have stepped up to ensure we continue to provide essential services in a safe manner.
We now have approximately three quarters of our office and field employees either working from home are starting their day from home rather than the office.
Out of our 2500 employees, we're fortunate that we've only had two cases up cobot 19 within our range, so far and importantly, no further transmission to other employees due to our our social distancing measures. We believe this is a testament to the rapid measures. We took early on and are continuing commitment to social distances.
Total calls for those who are not able to work remotely we've implemented preventive measures to help keep them safe on the job.
<unk> is going to provide more commentary on the operational impacts that cobot 19 has had on a regulated services business.
I might point out that are at our renewable energy generation facilities. The nature of the business has actually naturally supported social distancing when the lions share of our business contractor with credit worthy Counterparties, there's been essentially no coded 19 related impact.
Jumping to slide six.
First in terms of financial results for the quarter, we do view the quarter's financial performance to be below our expectations, but it seems pretty straight forward.
Oh, the winter weather in those service territories, which do not yet benefit from volume normalization.
From the Mdna you might have noted good news on this front with the pending significant expansion of decoupling mechanisms across a number of hours of service territory.
Year over year, we reported Q1, Twentytwenty EBITDA of $242 million, which represents a 5% increase as compared to the same quarter in 2019.
Well Q1 2020, adjusted EPS of 19 cents was inline with last year, you'll hear from David that these warmer than normal winter weather conditions negatively affected our operations.
Caused our results to Miss our budgetary expectations.
Nonetheless, we remain confident in the resiliency of our business model long lived assets, providing essential services operating under business provisions, which reduced economic volatility. This business model has consistently produce stable and growing financial results and we remain highly confident our plans to continue delivering strong.
Returns to our shareholders.
You'll also notice that our board has improved to 10% increase into did again dividend beginning with the Q2 dividend payable on July 15th up this year.
This increase.
Marks the 10th year of consistently increasing our dividends as well as demonstrates our collective confidence in the resiliency of our business model.
Secondly, we made positive progress on our strategic initiatives Q1 marks the first full quarter that have that includes Saint Lawrence gas and new products, what got us into our operations.
The transition as expected has been seamless.
With respect to our acquisition of Ascendant, the parent company Bermuda Electric company or Bellco as we refer to it the regulatory process continues to move forward, even know Bermuda like most countries in the world have put in place public health measures to deal with covert 19.
The regulatory authority in Bermuda completed its public consultation on May four.
We remain confident we will receive regulatory approval in the coming months and are excited about our role in helping implement new renewable energy generation in the country.
As for the purchase of American Water's, New York assets. The transaction continues to progress as we filed a joint petition with the New York.
Eight public service Commission in February.
In a procedural conference has been scheduled for early June.
Later on in the call I'm going to provide a quick update with respect to our major capital projects. All told we are executing on our commitment to build the business and bring value to our shareholders and with that I'll pass things over to a room for an update on the current operating environment for our regulated services group and the impact that coded 19.
Has had on it a room.
Thank you like <unk> and good morning, everyone.
Oh I'm pleased to participate in my first quarterly on it's called the industry community.
And I look forward to media with all the field person in the months ahead is what we'd like in restricted stock to ease.
My focus since joining the organizers to meet with as many of our colleagues as possible and come up to speed on all the operational development financial.
Modest across the company.
Oh Conklin safety is more than a bright.
It is part of what we are.
Our response to the evolving global crisis, the health and safety if not all employees, but also our customers was front and center in the actions we took <unk> protocols, we put in place.
You can imagine the increased density for an incident with all the distractions around us at the moment.
We have therefore double down on our focus on safety.
I'm gratified to report that our employees have reason to the jobs and continued our enviable safety that.
As a business, providing mission critical energy and water services to our customers. We are existing business continuity plans to ensure that we continue to provides services to our customers or be able to recover as quickly as possible in the event, we have seen some events such as hard against sluggish.
Tornadoes fires et cetera.
These business continued to black Scholes every element of our business and all the bosses are required to deliver this mission critical services.
As soon as you got visibility into overnight Gee.
We set up a walk from approach and started to analyze the RBC is for immediate actions and then she liked it is bcps Dick you account for longer term scenarios.
Given this intense focus we are fortunate to report that we have not had any issues in the delivery of mission critical services to our customers.
And do not anticipate any.
Certainly during Q1, we did not see any material banking related inefficiencies.
But mid Dudley very few days in the larger were impacted by cool.
We moved could you do a worked for a whole model where possible.
Actually the teams deemed critical to the business.
And practice physical distance thinking about seemed operations.
Yeah, we'll talk about the effects of 19 on our major capital projects and in a few minutes David will talk about Msrs, we have taken from a busy perspective.
Like you folks here on the offers only sets we see impacting our business for the balance a bunch of 90.
We have to examine what density back so close to 99 out of operations and on balance that you sense of 19 that clarity foresee.
Expected you have a relatively modest in back to our business.
But I'd like you spend a little bit of time on items got me back our business intelligence.
Source I.
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Like other utilities in the U.S and Canada, we have been constructed or.
Sure Brookdale collections activities, including Disconnections for non payment doing just by doing.
This is of course, the right thing to do to support our most vulnerable customers have just challenging time and based on a broad support for these actions. We believe that there will be appropriate cost recovery in due course.
We continue to see the vast majority of customers paying their bills in the normal course.
We are of course tracking our accounts receivable on a weekly basis and to date, we have seen only a minor Judy or you said you know Egypt accounts receivable.
And why do you get no certainty what this might mean by the end of year. This could lead to higher uncollectible, a mouse accounts using it.
Nevertheless, we will be tracking and ultimately do you expect to seek recovery of any additional expenses should future read for savings and believe that regulators should be accommodating August issue.
So I just I did not know bye-bye that bad debt expenses might have on our business.
Second.
We are carefully monitoring the changes.
Something about is a hard residential commercial and industrial customers across all see modalities of utility services.
However.
Oh, that's genes in consumption patterns doesn't.
That's not necessarily interchanges revenues given the various regulatory mechanisms. We haven't please also 40 utilities and forking regulatory jurisdictions.
In some utilities.
<unk> revenue decoupling.
In some utilities, where specifically whether decouple.
The other utilities, we have such a large fixed fee component.
I will say we are.
This means that you do over 50%.
Did you 50% of our revenues are protected and once we get through our current recusal, Missouri.
We have reached a non unanimous settlement agreement.
We are expecting the nearly 80% of our revenues would be protected.
So do you do all these mechanisms it is hard to draw.
Well, we have estimated that you do these days decoupling mechanisms. We haven't please the impact to our net utility sales for April to be around $3 million.
Given the uncertainty around how long the pandemic will last and what the shape of the expected recovery over the balance of the year what looked like.
I don't know the full impact that reduce mode, we'll have an absolutely there and results.
Thirdly, we also began implementing certain cost reduction strategies in order to mitigate some of the weather impacts if students during Q1.
Some of the reductions will naturally flow out of things like lower travel expenses over the course of the year did you called it.
But there will be other proactive measures taken to reduce operating expense, but without impacting safety or quality and reliability of service to customers.
We are targeting expense reductions of at least 15, one $5 million in the balance of Deutsche Bank.
Lastly, I wanted to address it goes to get back on regulatory proceedings.
With the exception of Kansas.
Which represents only a small proportion of our customers all state regulatory commissions W. Judas have remained open sort of gold nugget and to me.
Alright, great cases remaining bloggers are expected to be finalized in a normal course with only a relatively minor delays.
With that.
Boston David for parts, you want, but your 20 financial results and an update on our overall guidance for Clinton like.
David.
Thanks, a rune and we're now going to be on slide nine and moving to slide 10, and good morning to everybody.
And the first quarter of 2020, we can summarize the operating results that we experienced in one word whether.
Our adjusted EBITDA came in at $242.2 million, well up 5% from the previous year. When we reported 231.5 million. It was below our expectations due to weather, but other than for that overall or various utilities and nonregulated generating stations generally performed in line with our X.
Patients.
And as a room mentioned in the quarter was not materially impacted by Copel 19.
Moving into a regulated services group the business unit delivered $170.2 million, an operating profit in Q1 2020 compared to 161.2 million in the prior year as lower consumption due to warmer weather was partially offset by cost savings results also benefited from the first full quarter.
Her contribution of New Brunswick gas and Saint Lawrence cast as these acquisitions closed at various times in Q4 2019.
So well ahead of last year the results were below our expectations due to a 12% reduction in heating degree days.
The year over year basis, our renewable energy group delivered solid results in Q1, 2020, delivering $87.2 million of operating profit compared to $83.1 billion in 2019.
The increase of adjusted EBITDA is related to our investment in Atlantic that as well as increased production from our newer wind and solar facilities. Nevertheless at renewable energy group also experienced weather related impacts the resulted in the production being 94% of our long term average expected production.
Our adjusted EPS came in at 19 cents, which was in line with the prior year again, most of the variance was due to weather.
Moving on to slide 11.
I'd like to turn my attention to the measures we have taken within our Treasury group in response to the cold at 19 pandemic.
Well the onset of Coven 19 in March and with all the uncertainty, but that's a coupled with our largest capital program in our history and Twentytwenty.
We want it as a treasury group to move quickly to put additional liquidity in place so going into 2020, Algonquin had $1.5 billion of credit lines and available liquidity of just over $1 billion in normal times. This would have been more than enough liquidity for the year, but in times of financial market disruption.
What did he takes on an even more important place, particularly for a company like Algonquin moving forward with a relatively large capital expenditure program.
During times of market disruptions are not knowing the actual extent and length of cobot 19 affects about what is treasury team felt the prudent to obtain additional liquidity for the next 12 months as an additional margin of safety. So that we know with confidence we have the ability to move forward with our updated current year capital expenditure program.
Independent of the state of the capital markets, both from a debt and equity perspective here in North America. We have now obtained an additional $1.6 billion of bank credit to allow for the financing of our committed acquisitions, an orderly refinancing of debt maturities, depending on market conditions of the debt capital markets and any other unknown.
In variable that might arise we have more than sufficient liquidity without needing to access the capital markets well into next year should that be required.
In terms of credit metrics Algonquin targets, a triple B flat capital structure, which we believe is optimal from a cost of capital perspective, we remain highly committed to maintaining our credit metrics and so we'll continue to monitor both the debt and equity capital markets closely as the year progresses.
We are prepared to move forward opportunistically should the market settle and more normal access to markets become available.
Before I turn things back over to again I'd like to touch briefly on our earnings guidance that we put out at Investor Day last December at any given year, we know that a portion of our results are weather dependent and therefore when planning the year. We always ensure that we have contingency plans in place that would allow us to make up for any variances due to weather should.
That be necessary.
This then allows us to normally navigate to a relatively narrow range.
What is unique about this year is that in addition to weather. We also have to take into effect any potential impacts that might arise from cobot 19.
This has created additional uncertainty as we look at the remainder of 2020, and therefore is caught us to widen our guidance for 2020.
Items for 2020 has now widen to arrange for no annual adjusted net earnings per share of between 65 cents and 70 cents per share. The adjusted guidance is based on certain assumptions, which are more fully described in our Q1 2020 mdna.
So with that I'll turn things back over to you in thanks, David and we are no on slide 12, moving to slide 13, and before I close out our prepared remarks. This morning, I did want to give a quick update on our five year strategic plan and then as usual opened up the lines for questions.
We do remain committed to our five year capital investment program, which projects $9.2 billion to be spent across our two business groups, which will grow our asset base to close to $17 billion by the end of 2024.
The total growth thesis has not been impacted by the challenge is currently being experienced due to covert 19.
And Algonquin remains well positioned both in the near term analog terms to continue executing on our long term capital plan.
With respect to our major renewable energy a project for this year I'm pleased to report that they are considered essential infrastructure into jurisdictions in which they are located and therefore construction has been proceeding despite shelter in place orders all of these sites.
Construction activities have have basically proceeded substantially accorded but in accordance with the plan schedules.
Our three wind projects for the customer savings plan in the Midwest have proceeded substantially within the normal schedules as well as construction for our Sugar Creek project and with respect to our Maverick Creek project in Texas. We're currently I'm anticipating that delays in deliveries of components due to overseas manufacturing shutdowns and some similar.
Supply chain disruptions may cause the placed in service date.
For a small number 16 up 127 total wind turbines to slip into early 2021.
Notwithstanding sets delay, we still expect all of our projects to fully qualify for 100%.
Ptcs production tax credits under section 45 of the internal revenue code and with this will occur in either in reliance on meeting that continuous efforts requirement has described within the guidance.
Or perhaps the more omnibus relief to the December 30 for 2020 Safe Harbor date, which the U.S. treasury outlined in the letter back to Senator Grassley yesterday.
As part of our call for when program in Missouri, or Asbury coal plants is now fully retired.
As of March 1st 2020, and this closure is in line with our commitment to sustainability with accords, you're expected to reduce cotwo emissions by approximately 1 million metric tons annually.
At the same time, reducing customer rate through lower cost wind generation.
Take a bit of the stress both financial operational off of our organization as it learns to operate under the new covert 19 influenced a circumstance as we expect to be able to shift up to $300 million of our previously planned 2020 capital expenditures into 2021.
But keep in mind this deferral in no way diminishes, our commitment to our overall five year $9.2 billion capital plan.
Shifting to slide 14, just as a quick shameless plug for upcoming ATM I'm proud of the team that we've that we haven't and I think we've proven to be an agile workforce and I want to sincerely. Thank all of our employees and our own frontline workers for their ongoing commitment in current.
Fusion, which exemplifies what incredible teamwork can do.
Through both of our stable utility and a long term contracted renewable generation platform. We have a very resilient business model with predictable earnings and operating cash flows all turning a nice shade of green.
In light of covert 19, we will like many other companies be hosting our annual general meeting virtually this year and we welcome your participation on June 4th at four PM.
We remain firmly committed to extending our track record of creating shareholder value in the current year and beyond and operator with that I'd like to open it up for questions.
Thank you well now begin the question answer session.
To join the question Q you May Press Star then one on your telephone keypad, you'll hear a tone acknowledging a request if you're using speakerphone. Please pick up the handset before pressing any keys.
To withdraw your question. Please press Star then too.
Our first question is from Rupert Merer with National Bank Mr., Michael Your line is open.
Thank you good morning, everyone warning Rupert Hi, Robert.
So you have a looks like a positive outcome for the rate case that Empire District can you talk us through what's included in that rate case as far as COO, we give a little more color on the decoupling provisions.
And when they may start.
Well I'll start by saying it it's sort of a black box settlement. If you want to think of it that way.
But we were pleased that the outcome is generally in in accordance with our expectations from a long term model I think more relevant Lee given the circumstances is the first time inclusion of decoupling mechanisms as you as you mentioned a prior to implementation of said.
Bill Fivesixty for a couple of years back a decoupling with just not part of the regulatory landscape in Missouri and it now is and so this is going to be our first decoupling and it's an important one candidly. It takes a that have 50% decoupling opt to close to 80% when you add invests and.
A smaller granite state.
One of the I'll, just say uniqueness is of the of the decoupling in Missouri is that.
It's broad based volume metric decoupling for all of our residential and small commercial customers the larger commercial customers and industrial customers, who historically have been I'll say, whether insulated because just the nature of their usage are not de coupled and that's kind of that's one of the reasons why.
If you assume that those customers are de coupled weather wise it actually would it take that 80% up to 94% so huge win from our perspective in changing.
And changing the I'll say that the risk profile of the business Rupert I didn't know if that's kind of the color that you are looking forward in terms of a in terms of the the Empire rate case.
Yes, and when would the decoupling start well it capture any of the impact sourcing from Covidien team well isn't not an interesting debate that took place between ourselves and the and the PSC.
Right now it's scheduled to take to start on June 15th So while we were obviously, arguing for an early or start and ER and I'll say candidly as we were negotiating the settlement agreement staff. They were arguing for later start and we kind of settled on June 15, so that so as we think about.
Our Q2 results a portion of those will fall into this this I'll say, new leap more broadly decoupled world.
And then I look at that Missouri, or other jurisdictions have this impact of roughly.
3 million among from Cowen 19 are there other mechanisms to recover any revenues that maybe lost from from lower volumes related to cover 90.
Sure.
This is obviously an evolving regulatory landscape.
Right now three up our jurisdictions.
Oklahoma, Texas, and California have very specific tracking account mechanisms that have been put in place to track increased costs or.
Pardon me are lost revenues associated with the its whole situation in many states than I would expect the rest of our states to ultimately follow suit. Many states are treating this kind of in the same ways, we might otherwise treat a major store and that these costs would be aggregated in tracking.
Accounts are covered over time, so I think I think the regulatory jurisdictions are recognizing rupert that the world. This is this kind of feels obviously unlike business as usual and many of the current mechanisms just where aren't appropriately set up for.
Thank you all coal that too thanks for taking my question, yes. Thanks Rupert.
The next question is from Sean Stewart with TD Securities.
Mr. Your line is open.
Thanks, Good morning, everyone Hi, Sean.
A couple of questions.
David I'll start with you.
You've got a lot of incremental borrowing capacity here too.
I guess bridge the gap. This some of the other capital raises you had targeted there are compromise and I'm just wondering if you can.
First let us.
No what the cost of that.
Incremental 1.6 billion of borrowing capacity is if you do tap it.
And if you can provide any context on the mandatory convert market right now asset recycling opportunities how how those funding sources might be compromised in that the current environment.
Sure.
With respect to the the provisions under the the additional credit.
Spreads are so I'll say slightly wider than what we have in our existing credit facility, but I'll say not materially so so.
It's really a from from our perspective very much in line.
With.
With the terms that we that we currently have and we're certainly.
Pleased with the support that we received from syndicate.
Banking syndicate on these I think is something like 12 different banks and so we're quite pleased with the with the additional liquidity and accommodation they provided us.
For that with respect to the mandatory is I mean, you know I think pre Cove Ed.
It would have been a our plan to to move forward with Mandatories.
Earlier in the year probably than than later.
Right now what we're seeing in the market.
As a heightened volatility and of course that heightened volatility then.
Increases the cost of the of the mandatory isn't so.
It's turned down that I'll say at this 10 seconds.
Mandatories aren't aren't attractive we have.
Seeing some.
Early indications that there could be fine again and that there have been some mandatories that have got off but it's still not at the level, we would like to see before we move forward with it.
He said.
In my prepared remarks.
Well be monitoring the markets closely over the course of the year and I think the theme for us is going to be too to move opportunistically.
Depending on.
The market to security that kinda presents itself with but with the best opportunity and that could be in Canada. It could be the U.S.
And what we have a lot of.
Different.
Tools that we can avail ourselves of.
Thanks for that context.
Good question is free and I'm wondering if you can comment on the board shake up but as it atlantica.
And updated thoughts.
For your investment in that sure and and and as a good CEO I'm going to deflect a question and turn it over to Chris Jarratt, great. Okay. Thanks, [laughter], yes. So.
By way of background.
There were four directors at Atlantic and that we're not reelected.
By the shareholders.
The.
Atlantic has a lot of stuff on the goal we're in kind of an unprecedented times. So the remaining directors appointed new directors and you've seen the bio's and who the directors are.
The high level, if they're all highly skilled highly qualified or a 25%.
Our women up the total board now.
So I think we just see this is as these.
Or refresh of the board is just part of good governance, but it doesn't really signify any dramatic change theres no change in strategy, It's a great company in.
We see at the same way. So I don't think you should read too much into it that that we're seeing atlantica is any different than it was before so.
Probably the high level of what happened.
Thanks, Chris that's that's all for me.
Thanks, John.
Your next question, it's from David data with Raymond James. Please go ahead.
Thanks, Good morning, everyone.
David.
My first question on the renewable power side of business I understand the U.S. treasuries come out with a letter, suggesting an extension to the deadline.
Qualify for the PTC, an ITC and I realize that Maverick, it's going to qualify for 400%, regardless, but I'm wondering if any of your other prospective projects could see a benefit from some kind of extension there.
Well is it that I.
I totally agree isn't that cool so.
We obviously, we're on the front lines of trying to do regulatory and legislative re outreach to to get to get that this extension.
And right now it looks like and it's unclear exactly how it get it's going to get proposed but senator grassley. When he was interacting with the treasury basically asked for a year extension to all of the project spend.
And that will have some interesting and positive implications to projects that right now we had thought about being.
2021.
80% PTC projects and so.
I think we had originally I'll be candid had thought that it would probably only X X extend to projects that were fully in construction already but if they if they if the relief is broader than that I agree with you. It does.
Our potential application to key on just the projects that were originally slated for Twentytwenty now the good news is and while that's upside.
Well, we were confident in the 2020 projects fully qualified for 100 per head PTC is that shift so nice to take the pressure off of off of the team in terms of.
In terms of getting these projects done people, just well I'll say suite easier I didn't know if David if that's kind of the insight that you're looking for.
It is that's great color. Thank you and then maybe just I'll kind of a follow up on that topic.
All right how are you seeing I guess demand.
In terms of Counterparties for PPL, there or you know power hedge agreements under the current.
Environment.
Well I'll say, let's say early to say.
The good news is we're actually not trying to sign any right now.
We have obviously projects that we are continuing to work on but it's not like anybody has pulled the plug on a negotiation that has been ongoing which is obviously good I think.
What is very interesting and maybe this is a broad commentary about.
In the capital markets and May be society in general we haven't seen people running away. If you will from their STR sustainability linked objective and so therefore to the extent that investing in up in renewable energy through a PPA made since before the good news is we're seeing.
Now that the world steel thinks it makes sense going forward. So David I guess at this 10 second.
You know, we're not seeing immediate impact and perhaps over the longer haul we.
We can't foresee that the market for Cnine PPA basis is has been materially impacted.
Okay excellent. Thank you for that all I'll get back into queue. Thanks, David.
Our next question is from Nelson Ng with RBC capital markets. Your line is open.
Great. Thanks, good morning, everyone.
Hi, the first question relates to the Energynorth rate case, I'm, just wondering whether you can clarify the status so.
Thought a rate cases filed last year and it sounds like you're withdrawing filing a new on the summer I'm, just wondering whether that like resetting the clock in terms of.
Timing.
And I.
Sure, they're going to be a lot more additional information or a lot more additional items included in this summer filing.
I sure that let me answer that one and I can give you some more color to that one is.
Yes.
In the current rules within New Hampshire, there needs to be two years of of gap between.
Between rate cases, and while we were confident.
That was that two year period had had a lot.
I think ultimately there with some debate with that with the staff as to whether that two years had originally lapsed and and so.
And so as we agreed to pull the rate case with the thesis of re actually refining it in April.
And really re filing it in exactly the same form Nelson. So it wasn't that I just wasn't about us can be throw a more things into the rate case. It was really about just meeting. This two year requirement. Obviously Kobe 19 has stepped in and it's causing us to think of the data is now July rather than a.
We also did occasion to delay yes. It does it fundamentally change the risk or the or the context of the rate case no.
But I think could we have.
I'll say fight that battle, well I'll say regulators are certainly customs agent. There's nothing good will come out of you know you, having an argument with them over seven procedural point and so I think we bout gracefully and we are going to resubmit basically the same rate case I don't know now thats kind of the color you're looking for there.
Nothing to various surgeon.
Associated with this other than just meeting this.
Timing requirement.
Yes that answers my question. My next question is for its probably for around but in terms of the in terms of achieving at least $15 million the savings.
Can you guys give a bit more color on like where you're looking to achieve those savings whether it's from underlying operation.
Head office, whether it's for utilities, where there's somewhat of a delay in rate cases.
Good morning color.
There is.
Sure no.
So thank you.
So.
Thank you go into guidance as as you said, we've assumed a decrease of what a $50 million and it's really a bunch of things right guys something that are naturally reduce for example, lower travel expenses things. So this word.
And while.
Higher the piece is not at the same level as as at before just because of the.
If you looked out you'll work from home policies.
But there's also other things.
You know like operating costs.
And.
Also focus on things like possibly pushing out some of the operational and maintenance expenses, but again, we look at that very very carefully.
To make sure that it doesn't impact anything safety security availability things of the sort. So it's really a bunch of different things that make up that a $15 million.
Okay. Thanks for the color I would get back in the Q.
Thanks Nelson.
Operator.
Pardon me. The next question is from Ryan Greenwald's with Bank of America. Mr. Greenwald. Your line is open.
Good morning, guys.
Right.
Let's say liquidity issue and that you have to find that that deferred revenue, but in the context of our ways and the way regulatory assets work, obviously, you get to earn on your wife cut any deferred revenue. That's just the way it worse by David If you maybe you want to add for.
Sure.
I I mean, it from a a financial statement point of view it will be Oh, saying transparent you won't actually see any difference in our in earnings as a result of that will recognize that it will show up as a as a regulatory asset on the balance sheet customer rates will be.
Reviewed in 2021 and rates that are established that time, we'll incorporate a recovery of the regulatory outside and and so will begin collecting on that regulatory asset some time in beginning sometimes in 2021.
It really is just a a timing from a cash collection point of view, but will be transparent from a a gap earnings point of view.
And I'm afraid to complain components does the commission have to take action by June for that to go into a factor would you expect that to be retroactively applied.
Well I think <unk> right now the the the the expectation is hitting the settlement of the of the rate taste, assuming that it's it's a proof that that that decoupling calculation will be retroactive to June 15, 2020, now ultimately you know that I'll say that settlement tips.
You will takes place at a later date [laughter], there's nothing to be done obviously on June 16th but at a later date a one we'll look back and we'll we'll look back to June 15th and appropriate adjustments will be may. So so right I'm not sure anything actually has to happen on on June 15th to put this into into a forced into effect.
It's just we just all have to collectively agree that starting on June 15th that the the the volume metric <unk> will be.
Changes will be track from that day for it I know if that's helpful right.
Yeah that is helpful. Thank you and then just in terms of any granularity you guys have a round foremost succession timing.
Well I mean, it takes me.
Pretty clear I, what point out that's your third question right, but that I I think we've been pretty clear that yeah, we actually welcome to room to the to the organization in February I think he's done a great job drinking from the open fire hose, Oh, so far getting to know all of his colleagues and I.
Think so I'm not sure that the timing that we outlined when when it rune join the organization, we don't feel any different about this I mean, I I'm sure from a rooms point of view. He he stepped into a circumstance that he could never have foreseen in terms of Kobe 19, but I can't it may he's done a great job.
Me up to speed from a day to day perspective, and and I think I've got a a greater understanding to organizations. So that's where I have anything more to add to that right.
[noise] great. Thanks, guys, Congratulations again of ruin and best of luck and then they were all.
Thank you.
That's cool <unk> session I can I like to teleconference alcohol <unk> closing remarks.
Great. Thanks, operator in Hey, I appreciate everybody's time and interest today obviously.
Oh, we she can stay on the line for our riveting disclosure. This time provided by Amelia, saying, but before we go I guess I have two things again.
You know the state stay healthy stay safe and I look forward to at least skiing you in cyberspace on June 4th that our annual general meeting thanks, everybody.
Aren't discussion during the call contain certain weren't looking for me.
Looting, but not limited to our expectations regarding earnings in capital expenditure as well as potential future impacts approve it 19.
Portland's information is based on certain assumptions, including those graphs and our most recent M.D.N.A. Oh, that's <unk> and available on our website and subject to rent and uncertainty I don't sit there for for killing from extra result, or <unk> anticipated by the Fort looking information.
For looking information provided during this call the only as if the gain of this call and is being on the plan belief nets projection expectations opinions and assumptions management adds up to date date, there can be no assurance that for looking information what proved to be accurate you should not.
Do belonging relying on for looking information, we just clean any obligation to update any fort looking information or to explain any material difference between stuff I can actually then and that's for looking information, except as required by Oh Wow.
In addition, during the course of this call. We may have referred to <unk> financially measures, including but not limit to adjust isn't it earnings adjusted Ah adjusted funds from operation I, just the net earnings per share a net utilities.
There is no standardized measure upsets noncat national measures and Consequently April method of calculating these measures me <unk> differ from method used by other companies and therefore, they may not be comparable similar measures presented by other companies.
For more information about both for looking information and non got my national measures, including a reconciliation other noncat measures to the corresponding got measures. Please refer to our most recent M.D.N.A. files that are in Canada and at car in the United States and available on our website.
That's cool cool today's conference call. When they disconnect you lines. Thank you for participating and have a puzzled day.
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