Q3 2020 New Jersey Resources Corp Earnings Call
[music].
Good morning, and welcome to the New Jersey resources third quarter fiscal 2020 earnings teleconference. All participants will be in listen only mode should you need assistance. Please take note conference specialist by pressing star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone.
To withdraw your question. Please press Star then to.
Please note this event is being recorded.
I would now like turn the conference over the Dennis Puma. Please go ahead.
Oh, Thank you Brenda and good morning, everyone everybody welcome to New Jersey resources third quarter fiscal 2020 conference call webcast I'm joined here today by Steve Westhoven, our President and CEO, Pat Migliaccio Art, our Chief Financial Officer, as well as other members of our senior management team.
As you know certain statements in today's call contain estimates and other forward looking statements within the meaning of the securities laws, we wish to caution listeners of this call that the current expectations assumptions and beliefs, forming the basis for our forward. Looking statements include many factors that are beyond our ability to control or estimate precisely this could cause too.
Results to materially differ from our expectations is found on slide one.
These items can be found in the forward looking statements in today's section of our earnings release furnished on form 8-K and in our most recent form 10-K in Q as filed with the SEC.
We do not by including the statement assume any obligation to review or revise any particular forward looking statement referenced herein in light of future events.
We will also be referring to certain non-GAAP financial measures such as net financial earnings or NFC, We believe that NFC net financial loss and utility gross margin provide a more complete understanding of our financial performance. However, they are not.
Intended to be a substitute for GAAP.
Our non-GAAP financial measures will discuss more fully in item seven of our form 10-K.
Turning to slide two we have our agenda for today, Steve will begin todays call with highlights from the quarter, followed by pad, who will give a financial give our financial results. We'll then open the call up to your questions.
The slides accompanying today's presentation are available on our website and more furnished on form 8-K filed this morning.
With that said I'd like to turn the call over to our President and CEO, Steve Westhoven Steve.
Thanks, Dennis and good morning, everyone and thank you for joining US today before we review the third quarter results I want to provide a status update of uncoated 19 impacts on end Jr.
In June New Jersey, natural gas resumed in home inspection work for safe Green, our energy efficiency programs and over the last month, we started to resume other services that have been scaled back at the peak of the pandemic.
We are now performing non emergency service related utility work at customers request. Our team has done a terrific job navigating pandemic related restrictions. Despite a co bid related delays in certain home construction activities during the quarter utility continued to add customers.
We've added nearly 5900, new customers. So far this fiscal year, we have over 2500 pending installations as of today.
We are likely to lag our original goal of adding 9800, new customers in fiscal 2020, but we view this as a near term delay and remain confident in reaching our three year target of 28000 30000, new customers by the end of 2022.
As always to safety and well being of our employees customers and the communities we serve take priority.
We continue to voluntarily suspend customer disconnection late fees and provide assistance to those in need through various federal and state programs and through our gift of warm and NJ, our charity designed to assist customers and paying their bills.
Moving to slide four despite the challenging environment, we are reaffirming our fiscal 2020 NFC guidance range of tool five to 15 per share with the expectation of NFC falling towards the lower end of the range. We now expect new Jersey natural gas to contribute 64% to 67% of total Ana.
Compared to our previous range of 61% to 65% due to decreased on expenses.
We lowered the contribution range in our midstream segment to 8% to 10% from 10% to 15% due to lower AFUDC earnings on our Adelphi Gateway project.
The permits for adult here under final review by the Pennsylvania, DP and once agencies review is complete we will file for our FERC notice to proceed.
And despite the longer than anticipated permit review period Adelphia remains on track for 2021 in service date.
And at Energy services, we now expect a loss of negative three negative 5% of total NFI.
Moving to slide five as mentioned before despite some unavoidable delays related to the pandemic, we continue to add customers and remain confident in reaching our three year target of 28000 30000, new customers by the end of 2022.
New Jersey natural gas is capital program has not been materially affected by the pandemic and we see minimal downside risk to our previously disclosed CAGR of 10.3% for the three year period between 29 team in 2022.
Also during the quarter in New Jersey Board of public utilities released in order establishing rules for future energy efficiency filings, New Jersey natural gas is a strong track record of working constructively with our regulators to design energy efficiency programs aligned with states goals and as such we view. This change is positive for the utility the state.
Our customers.
The southern reliability linked continues to make progress with over 75% of construction complete leaving approximately 6.8 miles to go out.
However, in the third quarter during the returning drilling operation New Jersey natural gas experienced and ended Burton return, which caused damage to a structure near the drilling site, New Jersey natural gas takes the issue of safety seriously. We responded accordingly, we took immediate action stopped drilling activated our mitigation plan and in New Jersey.
Part of environmental protection was notified.
No permanent environmental impacts are expected as result of this release.
The following the end invert return on July eight the DP suspended New Jersey natural gas is permits for certain sections of Srl.
And after several productive consultations GDP a risk mitigation strategy required to lift the permit suspension with submitted and we're now waiting the piece review.
Construction activities continue to progress on the remaining portion to the project is resolved the Permian matter and we do not expect the completion timeline of vesser out to be effect.
Turning to slide six CV had another productive quarter, we're on track to meet our goal of adding nine commercial solar projects to our portfolio this fiscal year.
The growth of our clean energy segment is an important part of the sustainability agenda. We outlined earlier this year and another example of our commitment to help achieve clean energy future.
And the third quarter, we added three commercial projects totaling 32 megawatts of incremental capacity, including the New Jersey Oak Solar facility, our first acquisition of an operating solar asset.
Given our team's expertise and successful track record of asset management, we believe there's an opportunity related to the New Jersey Oak Solar project that can be realized through minor upgrades and OEM efficiencies.
As pandemic related restriction disease, we are beginning to see signs of improvement in the residential lease in small commercial solar markets. During the quarter sunlight advantage program added 90 customers and now serves over 8400 customers in total.
And through the third quarter the team at CV has satisfied the majority of their investment targets and is on pace for another very successful year, we expect to recognize approximately $60 million of Aesrx revenue and approximately $20 million from itcs in the fourth quarter.
Moving to slide seven I'll cover some highlights from LNG, our midstream and energy services.
At enjoy our midstream the leaf River Energy Center continues to be a positive addition to our portfolio of managed storage and transmission assets, performing well and inline with our expectations. The northern portion of our Adelphia Gateway project is flowing gas and we're working through final permitting for construction in the southern portion of the project and our in service date of 2021 remains on.
Changed.
For Penn East on August Threerd, FERC issued a positive environmental assessment for phase one of the project finding no significant environmental impact.
And as you May recall on June 29, US Supreme Court requested the view of US Solicitor General regarding the New Jersey portion of the pennies project, we await the opinion at the solicitor General in the decision by the Supreme Court and whether the here the case and we will provide updates when they become available.
Energy services continues to pursue steps that will reduce the risk profile this business and increased the stability and predictability of its cash flows we've made progress in one of our objectives and reduced on expenses over the first nine months of this year.
And in summary, despite a difficult environment strength of our diversified businesses has allowed us to reaffirm guidance maintain our capital programs and continue to provide uninterrupted service to our customers and with that I'd like to turn the call over to Pat for some details in the financials.
Thanks, Steve and good morning, everyone Slide nine shows the main drivers of our quarterly NFC and net financial loss changes during the third fiscal quarter of 2020, and John reported a net financial loss of 5.8 million or six cents per share compared to a net financial loss of 17.5 million or 20 cents per share in 2019.
Due to natural gas on NFI improvement quarter over quarter of $15.8 million due to higher base rates and lower Alam expenses midstream saw modest improvement during the quarter with increased operating income from leaf River and adelphia, mostly offset by income taxes interest expense.
Thank you ventures was down 6.8 million, primarily to the timing investment sales and investment tax credit recognition, which as Steve mentioned will mostly curve the fourth quarter.
Energy services improved 7.1 million due to higher financial margin this quarter when compared to the same period in 2019.
Home services and other decreased 5 million, mainly due the timing of some expenses related to our is system replacement project.
Slide 10 outlines our capital spending for the first nine months of fiscal 2020 in the next two years, Steve mentioned earlier the delay the delta gateways permitting process that resulted in a portion of our fiscal 2020 capital spend getting pushed to fiscal 2020 Wong.
We now expect capital expenditures for Delta gateway to be in the range of 140 to 160 million for 2021 in 2022 compared to our previous estimate of 100 to 120 million.
As you can see on slide 11 enjoy remains well positioned in terms of liquidity as of June Thirtyth, we had almost $600 million a liquidity available to us. In addition in July and jar received a total of $335 million for the issuance of unsecured enjoy our nose and then genji mortgage bonds, we use those funds to pay off our outstanding.
We have a bridge loan introduce short term debt balances.
Moving to slide 12, you can see an update on a cash flows and financing projections.
As previously communicated we have no equity needs for this fiscal year or fiscal 2021 due to the offering we completed last December.
I also want to take a moment to discuss the stability of our dividends in light of endemic on July 14, we declared our regular quarterly dividend of 31 in the quarter cents per share and currently do not expect changes in our long term vivid growth rate of 6% to 8%.
On slide 13, we've highlighted the details of our ESRT coach hedging program.
We continue to actively hedge to ensure asset revenues are largely unaffected by future changes and Essar crisis.
Energy or 2021, we are 94% hedged and for 2022, we have 92% of our volumes hedge.
While third year 2023, we've increased our hedge position to 55% from 22% when we last reported this data.
For any of your 2024 market fundamentals are strong with our current energy or 2020 for Aesrx trading at $185 or 85% of the SEC, we've begun hedging energy or 2024, and now have 21% of our volumes hedged at an average price of $184.
I'll now turn the call back over to Steve.
Thanks, Pat before I open the call for questions I want to thank our employees for their hard work and dedication, especially considering the circumstances that we're all dealing with.
Back in March we had to pivot quickly to this new working environment and all of our associates embraced the challenge and our performance through this period has been largely unaffected.
Whether in the field of working remotely weve excelled at serving our customers needs and respecting their wishes for how that service should take place.
Our focus on customer service is why we recognized in June for the seventh straight year as the most trusted utility nation. According to cogent syndicated by escalate.
I appreciate you taking the time to join US today and I'll now open the call for questions.
We will now begin the question answer session.
To ask a question you May press Star then one on your Touchtone phone fewer using a speakerphone. Please pick up your handset before press in the keys.
To withdraw your question. Please press Star then too.
This time, we will pause momentarily to assemble our roster.
Our first question comes from Gabe Moreen with Mizuho. Please go ahead.
Good morning, everybody.
Couple of questions. One of the me I can start with the energy efficiency programs on the solicitation.
You can you just talking about maybe the magnitude of what you're looking to do their over and above your screen programs once you're done in the past.
Hey, Dave This is Steve I'm going to pass this question over Q, Marc Caira Who's the head of our regulatory to give you. Some details on those programs, yes, though just to give you a quick background as you know our safe Green program and saving cost saving five was a vast improvement over our prior program, we had investing about that.
$18 million a year in the in the prior programs and we got approval in the last one to do $135 million over a three year period. When we take a look at the upcoming filing we're still working through that that is due on September 25.
We will know better what that program will look like when it gets approved in the target date right now as May of 2021.
We expect it to be somewhat similarly sized there'll be some ins and outs.
And the programs, but for right now, we're really uncertain and can can't discuss what the final details will be the positive aspect is that there are many programs that were run previously by the clean energy program of the BPU those programs on specific to our residential commercial customers will be coming over to the utilities and didnt.
For the natural gas so we look forward to that and working with the BPU on creating the collaborative.
Those programs.
Once they get approved and we're hopeful by May 1st they will be implementation required by July Onest of 2021. So right now there's still a lot of uncertain of what those programs look like the size. We know there will be about three year program. So expect these about similar to what say revive is or where you could even be able to bigger.
Appreciate it. Thank you and then maybe I can turn to covert costs or potential covert costs. It doesn't sound like there's been much of an impact.
Directly do you anticipate at all calling out some of the potential cobot impacts on other BP use allowed.
For that.
One of your peers I think noted.
We are doing so yesterday when they reported is that something you anticipate going forward.
Give this is Pat Migliaccio, certainly we are aware of the order to date coordinating costs for us has been largely immaterial.
And so we continue to monitor that we've not seen the material increase in net write offs related to bad debt expense to put some ranges around that in a typical year, we'll see the $2 million to $3 million.
Going all the way back to the.
Great recession, Avolio nine that got as high as 7 million just to give you some sense of the magnitude, but as I mentioned earlier to date those costs. Both coburn 19 specific as well as of bad debt are largely immaterial.
Hi, This is mark again, we get we have been having productive conversations with the board a public utilities about the whole aspect of Uncollectibles and so they are acutely aware that we'll work through that over the over the next periods and as we work through and getting them. Some of these customer the assistant that they need to be able to help pay their bills.
Thanks, Pat Thanks, Mark and then maybe my final question just on Us our Roe.
Can you just talk about whether the total cost there has changed for the project.
Yes are also slowed slightly this quarter versus a loss costs have gone up.
The capital tile slicing launch for us sorrow, but I'll just.
Looking for clarification on job.
I'll start up costs have gone up for confidence that you'll be able to recover.
During the rate case, even up costs are higher.
Gabe This is Pat migliaccio, so our estimates of cost for us oil largely unchanged from what we reported the last quarter and do not see any issues with recovering the costs associated with the project.
Okay. Thanks Bye.
Thanks.
Our next question comes from Michael Gaugler with Janney Montgomery Scott. Please go ahead.
Good morning, everyone.
One of my only Mike.
Steve got one for you.
Given the cancellation of Atlantic Coast.
Just wondering what you're thinking in terms of your existing midstream assets and energy marketing.
Does it create any opportunities for you in the future.
A few thoughts on that Mike one certainly infrastructure is becoming harder to build which is making the infrastructure. That's in place I think more valuable as in lower natural gas very important energy source and we've even seen that recently with that tropical storm that come through here knocked out a lot of.
Electric service and there's been a lot of gas fired.
Generators have been running that have been that helping provide electric service. So not only important in the winter, but important in the summer and its critical infrastructure.
So when we look at the projects that we have on the board Adelphia Gateway already in the ground, we've got some permitting still less than Pennsylvania, but minimal construction minimal Martin environmental impact in serving a constrained market. So we're excited about moving forward that project once we get the approvals.
Leaf River Energy center that storage facility down in Mississippi.
Performing performing well certainly Bala gas prices have helped there as well and Gulf Coast LNG liquefaction. It's been has been tough, but thats been but thats been helping spreads in such down in that area and really shows the balancing needs down in Louisiana as well.
Penn East still an important project, we've got capacity constraints in the northeast.
So I think as we push forward. We're CEA, we ought we are marching forward with that project certainly very needed.
But right now I think the opportunities that we have our to get the projects that we have on our slate develop and getting completed in running which is what we're working pretty hard at right now.
Okay, and then you broke Penn East Im just wondering what's the what's the target to begin construction there on phase one.
So phase one I think were have completion in in that 2022 and that we right now going through the process received EA, we need to receive the FERC certificate. This fall and then some some other approvals. So so I think we're we're working through the.
Process and as you know that's been an unpredictable process. So current schedule, having that in service I believe the end to 21 22 rate we currently.
Thank you Sir.
Our next question comes to Richard Sincerely with Bank of America. Please go ahead.
Hey, good morning, Thanks for taking my question.
I wonder into revenue.
Hey, I'm just curious if you guys could provide a little bit more color on what's driving your expectations for the remainder of the year.
Just looking at what you done year to date.
It seems like it would imply a 100% growth year over year for Q and I realize that there's some timing considerations about ITC recognition and fast RAC revenue that you're seeing the segment, but just.
Curious if you can provide a little bit more color that.
A rich you on our end.
You cut out a little bit on the initial side of the question into additional color on what specifically.
Sorry, you have for your your.
Expectations for the remainder of the year given that you kept your guide impact claim to the low end on the range but.
Just given what you've done year to date.
It seems like it would imply 100% gross for for Q year over year.
And I realize that the timing or what the I can see recognition, but what else is driving that.
Expectations for the remainder of the year.
Hi, Ritu you're spot on it really is timing as Steve alluded to in his remarks, we've got roughly 60 plus million dollars of Aesrx sales that we will deliver in the fourth quarter of this fiscal year, which you can effectively tax effect, those and drop them to the bottom line because there is no incremental additional operating expenses and the balances income taxes.
Brother investment tax credits associated with clean energy ventures. So it really is strictly a timing issue not much more than that.
Okay got it that's very helpful. And then just curious I I know you touched on the energy efficiency program, but also on the the IP program what are your expectations for.
For for rider treatment, there and when the timing for approval.
Hi, This is Marc Caira again, Vice President regulatory affairs. So we filed back in February of 2019 on that we answered oil discovery and submitted the cost benefit analysis that was required earlier. This year. We've begun the settlement process now so we're hopeful that during the course of this.
Quarter or into the early fourth quarter of first first quarter of 2020.
Slide 2021, we'll have some resolution on that in and close the at close the issue out and get some investments underway.
And Richard just as a reminder, that over 500 million dollar program approximately $280 million was related to what I'd describe as traditional pipe infrastructure.
220 million is related to our what we've done a project next which is the replacement of our customer billing system ERP and work in asset management.
At work is underway for our ERP.
So that's actually went into service in July the eight so just as an f. why those are the two different.
Types of spend under that program.
Okay got it and that's very helpful. And then just last one for me here.
You alluded to some of the I'm, the permitting challenges that adelphia and you shifted the spending.
And then also notice the some minor spending was shifted out at CV, we'll I'll, what's what's driving that.
So I think with a adelphia gateway the at getting the permits through the Pennsylvania, DP, we've been working with them extremely well, but cobot related impacts and just slowing things down a little bit could be a reason for that and that should slow in the product, but we still expect that to have commercial opt in commercial.
Operation at 2021, and you'd see in the in the numbers, we've shifted out the spending to reflect that.
And then what you out on the clean energy ventures side, we lowered our expectation for the sunlight advantage last quarter from $26 million to $20 million were still targeted there and again Thats also.
Principally co related reference on last call you will first with our channel partners not being able to get into homes to market to our customers and then second at the local municipality level permits habit of it a little bit slower to achieve.
All right guys. Thanks, a lot sort of color flat.
Thanks very heavily budget.
[music].
As a reminder, if you would like to ask a question. Please press Star then one.
Our next question comes from Travis Miller with Morningstar. Please go ahead.
Good morning, guys.
Hey, Travis.
On Srl I was wondering if the BP you was involved in anything in terms of investigation or looking into what happened and whether there was any kind of a process of.
Dealing with issues.
Like what wouldn't like what happened through the BP you rather than the D. P. Just wonder if there was any involvement there.
So the Travis we notified the beep you did this and it took place.
But.
Thats been about its really been the DP and local permitting that had been involved and then we're working with them right now and like we said weve submitted or risk mitigation plan with them and we're waiting review. So we can startup this sections constructions that still continuing on the only other thing that I would add is remember the BBU has proved this project to start this is.
Resiliency project that was really born out of Superstorm, sandy and necessary to get another supply point to our system. So extremely important for us to complete this project going forward, but that was that was the BP use I guess involvement and situation so far.
Okay.
Has there been any kind of push back from Interveners are possible interveners about rate recovery given.
What happened.
No. We havent. So this would go into our next rate case on so we haven't had the the opportunity to put it in a rate case at this point, we've got to get commercial operation in place first so no there hasn't been any reaction from an intervener.
Sure. Thanks, and then wondering high level your thoughts on the Berkshire Dominion.
Deal and.
Any chance that if the right price came along that you might look at a similar.
Divestiture on the midstream side.
We don't comment on those types of situations, but I will say, we're excited to get adelphia gateway up and running and and get some of these assets in the market. It's a constrained market, there's definitely a big need for for natural gas.
Deliveries in these markets that we're in so I think bill provide value for our company for very long time.
Okay appreciate the.
Very elaborate not answer.
[laughter]. Thank you much guys.
[laughter].
This concludes our question and answer session I would like turn the conference back over to Dennis FEMA for any closing remarks.
Alright, Thank you Brendan.
We want to thank everybody for joining us this morning.
As a reminder, a recording of this call available on our website for replay and as always we thank you for your interesting investment in New Jersey resources, but.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].
[music].
Good morning, and welcome to the New Jersey resources third quarter fiscal 2020 earnings teleconference. All participants will be in listen only mode.
Would you need assistance, please signal conference specialist, but pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then too.
Please note this event is being recorded.
I'd now like turn the conference over to Dennis Fiamma. Please go ahead.
Oh, Thank you Brenda and good morning, everyone everybody welcome to New Jersey resources third quarter fiscal 2020 conference call webcast I'm joined here today by Steve Westhoven, our president and CEO, Pat Migliaccio, or our Chief financial officer as well as other members of our senior management team.
As you know certain statements in today's call contain estimates and other forward looking statements within the meaning of the securities laws, we wish to caution listeners of this call that the current expectations assumptions and beliefs, forming the basis for our forward. Looking statements include many factors that are beyond our ability to control our estimate precisely this could cause to.
Results to materially differ from our expectations is found on slide one.
These items can be found in the forward looking statements in today's section of our earnings release first on form 8-K and in our most recent form 10-K into as filed with the FCC.
We do not by including the statement assume any obligation to review or revise any particular forward looking statement referenced herein in light of future events.
We will also be referring to certain non-GAAP financial measures such as net financial earnings or NFC, We believe that NFC net financial loss and utility gross margin provide a more complete understanding of our financial performance. However, they are not.
Intended to be a substitute for gap.
Our non-GAAP financial measures will discuss more fully in item seven of our form 10-K.
Turning to slide two we have our agenda for today, Steve will begin todays call with highlights from the quarter, followed by pad, who will give a financial give our financial results. We'll then open the call up to your questions.
The slides accompanying today's presentation are available on our website and more furnished on form 8-K filed this morning.
With that said I'd like to turn the call over to our President and CEO, Steve Westower Steve.
Thanks, Dennis and good morning, everyone and thank you for joining US today before we review the third quarter results I want to provide a status update of uncoated 19 impacts on end Jr.
In June New Jersey, natural gas resumed in home inspection work for safe Green, our energy efficiency programs.
And over the last month, we started to resume other services that had been scaled back at the peak of the pandemic.
We are now performing non emergency service related utility work at customers request. Our team has done a terrific job navigating pandemic related restrictions. Despite a cobot related delay in certain home construction activities during the quarter utility continued to add customers.
We've added nearly 5900, new customers. So far this fiscal year, we have over 2500 pending installations as of today.
We are likely to lag our original goal of adding 9800, new customers in fiscal 2020, but we view. This is a near term delay and remain confident in reaching our three year target of 28000 30000, new customers by the end of 2022.
As always the safety and wellbeing of our employees customers and the communities we serve take priority.
We continue to voluntarily suspended customer disconnects in late fees and provide assistance to those in need through various federal and state programs and through our gift of warm and NJ, our charity designed to assist customers and paying their bills.
Moving to slide four despite the challenging environment, we are reaffirming our fiscal 2020 NFC guidance range of two of five to 15 per share with the expectation of NFC falling towards the lower end of the range. We now expect new Jersey natural gas to contribute 64% to 67% of total Ana.
Compared to our previous range of 61% to 65% due to decreased only on expenses.
We lowered the contribution range in our midstream segment to 8% to 10% from 10% to 15% due to lower AFDC earnings on our Adelphi Gateway project.
The permits for adult here under final review by the Pennsylvania, DP and once agencies reduce complete we'll file for our FERC notice to proceed.
And despite the longer than anticipated permit review period Adelphia remains on track for 2021 in service date.
And at Energy services, we now expect a loss of negative three to negative 5% of total NFI.
Moving to slide five as mentioned before despite some unavoidable delays related to the pandemic, we continue to add customers and remain confident in reaching our three year target of 20000 30000, new customers by the end of 2022.
New Jersey natural gas is capital program has not been materially affected by the pandemic and we see minimal downside risk to our previously disclosed CAGR of 10.3% for the three year period between 2019 in 2022.
Also during the quarter, New Jersey Board of public utilities, released an order establishing rules for future energy efficiency filings, New Jersey natural gas is a strong track record of working constructively with our regulators to design energy efficiency programs aligned with states goals and as such we view. This change is positive for the utility the state.
Our customers.
The southern reliability link continues to make progress with over 75% of construction complete leaving approximately 6.8 miles to go.
However, in the third quarter during the between drilling operation, New Jersey natural gas experienced and ended Burton return, which caused damage to restructure near the drilling site.
Drilling for gas takes the issue of safety seriously. We responded accordingly, we took immediate action stopped drilling activated our mitigation plan and the New Jersey, the part of environmental protection was notified.
No permanent environmental impacts are expected as result of this release.
The following the end invert return on July eight to DP suspended New Jersey natural gas is permits for certain sections of Srl.
And after several productive consultation CDP a risk mitigation strategy required to lift the permit suspension was submitted and we're now waiting the piece review.
Construction activities continue to progress on the remaining portions of the project is resolved the Permian matter and we do not expect the completion timeline of srl to be effect.
Turning to slide six CV had another productive quarter, we're on track to meet our goal of adding nine commercial solar projects to our portfolio this fiscal year.
The growth of our clean energy segment is an important part of the sustainability agenda. We outlined earlier this year and another example of our commitment to help achieve clean energy future.
And the third quarter, we added three commercial projects totaling 32 megawatts of incremental capacity, including the New Jersey Oak Solar facility, our first acquisition of an operating solar asset.
Given our team's expertise and successful track record of asset management, we believe there's an opportunity related to the New Jersey Oak Solar project that can be realized through minor upgrades and OEM efficiencies.
As pandemic related restriction disease, we are beginning to see signs of improvement in the residential lease in small commercial solar markets. During the quarter sunlight advantage program added 90 customers and now serves over 8400 customers in total.
And through the third quarter the team at CV has satisfied the majority of their investment targets and is on pace for another very successful year, we expect to recognize approximately $60 million of Aesrx revenue and approximately $20 million from itcs in the fourth quarter.
Moving to slide seven I'll cover some highlights from LNG, our midstream and energy services.
It into our midstream the leaf River Energy Center continues to be a positive addition to our portfolio of managed storage and transmission assets, performing well and inline with our expectations. The northern portion of our Adelphia Gateway project is flowing gas and we're working through final permitting for construction of the southern portion of the project and our in service date of 2021 remains on.
Changed.
Penn East on August Threerd, FERC issued a positive environmental assessment for phase one of the project finding no significant environmental impact.
And as you May recall on June 29, UN Supreme Court requested the view with US Solicitor General regarding New Jersey portion of the pennies project, we await opinion at the Solicitor General and the decision by the Supreme Court and whether the here the case and we will provide updates when they become available.
Energy services continues to pursue steps that will reduce the risk profile its business and increase the stability and predictability of its cash flows we've made progress and one of our objectives and reduced own expenses over the first nine months of this year.
And in summary, despite a difficult environment strength of our diversified businesses has allowed us to reaffirm guidance maintain our capital programs and continue to provide uninterrupted service to our customers.
With that I'd like to turn the call over to Pat for some details on the financials.
Thanks, Steve and good morning, everyone Slide nine shows the main drivers of our quarterly NFI, a net financial loss changes during the third fiscal quarter 2020 enjoy reported a net financial lots of 5.8 million or six cents per share compared to a net financial loss of 17, and a half million or 20 cents per share in 2019.
Due to natural gas on NFI improvement quarter over quarter of $15.8 million due to higher base rates and lower Alam expenses midstream saw modest improvement during the quarter with increased operating income from leaf River and adelphia, mostly offset by income taxes interest expense.
That is your ventures was down 6.8 million, primarily due to timing investors sales and investment tax credit recognition, which as Steve mentioned will mostly curve the fourth quarter.
Energy services improved 7.1 million due to higher financial margin this quarter when compared to the same period in 2019.
Home services other decreased 5 billion, mainly due the timing of some expenses related to our IC system replacement project.
Slide 10 outlines our capital spending for the first nine months of fiscal 2020 in the next two years.
As Steve mentioned earlier, the delay the dopey gateways permitting process, resulting in a portion of our fiscal 2020 capital spend getting pushed to fiscal 2021.
We now expect capital expenditures for Delta gateway to be in the range of 140 to 160 million for 2021, and 2022 compared to our previous estimate of 102 120 million.
As you can see on slide 11 Ninja remains well positioned in terms of liquidity as of June Thirtyth, we had almost $600 million a liquidity available to us. In addition in July and Jarvis use a total of $335 million for the issuance of unsecured edge. Our notes and then James you mortgage bonds.
We use those funds to pay off our outstandingly for bridge loan introduce short term debt balances.
Moving to slide 12, you can see an update on a cash flows and financing projections.
As previously communicated we have no equity needs for this fiscal year or fiscal 2021 due to the offering we completed last December.
I just want to take a moment to discuss the stability of our dividend in light of endemic on July 14, we declared our regular quarterly dividend of 31 in the quarter cents per share. We currently do not expect changes in our long term deferred growth rate of 6% to 8%.
On slide 13, we've highlighted the details of our Essar coach hedging program.
We continue to actively hedge to ensure SMS revenues are largely unaffected by future changes and Essar crisis.
Energy or 2021, we are 94% hedged and for 2022, we have 92% of our volumes hedge.
While Fred year 2023, we've increased our hedge position to 55% from 22% when we last quarter. This data.
For any of your 2024 market fundamentals are strong with our current energy or 2020 for Aesrx trading at $185 or 85% of the FCP, we've begun hedging energy or 2024, and now have 21% of our volumes hedged at an average price of $184 I'll now turn the call back over to Steve.
Thanks, Pat before I open the call for questions I want to thank our employees for their hard work dedication, especially considering the circumstances that we're all dealing with.
Back in March we had to pivot quickly to this new work environment and all of our associates embraced the challenge and our performance through this period has been largely unaffected.
Whether in the field of working remotely weve excelled at serving our customers needs and respecting their wishes for how that service should take place.
Our focus on customer service is why were recognized in June for the seventh straight year as the most trusted utility nation. According to cogent syndicated by escalate.
I appreciate you taking the time to join US today and I'll now open the call for questions.
We will now begin the question answer session.
To ask a question you May press Star then one under Touchtone phone.
Fewer using a speakerphone please pick up your handset before press in the keys.
To withdraw your question. Please press Star then too.
This time, we will pause momentarily to assemble a roster.
Our first question comes from Gabe Moreen with Mizuho. Please go ahead.
Good morning, everybody couple of questions. One of the me I can start with the energy efficiency programs on the solicitation.
You just talk about maybe the magnitude of what you're looking to do their over and above your screen programs and once you've done in the past.
Hey, Dave This is Steve I'm going to pass this question over Q, Marc Caira Who's the head of our regulatory to give you. Some details on those programs. Yes. So just to give you a quick background as you know our safe Green program say being quoted me five was a vast improvement over our pride program, we had investing about fit.
$10 million a year in a in the prior programs and we got approval in the last one to do $135 million over a three year period. When we take a look at the upcoming filing we're still working through that that is due on September 25.
We will know better what that program will look like when it gets approved in the target date right now is may of 2021.
We expect it to be somewhat similarly sized there'll be some ins and outs and the programs, but for right now, we're really uncertain and can't can't discuss what the final details will be the positive aspect is that there are many programs that were run previously by the clean energy program of the BBU those program.
Specific to our residential commercial customers will be coming over to the utilities and demonstrate the natural gas. So we look forward to that and working with the BPU appreciating the collaborative.
Those programs.
Once they get approved and we're hopeful by May 1st they'll be implementation required by July Onest of 2021, So right now there's still a lot of uncertain as to what those programs look like the size. We know there will be about three year program. So expect these about similar to what degree by those or where you could even be able to better.
Appreciate it. Thank you and then maybe I can turn to covert costs or potential co. Good cost it doesn't sound like there has been much of that impact.
Correctly do you anticipate that all calling out some of the potential cobot impacts on other BP use allowed for that.
Your peers I think notice that they were doing so yesterday when they reported is that something you anticipate going forward.
Give this is Pat Migliaccio, certainly we are aware of the order to date coordinating costs for us has been largely immaterial.
And so we continue to monitor that we've not seen the material increase in net write offs related to bad debt expense to put some ranges around that in a typical year, we'll see the $2 million to $3 million.
Going all the way back to the.
Great recession avoid onein that got us highest 7 million just to give you some sense of the magnitude, but as I mentioned earlier to date those costs. Both coven 19 specific as well as of bad debt are largely material.
And this is mark again, we just we have been having productive conversations with the board of public utilities about the whole aspect of Uncollectibles and so they are acutely aware that we'll work through that over the over the next period as we work through and getting some of these customer the assistant that they need to be able to help pay their bills.
Thanks, Pat Thanks, Mark and then maybe my final question just on Us our Roe.
Can you just talk about whether the total cost there has changed for the project.
Rosetta stone slide this quarter versus a loss costs have gone up.
The capital tied with lots of launching must for us our ROE. So I'll just so.
Looking for clarification on the job.
Also costs have.
Confidence that you'll be able to recover.
During the rate case, even at these costs are higher.
Gave this is Pat migliaccio, so our estimates of cost for us oil largely unchanged from what we reported the last quarter and do not see any issues with recovering the costs associated with the project.
Okay all right.
Thanks.
Our next question comes from Michael Gaugler with Janney Montgomery Scott. Please go ahead.
Good morning, everyone.
Well, Mike Mike.
Steve got one for you.
Given the cancellation of Atlantic Coast.
Just wondering what you're thinking in terms of your existing midstream assets and energy marketing.
Does it create any opportunities for you in the future.
A few thoughts on that and like one certainly infrastructure is becoming harder to build which is making the infrastructure thats in place I think more valuable as in forward natural gas variant important energy source and we've even seen that recently with that tropical storm that come through here knocked out a lot of.
Electric service and Theres been a lot of gas fired.
Generators have been running that have been helping provide electric service so not only important in the winter, but important this summer and its critical infrastructure.
So when we look at the projects that we have on the board Adelphia Gateway already in the ground. We've got some permitting still left in Pennsylvania, but minimal construction minimal might environmental impact in serving a constrained markets. So we're excited about moving forward that project once we get the approval.
Leaf River Energy center that storage facility down in Mississippi.
Performing performing well certainly Balboa gas prices have helped there as well and Gulf Coast LNG liquefaction. It's been has been tough, but thats been but thats been health in spreads in such down in that area and really shows balancing needs down and Louisiana as well.
Pennies still an important project, we've got capacity constraints in the northeast.
So I think as we push forward we received the AG. We ought we are marching forward that project certainly very needed.
But right now I think the opportunities that we have our to get that projects that we have on our slate develop and get than completed in running which is what we're working pretty hard at right now.
Okay, and then you brought up Penny stuff just wondering what's the what's the targeted begins construction there on phase one.
So phase one I think were have a completion in.
2022, and that we right now going through the process. We received the EPA, we need to receive the FERC certificate. This fall and then some some other approvals. So so I think we're working through the process and as you know that that's been an unpredictable process. So current schedule.
Having that in service I believe the end at 21 22 right. We currently.
Thank you Sir.
Our next question comes to Richard Susser early with Bank of America. Please go ahead.
Hey, good morning, Thanks for taking my question.
I Wonder a terrific.
Hey, I'm just curious if you guys could provide a little bit more color on what's driving your expectations for the remainder of the year I'm just looking out what you done year to date.
It seems like it would imply 100% growth year over year from fourth to you and I realize that there's some timing considerations about ITC recognition and ask ranked revenues that you're seeing the segment, but just curious if you can provide a little bit more color though.
Hey, rich on our end.
You've cut out a little bit on the initial side of the question. So a little color on what specifically.
Sorry, yes for your.
Expectations for the remainder of the air given that you kept your guide in fact claimed to the low end on the range, but I just given what you've done year to date.
It seems like it would imply 100% gross for Fourq two year over year.
I realized you know the timing or what the I can see recognition, but what else is driving the or your expectations for the remainder of the year.
Right you are spot on it really is timing as Steve alluded to in his remarks, we've got roughly 60 plus million dollars of Aesrx sales that we will deliver in the fourth quarter of this fiscal year, which you can effectively tax effect, those and drop them to the bottom line because there is no incremental additional operating expenses and the balances income taxes.
Brother investment tax credits associated with clean energy ventures. So it really is strictly a timing issue not much more than that.
Okay got it that's that's very helpful. And then just curious I know you touched on the energy efficiency program, but also on the the IP program what are your expectations for.
For for rider treatment, there and when the timing for approval.
Hi, This is Marc Caira again by the present regulatory affairs. So.
We filed back in February of 2019 on that we answered oil discovery and submitted the cost benefit analysis that was required earlier. This year, we've begun to settlement process now. So we're hopeful that during the course of this quarter or into the early fourth quarter of course first quarter of.
2025.
Why 2021, we'll have some resolution on that and close the at close the issue out and get some investments underway and Richard just as a reminder, that over 500 million dollar program approximately $280 million was related to what I'd describe as traditional pipe infrastructure.
220 million is related to our what we've done a project next which is the replacement of our customer billing system ERP and working asset management.
At work is underway for our ERP so.
Actually went into service in July the eight so just as an f. why those are the two different.
Types of spend under that program.
Okay got it and that's very helpful. And then just last one for me here.
At you alluded to some of the the permitting challenges that adelphia and you shifted the spending there out and I also noticed the.
A minor spending was shifted out at CV will outlets, what's driving that.
So I think with a adelphia gateway the yet.
Getting the permit through the Pennsylvania, DP, we've been working with them extremely well, but cobot related impacts and just slowing things down a little bit could be a reason for that.
And that's just slow in the product, but we still expect that to have commercial opt in commercial operation at 2021, and you see in the numbers, we've shifted out the spending to reflect that.
And then rich on the clean energy ventures side, we lowered our expectation for the sunlight advantage last quarter from $26 million to $20 million were still targeted there and again that's also.
Principally koger related reference the last call first with our channel partners, not being able to get into homes to market to our customers and then second at the local municipality level permits have visited a little bit slower.
To achieve.
All right guys. Thanks, a lot sort of color and glass.
Thanks, very heavily guys.
As a reminder, if you would like to ask a question. Please press Star then one.
Our next question comes from Travis Miller with Morningstar. Please go ahead.
Good morning, guys.
Hey travel.
On Srl just wonder if the BP you was involved in anything in terms of investigation or looking into what happened and whether there was any kind of process of.
Dealing with issues.
Like what wouldn't like what happened through the BP you rather than the de Pete just wonder if there was any involvement there.
So so Travis we notified the beep you did this and it took place.
But.
Thats been about its really been the DP and local permitting that had been involved and we're working with them right now and like we said weve submitted or risk mitigation plan with then and we are waiting reviews that we can start up the sections constructions still continuing the only other thing that I would add is remember the BBU has proved this project to start this is.
Resiliency project that was really born out of Superstorm, sandy and necessary to get another supply point to our system. So extremely important for us to complete this project going forward, but that was that that was the BP use I guess involvement and situation so far.
Okay.
Has there been any kind of push back from interveners or possible interveners about rate recovery given.
What happened.
No. We havent. So this would go into our next rate case on so we havent had the the opportunity to put it in a rate case at this point, we've got to get commercial operation in place first so no there hasn't been any reaction from an interview here.
Sure. Thanks, and then wondering high level your thoughts on the Berkshire Dominion.
Deal and.
Any chance that if the right price came along that you might look at a similar.
Divestiture on the midstream side.
We don't comment on those types of situations, but I will say, we're excited to get adelphia gateway up and running and and get some of these assets in the market on the to constrain market Theres definitely a big need for for natural gas.
Deliveries in these markets that we're in so I think they'll provide value for our company for very long time.
Okay. Appreciate the a very elaborate not answer.
[laughter]. Thank you much guys.
Sure.
[laughter].
This concludes our question and answer session I would like to turn the conference back over to Dennis FEMA for any closing remarks.
Alright, Thank you Brandon.
We want to thank everybody for joining us this morning.
As a reminder, a recording of this call available on our website for replay and as always we thank you for your interest in investment in New Jersey resources, but.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.