Q3 2020 Xcel Energy Inc Earnings Call
[music].
Good day and welcome to the XL Energy third quarter 2020 earnings Conference call.
Today's conference is being recorded.
Questions will only be taken from institutional investors reporters can contact media relations with increase and individual investors and others can reach out to Investor Relations App.
This time I would like to turn the conference over to Mr., Paul Johnson, Vice President of Investor Relations. Please go ahead Sir.
Thank you and good morning, welcome to XL Energys, 2023rd quarter earnings Conference call joining.
Joining me today are Ben folk Chairman and Chief Executive Officer, Bob Frenzel, President and Chief operating Officer, Bryan been able executive Vice President and Chief Financial Officer, and Amanda Rome, Executive Vice President and General Counsel.
This morning, we will review our third quarter results.
Our recent business and regulatory developments provide 2021 guidance and our updated five year financial plan.
Slides that accompany today's call are available on our website as a reminder, some of the comments during today's call may contain forward looking information.
Significant factors that could cause results to differ from those anticipated are described in our earnings release and our filings with the FCC.
Today, we will discuss certain metrics that are non-GAAP measures, including ongoing earnings and electric and natural gas margin information on comparable GAAP measures and reconciliations are included in our earnings release with that I'll turn the call over to Benfold well.
Thank you Paul and good morning, everyone. We had another strong quarter booking earnings of one dollar and 14 cents per share for the third quarter of 2020.
Compare with a dollar and one cents per share last year.
Our year to date earnings are on track with our financial plan and we are mitigating the impact of the cold at 19 as a result, we are narrowing our 2020 guidance range to $2.75.
$2.81 per share.
Now consistent with our third quarter tradition, we have provided our updated base investment plan, which reflects 22.6 billion of capital expenditures over the next five years.
This represents a rate base growth of 6.3% off of 2020 base year.
This represents our base capital forecast.
In addition, we've identified potential incremental capex of 1.2 million associated with the Minnesota relief and recovery proposal, which if approved would drive rate base growth of 6.9% well.
We're also initiating 2021 guidance of $2.90 to $3 per share, which is consistent with our 5% to 7% long term EPS growth objective.
We're very excited about our plan, which provides significant customer value keeps spills whoa and delivers attractive returns for our investors.
We also continue to help our customers and protect our employees during this pandemic.
Stepped up charitable giving to help our communities, including donating the gain from the sale of our Mankato facility for more detail see our slides.
Our business continuity plans have been executed extremely well, including the completion of a refueling outage at our Prairie Island you to their facility.
So keeping employees safe, while providing reliable customer service.
And we're helping to restart the economy through our capital investment programs, which create jobs in our communities.
Earlier this year, the Minnesota Commission opened a relief and recovery docket and invited utilities to submit potential projects that will create jobs and jump start the economy.
September we thought of Repowering proposal that includes four excel energy wind farms of approximately 650 megawatts was $750 million of capital investment.
In addition to the proposal includes 67 megawatts of re powered PPA extensions.
The portfolio is projected to provide customer savings of over $160 million over the life of the assets.
We have requested a commission decision on a win proposal by year end.
We are also proposing 460 megawatts of solar facilities near eye retiring sherco coal plant to take advantage of the existing transmission.
Patrick represents and an estimated investment of 650 million.
We plan to file our solar proposal in early 2021 and anticipated decision in mid 21.
We are confident the commission will see the customer benefits of these projects.
We continue to make progress on our PPA buyout strategy and.
In August the Minnesota Commission approved our request to acquire the 99 megawatt now a wind farm. After it is re powered mauer is currently a PPA.
In addition, we filed to buy out the KEPCO solar facility in Colorado and.
And while the 41 million dollar investment is relatively small the PPA is out of the money and the buyout will save our customers $38 million over the 11 years I think this is another example, our of our keeping bills low priority.
We continue to make strong progress on our wind development initiatives in August our 500 megawatt Cheyenne Ridge wind farm went into operation.
Hi, Enbridge was completed ahead of schedule and under budget.
Since it began operations, we set a record with 70% of hourly load coming from wind generation in Colorado.
We also reached an agreement to acquire a 74 megawatt solar facility in Wisconsin for approximately a $100 million.
We expect a commission decision later in 2021, and this will be our first universal scale solar rate base investment.
I'm also excited to announce that Excel energy was recently awarded a 10 million dollar deal. We grant for an innovation pilot to produce carbon free hydrogen and one of our nuclear power plants.
We're partnering with the Idaho National lab, and others to use excess electricity and steam to separate the hydrogen and oxygen molecules in water using a high temperature electrolysis process, which is 30% more efficient and in a sustainable in a sustainable way to produce hydrogen.
And while it's not currently economical we think hydrogen has long term potential to be a carbon free form of dispatchable generation, which will allow the country to achieve its carbon goals, while maintaining reliability.
I want to wrap up with a couple of comments on electric vehicles we.
We recently announced our vision to enable $1.5 million Tvs in our service territory by 2030.
We spent the last few years working with our commission on programs that will enable ease in our service territory and help turn this vision into reality electrification of the transport system will reduce carbon and save our customers money.
I'm also proud of the recent award we received from fortnightly, which declared our EDI program. The smartest transportation electrification project as part of its smartest utility projects in 2020.
We have developed an easy subscription that makes it easy easier for customers to have charging stations installed at their homes and to be charged a monthly rate for off peak usage, which can save customers money and make more efficient use of the electric grid. So before I do turn it over to Brian for more detail.
So on financial results and outlook I, just want to say that as you probably know the south East is wrestling with hurricane data and its widespread outages and the southwest is working around the clock restoring our customers from the damages due to winter storm billing.
Customers over the past three days of restore two thirds of the 145 customers in Sps that have been out as a result of this ice storm I.
I know there are hundreds of thousands out there in other parts of the southwest that are out.
I'm, just so proud of our team for focusing on our customers in these adverse conditions and I'm proud of the industry. We have a history of mutual aid that's been never more evident in storm recovery in these last two events and quite frankly, the entire year, so with that I will turn it over to Brian.
Thanks, Ben and good morning, everyone.
We had another strong quarter booking $1.14 cents per share for the third quarter of 2020, compared with one dollar to one cents per share last year.
Most significant earnings drivers for the quarter include the following.
Our electric margins increased earnings by 20 cents per share primarily driven by rising rate outcomes.
On M. expenses were flat for the quarter, primarily driven by our cost management efforts and a lower effective tax rate increase earnings by seven cents per share as.
As a reminder, production tax credit is lower the GTR. However, ptcs are flowed back to customers through lower electric margins are largely earnings neutral.
Offsetting these positive drivers were increased depreciation interest expense, which reduced earnings by 12 cents per share, reflecting our capital investment program.
In addition, other items combined to reduce earnings by two cents per share.
Next I'll discuss the status of corporate banking impacts and our mitigation efforts.
As expected posted 19 had an adverse impact of third quarter weather adjusted electric sales declined by 2.4%.
However, these impacts were better than projected in our guidance assumptions, we now assume annual electric sales will decline approximately 3% for 2014.
As a reminder, we have a sales true up mechanism for all electric classes in Minnesota, and decoupling for the electric residential and non demand small to unite classes in Colorado, which covers about 45% of our total retail electric sales.
Boot sales have come in better than projected in weather has unfavorable we've adjusted our own them contingency plans accordingly.
We continue to closely monitor bad debt expense and work with customers on payment plans.
At this point, we expect bad debt expense will increase approximately $25 million over normal levels, which remains in line with previous forecast.
We have received approval will refer certain pandemic related expenses and all in all states, except for North Dakota, where our request remains under Commission review.
We've also made strong progress on reducing our onetime expenses to mitigate COVID-19 impacts.
Based on our year to date results and updated sales projections. We now expect annual on him expenses will decline, 1% to 2% in 2020 compared to our initial guidance of a 2% increase.
Next let me provide a quick regulatory update.
In Texas, We commission approved our rate case settlement that reflects on the electric rate increase of $88 million.
Our or we have 9.45% in equity ratio of 54.6% for APC purposes.
And acceleration of the depreciation life of the total coal plant.
In October the Colorado Commission accepted the LG is recommended decision to approve our natural gas rate case settlement without modification, reflecting.
The net rate increase of $77 million or are we have 9.2% and equity ratio of 55.6%.
And the historic test year over an adjustment for the tungsten to Blackrock project.
We view, both the Texas, and Colorado decisions as constructive regulatory outcomes.
Our preference is to avoid rate cases impossible. So in July we filed for rider recovery of our wildfire in advanced grid investments in Colorado and set of filing a comprehensive rate case. The riders will cover 2021 through 2025 and provide regulatory flexibility there.
We're still in the early phases of these proceedings.
September we filed a 2020 on sale proposal, Minnesota, there's an alternative path for the rate case, we plan to file in early November.
We expect the commission to decide in December whether it will accept the sale or proceed with a multi year rate case.
And as Bill noted, we will initiate initiating our 20 from your earnings guidance range of $2 or 90 cents to $3 per share, which is consistent with our long term EPS growth objective of 5% to 7%.
Our 24 annual EPS guidance is based on several assumptions are detailed in our earnings release, what the highlights several of these items here.
You assume constructive regulatory outcomes in all proceedings.
We anticipate modest impacts until the 19th.
I'm, sorry, which are pending commission approval as part of them in such a relief and recovery filing.
We're confident commissioner will see the customer benefits of these projects if approved great baseball for the 6.9%.
And we think there's other potential upside capex that could materialize in the future.
R Capital investment plans supports a 5% to 7% longterm earnings growth objected adults is will ever E. P. S and didn't go up in the upper half of the range.
We've also updated our financing plan, which reflects a combination of internal cash generation and dead issuances to fund the majority of our capital expenditures.
In addition, we expect a issue $250 million of equity and $400 million, a drip and benefits equity consistent with our previous forecast importantly financing plan maintains across the current credit metrics.
We anticipate that incremental capital if approved by the Minnesota condition refinance with approximately 50% equity and 50 per cent that.
This incremental equity will allow us to fund accretive capital investments, which will benefit our customers on maintaining solid credit ratings and favorable access to the capital markets.
And with that I'll wrap up we're effectively mitigating COVID-19 impacts you continue to provide reliable service store customers, while ensuring the safety and well being of our employees in communities.
Colorado, and Texas conditions approved a constructive brachia settlements.
A relief and recovery proposal, Minnesota will create jobs offered you rejuvenate our local economies and result in significant customer benefits.
We narrowed our 20th 20 guidance range to $2.75 to $2.81 per share based on solid year today. It results in progress on contingency plans.
The announcer robots updated capital investment program that provides strong transparent right based girls insignificant customer value.
Initiated 20th 21 earnings guidance of $2.90 to $3 per share consistent with our long term objective and finally, we remain confident we can deliver long term earnings and definitely growth within a 5% to 7% of objective range.
This concludes our prepared remarks, operator will now take questions.
Ladies and gentlemen, if you would like to ask a question. Please signaled by pressing star one on your telephone keypad.
Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment again Peace Press star one to ask the question.
Our first question today comes from Julianne Daemonian Smith of Bank of America.
[noise] Hey, good morning team congratulations on let me update their.
I get done here on the on the 21 that they can you talk a little bit about the thought process on the one per cent on an increase I mean, you know conceptually I get that you had it down here. This year. So he would reverse but how are you thinking about that reversing obviously you guys are one of the first out there and industry together.
21, with Covid impacts how are you thinking about the the back of the business maybe the same to me the benefits you found this year.
Hey, Julie and good morning, so so the way, we think about it and maybe a frame it up into two if you remember going into this year are O&M guidance was 2% off you know we're investing significantly in a wind farms along with all of the strategic priorities such as are good investments in customer.
And then you know we didn't prove you didn't see our guidance for 2021, but we expected a similar increase prior to covid in that range, but now if you look at where it will land this year down 1% to 2% and slightly up next year will roughly be flat to 2019, so that kind of gives you I and that's on a consolidator level obviously it's.
You know varies a little bit by off call, but overall that kind of gives you a sense of how're you know kind of driving costs transformation through our business and we absorb are are called strategic priorities and remain flat.
Got it and even to clarify that lately you you'd put it you said in your prepared remarks the.
Well the wind aspect of the Alabama agreed that would be also just won't do as well so when they impacting that margin.
I heard you right yeah. So that yeah, that's correct in terms of where it gets recovered.
Excellent and then if I can't a little bit more conceptual here have you thinking about contacting the next year and obviously things are pending next Tuesday here, but with respect to subsequent legislation in Minnesota, specifically around Rpf's reform et cetera can you help frame some of the possibilities.
That are out there today, if you don't mind.
R. P astronauts one drawing this has been.
Okay, and and and and.
Energy legislation I suppose as a Wow Wow talked about right and then I'll.
I'll leave you to fill in the blanks and be well.
Yeah, I mean, I think I mean, we'll have to see obviously, how it plays out at the state level and obviously, the federal level as well, but Julian I think we're very well positioned.
Or whatever happens I mean remember.
Yeah, one of the things I'm, so proud of as we're leading away even got an 80% it on target you know I.
100 per cent target by 2050, but we do that with a liability in economics in mind, so that tends to bring both sides of the aisle along.
At the federal level of it does become a bind administration and maybe the Senate flips as well I think I think we'll probably well positioned to two more with renewables I.
I think it would probably accelerate E d's.
And help with a 1.5 million target I would also welcomed the chance as both.
C E O of Excel and chairman a V I to work with the by an administration and kind of let them know that 2035 and utility timeframe protected for the technologies that'll be needed wood is very aggressive. So there was a reason why we chose 2050, yeah at the state level or just play it out, but I mean I think we.
[noise] demonstrated we can we can work very well crafting legislation that works for customers and shareholders alike.
Excellent.
Well I'll leave it there taking the time thank you all.
Thank you Joe.
Our next question comes from Jeremy Thomas off J P. Morgan.
Hi, good morning, Jeremy.
Just want to start off see if it's possible you could provide any early feedback that you might be happening on your Minnesota recovery planning application at this point.
Hey, Jeremy it's Bob and and thanks for the question.
Loved that headline on the report this morning, who reference.
You know on the on.
On the Minnesota, R&R plan and the broader stay out proposal, we are working productively with all stakeholders I think we've got support from the L. A G. In the environmental advocates for a stay out and so we are in our proposal where I would say proactively.
Working with the department and trying to gain their support.
We expect the fall are men rate case next week is the alternative to stay out proposal. It's similar to last year. We would expect the commission to take that up in about six to eight weeks. So call. It early to mid December timeframe, but we'd expect them to make a decision and what they think they are in our plan and the and.
Stay out proposal are very much in line with the administration and the Commission's gold.
And we'd expect a a productive outcome in December.
Got it that's a very helpful. Thanks for that.
And then just switching gears sure there's been multiple reports of potential M&A in the industry and some transactions have happened recently, just wondering there's actually I don't have any role to play in industry consolidation or just you know the great plans that you guys, having fun of yourself.
As far as the attractive organic growth that really kind of keeps off your attention and focus there and m&a's not really a big consideration for you guys.
Well I mean, we don't it it's a great question by the way and you know won't comment in anything specific but I mean, you know you've heard me speak over the years that focuses primarily on organic growth is nothing like one times book and I think our investors loved that but we obviously see what's happening in your.
Industry and you know the long term trend or consolidation and you know it's not like we don't look at things, but I will just tell you we can be disciplined because we do have good organic growth and we're not looking to fill in.
Some sort of earnings board or something like that so we're very disciplined about it and I think that's one of the reasons why we.
Trade it a bit of a premium to appears.
Got it that makes sense that's helpful. Thank you.
Our next question comes from Dark Ash Chopra of Evercore ISI.
[noise] warning.
Hey, good morning tea and thanks for taking my question just wanted to go back and clarify the December sort of timeline that you gave us is that part of the R&R filing I'm just trying to see what kind of the milestones or timeline that we should be watching for for you to kind of get approval.
The incremental Catholics say you laid out.
Yeah sure. So this is Bob again for the discernment. They December filing we would expect a decision on right case or stay out provisions. We also would expect the wind component of our our at our plan to be heard in the December timeframe as well I think.
The solar piece of our plan is more likely going to be a cute two of 2021 time frame and I think that makes up the bulk of the investment opportunity. There's some other areas around electric vehicles and distribution and transmission spend which will get taken up in normal course in separate dockets.
But those are the two big buckets.
Super helpful. So just to clarify wind.
By this year and then solar by the first quarter next year or anything like that right.
Correct.
And the second word is probably more realistic.
Okay understood. Thank you that's great and then maybe just they're going back to your comments around the potential regime change vitamin administration.
I think we hear you on on sort of be aggressive 2035 targets, but Tony speaking you know how does it how does it fit into your car and find is it a tailwind too you know a future future right based Catholic schools. The climate plan that is and then maybe just early costs and a potential tax rate changing implications for ya.
Well I'm Gonna, let Brian talk about the the tax implications as far as you know headwind tell when I I I think it's I think it's probably helpful to accelerate a renewable program mm I, absolutely think it'd be helpful to our 1.5 million electric vehicle.
<unk>.
And you know that's something that would create additional opportunities for investment.
I'm, particularly excited about E D's, if you've heard me speak before because.
I don't know if it's still for fuel, but it's the type of steel for fuel the variable cost a M. D is significantly below that of a gasoline. It's you know people charge off peak with some of our rights. It's equivalent of 60 cents a gallon. So while eevees are expensive today, we think that costs comes down.
Right and administration might help that cough come down even more and then we're getting more eevees out there, reducing the carbon Ah Ah Ah footprint, obviously and creating investment opportunities for us an additional sales load, which all customers benefit from I'll turn it over to Brian for your tax question.
Yeah, well the details on the bite and tax time, they're still a little bit light, but I'll hit on in a couple of high points right. If you think you know it was a tax rate increase from 21% to 28% you know just like the T. C. J, a where we went from 35 to 21 per cent of our customers saw a savings of.
3% to 4% so we'd go the other way you know will you expect to see a one time customer impact of of one and a half 2% you know, while it's never pause as a C that impact our customer and bugs. We do think it's manageable and we did set the precedent and all the regulatory proceedings going through the P. C. J a in terms of.
You know through the majority of our jurisdictions, we the customers saw a timely refunding those savings are we expect similar treatment. If the tax rate goes up on the part of the metric side now certainly an increase in the tax rates would would help on your credit metric side, you'd probably expect for us to see you know.
100 to 150 basis point increase in our credit metrics.
But that also that depends on the details I know there is a ah talk about Ah anti related to bulk income which would be detrimental.
Detrimental in that sense, but if you're that hundred to 150 basis point benefits are crowded matrix really related to if if a M. T goes back to their prior regime. So those are the two big components of the from the tax perspective.
That's fine Brian I'm, a little bit about that you have a a digression Bob just a couple of add ons to bend comments first of all of us on the federal side one of the tailwind we would expect to see is a real increase in the budgets for R&D for new generation, which we've been very focused on as a company added E E I and making sure.
[noise] that the next generation of dispatch will generation that will provide reliability and affordability for our customers and.
And the R&D as it started today and secondly, I want a diminished the impact that partnering with our states has had you know federal tailwind are good but our partnerships with our states have enabled us to deliver over the past four years, a substantial amount of carbon reduction electric vehicle penetration goes.
In other investment opportunities around cyber and wildfires in other areas that have been very helpful. So well the feds can be helpful. I think the partnerships of the state are really important as well I think we're very much a line there.
That's all customer driven which is why I think you know this was clean energy transition happens you know under just about any type of administration.
Super help anybody could maybe just.
Yeah no. Thank you I appreciate all the cause maybe just one quick follow up for Brian really just right on on C. D. C's Ah doesn't the actual increase in tax rate kind of help you with using heartbeat disease increases your appetite for using P. T CS.
Yeah, you're absolutely right and it also actually helps from just the else who you from our customers.
You're right about that.
Okay perfect. Thanks, guys much appreciate the time.
Thank you.
Our next question comes from James Harlacher off BMO capital markets.
Alright morning, guys and thanks. Thanks for the question time for the question.
Just looking at your updated you know capex forecast in the rate base forecast, an understanding that the bulk of the incremental.
Spend is probably not going to be sort of.
Fully articulated I guess until two two of 21, but how are you guys I guess thinking about that translation into where you sit within the growth rate right now it looks like you guys are kind of solidly at the midpoint, but should you'd be successful in Minnesota, what do you think that that could put you.
You saw will be at the upper end, even with their a modest solution you have with financing incremental.
Incremental mix.
Next week.
We strive to be at the upper end of that 5% to 7%.
Goal and the additional 1.4 million, albeit you know, we'll make sure we're sensitive to credit quality, which is really important would be would be helpful to that goal. So.
We're very confident that we're gonna be able to achieve our long term growth rate.
Is is outside of you know outside of an adverse outcome I guess on the solar sizes or anything that would prevent you from being at the top end of the growth rate.
Well I mean, yeah there's.
There's always things I mean, who thought thought we'd be in covid two years ago. So I.
You know, there's a lot of things that could happen and of course, there could be are always have regulatory outcomes and things like that to consider sales.
There's all those things, but again I think we're we're in very good shape.
Alright, and I guess, you're falling up on that point on on sale. So it looks like the 2021 assumption is for a 1% increase in retail rates could you talk I guess, a little bit about the component to the mix of that as you thinking about it for 2021.
Yeah, you sure and goodbye at a gym, so it'd be kind of break it down between residential N C. N I residential we expect it to be fairly flat cause. This year. We are seeing good strong customer growth of about 1% across the consolidated family. So we expect that.
Customer go up to continue and a little bit of a called a reduction in to use per customer on the C. N. I side I think what you see is no expecting a call at around 2% increase in CNI sales in the best way to think about that is is really.
Well, we don't expect in April and May to happen next year, but we do expect to know senior nice sales to be impacted so if you're kind of took April and may out kind of the the worst parts of Covid. This year is kind of gives you a sense of what we're thinking for next year.
Great. Thank you very much for that color.
Okay.
Our next question comes from Steven Bird of Morgan Stanley.
Hey, you can learn it.
Hey, Stephen.
Part of the spin covered already I didn't Wanna talk more about Ah E. D's and then you provided some some interesting commentary I was just curious let's assume that there is an interest at the federal level and giving.
Specific financial support for E B infrastructure, what what form of support would be most helpful. As it you know tax credits trek spending and how might some level of increase federal support accelerate.
Your plans in terms of spending on EV infrastructure.
Well I think you know rebates to the consumer to buy down the cost of the movies I do think they're gonna come down naturally as more and more models are introduced but you know that would that obviously.
Stimuli.
Purchases and.
You know just making you know an overall pack part of you know.
And then she like carbon goals.
Would be helpful to Stephen So I think a support can come in a number of forms you know I. The other thing I would say is kind of this you know the the.
Addressing range anxiety, maybe a public private partnerships to to make sure we have fast charging stations around the corridors. When people would travel those are all things that I think he'd be more likely to happen under a by the administration and then a Trump administration. So I mean, I I think we can get through.
Go either way, but I was asked to comment whether it be tell when a headwind and I definitely think that could be a tailwind for us.
That's that's really helpful and they can it's just building on that if you did receive or if we did see that kind of federal support is that the kind of support where you would then start to really take moves to you know to specifically sort of accelerate your your existing plans or is that just more more helpful to ensure adoption more helpful to ensure that you know you.
Listing plans could you know could could work well in that there's actually enough E b adoption to make sense for what you're already planning.
I mean, I I think it was I think it gives us more confidence in the 1.5 million.
Legal is is definitely a vision I mean, Iraq reflects 20 per cent of the cars that are currently on the road. So I think it would be very helpful to getting there.
Gotcha. Thank you so much that's all I have.
Thank you.
Our next question comes from Paul Fremont off Mizuho.
Find Paul Huh.
Hi, Thank you very much.
Basically my first question is are you immediately Uh huh.
Incrementals spin around 150 million do you spend.
Does that now been moved into your based in the numbers.
Hey, Paul Yeah that is correct or do anything in in the base numbers.
And then my other question is.
Went striving sort of the higher level.
N P.
<unk>, Okay <unk>, Wisconsin.
So the next 400 million Internet mm mm Sacramento spend attendants team Minnesota.
Well I think a big part in if you just big part is you know in Colorado were really starting to rule out our advance great initiatives and we also have some transmission investment, but we need to do in Colorado and longer term Weird you know we talk about it before that we have significant transmission investments and all rocco's.
Longer term really to enable the the generation transition.
In Wisconsin, we do have some the solar farm that we just announced $100 million Solar farm, which Wisconsin, which is you know for Wisconsin size that is material and we do is some transmission projects in Wisconsin. So those are really the big drivers for those off because.
In Minnesota keep in mind, there's a lot of women, it's going into service, which would lead to in a lot of that women in Minnesota.
Alright, the Minnesota can actually Lola.
Yeah, right, you're going for the big wind spending Minnesota. This year. So when you roll forward from 20 to 24 to 2025 is that what you're saying.
Got into some of that when did they actually just when that little taken place.
It's the prices have been completed and 20th Yeah go on in service Yeah.
Then if you think of the incremental plan right right, a German assault, Minnesota R&R, that's all Minnesota spend their you know significant customer value and if we can get that approved that'll that'll increase the overall capex from Minnesota.
Right.
Thank you [laughter].
Thank you.
Our next question is from ensue Kim of Goldman Sachs.
Good morning.
Morning.
Saint one question for me administrator, what what type of momentum if any is there for securitization legislation for you know to retire coal plants and I think correct me if I'm wrong. There is a precedent and the state for getting some accelerated depreciation for the remaining valley.
Valley of coal plants, how do you frame all of that and the potential to further accelerate the retirement of course blank like circle, three or or they can't Quinn.
And so it's it's Bob good to hear you. This morning, you know, we've got excel, who are accelerating with appreciation on the two plants that we have approval to retire early that's serco units, one and two and they're being accelerated in depreciated fully by there projected retirement dates in 23 and 2020.
Six respectively as part of our Minnesota Resource plan, we have offered to retire serco three and the King plants early also with accelerated depreciation.
And we thank those proposals will be likely heard some time in 2021 next year as we go through the resource planning process, we've been very successful I'm working with our stakeholders in.
In mitigating the transition of these these legacy plants of hours, we've taken care of the Workforces and the property taxes and the jurisdictions and so we think this is just part of the overall package and we've been successful at that in the past and you would expect to continue in that fashion.
Right. There is definitely that's the only place we have securitization as in Colorado too as of now we don't have it.
Right now I was I was just talking about asked me if I mentioned for any potential securitization of the state, but understood and just on that I I understand that circle, three and King what the proposals for you know a a 2028 and 2030. So that's your Prince respectively is is that the.
The earliest date that we should be considering for these plants given sexual or the depreciation timeline.
Yeah, I think that we've we've taken a proactive approach to propose those in our resource plan. It gives us a runway to manage to the employee and community issues and so that's that's our proposal right now.
Okay. Thank you very much.
The next question today is from Sophie Karpov Keybanc.
Hi, Good morning, Thank you for taking my question.
Missing from your proposed incremental project is energy storage and I was wondering if you could discuss making will probably what's place centered and spiritually having you put stroller going forward.
And that and you can find it that into potential election outcome, what kind of policy from the federal level of would be helpful to accidentally adoption that thank you.
Yeah. That's a great question, thanks for that I mean.
I think you're gonna see us and it.
The emphasis on storage will take place in a in a resource planning uhm.
Proposals both of Minnesota in Colorado, and we do see of all for storage.
Not a pinterest kind of see it I mean, it's.
Four hour batteries come up while I do so much. We so if you think of technologies that I needed to get that last 20 per cent out we're gonna need perhaps some form of long term storage.
Address those seasonal variations, but yeah you know.
Just thinking about the Minnesota plan you know, we we talk about peaking resources that'll be neat well that can that can.
Batteries are definitely part of it taking resources mishandled that'll the same old true in Colorado.
I, just hope that I would be happy.
To you know when we look at what we did with the R&R plant in Minnesota, we're actually saving customers money by Repowering wind projects.
And so you know to to us get an economic conditions, where I'm at that made all the sense in the world.
And got it and so I you considering than any other types of commercialism you can lie on maybe pump storage any other kind of older technology. So hydrogen even that can be effectively deployed to select contrived situations that you have in a cost effective manner, let me suggest to earlier.
To say right now.
Ah, yes to all of those I mean, I think hydrogen is perhaps that long term storage. It can be used in different ways, but storage is definitely one of the things I'm storage is on the table. We're looking at what we can do with our cabin Creek.
Plants, where there's pump storage in Colorado.
So yeah, I mean I have all of those things are on the table and.
And you'll see some of that good I think flushed out a little bit as we go through the resource planning process.
Alright, thank you.
Thank you.
The next question comes from Ryan Levine of city.
Good morning.
So regarding yes, it looks like he announced a couple updates around the P. P. A fire program can you comment around how's that.
Oh man or opportunity.
I'd change it to the interaction with a higher tax.
Tax rate could influence any P. P a fast decision.
Sure and good morning, Ryan Yeah, we we announce too right when we got a more in the wind farm buyouts approved in Minnesota, which which is very good C and deliver significant customer benefits and then that solar buyout in Colorado, you know file that and again significant customer and benefits, even though it's a pretty small dollar.
From a capital perspective.
Yeah. It is something that we spend a lotta time that corporate the development team in terms of discussions and just conversations with our with the the the the I P. PS that we do business with you know a couple of things right that we watch it if you wanted to kind of talk about the election opportunities right. If you could see an extension of P. P. CS maybe.
That provides more repowering opportunities if P. T Caesar extended certainly a change in the corporate tax rate could impact how these I P. P view the wind farm. So that is something that will continue continue to look at India conversations with and I I speak about this is just a something that we.
Continue to have conversations is really a longterm opportunity because it is about finding kind of the sweet spot in terms of ensuring that would deliver significant customer value and finding the price point that works for us to actually acquire it.
Have there been any recent acceleration of commercial development activity I and those efforts in the last few months or has it been relatively radical around.
The conversations you're having with counterparty.
I would say, it's relatively radical certainly some conversations pick up during Ah kind of impacts of Covid Ah as some of the developers had challenges you know there was a a P. P. A that was big into our Minnesota relief and recovery win RFP Uhm, though the P. P. A by all those.
Big in you know, we we were close to get in there, but we couldn't get to the customer savings number that we wanted to deliver in that RFP and so we'll continue negotiating with that counterparty to see if we can actually reach an agreement that provides our customers significant savings. So like I said, it's important for us to deliver those savings for our customers.
Appreciate it thank you.
I'm next question is from trauma Smeller of morning, Sir.
Morning, travelling running but good morning. Thank you.
But we're gonna talk about the election and issues. There just wondering the follow up call the conversation.
The state level or the regulatory level.
Are you looking at.
On election day, or any T U C.
State level races, or regulatory elections.
That you're looking at our policies at the local level stuff like that.
Well I mean, I I I think what.
What are we looking at in Minnesota is whether or not you know the.
Senate, which is kind of a Republican if it were to go Democrat then you'd have an all all Democratic D. F L.
Branches, and and you know I'm so.
So we will be looking.
Probably a increase corporate taxes, you know I and I and maybe some legislation energy wise, but I I again I think.
I think we've done a really good job developing relationships across the aisle and actually executing on on just.
You know just things you.
You know pretty bold and aggressive carbon reduction plans and and I do think the administration is appreciated what we've been able to do for our communities and things like the R&R plan that we've talked about so I don't I'm not particularly.
Focused on any kind of you know.
Transformative type legislation that might come out of an election.
I'd say that at all.
[noise] Amanda.
Comment.
Travis as viable I think the only other thing to watch is is obviously the ballot initiative in new Mexico on elected versus a pointed to a missionary and and I think we've got a good history of working there well and you know any new condition, we would we would.
Proactively engage wood.
Alright, this isn't the only other one where obviously watching it closely as the Boulder.
Unbelievable nation.
Okay. Okay, great no. That's very helpful. Thank you and then another follow up to the whole easy discussion that a lot of coughing and speculation about who my own and how they my own charging stations.
What are your thoughts around and in terms of your rule are you inclined to own them. It was right base type of assets and expand that way, we can be inclined but on him as a pseudo merchant pipe so to speak.
Ah So that's where you have to the charging b.
A third party just wondering your thoughts around who owns and hobby economics. The Chargers. Yeah are you talking about fast charging Travis.
Either either way or whatever not not.
And home would probably be the residential customer but yeah.
Yeah on the residential side or you know multi dwelling things like that I I think we're.
Oh, we're very well positioned.
Two one those charging stations in fact, you know I'm really excited about.
R E V plan, so I would allow you.
You know you had Ah Ah home and you wanted to get an M. D. We we try to make it easy for you because it's as easy as you think sometimes and so with a call to us we can get the home charge or installed at no cost for you build it into a subscription rate, which is encouraging you to charge off peak and saves you a significant amount of money. So.
You don't have to you know compare kwh and equivalents of like you know I think it's $44 a month.
That's all you can use off paint and you know we've done the math weekend, if it works out really well for E D on it but just as importantly, the other customers because it minimizes the impact of the grid that when you get the bike fast charging stations I think they're really necessary to address range anxiety, but just make the bones.
[noise] about it they're kind of loss of leaders.
So you know I think that that's where a public private partnership could come come into play we're happy to play a role there, but I I you know I don't have to I'd, just like to see what's on.
So I guess that would be kind of.
I answered your question I think that's where it was.
Sure Okay, great I appreciate it.
Thank you.
The next question comes from Paul Patterson of Glen Rock Associates.
Hey, Paul.
How're you doing.
Well that's.
Good so just on the curriculum E D thing just to sort of clarify this the public private partnership.
Just to help me out here, what's suit, who the public entities or entity that you're thinking about and who would be the private entities.
It's just really briefly through for decided I'm I'm missing exactly.
That would be.
Well I mean, I think it can take a lot of different forms I mean, you know the government either federal or state could provide funding to buy down the cost of those charging stations.
It doesn't necessarily have to have you know an excel energy label on it we can talk just provide the necessary.
Supporting infrastructure or we could be part of it I mean I would just tell you Paul were wide open to that the key to me is to get these stations, though so that people you know.
One of the biggest barriers and purchasing an E D as is range anxiety.
And so you know I think the right amount of fast charging stations, which again are loss leaders.
To be built so that you know.
More easy penetration, so it's kind of a chicken or the egg type thing.
Can take a lot of different forms.
Okay, and what I mean.
I was just wondering what about you guys basically just having a.
Having it put it in for raping so to speak.
And you know sort of socializing that caused.
[noise] customers I mean, I'm, just wondering is that an option oh or do you feel that.
Okay.
As long as it's.
Yes, the short answer, yes, but I mean, you want to make sure. The process is followed I mean, you know one of the things that we'd want to show is okay. If this leads to more easy penetration how does that benefit all of our customers. What is hum just exactly how much we're going to socialize and now you've heard me talk about you know and center.
And subsidies and things like that and I've always been okay with them as long as they're transparent. So I would not want something that is kind of hidden where you know people not we're not really sure what is being socialize and what isn't being socialize and I I don't think that would happen with these charging stations, but that's what would be advocating for just.
A real transparent process cause not everybody when you say the word socialization I mean, that's [laughter] [laughter].
And it gets people ups.
Upset, sometimes but Ah selective amount of seating I think it's really important and perhaps where he can play a role in that.
Like all I put off you know what are the witness kind of two areas, where I think were excellent that also.
Making sure that.
In a world, where where are involved we can make sure that public charging whether it's on interstates or a neighborhood that their their areas of town in areas of communities that they'll get left behind what to make sure that there's an equitable investments and making sure that all of our customers can benefit from the opportunity that electric vehicles provide and the second area, where I think that we are.
Very valuable in an ownership and control of the charging stations, there's really around the impact from the grid and they making sure that we have appropriate incentives for more off peak then on peak charging recognizes some on people will have to happen certainly in those public spaces balancing the grid loads and making sure that we're optimizing that.
Distribution investments around electric vehicles is really important and I think our role there is critical so that leads me to believe that we would be very good partner or owner of those types of stations as well.
Awesome, Okay, and then just on the tax issue.
And I I, just sort of a.
Crystal ball a question I mean, I realize it's it's kind of walk but.
[laughter] I I guess I'm sort of trying to wonder as I mean on the button plan. If we're more to assume that he got elected with their T V.
If you get what kind of furniture to get a by and.
In the Congress.
For higher corporate taxes in general and do you think it would make a significant difference if it was a democratic Senate or.
Public and Senate or just.
[noise] flavor, there I mean, when when we're thinking about this how and how you guys look at this when you're trying to plan and everything and.
I don't know what I mean is it sort of like do you feel that there is this a strong sense that people really want to raise taxes.
In Congress foreign corporations, and that that's probably pretty likely.
Well I think I think to to to implement the buying tax plan, you're gonna need a do sweep Paul.
I don't think I think it's you know you might have some sort of blown compromise wrapped around other things.
It's you know sports Congress and Senate.
But you know.
I don't think that I I don't think there's gonna be a tremendous amount of interest you know.
Public and told the Senate and implementing before I even tax plan.
But if we have a democratic Senate, maybe maybe yes.
Cause that's what I I know, it's early I think he needed that have that like send it and then I and I and I think if you look at how the Senate would be taken over by Democrats. Many of those candidates are running a moderate platform. So I I think you would have to be it would also depend on how big the sweepers.
Right.
Okay fair enough.
We should know sometime [laughter], that's right I'm not so sure it'll be November cleared by the way, but we won't know at some point [laughter]. So it's kind of way okay, great. So much.
Okay. Thank you.
That's all the questions I would like to have to call back to Mister Brian My neighbor CFO for any additional are closing remarks.
Yeah. Thank you all for participating in our earns called this morning, but if you have any follow up questions. Please contact Paul Johnson or in our Investor Relations team. Thank.
Thank you everyone. Thank you have a good day.
Ladies and gentlemen, Backfields today's conference call. Thank you for your participation you may now disconnect.
[music].