Q2 2020 NiSource Inc Earnings Call
[music].
[noise] good morning, welcome to the two teams 20.8.
Nice Force earnings Conference call all lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will do.
The press Star then it number one on your telephone keypad if people like.
Thank you I know I turn the conference over to Mr. make true director.
[laughter] of Investor Relations and corporate finance, So you maybe get Gary Good morning, and welcome to the nice or second quarter 2020 investor call joining.
Let me today, our Joe Hamrock, our Chief Executive Officer, Donald Sean Anderson, our Chief strike.
Energy and risk Officer, Irene Investor Relations and Treasurer review nice sources financial performance.
For the second quarter of 2020, as well as provide an update on our operations growth drivers.
And financing plans.
Following our prepared remarks, well open the call todays call are available on Nisource dotcom.
Before well John and Randy just a quick reminder, some of the statements made during this presentation will be forward looking.
These statements are subject to risks and uncertainties that could cause actual rate.
Results to differ materially from those expressed in the statements and for NTS is included in the Mdna and risk factors sections.
Additionally, some of the state.
Statements made on this call relate to non-GAAP measures for additional information to measure and a reconciliation of these measures. Please refer to the supplemental slides and segment information.
Including our full financial schedules.
With all that all the way.
Like to turn the call over to Joe.
One and thank you for joining us.
Hopefully you've all had a chance to read was issued earlier this morning.
As we did in the release or fix much broader than just our second quarter results.
2020 is a year of transition.
And for a nice worse as we mitigate the financial impacts of the code that 19 pandemic complete juices and repositioned in our key focus areas.
Well, driving our well established asset modernization and safe.
The enhancement programs and the duration, we have accelerated the initiative to realign our capabilities and cost structure.
Together. These efforts are designed to ensure optimal performance as we execute on the signal.
Sure the agenda, so let's turn now to slide.
Hi, Dthree and discuss our key takeaways.
As we've all seen cope ignite disrupt the global economy.
Throughout nice tours, we remain focused on employee and customer safety and providing reliable utility service as we adapt to the pandemics.
Our cobot 19 protections for.
I find it our first quarter 2020.
Yes.
In line with.
The base case scenario, we outlined in late May we continue to see modest commercial and industrial team, which are partially.
The offset by increases in residential load.
Cost savings and other measures have been implode negative impacts on sales.
Packs and we'll update investors in future quarters.
Despite challenges related to the pandemic, we $7 billion to $1.8 billion.
Theres in capital investments in 22, our planned sale of Columbia gas of Massachusetts assets. The Eversource remains on track for regulatory approval in the third quarter of 2020.
With closing targeted shortly thereafter.
Last month, Nisource, and Eversource filed a joint petition with the Massachusetts to seeking approval of the transaction.
I don't want with the Attorney General's office and the Department of Energy resources in state investigations really.
Stated to the 2018, greater Lawrence events, including the DP use investigations of pipeline safety and emergency response.
Nice sources agreed to make a payment of $56 million.
Colors in lieu of penalties emerge.
With the Massachusetts transaction closure imminent, we have launched a multiyear strategic initiative and Tim.
And to better leverage the company's current scale by improving our cost structure and capabilities across the organization.
As part of this effort today, we launched a voluntary separation program for certain groups of employee AIDS over the coming months with the first wave commencing immediately.
This initial.
Thing of executive leadership roles and responsibilities, we announced earlier. This year is intended to ensure that our organization is best positioned to drive enhanced focus on safety renewable.
Once and customer value.
We're also today in.
We're also today initiating non-GAAP net operating earnings per share guidance for 2021 in the range of $1.28 to $1.36 our expectations about the initial savings we expect to achieve through the.
Cost restructuring an increase of cobot 19.
It also establishes the starting point for a long term plan that will extend through 2024 with an expected compound annual rate base growth. This rate base growth is expected to drive compound annual earnings per share growth in excess of our annual growth commitment driven by our renewable portfolio investments.
Programs.
We plan to provide more detail around this new long term growth strategy at our next.
For September 29.
At Investor Day, which we expect will be a virtual event, we plan to discuss updates on our safety management initiatives. The next stage of our current $1.8 billion to $1.9 billion for annual capital investment and safety and asset modernization programs well also share details about our.
Faded incremental capital investment opportunities in the range of $1.8 billion to $2 billion across 2022, and 2023 related to our electric generation strategy.
This investment represents ownership through joint venture partnerships of approximately half of them renewable generation portfolio needed.
Tiring by 2023.
As we have previously indicated we expect to retire nearly 80% of our remaining coal fired generation by 2023 and 100% by 22.
28.
Our replacement plan is designed to reduce our greenhouse gas emissions by an industry, leading 90% by 2030 from a 2005 baseline.
At Investor Day, we'll also share progress in additional details on the cost restructuring initiative, we announced today.
These strategic long term cost reductions will support our growth strategy as they are expected to create offsets in future customer bills to allow for our robust capital investments.
We will provide details of our balanced financing plan to fund our robust capital investment plans. This financing plan will be focused on maintaining our current investment grade credit ratings.
And we'll put all this together to underpin our updated net operating earnings per share growth outlook.
We're pleased to preview this outlined with you today and we look forward to sharing all the details in September.
Back to 2020, we continue to execute on our key priorities asset modernization and safety enhancements and our electric generation strategy, we have gas base rate cases, pending in Pennsylvania, and Maryland, and we received approval of an extension of our long term gas modernization program in Indiana.
In our electric business, we made regulatory filings in Indiana seeking approval of PPA waves, representing 300 megawatts of new solar generation and 30 megawatts of storage capacity and commercial negotiations are advancing on build transfer agreements for a significant amount of additional solar capacity.
Yeah.
Now I'd like to turn the call over to Donald who will discuss our financial performance in more detail Donald.
Thanks, Joe and good morning, everyone.
Looking at our second quarter results on slide four we had non-GAAP net operating earnings of about $50 million or 13 cents per share compared to net operating earnings of about $19 million or five cents per share in 2019.
The year over year increase was driven primarily by reduced employee and administrative expense measures put in place to offset the revenue impacts of Kogut 19.
Looking more closely at our segment results on slide five operating earnings were up nearly $27 million in our gas segment, driven primarily by lower employee and administrative expenses and higher revenues from our safety and modernization investments.
This was offset slightly by coke, it impacts, including lower commercial and industrial demand increase bad debt and cobot specific on EM.
And reduce late payment and reconnect fees.
And our electric segment operating earnings were up nearly $4 million, driven primarily by lower employee and administrative expenses.
Lower generation maintenance expenses, and higher cobot related <unk> residential demand.
And this was offset slightly by the same kogan impacts I outlined for the gas segment.
As for Culver 19, as outlined on slide six.
Consistent with our base case, we saw lower revenue and cash flows in the quarter due to lower commercial industrial sales and increases in bad debt and other covert related expenses. The total impact of covert 19 in the quarter was approximately $30 million or 6.6 cents per share with most of the.
Demand related impact in April when states in our service footprint were shut down as I admit as I mentioned this impact was completely offset by non safety related expense reductions.
Today, the pandemic has not presented significant barriers to our safety and infrastructure modernization programs as Joe mentioned earlier, we're continuing to it we continue to expect to invest $1.7 billion to $1.8 billion of capital in 2020.
And we're monitoring the Coca 19 situation closely and will stand ready to make adjustments if necessary.
We've been in dialogue with regulators and all of our states. It's as we seek relief related to incremental coconut pandemic expenses, we've received orders in Indiana, Ohio, Pennsylvania, Virginia, and Maryland, which to varying degrees allow for deferral of note. These expenses for later recovery.
As we stated on our first quarter call the length and severity of the covert pandemic will determine how significant the impact on our 2020 financial performance will be.
Our base case steel has us expecting a gradual recovery into the first half of 2021, and we haven't seen anything that would negatively impact our long term growth.
Turning to 2021 guidance on slide seven as Joe mentioned earlier, we have initiated 2021 net operating net net operating earnings per share guidance with the midpoint of $1.32.
This guidance reflects our expectations about the initial cost savings, we expect to achieved through our cost restructuring and about a five cents impact due to covert 19, which are which is our base case scenario.
On this slide we provided some detail about how we arrived at our 2021 guidance range you will recall that our initial guidance range for 2020, which we withdrew when we announce to see it may transaction in February was $1.36 to $1.40.
Once we factor in the initial results of our cost restructuring and the expected impact of covert.
In 2021 that brings us to the dollar 28 to $1.37.
Dollarsthirty six guidance range for 2021 debt, we're initiating today.
This 2021 guidance establishes the starting point for long term plan that we look spent will extend through 2024 with an expected rate base compound annual growth rate of 10% to 12%.
This rate base growth is expected to drive earnings per share growth in excess of our previous 5% to 7% annual growth commitment.
With a shift to a CAGR due to timing of our renewable portfolio investments.
We're looking for.
Or to sharing more details of our for your financial plan and our refresh long term growth strategy at our Investor Day next month.
Now turning to slide eight I'd like to briefly touching our debt and credit profile.
Our debt level as of June Thirtyth was about $10 billion of which about 8.7 billion was long term debt.
The weighted average maturity on our long term debt was approximately 16 years in the weighted average interest rate was approximately 4.3%.
In April refinance our $850 million term loan and issued $1 billion, a 10 year notes.
We expect these transactions will provide us the necessary liquidity to manage through the impacts of the pandemic.
At the end of the second quarter, we maintain net available liquidity of about $2 billion, consisting of cash and available capacity under our credit facility in our accounts receivable securitization programs.
Our credit ratings from all three major rating agencies are investment grade and we're committed to maintaining our current investment grade ratings.
Now I'd like to turn to slide and that's in plan.
Our current plan, which is focused on providing funding for our ongoing safety and infrastructure investment programs continue to include annual equity in the range of 203.
Aftermarket or ATM equity.
The issuance program as well as from our employee stock purchase and other programs.
Now I'd like to turn the call back over to Joe who will provide some infrastructure investment and regulatory updates for our gas and electric businesses.
Thank you Donald now, let's look at some nice source you.
For an early third quarter of 2020, starting with our gas operations on slide 10.
In Pennsylvania, we filed a base rate case in April with the public utility Commission seeking an annual revenue increase of $100.4 million to invest in modernized and upgrade our existing natural gas distribution system as well as maintain the continued safety of this system.
New rates are expected to become effective in February 2021.
We also filed a rate case request with the Maryland to public Service Commission in May.
There's further upgrading and replacement of our pipelines in the state.
Our proposal updated in July would result in an annual revenue an increase of $6.3 million, including $1.3 million of current tracker revenue.
If approved as filed.
PSC order is expected in the fourth quarter of 2020 with rates effective in December 2020.
In Indiana, our application for a six year extension of our long term gas infrastructure modernization program was approved by the utility regulatory Commission in July.
The approved program includes nearly $950 million in capital investments through 2025 to be recovered through semi annual adjustments to the existing gas transmission distribution and storage improvement charge or T desk tracker.
The GAAP tedious program has been in place since 2014.
New rates went into effect in May in Ohio in our infrastructure replacement program following regulatory approval of our annual tracker adjustment.
This allowed us to begin recovery of approximately 230.
Infrastructure investments made in 2019.
As well established pipeline replacement program authorized through 2022 covers replacement of pride priority mainline pipe and targeted customers.
When Ohio, our annual application for adjustment to our capital.
Expenditure program rider remains pending before the public utilities Commission.
This rider allows us to recover capital investments and related deferred expenses that are not recovered through the IR P.
The adjustment application seeks to begin recovery of approximately $185 million in capital invested in 2019, a commission order is expected this month with new rates effective in September 2020.
Now, let's turn to our electric operations on slide 11.
Sean will cover our generation strategy progress in a moment, but I will mention that we continue to execute on our long term electric infrastructure modernization plan in Indiana.
This well established program includes enhancements to our electric transmission and distribution system designed to further enhance safety and reliability.
The program originally approved by the IMU RC in 2016 includes approximately $1.2 billion in electric infrastructure investments we expect.
On to talk about our renewable generation projects.
Thank you Joe we're excited about the operating.
Did you in front of us and our renewable transition Nisource has a significant incremental capital investment opportunity related to our electric generation strategy in Indiana.
This strategy is good.
Assistant with their 2018 integrated resource plan, which outlines plans to retire nearly 80% of our of our remaining coal fire generation by 2023 and retire all our coal generation by 2028.
Which will lead be replaced by lower cost reliable and cleaner options designed to drive a 90% reduction in our greenhouse gas emissions 30 compared to the 2005 baseline.
Notably we also expect this strategy to save our electric customers.
More than $4 billion over 30 years.
We've laid out our replacement plan on slide 13.
Which points to a renewable portfolio designed with a combination of NIPSCO ownership.
Luxury through joint ventures, and purchase power agreements.
Currently we anticipate half of the capacity in the replacement plan targeting ownership and a joint ventures, which includes NIPSCO and tax equity partners as the members.
The remaining new capacity is expected to be primarily in the form of Cpis.
As part of the transition to cleaner energy and renewable generation the mid continent independent system. Operator recently approved our plan to retire the R.M. Shaffer generating station by 2023.
We plan to replace approximately 1400 megawatts of this retiring coal fired generation.
And we see the incremental capital investment opportunities to replace this capacity with our renewable platform in a range of $1.8 billion to $2 billion, primarily in 2022 in 2023.
As you can see on slide 14, we currently have 800 megawatts of wind, our Jordan Creek Rosewater in Indiana Crossroads projects.
Approved by the Indiana utility regulatory Commission.
And 300 megawatts of solar and 30 megawatts of storage PB A's Brickyard solar in Greensboro solar pending before the value RC.
Jordan Creek in rose water or under construction and expected to be in service by the end of this year.
Nextera energy research in Greensboro projects would.
Thousand 23.
Projects just mentioned.
The value RC has already approved.
Sure in Indiana Crossroads projects.
Which represents $400 million in capital investments in rate.
Base opportunity for Nisource also moved forward with the tax equity financing agreement for the Rosewater project closing the structure with Wells Fargo go.
We're working on the next steps for Indiana Crossroads.
It's which is a 300 megawatt joint venture project with GDP Renewables North America.
Which is.
And is expected to go in service by the end of 2021.
And sing on additional build transfer agreements, representing a significant amount of additional color solar capacity.
The construction.
Right.
I get a tree filings related to these build transfer agreements are expected shortly after commercial agreements are executed.
We expect to have much more to share on their transition to renewable generation at our upcoming Investor day in September.
With that now I'll turn the call back to Joe.
Thank you Sean before we wrap up I usocial issues and actions taking place across the United States.
Earlier this summer we made a commitment to our employees that at nice tours, we will address.
Systemic racism head on wherever we see it.
We value diversity, and we will not tolerate in tolerance based on race or any other aspect of diversity.
Internally. This means we will hold ourselves and our colleagues accountable to ensure that valuing diversity is a fundamental requirements and for our managers great.
Nationwide job expectation to which they will be held accountable.
Before we turn to the Q in a portion of the call I'll share and reiterate a few.
Let me 20 represents a period of trends.
Position for nice tours as we mitigate the financial impacts of the cleat the sale of Columbia gas of Matt.
That's a juices and reposition nice source for enhanced execution in our key focus areas you live which involves the realignment of our.
This effort is designed to ensure that we are optimal lee position to support both the significant capital investments, we will we be making in renewable generation and our ongoing asked.
Investments.
We.
Continue to see modest commercial and industrial load impacts due to cope with 19, which are partially offset by increases in residential loan.
Cost savings and other measures have been implemented to mitigate these negative impacts on sales despite a.
Outages related to the pandemic, we continue to expect to make $1.7 billion to $1.8 billion in capital investments in 2020.
Looking ahead for 2021, we have initiated for share guidance in the range. These six.
This guidance reflects the initial cost savings, we expect to achieve through the.
And the base case scenario impacts.
So of Cobot 19, it for a long term plan that will extend through 2024.
Great based compound annual growth.
This rate base growth is expect.
Did the drive earnings per share growth in 7% annual growth commitment.
With the shift to a CAGR portfolio investments.
We're excited about sharing more details with you around this new long long term growth strategy at our next invoice.
Faster day, which again were plant.
Thank you all for participating today and for your ongoing in.
We're now ready to take your questions.
Free.
Question. Please press Star then a number one on your telephone keypad.
Your telephone keypad, well pause so just amendment to composite can you ask.
Yeah.
Yes, I'm with credit Suisse.
Hi, guys good morning.
Morning, Michael Good morning.
Hey.
Yes. It says that you guys I noticed clarity looks adequate set for the next 12 to 24 months. So I'm, assuming that means probably know block equity.
2021.
But would it be safe to assume.
First of all is that true and then second of all but it'd be safe to assume that there might be some blanketly needed. A you know last year as you're building out the generation plant at 22 and twice Ray.
I might go its Don I'll now.
Yeah, we'll provide more detail on our analyst day about what the financing plan looks like.
We will have to pay we're looking at it certainly equity hybrids, which was done in the past and and convert so really taking into account all the different options as we deliver this plan that you know builds on that tend to.
Growth and we're going to do that and the lease cost effective way, but yeah, we'll come back and.
Yeah on financing.
Right, that's but that's still 10 year, 5% to 7% CAGR right, which I assume is.
So the generation bill or the plan.
Yeah most of the invest.
23, and so it's really that the timing of those projects that impact the finance thing I'd say the other things that we're looking at as we continue to negotiate the generation projects I'm looking at our cost savings across that plan and then ultimately we need to align our regulatory.
Sorry, with our financing plans to provide that earnings guidance for sometime in September.
Great.
Hi, Thanks, I'll I'll step back into the back the queue. Thank you very much. Thank you.
Your next question is from Julien Dumoulin Smith with Bank of America.
Hey, good Oh, good morning, everyone. Thanks for the time aren't doing it now.
Out its if I can pick it up where where Mike lifted off.
When you think about the linearity.
Of that five to seven, especially since you're talking about being in excess how do you think about the lumpiness in the back half and let's just be a little bit more specifically can as you think about the cycle of those rate cases, and when those uplifts will be realized I suspect if I can say 22 looks more like.
The 21, and then you get a bigger uptick as you normalize into 23 isn't really the full year for 24, but can you talk about the trajectory, especially now that you're making this coming up being in excess of that five to seven.
[laughter] have you said you think about the you know who's got a chart in our supplemental slides that shows that the timing of investments as well as regulatory outcomes and we're going to make significant investments in 22 and 23. Your we're aligning what that regulatory timing is and when we.
At the revenues from those investments and certainly those early investments will dilute.
22, and in 23 before we fully have new revenues to support those investments and so it picks up.
Obviously after we get the full revenues.
And in 2024.
And so that's the reason that we're looking at a CAGR in terms of.
As well as fee earnings growth.
Got it <unk>.
For clarification on the tax equity bet here.
You guys talk about a roughly one thirds two thirds mix between tax equity investment.
How can component are you in that that that capital structure mix at this point time, I know that that's been something of a moving target a little bit over time as you fine tune the percent of window.
During the industry trying to get a little clarity on that and then also related to that.
Your level of confidence about where you could be within that you put it just against the backdrop of getting approval for the JV on probably.
Yeah, but there may be.
The wind projects, you know part Oh, the structure of the one third two thirds is really.
That we're seeing.
Back and we're starting to negotiate or were continuing to negotiations on and so that's a big driver of how much and <unk>.
The same time to pricing from the R.
P is really determining how much.
Ownership, we'd have versus how much is <unk>.
That's fair enough, but you feel a this is pretty.
This is fairly well established that at this point this portion of the overall RFP will be JV projects, there's not too much ambiguity in PA bucket versus ownership.
That's right.
Yeah. Good in the range provided do we believe it strikes the balance of benefits to customers in the form of that lower energy cost over the 30 year horizon that we pointed to in the 2018, IR p. as well as the significant capital investments yielding meaningful returns story.
Like we're stepping through those commercial arrangements at the moment, we will.
For a but we've been able to look at a couple of the structure is already in front of the.
It does feel that that's a good template for us to fall.
Hello.
Okay. All right. Thank you all very much I'll pass it on.
Thank you.
Your next question comes from and so Kim with Goldman Sachs.
My first question, just and on and Indiana, and the renewable projects what type of customer Bill Unpacking, you see when you balance the I thought the variable rate based on the coal capacity retirement.
Okay. Great question. This is sean or the customer Bill impact actually we expected the 4 billion dollar savings over the 30 year horizon as you imagine the lower cost of overall I went down for customers. So we actually ex <unk> see that that which over the long term err on the invest.
Inside and in that combined Bill we still see we still expect that low single digit bill increase when rates do increase on an annualized basis in terms of the regulatory filing and timelines you can see on the supplemental slide number 14, we wouldn't expect this activity really to occur until 2023 in 2000.
24, wearable stepped through that what's critical about that.
Of Schafer, which would yield than that I want him savings back to customers.
They have to work a little bit in concert with one another but we believe that bill impact to be moderated overall.
Got it and then just from a balance sheet perspective, you're still targeting the fortune, 50% no put it that longer term, we think about.
Well do you expect to be at least a 14% range or.
You know just by using your annual ATM program.
Yeah long term, we're targeting that 14% to 15% just recently met with the rating agencies and continue to have conversations with them about our investment plan I'm over the next four years and we're we're confident that plan again, we'll provide more detail.
On what that looks like in our analyst day.
Got it thanks, so much.
Your next question is from ACA Mcclatchy, Okay, what DBS.
Good morning.
Morning.
How should we think about the future renewable investments from 24 to 28 should that Capex I should be similar to investments that you just announced for 20 to 23.
Great question, we'll have a number of IR P analyses that will help to inform the real answer. Your question. In fact, a 2021 will be stepping through the the public RFP process again in Indiana. So we'll have much better insights as we get as we grow closer to that but speaking from the 2018 I or piece perspective it did.
Point to the retirement of the Michigan City generation facility by 2028 that facility, which is about 500 megawatts on my so I would then need to be that capacity, we would anticipate need to be replaced as far as the form we would a step through the RFP process and as Donald referenced earlier, what the commercial costs in a fuel costs would be.
The two then deliver what the solution would be for that capacity.
[noise] appear in Pennsylvania.
Roughly 30% <unk> revenue in their Red case could you provide an update on your Redskins, Pennsylvania are there any delays as a carve it up.
Right.
No. So we have filed the rate case, we continue to work with Interveners and the commission at this point, we're not seeing are expecting any.
Change relate it to cold it in terms of the timing or the outcome of that rate case.
Thank you for taking my question. Thank.
Thank you.
Your next question.
[noise] comes from desktop outlets Evercore ISI.
Hey, good morning join Donald Thank you for taking my question.
I'm good I ask you in terms of us and I think you Bart answered my question, but it's 10% to 12% rate base growth I'm going to Indiana.
No other jurisdictions, Pennsylvania for instance, Ohio, what what Oh, I should we think about I'm sort of a bill impacts.
From the 10% to 12% rate base growth.
Yes it so.
On the gas side, we continue to see rate base growth of about 10% to 12% that's not changing again, we're always targeting to be in the low single digits in terms of total bill NPAC for our customers.
Hello, six okay that makes sense and then maybe he can I just go back to the earnings growth trajectory and then move to keurig or you know given you know the cost reductions.
You are that you alluded to earlier should we be thinking about so so in low growth years, you still in that.
The 5% to 7% range and then in high growth years, maybe you exceed that or or any sort of <unk> could you be below 5% I'm not sure if you're ready to share that information here or not but how should we think about that.
Yeah, we're not ready to share that yet again, yes, we think about the timing of those investments the timing of cost savings and then aligning that with the regulatory plan is the work that we're finalizing now and we'll be prepared to give more detail in our analyst day.
Okay.
That's that's turned guys. Okay. Thank you so much.
Thank you.
Hi, My there.
If you like to ask a question.
Please press Star then a number one.
Your next question is fun, Charles Fishman with Morningstar.
Thank you.
Guys. The the five cents impact from Cold is 19 as you go from well I'm looking at slide seven you go from 2020 guidance to a 2021 guidance.
I've sent in fact from a cold did you indicated you yeah. I think the comment was you don't see any long term impact from cold at 19, So can I assume that that's five cents fades away post.
2021.
Yes, our base case really has an impact in 2021 lingering into early 2021 long term yeah, we'd expect to get that back through customers either through base rate cases, if it were permanent and or through the commercial side coming back.
That's right short term.
Okay. So that and then that's built into the 5% to 7% plus EPS growth of your.
Guiding.
That's correct.
Okay and then a question on the renewables <unk> was previous question about the 50% on and I know that's a number you've discussed in the past, but remind me.
Is that something that has regulatory approval have you just had just sort of informal discussions with the commission on that 50% owned and you you still would have to go back and Indiana project by project P.A. by P.A. for approval correct.
Yes that that's absolutely correct you would really look at it on a project by project basis, what the commercial arrangements would be you'd look at the overall cost of then went that project would be and then you'd push that out over a 30 year horizon. So to speak to find the balance of affordability for customers and delivering reliable service, but do you.
You answered it correctly.
Okay, and then I'll.
Horse here, because I think you answered this on a previous questions. This morning, the 50%, though you feel pretty confident with you you probably had informal conversations with staff and commission on that.
Yeah actually it's laid out fairly fairly explicitly in terms of the 2018 IR tea and we're at this point following that plan rather closely it. It is still tracking online said, it's been a pretty public process and it will continue to be in 2021 is we provide those updates okay I'm sorry, so the 50% as in the RFP yeah. It it tracks.
Through that analysis into 2018, I or pay it's not statutorily mandated that that is the requirement. It's still an approximation based on the commercial arrangements, but that is the analysis that was pointed to any any 18 therapy.
Okay, well I understand your confidence and thank you that's all I have.
Thanks Charles.
Next question is when prices go fight with Jefferies LLC.
Oh on.
Good morning, I wanted I wanted to maybe follow on from Charles is questions. There just with regard to coli impacts Donald you say the guidance is pretty clear I think for 2021, you had mentioned in I think your prepared remarks that only impacts on the second quarter, where.
Somewhere estimated around the six cents territory I'm just curious if you could maybe frame up is the guidance that you gave within may presentation around 2020 coli impacts still still still good benchmark to use as we think about sort of.