Q2 2020 American States Water Co Earnings Call
Ladies and gentlemen, thank you for standing by.
Welcome to the American States Water Company conference call discussing the company's second quarter 2020 results.
The call is being recorded if you would like to listen to the replay of this call. It will begin this afternoon at approximately five PM Eastern time and run through Tuesday August 11th 2020 on the company's website Www Dot S water dot com.
Lots at the company will be referring to are also available on the website.
Should you need assistance during the call. Please signal a conference specialist like pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions to ask the question you May Press Star then one on your telephone keypad.
To withdraw your question. Please press Star then too.
This call will be limited to one hour.
Presenting today from American States water company, as Bob Sprowls, President and Chief Executive Officer, and even <unk> Senior Vice President of Finance and Chief Financial Officer.
As a reminder, certain matters discussed during this conference call may be forward looking statements intended to qualify for the safe Harbor from liability established by the private Securities Litigation Reform Act of 1995.
Please review a description of the company's risks and uncertainties and our most recent form 10-K and form 10-Q on file with the Securities and Exchange Commission.
In addition, this conference call will include a discussion of certain measures that are not prepared in accordance with generally accepted accounting principles or gap in the United States and constitute non-GAAP financial measures under FCC rules.
These non-GAAP financial measures are derived from consolidated financial information, but are not presented in our financial statements that are presented in accordance with gap for more details. Please refer to the press release.
At this time I will turn the call over to Bob Sprowls, President and Chief Executive Officer of American States Water Company. Please go ahead.
Okay.
Thank you Andrea.
Welcome everyone and thank you for joining us today.
I'll begin with some recent developments for the company.
People will review some financial detail.
Now I'll wrap it up with some updates on regulatory activity.
S.U.S.
And dividend.
And then we'll take your question.
We have had many positive recent development.
Coding strong financial results.
The filing of our water general rate case.
The spin off of our electric utility business to a separate subsidiary of American States water.
Some term debt financing at Golden State water.
Hey, nearly 10% dividend increase.
New Coakley leadership at American States utility services or if you asked for short.
Continued strong credit rating.
And uninterrupted service to customers despite the ongoing pandemic.
Our consolidated results for the second quarter of 2020 were 69 cents per share.
As compared to 72 cents per share for the second quarter of 2019.
Included in the results for the second quarter of 2019.
What's the retroactive impact from a final decision on the water general rate case.
Issued in May 2019.
Which totaled approximately eight cents per share related to the first quarter of 2019.
Excluding the retroactive impact related to the first quarter 2019.
Consolidated dilutive earnings during the second quarter of 2020 increased by five cents per share were 7.8%.
Compared to the second quarter of 2019.
We continue to invest in the reliability of our water and electric system.
For the six months ended June Thirtyth 2020.
We spent $53.2 million in company funded capital expenditures.
The water utility segment continues with its construction program.
However, we have tried to avoid construction projects that would temporarily shut off water to customers.
Construction programs for the electric segment have largely not been negatively impacted.
We estimate will spend 105 $220 million for the year at our regulated utilities.
During any further delays, resulting from changes in Golden State water's capital improvement schedule due to the co fit 19 pandemic.
This would be about three and a half times.
Our expected annual depreciation expense.
On July 1st 2020, Golden State water completed the transfer the electric assets and liabilities.
This electric division.
To Bear Valley Electric service Inc. for baby yet yes.
For sure.
A wholly owned subsidiary of American States water.
Last week, the board of Directors announced a 9.8% increase in the quarterly cash dividend.
Which is 66 consecutive calendar year with an increase in the dividends.
Regarding any effects on our business customers employees related to the coated 19 pandemic.
We continue to provide the same high quality uninterrupted water electric and wastewater services to our customers.
We continue to make special accommodations for our customers in this uncertain time, including suspending service disconnections for non payment.
Through our emergency response planning, we were well prepared to enable many of our employees to work remotely.
And have made other adjustments as needed.
Until restrictions begin to eat.
We don't expect a significant earnings impact on any of our subsidiary.
I'm pleased to announce our new senior Vice President of A.S.U.S., Stuart Harrison, who joined our team on July Twentyth.
Sure It brings a wealth of experience.
He has a strong leadership background at a proven business development track record working with the department of defense.
He most recently served as senior Vice President of infrastructure and engineering for mental.
Information technology.
Nuclear and environmental remediation.
And threat mitigation along with other services.
I mentioned was formerly a division are they E com, but was sold to private equity in 2020.
Stuart work with a momentum and E com from 2011 through 2020.
Prior to a mental and E com Stuart work for Parsons Corporation held various positions in the U.S. Army, let's spend approximately 25 years.
As a master of Arts and National Security and strategic studies from the U.S. Naval work on such.
A master of Science, Environmental Engineering from Pennsylvania State University.
And is a graduate of the U.S. military Academy at West point.
Sure well build our successful contracted services business as well as our strong reputation with the U.S. government.
Our goal remains to continue providing best in class service to the 11 military bases. We currently serve.
And use our strong positioning to compete for new based contract.
I continue to be optimistic about our prospects going forward.
That is only strengthened with the addition of Stewart.
I'll now turn the call over to you, but to review the financial results for the quarter.
Thanks, Bob Hello, everyone. Let me start with <unk> second quarter financial we felt like a night.
Consolidated earnings for the quarter was nine cents per share compared to 73 cents per share. That's it for you I'm curious in 2019.
Bob mentioned last years second quarter earnings at our water segment, what positively impacted by the CP used the final decision on the general rate case.
We didn't you a retroactive to January of 2019.
The retroactive impact authentication, what effect, it and get leak out for the second caught it.
I'll pick consolidate the Companys 72 cents per share they said well what do we laid that took effect caught out 2019, which is shown on a separate lie in the table on the supply.
Burger impacting the compatibility out the water segment earnings between the two quarter.
What's the recording over a 1.1 billion dollar reduction administrators in general expense.
Your second quarter positively impacting earnings by two cents per share.
If you see May 2000, nightmare approval for recovery of cost previously Ben I think Craig.
There was no similar we got saying 2020.
The volatility into financial markets due to a coke at night.
As we felt adding significant fluctuation and investments how it can someone else Golden state water, we haven't class.
Okay.
These investments contributed 84 cents per share increased in the water segment earnings for the quarter.
Excluding the effect of these items earnings for the second quarter 2020 at the water segment increased by one cents per share as compared to the second quarter last year.
The increase was due to a higher water gross margin target, new water rates and lower interest expense, partially offset by increasing operating.
<unk> expenses and effective income tax rate.
Oh, you electric sector, I mean could second quarter of 20 to 23 cents per share compared to one cents per share for the second Cordell sniping.
Oh today due to increasing electric gross margin, resulting from new rates authorized by the CPV.
Its decision on the electric T I see the shooting August 19th.
Switching or retroactive to January out 20.
Hey, Paul.
Due to the delays in receiving to find that decision build the electric revenue for the first six months up 2019, well based on 2017 adopted rate.
Hi than your rate being in piping implemented comedy on January one 2018, earning would have been one cents per share higher in the second quarter 2019.
Earnings from our contracted services segment work 12 cents per share for each of the second quarter stuff 2020, and 29 King.
Increasing management fee revenue and overall increase decrease in operating expenses were mostly offset by decreased construction activity during second quarter out 2020.
Well the revenues on the fly were a 1 million dollar nowhere during the second quarter 2020, as compared to the same period in 2019.
Again due to that delayed receiving a final decision on the water T I see exploration.
Retroactive impact CQC decision was recorded during the second quarter lighting, which included approximately $3.4 million revenue that related to the first quarter 29 pm.
Excluding this retroactive effect.
The revenue increased $2.4 million for the quarter due to food for second your step increases for 2023 total passing Pat.
Electric revenues for the quarter increased $300000 to $7.7 million due to new rates improved quite CPC and effective January 120 20.
In addition, billed revenue for the second quarter, L. sniping or based on 2017 adopt the electric rate pending a CPC final decision on that electric T I see.
Which was not received into August 19, and whats retroactive to January IL 12 to 18.
Contracted services revenue for the quarter decreased $2.6 million to trend to $6.5 million.
You are primarily trick decreasing construction activities.
Actually offset by increases in management fee.
[laughter] resolution on various economic pricing Catholic.
Looking at slide 11.
Oh, well, they electric supply cost or $26.3 million for the quarter.
Decrease of $2.6 million saw the same period Scott yes.
The decrease was partially due to a $1.7 million increase we quoted in the second quarter of 19, which related to the first quarter of lighting to reflect the new adopted supply costs and corresponding bother revenue retroactive to January of 2019.
The changes to what part of that May 2019, Cpcs final decision on the water generated.
Total operating expenses, excluding supply costs increased $3 million persist two up 19.
Partially due to a $1.1 million reduction to reflect the cpcs approval emails 19 for recovery of previously incurred costs.
That were being tracked.
All right the memorandum account.
Well, it's a what as well as a $1.7 million decrease in depreciation expense recorded during the second quarter of 19.
Related to the first quarter due to lower authorized composite rate authorizing the water 10 right.
There were no similar reduction in 2020.
It was also increasing maintenance activity all the opposite effect right.
These increases were partially offset by a decrease in construction make sense at S.U.S.
Overall decreasing construction activity.
Interest expense net interest income and other income including investments held in a trust preferred retirement benefit plan.
Decreased to $3 million for the quarter due to higher investment gains as result of recent market condition.
Yeah, what those are decreasing interest expense due to decreased interest rate, partially offset by higher average borrowings.
Laitwo shows the P.S. Briggs for the quarter comparing to second quarter up Twentytwenty with the same quarter 2019.
Just as I reflect our year to date earnings per share by segment.
Fully diluted earnings for each of the six month period ended June 30, 20 to 20, and 20 29.9 to $1 seven per share.
For more detail seats referred to yesterday's press release and form 10-Q.
In terms of the company's liquidity.
Net cash provided by operating activities for the first six months of Twentytwenty was $46.3 million, that's compared to $44.7 million for extended periods in trying to 19.
The increase in cash was due to the flow of certain payroll income tax payments.
We don't have a cold at night TVD legislation.
This increase was partially offset by decrease in cash flows.
Accounts receivable thought utility customers due to the economic impact of the pandemic.
And this.
Thanks single service this connection to customers for non payment.
Our regulated utilities invested $53.2 million into company funded capital projects in the first six months of Twentytwenty.
Well it covert 19 has caused delays in certain projects.
Great that you'd currency are you planning to spend hundreds 5 million $220 million.
In company funded capital expenditure for the year.
Barring further delays hearing different dynamic.
On July eight this year.
So to say water completed the shares of unsecured private placement notes totaling $160 million.
Good if they want to use the proceeds to repay a large portion of its intercompany note shifts to the holding company.
Which allowed American states water to pay downs short term borrowing under its credit facility.
The result American States water took action to revert it borrowing capacity back to $200 million.
Which was its own reached a level when the facility what size in trying to 18.
We also establish a separate three years $35 million revolving credit facility.
For the electric settlement.
With a company option to increasing to $50 million.
In July 2020 center for Cobalt rating affirmed eight close credit ratings with a stable outlook on both American states water in Golden State water company.
Also in June Moody's Investor service affirmed its eight two rating.
With a stable outlook for Golden State water.
At this time would do not expect American states water to be sure additional equity.
With that I'd turn the call back about.
Thank you Eva.
I'd like to provide an update on our recent regulatory activity.
In July Golden State water file the general rate case application for all of its water regions and the general office.
This general rate case will determine new water rates for the years 2020 to 2023 in 2024.
Among other things Golden State water requested capital budgets in this application of approximately $450.6 million for the three year rate cycle.
And another $11.4 million of capital projects.
To be filed for revenue recovery through advice letters when those projects are completed.
Hey decision in the water General rate case is scheduled for the fourth quarter of 2021.
With new rates to become effective January Onest 2022.
On July 3rd the CPC issued a proposed decision in the low income affordability rulemaking.
Which is related to the low income ratepayer assistance and affordability objectives contained in the Cpcs 2010 water action plan.
The proposed decision also addressed other issues, including including matters associated with the continued use of the water revenue adjustment mechanisms.
Also known as the Ram.
If approved California water utilities that use full decoupling ram accounts, including Golden State water would be required to replace the Ram account with a limited price adjustment mechanism known as the Monterrey style Ram and their next general rate case filing.
This proposed decision was originally scheduled to be on the commission's consent agenda for a vote. This Thursday.
However, it is currently on the hold list, which means it will not be decided this thursday.
The next CPC meeting after this week is Thursday August 27.
Management believes the proposed decision if if approved.
I would not have any impact on Golden state waters WRAM balances during the current rate cycle.
Which include years 2019 through 2021.
Since its implementation in 2008.
Ram has helped mitigate fluctuations in Golden state water's revenues due to changes in water consumption by its customers.
Replacing the Ram with the mechanism recommended in the proposed decision would undo the current decoupling mechanism, which could result in more volatility in Golden state water's future revenues.
And prevent full recovery of its authorized revenues.
Golden State water filed comments to the proposed decision.
At this time management cannot predict the outcome of this matter, including its potential impact on the water general rate case application filed last month.
Which will set new rates for the years 2022 through 2024.
Turning our attention to our electric utility business on July 1st of this year Golden State water completed the transfer of the electric utility assets and liabilities.
From its electric Division to Bear Valley Electric serve a service Inc. a wholly owned subsidiary of American States water.
This reorganization is not expected to result in a substantive change to American states waters operations.
Our business segments.
As you'll see from this slide the weighted average water rate base as adopted by the CPC has grown from $717 million in 2000 $17 billion to $916 billion in 2020.
A compound annual growth rate of 8.5%.
The rate based amounts for 2020 do not include the $20.4 million of device litter projects approved and Golden State waters last general rate case.
Let's move on to issue asked on slide 19.
Yes, you asked his earnings contribution for the quarter was 12 cents per share consistent with last year.
As we look ahead to the full year, we reaffirm our previous guidance for issue as 2020 earnings contribution.
So 46 to 50 cents per share.
We are still involved in various stages of the proposal process at a number of military bases.
Considering privatization of their water and wastewater system.
The U.S. government is expected to release additional bases for bidding over the next several years.
Due to our strong relationship with the U.S. government as well as our expertise and experience in managing bases, we are well positioned to compete for these new contracts.
I'd like to turn our attention to dividends outlined on slide 20.
Board of directors last week approved a 9.8% dividend increase.
Increasingly annual dividend from one dollar and 22 cents per share to $1.34 cents per share.
On American States common shares.
This is an addition to the 10.9% increase in 2019.
This nearly 10% dividend increase reflects our board's continued confidence in the growth and sustainability of the company's earnings.
We believe achieving strong and consistent financial results, along with providing a growing dividends allows the company to continue to attract capital to make necessary investments in the utility infrastructure for the communities in the military bases that we serve.
And return value to our shareholders.
American States water company has paid dividends to shareholders every year since 1931.
Increasing the dividends received by shareholders each calendar year for 66 consecutive years.
Which places it in an exclusive group of companies on the New York Stock exchange that have achieved that result.
The company's current dividend policy is to achieve a compound annual growth rate in the dividend of more than 7% over the long term.
I'd like to conclude our prepared remarks by thanking you for your interest in American States water.
I'll now turn the call over to the operator for questions.
We will now take your questions to ask a question you May Press Star then one on your telephone keypad.
If you're using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then too.
For the record please state your name and your company prior to ask your question.
We will pause momentarily to assemble our roster.
And our first question will come from Angie Storozynski of Seaport Global. Please go ahead.
Thank you so.
Okay. So I wanted to ask a question BC about this potential change to your decoupling mechanism you mentioned that there wouldn't be any impact to your earnings sort of 21, which.
Somebody is given that the that's the duration of the current rates set up now.
You have Oh, we managed to earning your allowed our are we on the other waterside now.
Given given those changes that could happen on the big on there be couple of weeks side is there anything you can do and the way you manage your business that would allow you to still hit your about our lease that without that Ram mechanism in place and also.
The engineering and that's filing you made in July.
The next year see that would allow you to have too.
Additional basically levers diminish earnings thank you.
I Angie and.
Good to hear from you.
So let me start with the.
Oh, the proposed decision that's out there.
We believe the language in the proposed decision is fairly clear.
First of all that it would it would apply to the first general rate case filed after the date of the final decision.
So we filed our general rate case for 2022 through 2024.
Right now we don't believe the language in the proposed decision would apply.
It would require us to use the monorail Monterrey style Ram for 2022 through 2024.
However, if the decision were to get changed then.
We would need to basically refile our rate case.
So sort of back back to your original question about is there anything we can do on that front.
Well.
Introducing the Monterrey still Ram I think will cause us to change our rate design a bit.
We would look to.
Probably reduce the tier structure, that's in our rates.
Therefore make it a little easier for us to forecast our sales.
It's really important when you have a monterey style Ram that.
Youre able to achieve the sales forecasts that you have included in your adopted revenue requirement.
So.
I would sort of have to start I believe from square one on in terms of designing our rates.
And perhaps flattening the tiers so that.
The company is is ER.
Able to do a better job of forecasting sales with a with a tiered rates the significant tiered rate skews lose excuse me that we have which as you know encouraged conservation.
It does make sales forecasting more difficult because you're not sure how much of usage is going to be used at the higher the higher tiers. So again, perhaps flattening the tier structure.
And then.
Although we spend a great deal trying I'm trying to get the sales forecast right I think the tiered structure makes it.
It makes it more difficult.
Okay, because I'll send out the <unk> or one of the consumer advocates have already suggested not to wait until the last next rate case, but instead incorporated in our current are attending.
For Ses.
Yes in your case it would be easier because you just made a filing and he could actually program to make some correction such you know it's my understanding that there are two other largish light duty Smith.
Our pending GRC, so our pending decisions and their GRC. So I I mean, I'm, assuming that the Verity The commission would would apply.
And he will change to all of the utilities at the same pace instead of just.
Somewhat penalizing, you, but not applying the same road to say CW T or American waters, New Jersey, Sorry, California utilities would you agree.
I would agree that if they are to move they won't I don't believe they'll move select companies choose amount or Monterrey Ram I think they would need to move.
There is actually four of us that have a full ram at this point so they would need to move all four of us.
How it affects their current currently filed rates and their outstanding rate case, I'm really not the right person sort of comment on that but.
Just just want to let you know, though that it's not easy to.
To go back and do rate design on our on a rate case, that's it's very very complex and so having to refile the GRC.
Yes, they require us to do that would be.
Difficult task, which we would be.
No we would be of course willing to do if we're expected to do that.
Because you know that the current filing we have with the commission.
And the current rate design, we have filed with the commission for 2022 through to 2024.
It does not anticipate moving to a Monterrey style around.
Okay.
That's great and then separately Ace U.S. Deutsche led but you have new management in place and were waiting probably felt some.
New contract and words do you actually think that's still possible this year given pull them.
And and given the changes on leadership are you, becoming more bullish about longer term growth expectations for that business me you never really gave us down could you just keep up the the diffuse guidance did you comment about I used the methanol.
Sure. There's you know Theres a number of privatization awards pending.
And.
We havent heard from the government that that none of them are going to be awarded this year. So the expectation is still that we may see some awards before year end.
With regard to the new hire at issue as we're expecting big things from them reserve is a very talented person and.
You know, we would be looking to sort of step up our game on the business development front. We we were very good in that area. We believe we're just I would say, adding a adding a little muscle to the team at this point. So so looking forward to.
To the future it issues.
Great and just last question. So we haven't had much of a growth that to date and up business and it's a b, but you did maintain the guidance range. So I'm, assuming that's the most of the growth happened so and the remainder of the year and also as you see it right now the say three cents a I knew.
Growth in that business is E secrets sustainable or is it very lumpy depending on [noise] on the of those contract awards.
Well, yeah, I think it's a little bit lumpy because.
It is a a bit of a function of new contract Awards also as you know Angie we are.
We're always trying to get more work on the basis. We currently serve we're also looking to try to get additional assets transferred to us on the basis. We currently serve and so those really sort of three different avenues in terms of trying to grow the revenue stream, but but clearly.
We had to step up in in our revenue projection through winning the Eglin Air Force base in Fort Riley when you get new privatizations. It does it does make the growth easier I left I'll have to say that.
Okay. Thank you <unk>. Thank you Andy.
Again, if you would like to ask a question. Please press Star then one.
And our next question will come from Jonathan Reeder of Wells Fargo. Please go ahead.
Good morning, Bob an Eva or Ah, yes, still good morning for you guys [laughter].
I think the midpoint of the new Capex range is like 15 million lower than what your range was at the beginning of the your do you expect to make that shortfall on perhaps in my 2021.
I think Tim.
Yeah I guess.
10 million from the.
That was 150 to 130, it's not 105 to one day, one and so did so 10 million.
Yeah, because I mean these are all projects that are approved and it's just.
Some of the struggles we're running into is just getting getting projects permitted and and because of a pandemic.
And then the other issue is we've avoided taking people taking customers out of water in a sort of be a little bit of a function of Ur cobot, 19, and where that has but you know we're we're making really good progress I would say on our capital plan. Despite the pandemic.
So again, we would look forward to to trying to make that up in 2021.
Okay, Great and then.
On the random MCV, a hypothetically they went away and what kind of like net income headwind would that created for you you know maybe for full year 2019.
Well I. So so Jonathan I think I think looking back is very difficult.
Given that.
Our cure rates were structured with the full Ram in mind.
In other words, there are lot steeper and therefore the forecast is.
Sure more more difficult to forecast.
So I don't know that.
So it wouldn't be fair to even.
Overlay on 2019, if the Ram went away I mean, we did have we did have some under collections because.
Sales were a bit lower than what what was included in the in the rate case, but.
A you know as long as were able to.
Allowed to adjust our rate structure.
I think we can we can control that.
Okay. So you think going to Monterrey ramp could be manageable.
If you do modify them back to your design.
So you kind of push a little hardware sales forecast to make it as reasonable as possible.
You still think achieving or exceeding your allowed our views on a go forward basis would be to be reasonable.
Yeah I.
Have you see has always been pretty fair on these things.
Hi.
I don't think.
Removing the full Ram is the greatest thing for conservation.
It's a real head scratcher to me a in terms of public policy.
But you know if you start needing to flattened.
Pricing curves are the tiered rates then all the sudden perhaps you'll see increases in water use.
But other companies that have the you know theres a few companies that have the Monterrey Ram that like it.
I personally would I personally prefer the full ramp because we're just used to it.
So, but it all but it does come down to to forecasting and it does come down to tier rates.
Right I mean should we interpret anything at the site.
It was held.
Commissioners are.
Maybe not expressing the same view as you know commission do has been a savvy to Penn.
On his decision or.
Is it just too early to kind of tell how receptive your efforts to get the PD modified.
Yes, it it'd be difficult to speculate at this point no I think it's it's a little bit of a good sign that is being held.
What what caused that I really don't know.
You know I knew.
Perhaps some of the environmentalist are not fans of getting rid of the full Ram.
But it's a it's a bit of a head scratcher to.
So some of the folks is too you know what what's driving this really you know really doesn't help.
No income customers 'cause it basically reduces if you've reduced deteriorates the folks with the biggest property a end up paying less and for the same revenue requirement that means others pay more so I just.
I, just don't understand it but anyway nothing about that.
[laughter].
We are unrelated on the electric side has the CP you see acted on their values Solar project application I think it Q2 20 decision had been expected.
But they have not.
We're.
We're we're working through that at this point they are asking a number of questions about the.
The solar facility and so we're answering those questions a and working through it as you know we had a you know we have a settlement with public advocates on that particular project.
But theres a you know a few moving parts to it so.
So we'll just continue to work through that.
Oh I didn't realize you do house.
The project to move forward or you know how did that some parents.
Give me the last part of your question Jonathan Sorry.
How does the settlement compared to your proposal I wasn't I wasn't aware that there was a settlement.
<unk>.
Yeah, I know, we haven't we have a settlement on it yeah. It's you know where you know we're fine with the settlement.
The.
The administrative law judges asking questions and has.
He or she and or their staff have a bit of a background in the solar area. So you know, we're we're happy to.
You know answer any of their questions is just.
Taking a taking a bit of awhile and as you know Jonathan.
You know the.
Do you see is pretty focused on a PGT wildfire mitigation efforts et cetera. So you know we're continuing to work with with the PC on the solar project I mean, it's a it's a long term project and we're you know very patient so.
We're we're working hard to try to push across the.
Across the goal line here.
The.
Public obviously softness and accorded you guys doing for that project I mean does that went to settlement does say and.
Just trying to get Yale Jen supported the structure, yes, we I mean, we have a settlement to move the project forward with with public advocates.
Okay, and it's like the size contemplated roughly or yes, yes, yes, that's kind of what we submitted.
Okay.
Sorry, I I wasn't aware the settlement just yet.
Kind of.
In agreement with what you've got some analysts you sound like well so okay. So there was up a bit of or wrinkle.
Jonathan There you know we had.
We had file a solar facility, where we were going to.
So some of the power too.
A big bear area, so wastewater facility and.
Yes, the government entity that does wastewater up at big Bear and.
And they they do their own generation at this point, but they were going to come on as part of it's part of this.
And they had a specified rate that they were willing to pay to become part of the project ultimately public advocates did not like that rate.
And therefore.
Acronym as bar lot Big beer area of regional wastewater authority thought it yeah. So so they back.
I got taken out of the project because.
The price that was in the filing was sort of there.
They are their price in a public advocates wanted to increase the price to them in and so they backed out of the project and then we were able to adjust the project.
And still still get a settlement with the public advocates once once a borrower backed out of the project or because of that we were able to get a settlement with public advocates.
Oh it so it did incur a bit of a wrinkle along the way.
That's a little little small on what you're thinking.
Actually it said, hey, inside and outside fell $14 million at $14.
Perfect perfect well good news there okay.
Okay.
John that issue.
Thank you [laughter] you're welcome.
This concludes our question and answer session I would like to turn the conference back over to Bob Sprowls for any closing remarks.
Yes, I just want to wrap it up today by thanking all of you for your participation and we look forward to was speaking with you next quarter and thank you very much for your participation.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.