Q3 2020 Sempra Energy and Oncor Electric Delivery Company LLC Earnings Call
Good day and welcome to the energy third quarter Earnings Conference call Today's conference is being recorded.
Just like to turn the conference over to Mr. <unk>. Please.
Please go ahead.
[music].
Good morning, and welcome to Sempra Energy's third quarter 2020 earnings calls <unk> eight like what's classifieds teleconference. In a slide presentation is available on our website.
<unk> under the Investor section.
All members of our management team on the line with US today, including Jeff Martin Chairman and Chief Executive Officer.
<unk> Executive Vice President and Chief Financial Officer, Justin Bird cheapest ticket at all because they don't tend not to LNG I deny chief Executive officer, and up on cord cutting Cidara group, President and Peter Walsh, Senior Vice President Controller, and Chief Accounting Officer.
One study I'd like to remind everyone that we'll be discussing forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Well results may differ materially from those projected in any forward looking statements we make today.
Factors that could cause actual results to differ materially I just goes in the company's most recent chunky and 10-Q filed with the FCC.
Well not be earnings for set amounts in our presentation ive shown on a diluted basis, it will be discussing certain non-GAAP financial measures.
Please refer to the putting Christmas lights that accompany this call for become fusion to GAAP measures.
I'd also like to mention that forward looking statements contained in these presentations, which speak only as of today November <unk> 2020, and the company does not assume any obligation to update or revise any of these forward looking statements in the future.
With that please turn to slide four let me hand, the call over here.
Thanks, Neal and thank you all for joining us today before I start I'd like to take a moment to recognize the exceptional work.
18000 employees, who have been working hard to improve the safety and resilience of the communities. We serve we power thousands of hospitals and emergency service providers. The nations two largest sports hundreds clean transit in heavy duty trucking fleets and essential electric generation millions of people count on our critical energy into.
Restructure and the work we do is a great credit to the dedication and professionalism of all of our employees.
Last quarter, we successfully concluded it to your capital rotation program, where we divested non core assets and repositioned our business and what we believe are the best markets in North America, and we continue to see steady improvements in our financial results today, we're proud to be reporting strong earnings in reaffirming guidance.
Hi end of our full year 2020, adjusted EPS guidance range. Additionally, we're reaffirming our full year 2021, EPS guidance range now please turn to the next slide.
In addition to improving financial performance, our current strategy of focusing on lower risks T. Indy investments has the added benefit of producing stable cash flows and improved earnings visibility in large measure. This is the result of strong growth that we're seeing in our California, and Texas utilities were constructive regulation.
Limits exposure to the price and volume of electricity and door natural gas sold also when taken together our U.S. utilities have a blended authorized Charlie.
Right around 10.1%, which is excellent given the current environment.
Adding to the growth profile of our utilities, our north American infrastructure businesses also provide attractive economic returns that are supported by take or pay contracts with over 20 year terms on average yes.
As we demonstrated in true in Chile, as well as our renewables business, we built strong franchises that computers locally and globally. When we sold those businesses investors not only bought the assets, but also the franchise value. We had built up over decades, which was reflected in the premium multiple that we received similarly, we safely.
A strong franchise in our LNG business. It just funded spreads needs. We're focused on sourcing the lowest cost of capital to enhance value to our shareholders Cameron.
Cameron LNG, we believe cash flows from phase one should cover any required equity for the phase two expansion separately at Port Arthur LNG, we're evaluating efficient financing options with a view toward shifting post F.I.D. equity contributions until much later in the construction phase and <unk> LNG.
One we estimate that sempra and eating up as equity funding to be approximately $250 million for each company. That's why with all this growth in front of US we're actually looking at different financing structures and different forms of infrastructure and strategic capital in doing so we think it gives us the opportunity to assess.
Absolutely fine grows to highlight the growing value of our LNG franchise and just for instance, supers balance sheet, which is important since we expect to also increase our investments in our utility businesses over the next five years beyond highlighting our continued execution and a strong organic growth from our infrastructure platforms I would also like to us.
Got you on the recent recognitions Weve received in the area of diversity and inclusion, which I would note is central to how we think about a high performing culture. Please.
Please turn now to the next slide.
[noise] in the last month, we received two awards recognizing sempra for its industry, leading approach to diversity and inclusion of the first was the National Association of corporate Directors any equity award, which recognizes company boards for their excellence and utilizing diversity and inclusion as a strategy for building long.
Long term value for their companies and the second was the Forbes just 100 list, which recognizes companies are doing right not all other stakeholders. We're proud of the results of our continued focus around people pricing culture across our management and more broadly our workforce, we compare favorably to industry benchmark.
It's in the representation of both women and people of color. We also have a strong record and commitment to supplier diversity and I think the key take away is we're focused on advancing our strategy in a way that is increasingly responsive to all stakeholders overtime now please turn to the next slide where I'll highlight some of our more notable accomplished.
That's for the year.
This slide shows why couldn't be more proud of our team I won't discuss everything that's referenced here, but several points are particularly noteworthy this year, we launched a record five year capital plan.
Completed the sale of both our Peruvian and chalet in businesses with cash proceeds of approximately $5.8 billion before tax guidance to the high end of our 2020 adjusted EPS guidance range in May and didn't raise guidance in June and now we're guiding to the high end of that increased range.
And lastly, we executed a $500 million share buyback before turning to the next slide I wanted to briefly discuss the San Diego franchise agreement.
The city charter here in San Diego requires a competitive process to renew their franchise with a view towards getting the best outcome for the residents of the city and those same residents happened to be our customers as well. So we have a strong alignment of interest here whats the city to ensure a great outcome as teaching he recently submitted a compare.
The bid and looks forward to concluding the process later this year, but because we are in a quiet period, we need to be respectful of the city's process and accordingly, well not be able to comment further.
Please turn now to the next slide and I'll turn the call over to Trevor to review some of the more notable operational and financial developments.
Thanks, Jeff.
We had several positive developments this past quarter at all of our infrastructure businesses.
STG any launched a comprehensive sustainability strategy to advance carbon neutrality.
This strategy focuses on aspiration goals and environmental stewardship clean transportation.
Grid modernization and community engagement, all designed to directly support California's clean energy goals.
Part of its sustainability commitment STG any announced its plans to place to green hydrogen projects into service by 2022.
All these projects are small in relation to our capital plan, we view them as an important steps towards a cleaner energy economy.
And our an acknowledgement that we have an important role to play.
That's so Cal gas, we announced that the U.S. department of energy awarded funding, but three projects advancing clean automotive transportation technologies that were participating in.
Including fuel cell technology for trucking and transit and near zero emissions natural gas technology for rail locomotives.
This is another demonstration of our commitment to be an integral part of California's clean energy future.
In addition, the California utilities received a final decision from the CPC for approval to recover approximately $935 million related to the pipeline safety enhancement plan.
This represents approval for virtually all of the amounts requested in the proceeding.
Moving to Texas today Encore announced its 2021 to 2025 capital plan of $12.2 billion. This is an increase over the previous five year capital plan and is a testament to continued execution by the encore team growth in its service territory and resiliency of its business.
Additionally, encore issued its inaugural sustainable bonds, but proceeds to finance or refinance expenditures with minority and women owned businesses.
Now, let's shift to our north American infrastructure businesses.
We're pleased that Cameron LNG phase one reached full commercial operations in August all three trains are now generating earnings and cash flows as a reminder, we expect our share of annual earnings to be approximately 400 million to $450 million with no commodity or volume at ARCC exposure and the contracts are supported by a.
Rated customers, who are also equity partners in that facility.
Additionally, due to the structure of the tolling agreements Sempra Doesnt expect an earnings impact from the recent outages due to hurricanes, Laura and Delta.
We continue to work with our partners to ensure the resiliency of the operations.
Moving to LNG phase one we're continuing to work closely with the local authorities as well as at the highest levels of the Mexican government to advance the export permit process works.
We're expecting to reach a final investment decision by year end.
As a reminder, ECA LNG phase one is fully contracted with long term take or pay contracts S.P.A.'s, what totality Mitsui are each in place for a 20 year term and we have a lump sum turnkey EPC contract with Technip FMC.
Shifting to Mexico.
With advanced construction of the Gulf of Mexico, Jill Terminal network. Once completed three strategic terminals, which are all backed by dollar denominated take or pay contracts with Valero should contribute nearly 3.4 million barrels a combined refined product storage capacity.
While improving Mexico's energy security.
Notably the Barracuda terminal is situated in the largest Mexican ports on the Gulf Coast and is expected to be one of the largest terminal terminals in the country.
Please turn to slide nine where I will discuss more detail about encores capital plan.
Texas continues to be one of the premium macro and business environments in the United States and Encore is well positioned to take advantage of these strong fundamentals.
This was demonstrated by an increase in encores five year capital plan to $12.2 billion projected for 2021 to 2025, which.
Which is primarily attributable to supporting new growth across both the transmission and distribution systems, maintaining the transmission system, including investments to enhance the safety and reliability of service and continuing investments in innovation and technology.
Overall encores five year capital plan has increased by over 60% since the 2017 regulatory commitment, reflecting the continued growth and critical investments needed to support its customers the state and the ERCOT market. Please.
Please turn to slide 10, where I'll review our financial results.
Earlier. This morning, we reported third quarter 2020, GAAP earnings of $351 million or one dollar and 21 cents per share. This compares to third quarter 2019, GAAP earnings of $813 million or $2.84 per share.
On an adjusted basis third quarter 2020 earnings were $380 million or one dollar and 31 cents per share.
This compares to third quarter 2019, adjusted earnings of $425 million or one dollar and 50 cents per share. Please.
Let's turn to the next slide.
The variance in the third quarter 2020, adjusted earnings when compared to last year was affected by the following key items $56 million of lower earnings due to the sales of our Peruvian insulation businesses in April and June of 2020, respectively.
$32 million of lower income tax benefits from flow through items due to the timing of the 2019 GRC final decision at so Cal gas.
$32 million of unfavorable impacts from foreign currency and inflation effects at Sempra, Mexico net of foreign currency derivatives third quarter to 2019 had approximately a $10 million gain and third quarter 2020 had approximately a 20 million dollar loss.
$29 million charge related to an energy efficiency program inquiry that STG any.
$3 million of lower earnings at Cempra, Texas utilities, including $21 million from unfavorable weather.
The lower earnings were also due to increased operating costs, partially offset by increased revenues from rate updates to reflect invested capital.
This was partially offset by $79 million of higher equity earnings from Cameron LNG JV, primarily due to phase one commencing commercial operations and $21 million impairment of non utility native gas assets. So Cal gas in 2019.
Please turn to the final slide.
We're pleased to report a successful quarter, both operationally and financially.
Benefiting from a more narrowed strategic focus we are reaffirming guidance at a high end of our full year 2020, adjusted EPS guidance range and reaffirming our full year 2021 EPS guidance range.
We remain committed to creating long term shareholder value and I could not be more pleased with our overall year to date financial performance even in these challenging market conditions.
With that this concludes our prepared remarks, and we will start to take your questions.
Thank you if you'd like to ask a question. Please take my pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure that your mute function is turned off to layer signal to recharge equipment. Once again that is star one if youd like to ask a question.
Well take our first question from sharper Guggenheim partners.
Good morning, guys.
When his sharp.
Just couple of questions just.
Just first we touched on some of the moving pieces on sort of the 21 earnings drivers as you're thinking about it, especially that sort of sets up to be a cleaner year from a business mix perspective, I guess, how do you think about year over year growth from your prior revised higher 20 years, 2020 bps guidance range, which now actually point to the top.
Okay. So what does some of that pushes and takes as we think about 21, a build up the higher 2020 base.
Well I appreciate the question, Sean I think I would just start less than that we feel great about you're having in 2021 and I think I want to emphasize the fact, when you think about what the market backdrop is I think it's it's one of the toughest situations that any of US had gone through in terms of the covidien the impact to our economy.
As you think about 2021, you raise a great point, which says it will be a very clear clean year for us will be the first year, you will not see contributions from any of our divested businesses.
Recall that we divested roughly 30 billion enterprise value of assets over the last two and a half years and I think the whole goal was to make sure that we improved our performance going forward. So as you look to 2021 I think you should continue to expect that the lead driver for our company will be our utilities right. So you've got.
Upwards of a $30 billion five year capital program dedicated to our regulated investments you've got a blended our lee across that platform of about 10.1, which is differential in today's marketplace and to a point that you alluded to next year will be the first year, you'll see full annual run rate earnings from Cameron.
Yeah, we've talked about being a net $400 million to $450 million range, but I do want to mention that.
The goal of this whole capital recycling program sharply over the last two years was to put this management team has positioned where we had a clear field of vision to do one thing, which was improve our financial performance and I was thinking about it coming into this call. If you think back chart to 2019, we began the year with a guidance range of five to.
Cars from 70 cents to $6.30.
And then last year on the Q3 call we raise the entire guidance range to $6 to $6.50 of bps and then we delivered the year with an actual earnings number adjusted of $6.78 that really set us up quite well for 2020, we began this year with $6 and 70.
The $7.50 guided to the high end of that range you may recall on the Q1 call and then in June just over a month later, we raised the entire range to $7.20 to $7.80 I think I called this out on our last earnings call, which you may remember back when.
Leaves to provide five your guidance I went back and looked at 2016 in five years in advance we had forecasted and adjusted EPS range of $7.20 to $7.80. So.
Well to deliver that performance in 19, and 20 and now be in a position to your point to guide to the high end of the range, we're going to we're going to exceed 12% earnings CAGR over the last five years. So this idea that we're going to be nimble, we're going to change that to compete our capital and adjust our portfolio to deliver rich.
Burns I think has set us up really well for 2021. So I would just conclude on this point we are optimistic about the returns would you produce next year.
Perfect Perfect and then just on E car I know clearly the gating factor for phase ones the permits.
Sort of updates Jeff at this juncture.
The perception out there that this process really now relies on a second proposed LNG project can you just maybe touch on that and then what's your sort of stacks or threshold that further Mexico investments.
Yes, Theres a couple of questions embedded there about I'll start from the top and say that for the eager project to go forward. It is 100% disconnected from another project going forward. So I think the most important developments, which caused us to have improved confidence is that we completed the successful consultation.
We bought over the last three weeks, we may have seen that we received a positive vote with strong local support around the 60% level and what's most important is that sends a strong message to the central government, where we've developed some great relationship. So I think yes I.
I've been wrong on this before I must confess we originally thought that we get this permit with the team in Q4 of last year I think what has been the big difference now has been the relationships, we've developed and the consultation that occurred down in Baja on.
The goal here is to get the scenario permit which we're forecasting to get this month, that's the authorization to export hydrocarbons off the coast of Mexico, and we also think it's reasonable sharp we will have a final investment decision with the permit this quarter try.
Transitioning to the larger picture down in Mexico.
You've heard US talk about this in the past where were constructive I think over a longer term horizon. Thanks, a short term, we definitely ambitions in headwinds.
There have been some dislocations in the market based upon some of the policies and protections around state owned enterprises and that's why you saw the and other team earlier this year adjusted or plan to namely they backed off on just over $200 million of capital for 2020 and that was designed to free up cash to support.
An opportunistic share repurchase program. They fall back to date, I believe roughly 77 million shares.
Which has increased sippers ownership and that public company. So the 70% level and I think when you trace that through they put about $230 million to work in the share repurchase program and their approach very similar to ours at Cempra is to be opportunistic when they think the market supports that and then I think the final update I would say as a re.
Recently cut their dividend so they're doing all the things you expect them to do to preserve the value of the business and be opportunistic about positioned the business for more value on the dividend cut it's really designed to bolster liquidity and shore up the balance sheet. So I would just say big picture the focus of scent for LNG.
And the focus of the Inova is really all about getting the eco project watch, which is a very very big project. It will be the largest construction project in the history of Baja California, I think we're very well positioned to execute it.
Got it and just one last one for me a little bit more of a strategic question for you is yes.
Cempra is effectively one of the last sort of hybrid utilities will be moved the scale of the infrastructure investment since you have so that's been a big theme. This year about de risking about simplifying so I'm just kind of curious what are your thoughts on sort of the overall business mix.
Especially if your stock really never gets the value that it really does deserve when do you and the board start to like maybe consider options and we think the correct strategy.
Yes, I would say.
One of the things that's embedded in your question Shire as you should assume that we're doing that all the time I think sometimes people outside perception is that in a board of directors. Our management team will have a strategy session. Once a year that's not the way it works at Cempra.
As a credit to our board and our management team.
Can't find another company in our space. It had the transactional activity we have in the last 24 months. So you think about transacting on enterprise value roughly $30 billion of transactions in two years, its a pretty sweeping change to our portfolio and you couple that with the earnings performance that we demonstrated in the last two years we have.
Something special going on at the company in terms of the unique growth in income story and I'm not here to tell you that the market gets it right every day I do believe inefficient markets over time, we certainly think our stock is undervalued and that's why you saw us be proactive in summer in terms of executing the share repurchase program, but I will tell you that we're not wedded to anything.
Total asset.
Theres opportunities or dislocations in the marketplace, you should expect us to look for them and let me highlight one example for you that I referenced in my prepared remarks.
Think about the LNG space is a vertical category.
We have a pretty confident view that we've got a leading franchise in North America.
Well capitalized I think there's a series of building competitive advantage as it allows us to access both the Asian market and unique way as well as being able to dispatched directly into the Atlantic and if you look schaar at the runway of growth in front of our LNG business is differential from any other company in North America. So in my prepared remark.
Mark one of the things I highlighted is that we're actively looking at ways that we can create more value of the portfolio and really compete different sources of capital. So that we can fund growth.
Our goal obviously is to source the lowest cost of capital to fund that growth, but I want to be very clear. We're also shot looking for ways to highlight value for our shareholders and strengthen our balance sheet. So is the thought about.
This call today, we went back and looked at some of the transaction values in the marketplace and a Lotta research work around our business will show people in a sum of the parts analysis looking at our LNG business at nine or 10 time DDB EBITA EBITDA you look at some of the transactions and some of them are quite recent whether it's coke point she.
In your energy partners is a variety of transactions, where there's there's value being highlighted in the marketplace and you're seeing those shargel off at 12 to 14 times. So there's certainly a dislocation between the value being attributed to our portfolio and that's why I would say that the bottom line is we think there's a lot of franchise value.
In our LNG business, you saw that show up.
In how we transacted around wind and solar you saw that franchise value in the transaction multiples improve in Chile, which went off at 16 and 17 time. So one of the things I can commit to you is we're going to be active and were really active about driving value for our shareholders. I certainly agree with you that we havent seen that show up in our stock price.
We will not be standing still.
Terrific, that's very helpful, Jeff and thank you, Jeff and Trevor I guys.
Thank you okay.
Thank you we'll take our next question from Steve Fleishman with Wolfe Research.
Wednesday, Jeff.
So sorry I My question actually was related to that last question, then and the comments you made in Europe or.
Remarks about looking at different financing structures and strategic capital.
For the LNG projects and I guess.
My question. There is when you make that comment is it is it more for each individual project.
If you're thinking about that or is it for kind of the business as a whole.
Well, let me start Steve Thats and we appreciate having the opportunity to participate in the conference of the last couple of weeks on audit participate on the day that the caucus Ashley let off its always a conference we look forward to so.
As we think about the options were looking at them you can go back and review my prepared remarks, we're active in both regards we're looking at those financing options on financing structures at the project level at the portfolio level and to be very specific we're also looking at both infrastructure and strategic capital.
Got it.
That's helpful.
And then.
Yes.
I guess.
I guess as a balance between value and then.
Your next rate, particularly on Cameron good earnings out of the business.
So when you when you think about kind of.
Value creation, how are you just thinking about that aspect.
In terms of.
I guess really because when things may be accretive, but not or.
Are you thinking about that.
I think you can go back and look at our track record as we look at things that we have the best and things that we invest in we always do it through the lens of accretion I think that the three comments I've made I.
I think twice now on this call as were looking to source lowest cost of capital to fund growth. We're looking to highlight value certainly we feel quite constructive about looking at things that you're only accretive and also think in doing. So this is not just an academic exercise I meant that our partners, particularly in the LNG space really thanks.
One of the things that's unique about our LNG story is the strengthening financial commitment behind that business and particularly in this market place I think it has really allowed us to have a more competitive position, particularly relative to our peers. Your north American So I would just say, it's about funding growth efficiently, it's about highlighting value and accretion.
That's about supporting our balance sheet.
Great. That's helpful I'll, let others ask questions. Thank you.
Thanks for joining us today.
Thank you well hear next from Julien Dumoulin Smith with Bank of America.
What are you doing.
Hey, so perhaps just to pick up where Steve with Docker, Dave just to be very clear about your thoughts on buybacks right. So obviously you did some early this summer.
It's less so this quarter how are you thinking about capital allocation kind of the nearer term sense here I mean, obviously I think you are.
Fairly clear last quarter, so I just want to make sure we're hearing right.
How you're thinking about some of the near term priorities for capital.
Well I think if you go back to the early part of the year, we announced what was our largest ever five year capital program of just over $30 billion to $32 billion of cap over five years.
Thats completely geared towards supporting the growth in our regulated businesses, you've heard Alan talked about or at least we talked about with Alan in our script. The growth, we're seeing an encore and he's always got another $750 million of of capital outside of that plan that they've struggled in their tracking which could also increase.
Our job is to continue to find ways to produce what we think is a differential growth in income story, we're going to support our dividend, we're going to manage our balance sheet and we're going to fund the growth is right in front of us if there's times, where we see a dislocation in the marketplace Julian like you and I've talked about before.
We will always look for opportunities to be opportunistic around the share repurchase program I think you've seen.
Nova Takeout approach, obviously, you saw us do that earlier this summer having that dry powder with the $2 billion approval by our board is very helpful. It's something we constantly look out and that's available to us and it's going to be driven by where we think that we can produce the best value. So you saw a decline in our stock price in the mid part of the summer.
And we were active there, but we're also going to meet the growth need so it's a balancing issue.
It's something we look at a lot join in we don't take eight A. from you and and now quote unquote, a $2 billion program that authorizations. There. So let us do what we've done in the past, which is approach it opportunistically to create value.
Let me turn it over to John.
You all talked about upsides as previously upwards of $1 billion, you raised I think I'm going.
The call just 300 million of late how do you think about feathering in further outside capital and encore and in this 300 relative to the larger numbers you guys have talked about is that some of the potential there earlier.
Yes so.
Obviously, we own right over 80% of Encore. This is an investment that we think very highly apps and you think about our commitment to invest in T.N.D. assets or assets that have T N D level risk.
One of the things that Alan outlined in our Analyst conference was some incremental capital opportunities between right around 770 million to 1.17 billion of incremental capital, we think that a lot of that opportunity still there. It's outside of this 12.2, but I would just comment that we have a strong.
Our own view about our ownership position encore, we certainly do not see any need to bring in outside third party capital to support that in fact, we love to own more of that business, but let me stop and bring Allen Inn and Alan perhaps you can talk about.
The current market environment and growth you're seeing on your system, which I think call. It as all of us have more confidence about being able to better serve Texas customers.
You bet, Jeff and thanks for the question Julien.
First the incremental Caf a point just to reiterate the you were doing two things today. One we've increased the five year plan by 300 million and then we're also adding another year right at the back end of the plan for 2025, another strong year at 2.4 2.5 billion. So we do feel good about about growth and where the state is going where companies going as Jeff said.
Had the 12.2 separate in part.
Of the incremental capital that we talked about before so if you look back at my last.
Last analyst presentation, as Jeff said, I think we had a slide around 775 to 1.275 Ann.
An incremental capital opportunities above and beyond that that is still available that is not diminished by this increase today.
If we if we see you know we try to be conservative in our planning.
If we see growth really strong growth continue at levels that exceed what we're anticipating now.
We get you know oil and gas returning to pre coated.
Beyond levels.
We continue seeing really strong growth in renewables I'll talk about a second.
Then we made that maybe back with more at some point, but we feel very good about the 12.2 over five base.
Based on what we're seeing on our system now and and our Conservative planning approach.
With regards to the growth that Jeff mentioned, when we talk about growth on our system. There are several kind of criteria we look at.
One is obviously serve new it's basically the number of new parenthesis or number new meters on our system.
Notwithstanding all the challenges of 2020.
We just did around 64000, we added about 64000 last year 2019.
We added 21000 in the third quarter of this year and we're on track to be right on top of the of our 2019 number so notwithstanding economic downturn Cove it and.
And all the the brunt of 2020, we feel good about our news are coming in basically where it was last year.
On the transmission side, we generally have two buckets of retail points of interconnection.
Generation points of interconnection.
Retail or slightly down however generation interconnection request are significantly up.
And far exceed the decrease on the retail side to the point where.
We're anticipating we'll have probably our highest level ever of total transmission POI request that we have active.
At any given time, we had I think about 275.
The key right now so growth remains strong we're.
Still clicking along at about a 2% front us growth.
Transmission penalize looked good and obviously based on the movie made today on Capex, we feel good about growth moving forward. Thank you.
Thank you.
Thank you we'll take our next question from Stephen Byrd with Morgan Stanley.
Hi, good morning.
Hi, Thanks for taking my questions I wanted to spend some time on California, I guess first just talking about.
The eventual move away from from ethane I know you've been a thought leader in in approaches. There I was just curious in terms of your dialogue with regulators and legislators et cetera, just sort of generally the feedback you're getting and your sense of potential sort of concrete next steps or is this just a very long.
On gradual process had any kind of see that unfolding.
Yes. Thank you for the question well a whole Kevin Cigar group President for California into that momentarily and while there is a process underway at the PC to look at a phased approach to how we integrate a natural gas strategy over multiple decades to help decarbonize. The statement I might start just with a little bit of a perspective.
Lastly, I think that.
Over the last several decades, Steve in the United States has led the world in reducing energy related emissions.
He came out the steady in February that showed that emissions globally were flat in 2019, but they have all the nations in the world. It was the United States that led by declines in 2019, as we grow our economy at 2.3% and reduced our energy related emissions by 3%.
And on that study what they indicated was you saw.
Decline in admissions and CD nations, an increase in emissions in the developing world and since the year 2000, we led the world an absolute decline in admissions were currently one gig a ton of carbon below the 2000 period here in the United States and what the EEI credits.
The massive build out of renewables combined with support from natural gas and switching from coal to natural gas I think it's a case study.
Being viewed that way all around the world about the importance of getting LNG into developing markets.
Whether its China, or India, or Malaysia, Vietnam, or Thailand, they have the opportunity to build a lot of renewables and not back it was cold that support it with with natural gas. So I think that thesis is spilling over Steven and to help people think about ltcs, particularly in Europe.
Today, Ltcs have outperformed us ability to 40% and the narrative in Europe is there is a clear recognition that ldcs are a big part of the solution by taking advantage of methane in the form of renewable natural gas and putting that into the distribution system and second leading.
The world and not only producing hydrogen to distribute it across transportation and industrial uses and power production. So I think there's a thesis around methane than is really really important that you can capture the stake in emissions.
And you can be very proactive in terms of how you address environmental issues, but it is a core part of how we will support an energy transition globally and I think the blackout from the summer has had a big sea change in the state in terms of how we think about the long term role there, perhaps Kevin you could talk about some of the things that are actively underway to support.
Natural gas is rolling California.
Thanks, Jeff.
Let me tell you why were so excited about the gas companies leadership position in the energy transition I, often my optimism with experience from a couple areas. One it's what we're doing now and to our aligned with energy policy in California gas company has an important role in the energy transition in California today, we had a.
Dallas to voluntary goal, how you 5% of our core gas come from renewable natural gas by 2022, and 20% by 2030 right.
Right now, we're flowing 100%, California produced annual natural gas for all of our compressed natural gas refueling stations our service territory.
We will have reduced our fugitive methane emissions by 20% by 2015 as they have the goal we do that by 2025. So we are five years early in meeting the state mandate.
Also accelerating like Jeff talked about innovative technologies like renewable natural gas and hydrogen and I'm really excited also about opportunities in carbon capture our infrastructure play role play a role there as well.
Well there are things that we're doing so now spoken sole deeper on how we're aligned with the three legs of the energy policy School in California, those legs arc clean energy safety and reliability and affordability in the area of clean.
Notably, we need we'll see increasing penetration of renewable energy and electrification in the state.
However, natural gas is a fundamental component of getting higher penetration of renewable resources on the grid.
These are expensive can't provide the long duration storage, we need at times.
During certain periods in the summer with 80% of our power is coming from gas on a little bit from call in August like Jeff mentioned, there were blackouts.
When the stock went down I remember one day Barbato system peak in California, like maybe 50 or 60, Gigawatts and 29 Gigawatts are coming at that point when the Sun went down from gap, we're getting one gigawatt from batteries and so that was a real warning shots of the state that gas infrastructure is important and really gas infrastructure.
Sure enables more renewable energy when you think about you want to get more renewables on you got to have more backup backup and that comes mainly in the form of gas.
In the area of safety reliability again back aspects of renewables for the reliable grid and its safety.
Obviously, our number one priority.
And it's that emphasis as they are reflected in our in our most recent rate case, a piece that decision that Trevor mentioned in his opening remarks.
Pcs, providing us the capital necessary to keep the gas system safe and reliable best aligning with the states priorities, the safe and reliable energy system wide.
Lastly, the gas system as an affordable second energy system for our customers. The average natural gas natural gas, though something around $40, a month and stakeholders in California or recognize the increasing importance of.
On affordability as we execute this transition so super excited about this energy transition you can watch.
We're going to be leading it so cal gas in this area. The only other thing I would add Stephen too is that if you look at natural gas penetration rates I think you'd be hard pressed to find anywhere in the country, where you have a 90% penetration rate like you see in southern California with one of the largest population centers in the country. So look we're going to be thoughtful.
We're going to partner with the Governor we've made a commitment to do that I think there's a growing recognition that there's a transition here and natural gas is part of the answer to help us get higher renewable penetration rates and I think Kevin made that point, there's an efficient frontier and California is setting a record in the world for renewable penetration on that.
On the electric system.
Oh, it's really thorough answer maybe just one follow up on an element. There you know just following up on the blackouts that a that we saw this summer I saw the root cause assessment that came out you mentioned this in your response to my first question. Just curious how has the state sort of thinking through I mean, that's kind of a.
It's aside I mean that the state has a long way to go still to add more renewables. So forgiving blackouts at this stage I think that that's kind of a warning sign in terms of just some changes that need to be to be made how's that dialogue sort of playing out and what might come out of sort of that that would cause assessment or desire to make sure you don't have further blackouts in the future.
Yes. Thank you for the question I think that you have a lot of people that take a lot of pride in California about being a leader around the clean energy transmission and this is something that the state cares a lot about all the utilities up and down the state are committed to supporting it but when you think back about how how challenged our system.
Was that you build the system and all your integrated resource planning around a one in 10 year event the people or.
Concluding that maybe it was a one in 30 event or one in 35 of that there's a couple of things that were uncovered which I think they are really taking to heart in California, the first of which as the imports in the state we routinely run between 20 and 30% so what happened during this.
South West weather event was a lot of generation in Nevada, and Arizona that we would otherwise rely on which is all natural gas and coal, particularly in certain times during the day.
It was not available because it was being used in those states for cooling and air conditioning.
Secondly, when you look at our state you may have been late in the afternoon, where you are getting a lot of of solar contributions there wasn't sufficient ability to basically load. Following so you've got really two issues here, one is california energies and secure.
We rely too much on imports and we need to build more generation and the state. So we're not reliant and dependent on other states and number two when you have a 130 event like that it costs you could go back and looked at how you do your integrated resource planning to support your reserve margin. So typically the state has looked at between 15 and.
17% required reserve margin by utility as you procure your resources and that has an implied value assigned to solar for resource adequacy, an implied value to win all those assessments have to be revisited to make sure that we have a larger more reliable reserve margin. So I think the outcome from this will be.
Hey.
The existing national gas plants will be repower state needs more peaking national gas generation, you will see more electric storage put on in the state and you need to see a lot more capacity built in the state of California. So there will be a process that takes place between the three energy agencies, The California Energy Commission that.
California independent system operator in the seat you see that's about being less reliant on third party state. It's about revisiting our one in tenure analysis and making sure that we revisit the capacity value that we allocate to planning around solar and wind.
It's early there answer thank you so much.
Thank you.
Thank you well hear next from Jeremy Tonet with JP Morgan.
Morning, Jamie.
Good morning.
Just want to circle back to encore for a minute if I could with the capital plan and if you could talk a little bit more on specific customer growth you're assuming under your updated plan here and does this kind of bake in kind of the current trajectory in west, Texas as it is and I guess trying to feel out what type.
I have a sensitivity what type of upside as possible if the commodity price environment does improve there.
Yeah, Let me make a couple of comments then Alan you can fill in behind me, but I just want to re characterize when people think about west, Texas I think about the Permian in the Delaware Basin, it's really important to understand that what producers are trying to do right now is lower than the marginal cost of production and there is a huge benefit to be able to attached to the grid.
Good instead of self generating so a lot of what the capital that the inventories by but Alan right now in West, Texas is largely been approved and locked into the next two years and there's still a lot of demand for more infrastructure in that region deposits fuse, it's viewed as making their production more competitive and then second.
We usually circle something around 70000, new meter additions a year.
Alan can update on that but I, just think going through this pandemic and go into the disruption we've seen no Texas today has roughly an 8% unemployment rate against something.
Here in California, which is closer to 12, we think that Texas will be a big part of our nation's economic recovery and we think encores is well positioned as any company to benefit from what were forecasting in Texas. The Pref Alan you could provide some color behind that comment.
Yes, Thanks, Jeff and Jeremy the direct answer to your question as to what's in our kind of plan with regards to the customer growth.
As you know for the last few years, we've seen 2% premise growth, which is around that number furnaces. It just spoke about a minute ago and that's what we have currently in this 12.25 year plan, we're assuming 2% continued 2% premise growth.
So when you think about things that could lead to increased.
Investment if you if we were to get things like I said before we can get a residential rather.
Premise growth in excess of what's in plan or another example, what they gave earlier with things returning to normal or better than normal in the oilfield.
Thats a couple of examples obviously.
A.
Quicker or more aggressive implementation of renewable power effect is already leads the nation in renewable power, but there is currently more than a 100000 megawatts.
Renewable via the solar wind or solar storage.
In the queue at Arconic to the extent that you know.
That manifests the lever high level higher than a historical average of 30 or 40%.
Those things would all be drivers that could ultimately end up increasing our capex. When you look at West, Texas, particularly we're actually seeing some pretty good signs in west Texas.
Couple that frankly were counter intuitive to me.
Just based on the fact that I know a lot of our customers out there have been significantly impacted but if you look at archive data month over month demand the far West, Texas region is actually up every month and 20 versus the corresponding month in 2019, so demand and far West Texas region for every month and 20 is an excess of 20.
19 month over month.
So that's one and two.
Delaware Basin, we serve the portion of the Delaware base than we do on what's called the Culberson Lou.
Which is a transmission loop system that we have out there.
The 2019 peak on that system was 550 megawatts.
On September 25th of this year, we saw a peak of 678 megawatts.
So while were undoubtedly seeing impacts to our customers in the West Texas region, we're seeing some really positive trends with regards to consumption.
So there's hopefully light at the end of the tunnel, there, but if west, Texas oil and gas activity returns to pre coded levels or they're above or.
Or if we see some of these other positives from generation or customer growth. Those are generally the kinds of things are certainly more of those are the kinds of things that would drive increased capital allocation.
Hey, Alan Keyes, Jeff one of the one of the things we've talked about that you might want to share as we had a really major legislative development last year with no 1938, and maybe talk about the overlay that on top of the market description use gains.
Yeah, I'd be glad to Jeff. So just refresh you all 1938, which was passed by the legislature last year and signed into law effectively put into pure the current construct and archive, which allocates transmission projects.
Based on ownership of endpoints sub stations more or less.
And so when you when you think about.
Generation development when you think about transmission point of interconnections. When you think about adjusting the grid as we shift more renewables and the impact you have when you reallocate the flows around the system to the extent those require transmission upgrades or additional greenfield transmission projects those projects would be allocated to the owner.
As of the end points based on being 938 now allocate our now rather codified into pure a law, we own more than 1100, probably closer to 1200 of those endpoint sub stations. So we believe were fairly uniquely situated to capture a significant part of that growth next year.
Thank you Alan.
Got it that's very helpful. Thanks to that.
And then maybe kind of pivoting here and recognizing that this dynamic impacts peers far more than you, but how.
How are you finding the insurance market in California, specifically for wildfire insurance here and does your risk profile of your system relative to peers benefit your ability to secure cost effective coverage and do you anticipate any changes here given the record prior season.
Yes. Thank you for the question I'll go back and talk about our original thesis, where we're trying to build a portfolio that's really focused on T.N.D. investments or.
Investments had C and D like risks when you bring that into California. We certainly have received that's a differential approach by the insurance companies in terms of how they think about our risk relative to our peers I'll pass it ever Trevor to provide a little bit more color about our insurance program. Yeah. Thanks, Jeff Yeah. So Jeremy we have not had a.
Problem procuring insurance and we've got a separate wildfire tower of over a billion dollars and we were getting it at very competitive rates and in fact, we were also able to.
Put out a cat bonds this year at under 10% so from our perspective, given all the technology and watch the STG and he has done to fire harden it system and around the fire Sciences, we are recognized differentially within the insurance markets in procuring insurance at competitive rates.
It is something that we're able to do fairly efficiently and effectively.
Got it that's helpful I'll stop there and live questions brothers.
Appreciate it.
Thank you we'll take our next question from Michael Lapides with Goldman Sachs. Please go ahead.
Hey, guys. Thanks for taking my questions and congrats on progress during what's been a crazy year Jeff.
<unk>.
What specific detail to weapons potential financing options for both Cameron four through six in Port Arthur can you give a little more detailed update on kind of.
What's your expecting progress wise for both of those in terms of the eight contracting a bit and go again, I'd, just broadly kind of water macro environment or incremental selling g. or flip what batch.
Sure well first off let me say, thank you Michael for joining our call and we've got Justin on the line with us and the what I'd like to do just that if you don't mind press tackle that the macro side first and then come back and maybe provide you know a project by project update on the progress we're seeing around our contracting that capacity.
Sure. Thank you, Jeff and thanks for the question Michael.
In terms of the market I think we're seeing continued growth.
And U.S. LNG exports this year, I, clearly dampened a bit by the hurricane season, but it looks like frankly LNG record exports could set a record in November.
It's really been underpinned by increasing demand and stronger prices in Asia.
Also seen stronger prices in Europe.
Prices in Asia is actually tripled since the summer and really we think its a demonstration that LNG demand growth is driven by recovery in global GDP, Unlike oil, which really isn't mobility or transportation fuel in terms of the longer term in the LNG market you.
We still think we'll see some short time.
[laughter] oversupply, but.
But we think over the medium term, let's call. It 2023 25.
We see that the lack of F.I.D.'s over the past few cent recent years will.
Create a situation where demand will exceed supply we see that continuing I think for us. It's importantly, because as Jeff mentioned, he talked about our uniquely positioned.
[noise] LNG business.
I think we have an opportunity to really capitalize we will have Pacific and Atlantic access.
Were bolstered by Sempra strong balance sheet.
And we have and continue to create strong relationships and partnerships in the LNG space. So we think our business our franchise will be more successful over the medium and long term in the short term, let me talk about our development projects as Jeff mentioned in his prepared remarks.
We are hoping to take F.I.D. and plan to take if I did at the end of during this quarter our prior to the end of the year.
That off take for that project is completely sold and shifting to Cameron phase two yeah. We're continuing to work with partners on optimizing the design of that phase I really building on the strength of a camera in phase one.
And leveraging that to really create expansion and brownfield economics in terms of the timing of that development we are.
Are progressing and we're working closely with the partners.
But we don't have a specific timeline for that.
Port Arthur we previously announced that we were delaying final investment decision to 2021.
Based on where we are what we're seeing in the market. We are seeing a little bit a rebound in the short term market, we're frankly seeing.
Some challenges practical challenge just as a result of coated LNG tends to be a face to face business.
And although we are all starting to use conference calls it still I would say slowing down the process a debt.
We still have a continued conversations are continuing to co develop with Saudi Aramco I only think port Arthur really has the opportunity to be not only a successful first phase a truly one of the great LNG Mega projects in the world.
So again, we're very excited about our development prospects.
As we previously stated we will not develop a project until March.
The market is ready for it we are a show a tremendous level of capital discipline, we at Sempra LNG compete.
For our capital and really we're here to create value for Sempra shareholders.
So we think we have a uniquely position franchise and we see both.
In the short term and then the medium to long term continued success.
Got it thank you guys.
Hey.
Follow on very unrelated it's probably for Alan just curious Alan thoughts if I remember correctly encore is going to file a rate case that store.
Thoughts on a given just the broader economic environment with coated.
The delay or push out that rate case and be at the parent.
Although we've done.
This is kind of a move that needle type of request or is this just a mandatory coming back in but it's not something that's going to drive significant rate pressure on customers.
Well go to Alex.
Hi, Jeff.
You are 100% correct. We are required by PC rule to fire file a next rate case by October Onest of next year, and so where we're currently planning on that working on that you're also 100% correct a very unusual test here to say the least now.
Now we will you have the opportunity to make known and measurable changes and normalize some of our test your data.
But it's unquestionably going to be an unusual test here.
I think there are four rate.
Rate cases presently scheduled for the PC to hear next year ours is obviously the biggest.
I have not had any discussions nor received any feedback so far from the commission as to whether they would like to delay certainly to the extent the state would like us to delay its something we always worked very well with the state and the Interveners.
And we would consider that it's just not a topic that weve addressed yet.
With regards to what will be asking for we're putting that together right. Now you know we havent been in a few years.
So, we'll just have to wait and see I can't really predict what will be asking for we're obviously cognizant of of what the other utilities and their experiences.
Recently at the Commission.
I would just simply say the rate cases are obviously very very specific specific to the time you file to the utility is and what what the facts and circumstances are.
I think our history has shown we have good relationships we've been a good good player gets supporter of our Cup market. We've done everything the commission has asked us to do so we we feel like were in a good position going into next year to the extent we have to buy we're anticipating that we will unless we're told otherwise.
And we're anticipating that we'll we'll do what we've always done and we will work with us stakeholders and we will try to come up with something amicable unreasonable for for the customers and for US. So that's kind of where we stand on a rate case that answer your question.
Yeah, that's super helpful. Alan much appreciate it. Thank you guys. Thank you.
Thanks, Michael.
Thank you will hear from Ryan Levine with Citi.
And Ryan I think good morning.
And like I said 2035, the California electric vehicle policies, what are your current thoughts around incremental restructuring need to prepare these policies and what role.
A separate play and this trend in light of the strong adoption rates and the San Diego market.
Thank you for that question, we do have a leadership position in the San Diego region with respect to electric vehicles I think we've got roughly 60000 on our system today, which scores very high on a per capita basis.
Got to tell you I recently published an article in the World Economic Forum about importance of clean transportation that was quite laudatory about governor Governor a nuisance leadership position here. So you know this I said this earlier my comments. This is the state has justifiably pride fall about their leadership position around all issues of clay.
In energy and when you think about I think statewide is roughly 40% of the greenhouse stack is associated with transportation here in the San Diego region. Its just over 50%. So a lot of times people, who talk a lot about the clean energy transitional we'll focus on things, which are relatively small and don't move the needle.
This is probably the most complicated issue globally, if we're going to be successful about combating climate change I really think the state is real committed to progress here in the final comment before I pass to Kevin as people.
People don't fully understand the circuit by circuit changes you have to make as utility what we refer to as make ready work you start, adding two or three electric vehicles to a street you've got to upgrade the electrical system. So there will be a tremendous amount of distribution infrastructure that will be required to accommodate.
The type of penetration, we're expecting to see with electric vehicles and Kevin perhaps you could talk about some of the things the best duties. During this area no. Thank you for that question. Ryan We are really excited about the Governor's executive order and STG anyway, we could be gone a long way already of having a significant amount of work around.
Charging for electric vehicles, some of our newer programs have to do it exploring vehicle the grid, so taking down like school bus fleets or something and charging those at the right time, employing only electricity often that another time like Jeff mentioned, all the make ready work presents a big capital opportunity for STG any over timing.
Jeff mentioned at the beginning we're not going to get where we want to go on a high end perspective.
Carbon reducing carbon intensity without addressing the transportation sector and that's why this is an executive order. It was so important and unlike like we said a big opportunity trustee Ginnie, but also I tell Cal gas right. So you can see on the on the medium and heavy duty side. You got my 2045 go to go to zero emission vehicles, there and so when you think.
About that particular segment right now there's some lack of clarity, whether it's electric or hydrogen fuel cells, but my own my own belief is you know we're going to lean more toward the hydrogen side unlikely we've spoken about in the past.
Refueling opportunities on hydrogen fuel cells, and and hydrogen itself had a gas company is is a tremendous opportunity. So it's going to help both companies a lot and so what I'm happy to see that I would also add Ryan that Trevor now are also board members and encore and Alan puts on a really thoughtful strategy session.
Every fall and Trevor now just in the last couple of weeks join Allen and one of the things we've talked about really is the opportunity for clean transportation, Texas Whats unique in a lot of Allen service territory as the commute time in Texas is shorter than is in many communities in California. So certainly we think Texas is not going to move the same pace as California.
The going back to his footprint in the state of Texas. This is another long term upside for that franchise.
Great. Thank you.
Thank you Ryan.
Hey, Good we'll hear next from Anthony Codell with Mizuho.
Well good morning, Phil Good morning Trevor.
Just hoping for more than a quick question, Jeff why don't we.
Okay seen multiples valuation multiples of role coming over the last 12 months I'm curious if you think thats more temporary or is that the whole when it will take us a couple of years.
Yes. Thank you note for many of US who have been around the industry for a long period of time, we've traditionally seen ltcs trade at a premium to electric utilities Lars.
Largely because natural gas can be stored it was viewed by many as being more likely regulated whereas electricity large that's the U.S instantaneously intensity more politicized I.
I will tell you I think that in my personal view I think it's temporary and here's my my base case for that I was moving into takeover and run STG knee in the fall of 2013 that think I stepped in in January of 2014, and many of you will recall one of the common themes our industry was the death spiral of utilities.
Particularly electric utilities, and Alan Battle day were going forward and I think what people couldn't see at that time was that they were taken steps, particularly in the power generation side to change the feedstock for power generation as you de carbonized that commodity it became a real weapon to actually electrified the United.
State and compete on the transportation side, which was similar to Ryan's question, just a few minutes ago. So an entire new landscape opened up and probably less electricity businesses and now we all talk about electrification like it's a secular trend and it is I personally think it as one of the most dominant trends in our industry is electrification, but.
If you go back six or seven years, there were a lot of dark clouds on the horizon for the electric business and I will tell you I think the European sentiment is further ahead of the United States and this area. There is a growing recognition to outside the United States that a central player in leading energy transition will be our LTC because they've got there.
Prior investment, which is quite significant and they've got a leadership position. If you go country by country in cotton and by putting that most of the hydrogen work is being led by Ldcs and that's one of the reasons that.
Then participated on the World Economic Forum is to help US track some of the new developments in this area. We think that so Cal gas, which is the largest LDC in the western hemisphere will be the national leader here in the United States and Scott during his team I believe have 10 to 12 projects spending currently and we've talked about this just in the last couple of weeks Anthony.
We're going to make an entire breakout category in our March analyst conference around the clean energy transition and innovation and technology across each of our portfolio companies. So I actually think that LTC will be valued differently in the future at a more premium value.
Great and then just lastly, I guess.
Separately, Jeff I guess really high class problem.
It seems to be very little question last earnings call like there's no question that we earn with whatever that.
The power of what we're comfortable with our core utility businesses.
Most of the questions are answered a little problem.
Over the smallest quarter. So a simple family I guess, how do you love the focus away from.
Yeah.
Those are big goals, while mobile Mexico will focus more on the core earnings power of Us in July so far while I'll leave it at that.
Well I think it's I'll start by saying I appreciate the positive comments about the earnings power of the company I spent a little bit of time earlier in my remarks talking about how we've seen steady improvement in the core earnings power of the company. Both in 2019 and 2020, it's not just earnings growth to your point Anthony It's also.
The improved earnings quality and earnings visibility. So I think overtime that will get valued into the stock I think going to your larger point about our unregulated businesses. You should expect that set part of overtime will become increasingly have higher content and its regulated businesses. So we think that our utilities look.
From a larger part of our earnings stack. If you go forward in time, and that's kind of a signal about how we expect to manage both Mexico and the LNG business and I think part of what we need to do there is we just need to execute cleanly in Mexico, and execute cleanly and LNG I spent some time early on todays call talking about some.
Active steps, we're taking to make sure that we can demonstrate that value to the market, we're quite optimistic actually.
Great, Jeff you're not in my group.
Next week, so one of the visual early a happy veterans day and thanks, so much for taking my questions.
I appreciate it thank you very much.
Thank you will hear next from Jonathan Arnold Research partners.
Yeah good.
Good afternoon, let me know.
Thank you for taking my question.
Okay. I appreciate that you are in this quiet period on the franchise agreement.
Able to share any and the thing about the the process from here, which you know how it works and what the timing would temper.
Eventually people would like to be news.
[noise], Yeah, Theres been a lot of Odyssey. Good good research publications around this we talked about it a little bit more a few simply on our Q2 call because we're in the quiet period, Jonathan I apologize I think it's really important for us to respect the process at the city has underway I would just say that.
Caroline win and the team are really excited to weren't collegially with the city and I made this point in my prepared remarks, I think we have an identity of interest in it right. We're both looking to serve the benefit of the same people and I remain optimistic.
And do we know if it was going to be some sort of open bidding.
The hearing you can you talk about it though.
No I would just say that there was a invitation to bid process that process came to a conclusion in October.
We made a filing which we thought was competitive it's Tom is the bids were due they have not announced whether there is one bid or more bids they have not announced when they plan to specifically open the bids and what the definitive process will be but I think it's reasonable to expect that the process will be finished this quarter and we feel we feel.
Quite good about the bids that we've we've submitted.
Okay, great that's how.
Well. Thank you if I may just on thank you for your comments about pick up on your comments on 2021, I mean earlier in the year. You explicitly said you were positively inclined around that 2021 number [laughter]. This year like last quarter. You did the buyback is are we a dime accretive something like that.
Just curious what well why would you.
Change your view.
Yeah, I'm actually I'm actually smiling, because I did actually say that and I was optimistic then and I'm optimistic now and I think we tend to take a relatively conservative approach to planning, but I will say is this is you know if I was an outsider looking at the company. Your first question is is there something that you're not aware.
That makes 2021 does not look good or not all phases as we had a great year in 2019, we have improved portfolio with improved earnings power, we're having a heck of a year and 2020 and it's been a really difficult environment right. I mean, our employees have really been challenged to both work at home and we've got a ton of.
People in the field working so I think we're set up extremely well for 2021 I made a comment earlier I think you should expect to see the power of our earnings growth continue to be from our three leading utilities and next year. We're really excited to see full run rate earnings from Cameron. So there's no real back story here other than us going through the planning process.
Yes, and when we have an updated view on 2021 I'll be excited to come back to you.
All right well, thank you very much.
Thank you.
Thank you we are next from Paul Patterson with Glenrock Associates.
Good morning, Paul.
Do it.
Alright.
So.
Just.
Just to sort of follow up on the Michael Petersons question on sort of the of the natural gas outlook. I was wondering if you had any thoughts on the energy.
I apologize if I missed it fucked distraction here, but you Angie.
Next decade.
Announcement and that thing in Europe, the concern there I guess.
Any thoughts about that or any any trends or anything you're seeing.
Yes, I'm glad you asked the question Paul I would say, it's a view it a little bit as a red herring right on GE was formerly a partner with us.
And the Cameron facility, obviously totality shop partner now.
We have emote use for the full capacity of Cameron expansion on cheese, and a little bit different position relative to total, but I don't see any read through from orange each any of any impact on our LNG program.
Okay, Great and then just to what do you think we might see.
At the end of or at the conclusion of the the LIFO King and I noticed from quarter to quarter. There's been some some sort of small movements. It seems to me on the activity there, but where do you think we'll we'll get some some some closure I guess or foreclosure with respect to the the lease okay.
Litigation.
Yes, the way I would think about it as you recall that we've had a catastrophic equipment failure back in 2015 and.
And out of that there are rows really put I think about it as you know three buckets of risk and exposure that we have been actively managing the first of which was from.
A group a coalition of government of plaintiffs, which we've resolved in 2019, Justin Bird, who is now running our LNG business was our lead executive to help us resolve that and now Paul there are two remaining buckets or manage the first of which is a civil litigation process.
We're engaged in those activities you saw that last quarter, we recorded a charge related to the civil litigation and our settlement discussions there what you're looking at in this quarter is the ongoing process, We Havent commission or what we might loosely call the penalty phase and that just shows the nature of our current discussion.
And around trying to settle to settle that process with the commission currently.
Okay, and what do you think that this what do you think it might all be sort of finished.
I mean look we were that yeah.
No anytime you talk about litigation you know, we're going to be reticent to provide a lot of note.
Yeah forecast about the timing of it I would just say that where we have good positions in both matters, we're working to easily with the folks that we should be working with and that that's reflected in both our Q2 results and our Q3 results.
Okay awesome.
Most of my questions. Thank you.
But.
Yeah, I really appreciate it.
So you know as I come to the end of today's call I wanted to thank everyone for joining us I know that theres like a dozen other companies that are reporting. This morning, I hope everyone continues to be safe and healthy and feel free as usual to reach out to anyone of the IR team. If you have additional questions and this concludes today's call. Thank you.
Thank you that does conclude today's conference. Thank you all for your participation you may now disconnect.
Hmm.
[music].
[noise] Hmm.
[music].
Do.
Yeah.
[noise] mm.
[noise] [noise] [noise].
[noise].
[noise] [noise].
[noise] [noise].
[noise] [noise].