Q2 2020 Xcel Energy Inc Earnings Call
[music].
Welcome to the XL Energy's second quarter <unk> earnings Conference call.
And we'll only be taken from institutional investors reporters can contact the media relations.
Inquiries and individual investors and others can reach out to Investor Relations. Today's conference is being recorded at this time much of the conference over to Paul Johnson, Vice President of Investor Relations. Please go ahead Sir.
Good morning, welcome to Excel Energy's 2022nd quarter Earnings Conference call. Joining me today are then folk chairman and Chief Executive Officer, Bob Frenzel, President and Chief operating Officer.
Hi, invaluable executive Vice President and Chief Financial Officer, and demand from Executive Vice President and General Counsel.
This morning with review, our second quarter results share recent business and regulatory developments and discuss how we're managing through uncertainty around cobot.
Slides that accompany todays call are available on our website.
As a reminder, some other comments we made during today's call may contain forward looking information.
If can factors that could cause results different both anticipated are described in the earnings release and our SEC filings.
Today, we will discuss certain metrics that are non-GAAP measures.
Including items ongoing earnings electric and natural gas margins information on comparable GAAP measures and reconciliations are included in the earnings.
Now I'll turn the call that menfolk.
Well, thanks, Paul and good morning, everyone. We had a strong quarter booking earnings of 54 cents per share for the second quarter of 2020, compared with 46 cents per share last year.
Our year to date earnings are on track with our financial plan and we are mitigating the impact of Cobot 19. As a result, we are reaffirming our 2020 guidance.
We continue to help our customers and protect our employees during the pandemic.
That being up our charitable giving to help our communities our business continuity plans have been executed extremely well.
Keeping employee say, while providing reliable service to our customers and we're helping to restart the economy through our capital investment programs that create jobs in our communities.
Earlier this year, the Minnesota Commission open day relief and recovery docket and inviting utilities in the state to submit potential projects that would create jobs and help jumpstart the economy.
In June we filed a plan that proposes $3 billion of capital investment.
This includes approximately 1.8 billion of incremental Capex for when Repowering, a 460 megawatt solar facility.
And it easy infrastructure and about 1.2 billion of accelerated transmission distribution and natural gas investments.
We recently announced this oh solicitation for Repowering of wind projects that are better either owned by excel energy or under P. A's, we estimate 802000 megawatts of potential repowering projects and expect to make a commission recommendation by year end.
Well also proposing options to mitigate customer bills overall feedback has been very positive and we look forward to work into the process with the commission.
Now as you might have heard the U.S Treasury recently announced a one year extension of the safe Harbor for renewable projects when projects that began construction in 2016 now have until the end of 2021 to complete construction and receipt ptcs at the 100% level.
While we were confident that our projects would qualify for 100% PTC level, regardless of this change the extension assures has been up there for our customers should any project slip into 2021.
Importantly, this change also presents the opportunity to move Dakota range from the originally planned 80% PTC level to 100% PTC level. While this will not impact earnings it will significantly reduce costs, which is a great outcome for our customers.
Advancing our strategic priority of leading to clean energy transition, we and our co owners recently announced the early retirement of the second coal unit at Craig while we only have a small ownership stake in Craig we're proud to help drive the early retirement of another coal unit.
We're also making significant strides to improve SG transparency and disclosure. We recently issued our Tcf de report and risk assessment, which describes the resilience of our climate strategy using different scenarios.
The addition of this report enhance our disclosures and results and a full tcf the compliance for excel energy.
Another strategic priority is to keep our customer bills low as a result, it was very satisfying to see that Sps is electric rates in Texas and in Mexico, where the lowest in the country for 2019 has recently reported by S&P Global.
Providing strong customer service and reliability and an attractive prices a hallmark of excel energy and we're very proud of this recognition.
We're also excited that after 10 years, we've reached a settlement agreement with Boulder that will result in a new franchise agreement and also a partnership to explore grid side options to meet our carbon goals.
The approval process for the settlement will include a vote by city Council in August a ballot referendum and vote by the people of older in November if approved the franchise would go into effect in January of 2021.
Finally, I was recently elected chairman of the I will be an honor to lead the industry in such an important and challenging time and I tend to focus on three areas. My first priority is the Industrys ongoing cobot 19 response related to the workforce customers and recovery from from the pandemic.
Second I intend to focus on clean energy innovation.
I'm asking IAI to develop federal and state policy proposals that will bring dispatchable zero carbon technologies into the marketplace to enable the industry to meet our long term carbon goals.
Finally, I've asked he died of focus on what our industry can do to promote racial justice and increasing our commitment to advance diversity and inclusion.
Like our country, our entire industry has been shaken by the death of George Floyd. Mr. Floyd died only a few miles from our corporate headquarters in Minneapolis was the first city to experience widespread protest and writing.
I think at Society, we have a lot of work to do we need to look hard at ourselves our unconscious biases and our business practices. They have some hard questions about how we can improve our diversity.
I'm confident that excel energy can play a leadership role in driving positive change for our country and our communities.
So with that let me turn the call over to Brian will provide more detail on our financial results and our outlook right.
Thanks, Ben and good morning, everyone.
Increased earnings by two cents per share, which reflects riders and rate increases that offset the negative so seven cents per share impact from declining sales largely due to covert 19.
Higher Hvdc equity increased earnings by three cents per share and finally, our lower effective tax rate increase earnings by seven cents per share.
However, the majority of the lower each yards due to an increase in production tax credits, which flow back to customers through electric margin and is largely earnings neutral.
Offsetting these positive drivers or.
Increased depreciation and interest expense, reflecting our capital investment program and other items, which combined reduced earnings by nine cents per share.
Next I want to discuss the status of cobot 19 impacts our mitigation efforts.
As expected Kobin 19 had a major impact on second quarter sales.
Our second quarter weather adjusted electric sales declined by 7.1%.
However, these impacts are better than projected in our base case scenario, which is embedded in our guidance assumptions.
On the weather adjusted basis April retail electric sales declined 9.6%.
May showed improvements as retail electric sales declined 6.7% in June showed further improvement as retail electric sales declined 4.7%.
This monthly trend reflects economic shutdown that started in mid March and the gradual opening up of the economy in May and June.
As a reminder, give us sales trip mechanism for all electric classes in Minnesota, and decoupling for the electric residential and non demand small cnine classes in Colorado. This covers about 45% for a total retail electric sales.
Since second quarter sales came in better than projected in our base case scenario, we have additional cushion shouldnt economic collapse occur the recovery falter.
Conversely, if sales continued to come in better than expected, we'll adjust our contingency plans accordingly.
We're also closely monitoring bad debt expense and working with customers on payment plans, while while it is difficult to reject wearable and bad debt expense increased approximately 25 million in the 2008 2009 time period as a reference point.
Our commissions in Minnesota, Wisconsin, Texas, New Mexico in Michigan have issued orders to defer pandemic related expenses.
Also reached a settlement in Colorado staff, and LCC that would allow us to defer cobot 19 related bad debt expense pending a commission decision finally, a filings in North Dakota in South Dakota remain under Commission review.
We've also made strong progress on our efforts to reduce on him cost to mitigate the impact over 19.
Based on our contingency plans, we expect annual on M. expenses will decline, 4% to 5% in 2020, which was offset covered 19 impacts in the base case scenario.
We're also prepared to implement additional contingency plans at the impact exceed our base case scenario.
And as we've discussed in the first quarter there are limitations to what we can offset we remained focused on providing strong customer service and reliability and will not make short term decisions that have a negative long term and back on our customers are shareholders.
The last covert 19 topic I want to covers liquidity.
We finished our planned debt issuance issuances for the year and we were able to access the capital markets on strong terms in issue bonds at a record low coupons.
We also closed on the sale of the Mankato Energy Center, which provided approximately $650 million of cash proceeds after carving out the gain for charitable contributions.
As a result, we now have available liquidity of approximately $4.5 billion.
And finally, we issued an equity forward last year, which we expect to settle later this year, bringing our total liquidity to approximately $5.2 billion.
Next let me provide a quick regulatory update in new Mexico. The Commission approved our constructive settlement that reflects a rate increase of $31 million are are we have 9.4 or 5% in equity ratio of 54.8% and accelerated depreciation of the toll coal plant to reflecting earlier earlier retirement.
In Texas, we reached a constructive unopposed black box settlement, which reflects an electric rate increase of $88 million.
Our OE of 9.4 or 5% in an equity ratio of 54.6% for ABDC purposes, and acceleration of the depreciation life of the total coal plant.
We anticipate a commission decision in the third quarter.
And in July we also reached a constructive settlement in our Colorado natural gas rate case, which reflects the net rate increase of $77 million are are we have 9.2% in equity ratio of 55.6% and the historic test year with an adjustment for the tunks into Blackrock project.
Anticipated Commission decision later this year.
On our last call, we discuss our preference to avoid rate cases impossible, especially in light of called the 19.
So we recently filed for rider recovery of our wildfire in advanced grid investments in Colorado set of filing a comprehensive rate case arrivals will cover 2021 through 2025 and provide regulatory flexibility.
And as part of our Minnesota relief and recovery filing we express or interest in seeking an alternative path to avoid a rate case filing. This year. We think this would be a constructive outcome for all parties, who had initial discussions on we'll keep you posted.
With that I'll wrap up we're effectively mitigating coated 19 impacts we continue to provide reliable energy service to our customers, while ensuring the safety and well being of our employees in communities.
We reached constructive settlements in our Texas, and Colorado rate cases.
We avoided in electric rate case in Colorado by filing for wildfire and advanced grid riders.
We filed our relief and recovery proposal in Minnesota, which will create jobs of rejuvenate our local economies and result in significant customer benefits.
We announced early retirement of another coal plants and achieve Tcf the full compliance.
We reached a settlement was boulder that should and their municipal innovation efforts.
We are reaffirming our 2020 guidance range of $2.73 to $2.83 per share based on our solid year to date results in progress and contingency plans.
Finally, we remain committed to delivering long term earnings and dividend growth within our 5% to 7% of objective range.
This concludes our prepared remarks, operator, we'll now take questions.
Thank you the question and answer session will be conducted electronically if you'd like Downscaled question. Please do so by pressing the starkey followed by that digital one on your touched on telephone if he is the speakerphone. Please be sure. Your mute function is turned off the layer signal.
Each our equipment once again, ladies and gentlemen, please press star one.
To ask a question and we'll take our first question from Jeremy Tony with JP Morgan.
Hi, good morning.
Good morning, good morning.
Just wanted to touch base I guess on your retail sales expectations at this point I'm getting help you had any data from July if you could provide us anymore color. It. It seems so far in the second quarter you guys are trended somewhere between the base case and the mild case and just wondering if you'd give us any feeling I guess from what you can see so far I'm you know how the.
Third quarter might be shaping up initially between those two scenarios.
Yeah, Yeah happy to answer, but just as you know we don't have amyas. So we have some visibility into July information in particular from we have some sampled customers and what we're seeing on to see Eni side as we're seeing a slight improvements as we look at some of the specific.
Data that we have we've seen some improvement in the oil and gas slowed down and Sps something we're watching closely if you looked at the results down there.
On a bond symbolic in may and we've seen improvement relative still below both 5% for more was pretty cold levels, but good to see the Sina improvement. There were also watching our Colorado see Eni. If you look at our earnings release in our presentation. You can see that's the C. United sales from May to June.
I didnt improve as much as they did from April to May. So that's something we're focusing on in Q3, but we are seeing positive trends there in the residential I think we're still continue to see that the strength that we saw him to too.
So overall no positive trends going into Q3, but you know you're looking to base scenario. We did have significant improvement from the depths in Q2 to Q3. So some are watching closely.
Got it that's very helpful. Thanks.
Just with regard to the Minnesota relief and recovery proposal.
Just wondering if you might be able to share anymore as far as any early feedback that you might have received so far just kind of expectations going forward at this point.
Yeah, Jeremy its Bob and thanks for the question.
You know coincidentally, we actually had a benefit of planning meeting yesterday with the department and the commission to talk through the relief in Recovery Act. We think this is a.
Really interesting example of coordination between the.
You know investor owned utilities, and the political community to try and solve some of the problems that are affecting our communities from the pandemic.
I think the commentary yesterday was kicked off by lieutenant Governor with a positive tone I feel like we had some positive tone from some of the commissioners.
With a special interest to an expeditious resolution and timeline. So we'll know more as we work through the rest of the summer in terms of timeline, but I think yesterday's planning meeting felt fairly positive.
That's encouraging that's great. Thanks, and then I could just sneak in one last one here it seems like a year. Your guide DNA interesting ATDC equity all kind of changed a little bit. There I was wondering if you could help us for some of the drivers.
Yes, certainly I mean, when you put them all together bottomline impacts pretty immaterial for the year puts and takes depreciation changes coming out of our rate cases, we had some depreciation rate changes that were implemented obviously interest expense.
We set a record low coupons, Minnesota, we issued a 30 year bond at 2.6%, which is the lowest 30 year first mortgage bonds for utilities.
So really good results there out of the team and then on the other pieces a rider revenue right, just a little bit a delays and the implementation or wind farms, but net net pretty immaterial impact when you take them altogether.
Great. Thanks, so much.
Next we'll go to a Julien Dumoulin Smith with Bank of America.
Hey, good morning.
Hey, thanks to the time Guy.
So let me let me get the other side of what Jeremy We're just talking about let's talk about cost reduction and let's talk about that in the context your progress.
Year to date and what this means going forward into future years right I hear you guys talking about staying out here in Colorado for instance, leveraging riders little bit more but give us a little bit of context, when and where you are against the plan given the 45% articulated and then what that means for sustainability.
City and prospects to stay out anything.
It was funny, but I think I'm going to let Brian.
I gave you the details on that drilling, but let me just say I really proud of how the entire team tyrants sell workforce has really stepped up.
To a mitigate the impacts of cobot 19, while still some you know.
Providing this important obviously product that we deliver.
And we've done in a number of different ways, but what is most impressed me is the innovation and creativity to use of technology and to improve our business. So you know I'm optimistic that a lot of that we've got to work through about a lot of this will give us a lot of thought momentum as we go into 2021.
With that I'll ask Brian to give some more details.
Yeah. Thanks died and good morning, Julien <unk>, yeah. So from a run rate right you know weve put in the in the contingency plans in essentially the end of March as what we saw let's say it and so we had nine months from a year to date perspective, we're about little over $50 million ahead of 2019, so executing I would say slightly Uh huh.
Had a plan when we look at what our plans or for Q2, so that puts us in a good position for the balances a year now obviously, if sales coming a little bit better we can adjust those contingency contingency plans for the year.
In Ben said, it well you know teams done a great job of actually developing and executing those plans for this year and we've really turned our attention to what is sustainable in 2021 and beyond but I think you got to when you talk about regulatory flexibility in rate case sales were also the other side of equation is you know were everything we've learned over the.
Past few months from from the impacts you probably 19 years, we're incorporating into our sales forecast for 2021.
And.
And in covering having or sales forecast for 2021 in so we're looking at both sides of the equation in so big focus for the team in Q3 from and own M. sustainability perspective, which will deliver further guidance in clarity it in Q3.
On that.
Got it but net net I'm fairly confident because Disney earned at authorized levels to the extent switch that you're successful and staying out in these cases.
Inclusive of for instance, the Colorado.
Yeah, I think that's a fair assumption you broke up a little bit I think you I think he said you read.
I expect or another authorized levels or with a regulatory proceedings just to make sure I heard you correctly.
Yeah.
Where exactly are you Julien.
[laughter] well talk about that later [laughter], we have we have enjoyed your notes from the road Julien.
[laughter] varagon or big so in Colorado, and speaking of Colorado, what are your prospect for stimulus here as you think about the.
Potentially nearing your African minute in Minnesota.
Hey, Julien, it's Bob stuff here in Colorado, you know.
We haven't good weather out there we've had a nice a warm summer I think you saw some are weather adjusted sales were pretty strong in Colorado as far as relief and recovery goes you know what we've done in Minnesota, We believe it's been relatively unique.
For the country, but we're certainly open to the ideas and trying to partner in other jurisdictions.
Well I'll give a lot of credit to the administration and the commission in the Department in Minnesota for their leadership and their partnership with US on the our and our plan and getting utilities in the state to step up and try and help our communities and our customers.
And we can find that kind of partnership we are absolutely looking and willing to do that you know as it's a pandemic continues or if we see some resurgence you know there may be more opportunities down the road for us on something similar in other jurisdictions.
I wouldn't rule it out.
Right, that's the block that guy.
You do see I travel.
Hey, safe where are your math [laughter].
And next we'll go to Travis Miller with Morningstar.
Good morning gravity too.
Hi, I.
I Wonder if you can talk a little bit more when you said in Minnesota the alternative Pat.
What that might look like in lieu of.
One of the full three year rate cycle filing.
Yeah, Travis you know as we kind of put in our relief and recovery plan they'll turn on a path is really looking at a potential stay out for 2021.
So is it going into 2020, we we were able to reach or a constructive stay out with the parties, which is a commission approved in those really focus to know a couple of key components round of sales true up in a deferral the any t. amortization a couple of key components and now. We're we're just started we've we've put that in or releasing.
A recovery plan to think there there's another path there and we've just started to the initial discussions around that and certainly we'll look to see if we assigned to a good constructive settlement that works for customers and us.
Okay. What do you include potentially something like a <unk>.
Great based true up something like that as well or.
Are there other mechanisms in there that we keep you at that louder or slightly below the allowed or are we.
Well for Minnesota, the two big components, if you look similar to.
It was sitting here today similar to the settlement that we reached for this year. The big component is the sales true up and then the deferral of some amortization.
We do have right. We do have rises recover a lot of our investments.
With our renewable investments flowing through our renewable rider and we have our transmission cost driver, which covers some investments. So we have a rider mechanisms that help recover the investments, we're making for our customers.
Okay got it and then just confirming that you guys are still on track for that.
Got your 7% in rate base growth in the 22 billion Capex and any changes.
For those normally I would say Travis this is Ben Yeah, we were on track and you know we're targeting the upper happen.
Most of you know well, we'll update all of that and the third quarter will mean, we update you on their five year capital forecast, but.
Yeah, I think you'll be you'll be pleased with what we're projecting.
Okay and then just real quick does that include the 3 billion.
In Minnesota or would that be incremental.
That would be in because that would be well first of all 1.8 is incremental <unk>. The other is an acceleration, but but yeah, I mean that that's not necessary to for us so that would be incremental.
Okay, great. Thanks, so much.
Next we'll go to a Steven Fleishman with Wolfe research.
Hey, Steve.
Yeah, Hey, good morning.
I'm going so I just.
Hi, good to hear your voice then.
And have fun being the cervi.
[laughter], the virtual higher I suppose [laughter] [laughter].
So the.
On the Minnesota kind of recovery investment.
Has that has the commissioning give some indication on the basis for the decisions that are going to make in terms of like is it based on the amount of jobs created.
Versus you know the rate impact or just how are they going do.
With that.
Decision I think what does take a number of factors into consideration on but you know I think as.
As you know our steel for fuel strategy accomplishes capital investment job growth and health with rates. So this that we can emphasize that I think the better we'll be there will be a solicitation animal will bring those projects and we are anticipating you know that we'll have a very good price point for the solar that we're planning.
And Ah yes.
Brian or bottom onto add anything else gay as Steve I think it's still just a little bit early innings, but I think the comfort level with the investment a the economic development the job creation that portfolio account you know.
Coupled with the relief opportunities as the Brian mentioned on rates and stay out mechanisms I think as it is a big package, we haven't got to fold timeline out of them. We had a big planning meeting yesterday, which was favorable with some positive comments from the commission, a and even the administration and so.
We're.
Comfortable and confident where we simply don't have a lot of details other than that to share with you right now.
Yeah did did you do you.
Sense of the rate impact as the 3 billion.
For your kind of waiting to see you're bidding and all that.
You know I think we still need to run through the solicitation process on the renewable portions for sure which will run through August in its into September before we make some decisions.
But we're pretty confident that we know the impacts.
The things, we would put forward and we know a little bit of what other people would do as well so we're pretty comfortable with the cost side. It seems to be what do you put forward a wind repowering if it wasn't a NPV positive to the consumer so so I I think the real okay. He is.
Well that offsets the acceleration of some of the distribution and transmission spend that we're talking about and I think I think likely it will but to bobs point will run through those numbers, yes, Steve just some further color and already powering very we had so the long road Repowering approved and we have mile or should be up front and ignition hopefully in Q3 in those.
The front end customer savings and you've got for the Repowering, Oh, which is no really good in this environment and so we're working through no similar analysis on our currently owned wind farms I always think would be good candidates for that.
Okay and since most of these things are related to things that you own or like your pre assuming it gets approved pretty highly likely it would be you who actually makes investment.
No not us correct third parties.
I think Thats, a fair and just last question.
Okay.
And last question related to the so if if that is all true yeah.
He is one thing to be clear I know there are a third parties that could submit a P. Eight for either a PPA extension or B O T. So some six so in some combination of our investment plus others.
Great and I apologize last question on this which is just how should we think about.
Financing plan for.
If you know as much as the incremental.
You know more.
More time, yes, Steve is supposed to be filing as multibillion.
Yeah, as we talked about before and then really you know in the filing or do we think about 1.8, it's the incremental part the other the 1.2 off lease accelerated but as we go through this process. You know, we expect commission indicated yesterday that the the looks to.
Find a way to move through this pretty quickly and no. It's the same time are developing our five year capital plans for 21 through 25, and so we'll put that altogether and and rollout a five year financing plan. If you have enough clarity to include this in our five year capital signed by October, but generally you know what we've spoken about before.
Timing in size matters for incremental capital.
And if it's significant enough in and it lines up in a will generally fund that with at our consolidated capital structure now as you as we've spoken about four it's important to maintain that financial strength and.
Credit quality the company.
Yeah.
Okay, great. Thanks, so thanks, so much appreciate it.
Thanks, Dave.
Next we'll go to Sophie Karp with Keybanc.
Hi, Good morning, I can walk in the quarter. Thanks for taking my question.
Thank you Sophie.
HM.
Well done.
Well I Didnt hear on the question. So now I'm wondering if you know it within lot more I guess, yeah, I think yeah, yeah right decision and then they called it situation, but yeah as they think it's communicate quoted as saying.
And it looks like they come on the Hum performed well during going for awhile.
Did you see at predicting although strategy, where you're moving away from periodically paid.
Okay Thats it from the more permanent basis to what kind of mechanism and just kind of moved away from to try to give being I'd say over 85 or 10 wells.
They now Columbus, you're pulling back on that.
Thank you.
Hey, Sophie it's Bob good to hear your voice you were a little broke up there, but let me let me try and address the question, which I think is.
You know how do you think strategically about rate cases in the context to the pandemic in longer term is sort of my take away and you know.
We have a lot of writer mechanisms in our various states and we're making billions of dollars of investments on behalf of our customers and infrastructure around clean energy transition and grid modernization.
And we also have to keep the the utility financially healthy. So that's the backdrop that we work with we are obviously working with our regulators right now on mechanisms by which we wouldn't need to file rate cases, and we're actively engaged in conversations the stake holders in Minnesota.
In Colorado, I think you saw settle our gas case, and then file a couple of riders, which we think will allow us to stay out of our electric case in Colorado.
And that's a bit of the strategy.
As to continue to invest in areas that have real time and rider recovery, you've seen us execute on decoupling in sales throughout mechanisms in our businesses and that's helpful. As well a insist strategically I think you're in the right places, we're always going to look for mechanisms by which we can mitigate our cost structure keep our bills low for our customers.
While we keep continuing to invest in the infrastructure that we need to so we'll continue to be creative there and partner with our commissions are and you know the goal would be to did not go into rate cases, if we could avoid them, but we have to keep the utility financially healthy and so we balance all of that yeah. Sophie just building on what Bob said I mean.
Whether its.
Traditional rate cases or expansion of writers or some combination to so bottom line is.
We're going to achieve our clean energy objectives, our levels of reliability and our customer improvements in customer experience all while keeping total bills you know below the pace of CP VI, that's our objective and that's what we're on track for and that's what I think.
We still remain on forecast to do so because that's the key thing is to make these investments while not a lot.
But while keeping our product affordable.
Hi, guys. Thank you and then a follow up if I may on they only ma'am.
Oh, yeah, you're guiding for Oh nm growth year over year and then.
And you have to sleep that and basically.
Fine plus cost so I thought that may impact and it seems like it's going to high scoring well [laughter] some sense more shape of that go out the year I you can't even into it now and plan to ramp up in the second half or are you pretty much try and that's Roger what I'm right. At this point and then should we expect this baby crying out one entity I think about.
Yeah, how should we think about that.
Hey, so because this is Brian having your <unk>. The way you said it is assume a steady run rate I'm pretty ratably over the quarters. So I think you're thinking about a REIT that continues you that run rate.
Got it thanks, so much.
Thank you.
Yeah.
Next well go to Paul Patterson with Glenrock Associates.
Hey, good morning.
Hey, Paul [noise].
Just a few quick follow ups, so that the Minnesota.
I'm, sorry, I completely understand is how much did she goes where you guys, saying that this.
This capex might be going to third parties to contracts how much how much of the total is subject to that [noise].
Does that the 1.8 incremental is that's our spend.
Okay.
But what Paul was saying is when we do a solicitation well have our own wind projects that we all that we bid into that.
And but we will also encourage.
Independence did in as well and they can bid and either as a build on transfer which would result in our ownership or they could bid and with the an expansion of a power purchase agreement and we'll take a look at all of those but at the end of the day, our incremental Capex will come from from a ownership and wind projects.
Perhaps perhaps our own and perhaps be Oh geez.
The the solar facility that we're talking about it at our coal plant and Becker.
Minnesota, a advances in easy infrastructure.
And I think that covers the incremental and then we then we look at the acceleration about 1.2 billion or a grid span.
Okay, all right even medal.
We're not going to know what other parties are gonna built in till we get through the process, which should be more towards the end of August.
Okay.
And then when you when we say incremental just to be clear that doesn't mean, bringing something in for the future of this is just incremental in other words it wouldn't it wouldn't happen any way it doesn't change the trajectory of out of your Capex outlook from you know in other words, you don't looping something from the future two to now it's.
Hasn't accelerated would suggest when you say incremental it would if they wanted if crude otherwise is that the way to think about.
Yes, I mean, I, just think about as well, okay I mean it.
I think I understand it and then with respect to the.
The good the Oh, well just suddenly I mean go look I think the way to think about it is the 1.2 billion that we're not calling incremental that's an acceleration of something that's already in our forecast for 1.8 billion would not be in our existing forecast now over the course of 15 years might end up happen yeah, but that's that's how we're that's.
How we're defining that.
That's that's really helpful. I appreciate it and then with respect to the.
The CPR.
The goal is that still 2%.
Yeah, I mean, I think it does depend a little bit by jurisdiction has that yeah. That's roughly at XL level. It gives way to think about it.
Okay, and then just in general I mean defenses are touched on brother people, but I'm just wondering if this you know weve.
Continue down this road is there any potential David to upsize list.
If we have a weaker comedy if it from.
Do forward and thing is there any sort of discussion.
Potential like Hey, maybe maybe this is a good a good jobs like the or economic stimulus ideas.
And and we could see something we'd be bigger than this.
I think Elliot.
Team weigh in on this fall, but I think it's probably would come from other jurisdictions.
Okay.
And Okay, you got your sort of address that okay. I really appreciate it takes too much.
Thank you have good day.
Well go to Insoo, Kim with Goldman Sachs.
Thank you sub one quick question and your guidance for the year and your base case assumption that type of I guess assumption are you, making on it full treatment of corporate related costs.
Or around yeah bad debt for all the changes as a Brian.
Oh, you know as we've talked to one in Q1, we assume that we get a constructive treatment around the regulatory deferrals and now you know when we think about a bad debt expense. We have roughly you know about 25 million dollar increase somebody's look at what happened in 2008 in 2009, and that's you know everything we've seen for the three months of impact.
So that remains pretty consistent as is our thinking going into this you know and if we think about it right. We have about 95% of our ours of our business is covered with our six deferral orders that you were waiting for the other Dakotas. So we feel like under we've reached a concern.
Second place with those deferral orders and we'll continue to value, even though you evaluate the deferrals as you go through the balance of the or.
Got it so the bulk of any of the bulk of what's happened in terms with the the approvals were.
Someone embedded in making that right.
Yes, that's correct.
Got it that's all thank you.
That concludes today's question and answer session I'll turn the call back over to Brian Van able for any additional for closing remarks.
Yeah. Thank you all for participating in earnings call. This morning, please contact our Investor relations team with any follow up questions.
A good that thank you.
And that does conclude today's conference. We thank you for your participation you may now disconnect.
[noise].
And.
[noise].