Q1 2020 Earnings Call
[music].
Thank you for standing by this is the conference.
Right.
Welcome to the Algonquin power and utilities car 2021st quarter.
Got it always done Investor earnings call.
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I'd now like to turn the conference alert your Christopher Jones, Vice Chair of Algonquin Power and Utilities Corp. Please go ahead Mr. John.
Pardon me.
Hi.
HM Okay. The presenters line.
[noise].
And it's my pleasure to introduce Mr., Christopher Jones, Vice chair of Algonquin power and utilities. Please go ahead Mr. Jarrett.
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's Christian I'm, the Vice Jeroboam 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 there in Ben Scott, who joined our organizational president and.
February of this year.
To a company earnings call today, we haven't.
Supplemental 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.
We're 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 and capital expenditures.
Well I potential impacts of coded 19, we will also refer to certain non-GAAP financial measures and at the end of this call <unk> mail, yet, we'll read a legal notice regarding both forward looking.
Information and non-GAAP financial measures. Please also refer to our most recent mdna for additional information.
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 for the 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 rescued you have additional questions and with that I will turn things already in <unk> talk about Q1, thanks, Chris and of going back to.
Old School I'm gonna be referencing slide four in that slide deck.
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 coated 19 pandemic and so I think this slide five I I point out that utilities, such as we provide our ineffectual service and they do play a unique rule and maintaining the fabric of our society people.
Need to like heap their 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 recognize 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 move to help lesson any potential financial hardship that the financial or that the covert 19 pandemic is causing for our customers. We have temporarily wave late payment charges suspended collection activity and delayed service conduction disconnections for non payment.
Bills across our service territories.
We've also recently made a 500000 dollar donation to support our communities during the co had 19 pandemic, including our low income individuals food banks and first responders.
Additionally, we're helping our local coded heroes by donating excess personal protective equipment ever PPS is referred.
By donating already 5000 massively of 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 and customer remains our top priority I'm 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 in field employees, either working from home are starting their day from home rather than the office.
Out of our 2500 employees were fortunate we've only had two cases of 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 distancing.
Protocols for those who are not able to work remotely we've implemented preventive measures to help keep them safe on the job.
So it's 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 distances.
The lions share of our business contracted with creditworthy Counterparties Theres been essentially no coded 19 related impact.
Turning to slide six.
First in terms of the financial results for the quarter, we do view the quarter's financial performance to be below our expectations, but it seems pretty straight forward to attribute the impact to mild winter weather in Ddos 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 versus service territories.
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 and caused our results to miss our budgetary expectations.
Nonetheless, we remain confident then the resiliency of our business model long lived assets, providing essential services.
Operating under business provisions, which reduce 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 noted that our board has improved to 10% increase into did begin dividend beginning with the Q2 dividend payable on July 15th of this year.
This increase.
Marks the 10th year 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, a new Brunswick gas into our operations.
The transition as expected has been seamless.
With respect to our acquisition of Ascendant, the parent company of Bermuda Electric company or Bellco as we refer to it the regulatory process continues to move forward, even though Bermuda like most countries in the world have put in place public health measures to deal with Covance 19.
The regulatory authority in Bermuda completed its public consultation on may 4th.
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 State Public Service Commission in February and 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 occurred operating environment for our regulated services group and the impact that code at night.
He has had on it a room.
Thank you again and good morning, everyone.
Can use to participate in my first quarterly on its called industry community and I look forward to media was all three in Boston in the months ahead is covered lives in restricted stock to ease.
I sold to since joining the organizes Nashville image was as many of our colleagues as possible and come up to speed on all the operational development Financeable and corporate matters across the company.
Algonquin safety is more than a brighter.
It is part of what we are.
In our response to the evolving global crisis, the health and safety of Natalya employees, but also our customers was front and center in the actions. We took I look forward to goals, we put in place.
You can imagine the increased potential for an incident was all the distractions around this at the moment.
We have therefore double down on our focus on safety.
And I'm gratified to report that our employees have reason to the challenge and continued our enviable safety record.
As a business, providing mission critical energy and water services to our customers. We are existing business continuity plans to ensure that we continued to provide the services to our customers or be able to recover as quickly as possible in the he said we have seen some events such as Hardy games slugs.
Tornadoes highs et cetera.
Views business continued to plans over every element of our business and all the processes required to deliver does mission critical services.
As soon as you go to visibility into over 19, we sit above water approach and started to analyze the RBC pays for immediate actions and then revised Jay's 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.
Customers.
And do not anticipate any.
Certainly during Q1, we did not see any material banking related inefficiencies.
But admittedly very few days in the larger were impacted by quarter.
We moved could you do a work from home model where possible.
Isolated teams deemed critical to the business.
And practice physical distance and get our field 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 absurdity perspective.
I would like to folks here on the offers only sets we see impacting our business for the balance of uncertainty.
We have to examine potential impacts of 19 on our operations and on balance.
That's a 90 MW currently foresee are expected to have a relatively modest in back to our business.
I'd like to spend a little bit of time.
Items that may impact our business into engineering.
Sure.
Higher accounts receivables.
Like other utilities in the U.S and Canada, we had been constructed or asked.
Collections activities, including Disconnections for non payment during the standard.
This is a floor is 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 believed 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 a force tracking our accounts receivable on a weekly basis and to date, we have seen only a minor Judy will you said in our aged accounts receivable.
And why do you have no certainty what this might mean by the end of the year. This could lead to higher collectible amounts there is a bounce using it.
Nevertheless, we will be tracking and ultimately do you expect to seek recovery of any additional expenses, so future rate for savings and believe that regulators should be accommodating on this issue.
So at this time, we did not know by by higher that bad debt expenses might have on our business.
Second.
We are carefully monitoring the changes in consumption patterns of our residential commercial and industrial customers across all three modalities of utility services.
However.
No that's James in consumption patterns doesn't.
That's not necessarily into changes in revenues given the various regulatory mechanisms that we haven't please across our 40 utilities and 14 regulatory jurisdictions.
In some utilities, we're seeing revenue decoupling.
In some utilities, where specifically whether decouple.
Other utilities, we have such a lot as fixed fee component that you may as well say we are deep.
This means that today over 50% hi to do a 50% of our revenues are protected and once we get through our current recusal, Missouri, where we have reached a non unanimous settlement agreement.
We are expecting to nearly 80% of our revenues will be predicted.
So due to all these mechanisms it is hard to draw a quick rule of thumb.
But we have estimated that due to these various 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 you looked like.
No the full impact that reduce load will have an absolutely there and results.
Certainly we also began implementing certain cost reduction strategies in order to mitigate some of the weather impacts it 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 French adventure.
Lastly, I wanted to address the gold in fact on regulatory proceedings.
With the exception of Kansas.
Which represents only a small proportion of our customers all state regulatory commissions W.G. list have remained open sort of gold nitrogen and to me.
400 cases remaining bloggers are expected to be finalized in a normal course with only a relatively minor delays.
With that I'll pass it over to David for review of our Q1 front your 20 financial results and an update on our overall guidance for Clinton like.
David.
Thanks, Rune and we're now going to be on slide nine and moving to slide 10, and good morning to everybody.
In 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.
Dictation.
And as a room mentioned in the quarter was not materially impacted by Covance 19th.
Moving into a regulated services group the business unit delivered $170.2 million, an operating profit in Q1, twentytwenty 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 of 2019.
So well ahead of last year the results were below our expectations due to a 12% reduction in heating degree days.
On a 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 million in 2019.
The increase of adjusted EBITDA is related to our investment in Atlantic that as well as increase 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 Cobot 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.
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 liquidity 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 and not knowing the actual extent and length of cobot 19 effects of banquet 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 ends up.
And then 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 Barry.
Double 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 about when 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, and 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 Ian 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 our 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.
Essence area.
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, our guidance for 2020 has now widen to arrange for an 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, we'll open 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 and long term to continue executing on our long term capital plan.
With respect to our major renewable energy.
Projects 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.
The construction activities have have basically proceeded since that's the accorded but accordance with the plan schedules.
Our three wind projects for the customer savings planned 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 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 of 127 total wind turbines to slip into early 2021.
But 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 the 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 US 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 disclosure is inline with our commitment to sustainability with the closure expected to reduce cotwo emissions by approximately 1 million metric tons annually.
At the same time, reducing customer rate through lower cost wind generation.
To take a bit of the stress both financial operational off of our organization as it learns to operate under the new covert 19 influenced circumstances, we expect to be able to ship 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 Weve.
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 and contribution 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 and 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 in 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. Good morning, Rupert I Rupert.
So you have a looks like a positive outcome for the rate case.
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.
Yes, well I'll start by saying it it's sort of a black box settlement. If you want to think of it that way.
We were pleased that the outcome is generally in in accordance with our expectations from a long term model I think more relevantly given the circumstances is the first time inclusion of decoupling mechanisms as you as you mentioned a prior to implementation of Senate Bill.
Hi, 60 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 small.
Other 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 thats 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 thats kind of the color that you are looking forward in terms of in terms of the the Empire rate case.
Yes, and when would the decoupling stark bullet capture any of the impact sourcing from Covidien team.
Well isn't that 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 earlier start.
And and I will 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 newly more broadly de coupled world.
And then I look at Missouri, or other jurisdictions and you 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 of our jurisdictions.
Oklahoma, Texas, and California have very specific tracking account mechanisms that have been put in place to track increased costs or.
You 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.
Major store and that these costs would be aggregated in tracking accounts have recovered over time so.
I think I think the regulatory jurisdictions are recognizing Rupert that a world. This is kind of feels obviously unlike business as usual and many of the current mechanisms just where are in appropriately set up for.
Thank you ill call that too thanks for taking my question yet thanks Rupert.
The next question is from Sean Stewart with TD Securities just Sir your line is open.
Thanks, Good morning, everyone.
Sure.
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 if some of the other capital raises you had targeted there.
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 are 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 from from our perspective very much in line.
With.
With the terms that we that we currently have and we're certainly.
I'm pleased with the support that we received from syndicate.
[noise] 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, it you know I think pre Cove Ed.
No. It would have been a our plan to to move forward with Mandatories.
Earlier in the air 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 I'll say at this 10 seconds.
Mandatories aren't aren't attractive we have.
Seen some.
Early indications that there could be thawing 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 like I 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 in 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, and second question is free and I'm wondering if you can comment on the board shake up at a at Atlantic.
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 and well.
Yes.
Just by way of background.
Were four directors at Atlantic and that we're not reelected.
By the shareholders.
So 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 theyre all highly skilled highly qualified.
25% are are women of the total board now.
So I think we just see this is as these.
Or refresh in 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 and.
We see at the same way so I don't think you should read too much into it that it.
No. We're seeing atlantica is any different than it was before so.
That's probably the high level of what happened.
Thanks, Chris that's that's all for me.
Thanks, John.
Your next question from David can data with Raymond James. Please go ahead.
Thanks, Good morning, everyone Hey, 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.
To 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 sand.
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 yes, I think we had originally I'll be candid had thought that it would probably only Ics Ics extend to projects that were fully in construction already but if they hit the if the relief is broader than that I agree with you. It does have a potential implication to key on just.
The projects that were originally slated for Twentytwenty now the good news is.
And well that's upside.
Well, we were confident in the 2020 projects fully qualified for kind of 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 sleeve 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 Pizza is our or 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.
And 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 app in renewable energy through a PPA made since before the good news is we're seeing.
So 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 is has been materially impacted.
Okay excellent. Thank you for that all I'll get back into queue. Thank David.
Our next question is from Nelson Ng with RBC capital markets. Mr. On your line is open.
Thanks, Good morning, everyone.
Hi, the first question relates to the a energynorth rate case I'm, just wondering whether you can clarify the status so.
Thats thought a rate cases filed last year and it sounds like you're withdrawing filing a new on this summer I was 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.
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 would that two year period had had to laugh.
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 if 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 I just wasn't about us can be through 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 isn't nothing good will come out of you, having an argument with them over seven procedural point and so I think we bowed gracefully and we are going to resubmit basically the same rate case, I don't know Nelson if 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 of 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.
That's for utilities, where there's somewhat of a delay in rate cases give more color in those areas.
Sure.
So thank you.
So.
Thank you go into guidance as as you said, we've assumed a decrease of what a $15 million and it's really a bunch of things right guys something got that are naturally reduce for example door 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 look to 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 with Bank of America, Mr. Green Love. Your line is open.
Good morning, guys Hi, Ryan.
Let's say liquidity issue and that you have to find that that 10 deferred revenue, but in the context of our ways and the way regulatory assets work, obviously, you get to earn on your whack on any deferred revenue. That's just the way worse by David If you maybe you want to ask for.
Sure.
I I mean, it from a a financial seven point of view it will be Oh, saying transparent you won't actually see any difference in our in our earnings as a result of that will recognize that it'll 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 asset and and so will begin collecting on that regulatory asset sometime in beginning sometime in 2021.
It really is just a a timing from a catch collection point of view, but will be transparent from a a gap earnings point of view.
And then when Ted to complain component 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 Ratecase assuming that it's it's a proof that that that decoupling calculation will be retroactive to June 15th 2020, now ultimately you know that I'll say that settlement.
You will takes place at a later date, if 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 neat so to ride I'm not sure if they actually have to hop in on on June 15th to put this into into <unk>.
It's just we just all have to collectively agree that starting on June 50 that the that that Volumetrics <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 around for almost six action timing.
Well I mean, I think we <unk> <unk> pretty clear I will point out that your third question right, but that time I think we've been pretty clear that you know we are few welcome to room to the city organization I in February I think he's done a great job drinking from the telephone can fire hose I'll show.
Far getting to know all of his colleagues and I think show I'm not sure that the timing that we outline when when it rune joined the organization, we don't feel any different about this I mean, I I'm sure from a ruse point of view. He he stepped into a circumstance. If you 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 Ah has got a a greater understanding to organizations. So I'm not sure I have anything more to add to that right.
[noise], great. Thanks, guys, congratulations to Ghana ruin and best of luck in the new World.
Thank you.
That's cool <unk> session I can I like to teleconference alcohol <unk> for closing remarks.
Great. Thanks, operator, and Hey, I appreciate everybody's time and interest today, obviously <unk> as as always you 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 they say and I look forward to at least seeing you in cyberspace on June 4th that our annual general meeting thanks, everybody.
Aren't discussion during the call contain certain sports information.
Shooting, but not limited to our expectations regarding future earnings in capital expenditure as well as potential future impacts approve it 19.
Portland's information is based on certain assumptions, including those described in 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 differ for killing from electrical result, or <unk> anticipated by the Fort looking information.
For looking information provided during this call speak only adds up to date of this call and his name on the plan belief nets projections expectations opinion and assumptions on management adds up to date date, there can be no assurance that for looking information or proved to be accurate you should not.
Do belonging reliant on for looking information.
<unk> any obligation to update any fort looking information or to clean any material difference between stuff I can actually then and that's where it looking information except as required by a plus and blah blah.
In addition, during the course of this call. We may have referred to <unk>. My next one measures, including but not limit to adjusting it earnings adjusted adjusted funds from operations adjust the net earnings per share and that utilities.
There is no standardized measure upsets noncat national measures and consequently, Aproch method of calculating these measures me <unk> differ from methods used by other companies and therefore, they may not be comparable similar measures presented by other company.
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 Edgar in the United States and available on her website.
That's cool cool today's conference call. When they disconnect you lines. Thank you for participating and have a puzzle day.
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