Q3 2020 Emera Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the immune from Q3 2020 analyst call.
The time, all participants are in listen only mode. After.
The speakers presentation, there will be a question and answer session.
Ask the question during the session I need to press Star one and your telephone if you require any further assistance. Please press star Zero I would now like the and the conference over to your Speaker today, Scott Hastings. Please go ahead.
[music] psyche of our job.
And thank you all for joining us this morning for Americas, and third quarter 2020 conference call and life work out.
Americas third quarter earnings release was the distributed this morning via newswire and the financial statements management discussion and analysis and the presentation being reference on this call.
On our website out of Merit Dot com.
Joining me this morning for this call and Scott the <unk> for Ameris, Chief Executive Officer.
Craig Blunden, Ameris, Chief Financial Officer, and the other members of the American management team.
Before we begin I'd like to take a moment to advise you that this morning's discussion will include forward looking information, which is subject to the cautionary statement contained on the supporting slide.
Today's discussion and presentation will also include references to non-GAAP financial measures.
You should refer to the appendix for definition old and information and reconciliations of the historical and non-GAAP measures to the club called the closest GAAP financial measure.
And now I'll turn things over to Scott.
[music].
Thank you Scott and good morning, everyone.
We're pleased to report the overall the business remains strong despite the impacts of the global COVID-19 pandemic.
Our teams continue to deliver the of central energy our customers count toward every day.
And is it the and then the continues we understand the increasing financial pressure and many are facing.
And so in addition to our significant commodity investments and rate relief programs. Our employees continue to work with customers on payment plans to connect them to financial aid programs available to help reduce the financial pressure.
[laughter].
And these waves and many others are teams that are gas and electric utilities continued to be customer centric.
And this quarter, we saw strong customer satisfaction scores that are electric and gas utilities.
Peoples' cash for the eighth consecutive here was named the top rated utility and customer satisfaction and.
The mid sized natural gas companies in the South region bunch of the power.
And doing so they received the highest customer satisfaction scores in the nation.
Our teams have also been of dancing [laughter] excuse me also been advancing our 200 2020 capital program, which focuses on investments and cleaner and reliable energy.
Even with the additional cope and 19 group and health and safety measures in place I'm pleased to say again this quarter that are large capital projects, including the Big Bend modernization and are sold of projects and Florida continue to be on time and on budget.
These projects and our capital program as a whole reflect our strategy of action.
Facilitating our transition to the worker and improving the liability.
All the while never losing sight of customer affordability.
With that I'm pleased to share that our updated capital plan anticipates the investment of between 7.4 billion and 8.6 billion over the next three years.
As in the past the baseline capital plan all the campaigns committed projects. The we're highly confident we'll proceed over the forecast period.
The baseline capital forecast includes previously announced projects like the Big Bend modernization project.
And solar storm, hardening, and Florida, and Hydro Refurbishments and Nova Scotia.
In addition to the baseline forecast and you do see incremental upside the could provide an additional $1.2 billion of investment opportunity and development.
I will speak of but one of those development opportunities and a few moments.
A couple of program is directed towards regulated and freshmen that support our strategy and growth and earnings over.
Over the next three years, almost 80% of our capital will be deployed in the electric utilities, well are and where our investments and renewable and cleaner generation grid resiliency and smart meters.
The remaining 20 per cent will be invested in or guess he took the where the focus is on system expansion to support customer growth and the investments that enhance reliability.
Notably about 70% of our capital is expected to be invested in the state of Florida.
Optimizing our capital allocation to of jurisdiction with favorable equity thickness and returns.
And notably on a combined basis over 60% of EUR $7.4 billion before the capital program will be invested in projects the promote cleaner and more reliable energy.
This robust capital program will drive rate base growth between 7.5% and 8.5 per cent from 2019 to 2023.
We will continue to update both the baseline and development opportunity forecast and the future to keep the market up to date and significant advancements.
We're very proud of the growth, but the marries demonstrated and we'd look and and as we look to the future. We're excited about the opportunities that we see for your company.
Our strategy team and focused capital plan are driving real and meaningful contributions to national perpetual and state level of responses to climate change, reducing greenhouse emissions from our operations and strengthening the resiliency of our energy systems.
And as compared to two of 2005 base period, or two largest utilities Tampa electric and of course your power have reduced their greenhouse gas emissions by over 35% and 29 team.
And are forecasting and overall, 50% reduction and 2023.
Well, we're proud of our track record we know we still have work to do as we continue to transition to a lower curb the economy.
The reality is that when it comes to emission reductions.
Sustainability efforts and positioning overall, we have a very good story to tell and.
And you're working hard to tell the back.
In October we published our annual sustainability update which provides a complete picture of our performance on environmental social and governance matters.
This year, we added two new disclosure frameworks, SAS B and TFT.
And we look forward to continuing to build on our E. S G disclosures and future of reports.
The integration of renewables and natural gas the significantly transformed and mirrors generation fleet with.
With our committed capital program in place it is anticipated that and 2023 simple electric and Nova Scotia power will have reduced the percentage of coal generation like somebody from more than 20.
Hi.
More than 80 per cent excuse me as compared to a base period of 2005, and 80% reduction compared to 2005.
Our service territories are unique which of course drives our approach to achieving these reductions and each jurisdiction and.
And 2023, Tampa Electric will have over 1200, and 50 megawatts of solar connected to their system. That's.
That's compared to just four megawatts one of the mirror acquired the utility and 2016.
The Big Bend modernization project is also contributing to the significant reduction of GHG emissions and our Florida operations.
Yeah. The Scotia power is the leader in wind generation was 18% of its energy coming from the wind one of the highest penetrations of wind energy and North America and.
And 2019, 30% of Nova Scotia Standard you came from renewable sources and we're on track to increase that to almost 60% and 2023.
And it was quite the power has already exceeded the commitments made by Canada, and the cop 21 form.
Investments and renewable and cleaner generation and transmission to bring renewables to Merck and well remain a central part of our strategy for years to come well never losing sight of the cost for customers.
On that note as I mentioned earlier and there is capital program includes both baseline capital and the government opportunities. These.
These development opportunities or projects that our teams are currently work and that are not committed to the point of being considered baseline.
And one such opportunity is the potential development of the new large scale transmission project that would enable the movement of clean energy and from the capacity through the Atlantic region. The.
This project was referenced recently and the federal government strength speech at the Atlantic.
And Mary has been working with our partners to advance this exciting idea and we're encouraged by the recent progress, but it's important to note that it's there it's still very early days.
And the number of provinces and utilities potentially and bought makes for a very complex project.
However, we see tremendous benefits for the whole region with this transformative and a shift.
Before I pass the call to Greg I'd like to recognize Peter Greg who has recently joined the near team as President and CEO of Nova Scotia power.
Peter brings deep experience and the Kt and energy sector, where the focus on energy efficiency renewables and innovation welcome.
Welcome Peter.
And with that I'll turn it over to Greg the ticket your financial results for the quarter [noise].
Thank you Scott and thank you all for joining us this morning.
Our portfolio of regulated utilities and remain strong and perform very well delivering adjusted earnings growth of 10% year to date.
We are very pleased with these results, which was primarily driven by strong earnings from Tampa Electric and five will discuss in a moment.
Our regulated utilities, our premium jurisdictions, what supportive regulatory relationships. The point is further supported by the recent construct of settlement agreements filed our gas utilities related to their general rate case.
The settlement and the number of rate design improvements and provide clarity around the earnings and cash flow growth of these utilities.
Earlier today, we reported third quarter adjusted earnings of $166 million and adjusted earnings per share of 67 cents per.
For the nine months year to date adjusted earnings were $477 million and adjusted earnings per share of the dollar 93.
The Mers adjusted earnings per share increased for the quarter and year to date when normalized for the asset sales and the timing of preferred dividends.
These increases were mostly driven by favorable results of Tampa electric and the other segment.
Now, let's get to the details of what the result.
With the sale of the unregulated gas plant. The the mirror mean, we expect there to be a fluctuation and I results due to the lost earnings contributions from these businesses.
By normalizing the earnings impact of the asset sales or greater transparency of the before me of our ongoing business.
For the third quarter 2019 result, when normalizing for the sale of America me would have been 44 cents.
And for the year to date 2019, the adjusted earnings per share was the dollar 99, which included 29 cents from assets that have and subsequently sold.
These assets include the unregulated gas plants and their mi and the sale of property in Florida and 20 Nike.
Therefore, the normalized earnings per share year to day 20 liking what had been the dollar 70.
Normalized results 44 cents for Q3, 2019, and the dollar 74 2019 year to date because of the starting point the compare results for the third quarter and year to date 2020.
[noise] growth from the normalized Q3 2019 base of 44 cents was largely driven by from performance by simple electric and our other segment.
During the quarter came from electric and <unk> contributed $175 million of earnings an increase of $22 million for the third quarter of 2019 and.
The electrics growth was driven by increased sales of residential customers higher silver revenues higher AFUDC earnings from the Big Bend modernization and other non solar projects and other other non sober solar projects and lower depreciation and amortization expense.
Third quarter earnings from our other segment improved when excluding the timing of the preferred dividend, which is shown separately on the slide.
The increase in earnings was mostly due to the lower interest costs and the fact that in Q3 2019 results included a one time expense related to the impact of Hurricane Dorian on frame of our company.
In addition, the <unk> energy market share trading business improved results by $8 million and Q3 2020, due to lower fixed cost commitments for gas transportation and storage assets.
During meaning the mirror utilities combined for two cents decreased and EPS for the quarter.
The Caribbean earnings were lower because of the pandemic the impact on the tourism industry and the economy in particular and Barbados.
In addition, the Grand will have a power company. The company continues to recover from the effects of hurricane door and we.
We don't expect this trend to continue over the long term, but short term results for the segment are expected to underperform and the full year basis as compared to 2019.
The gas utilities and infrastructure segment experienced lower earnings in the third quarter of 2020 as compared to the same period and 2019.
Excluding the 7 million dollar impacts of regulatory decision in new Mexico, and Q3, 2019, New Mexico, GAAP and higher earnings driven primarily by lower operating costs.
And at peoples gas lower base from used to the impact of cold and 19 of commercial sales were offset by higher customer growth increased if you do see earnings and higher return on investments and our cast iron and steel replacement rider.
The earnings of the came utility segments were up compared to Q3 2019 to an increase in equity earnings from the maritime linked and Labrador Island link investments.
The increase was partially offset by a decrease and those push of Power's earnings and the impact to cope and Nike and and sales volume increased income taxes, and the reversal of fixed cost deferrals and 20 Nike.
So on a normalized basis, the merits earnings per share for the third quarter of 2020 was 58 cents versus 44 cents from Q3 2019, representing the growth rate of 32%.
Lastly for the quarter the timing of preferred share dividend Declaration in Q3, 2019 versus Q3 2020 called the night that impact for the quarter. This is simply a timing difference and there'll be no impact on the annual amount of preferred dividends.
Similar to the quarter year to date growth from the normalized 2019 base of $1.70 was largely driven by the strong performance of Tampa Electric.
For the year to date 2020 capital electric contributed $400 million of earnings and increase of $61 million or 15% growth of the 2019 year to date.
And the electric growth was driven by higher base revenues related to favorable weather customer growth and the greater mix of residential sales.
In addition to sample electrics earnings benefited from higher if you do see from the Big Bend modernization and non solar solar projects and lower depreciation and amortization expense.
The other segment have increased earnings from their energy from higher Mark and trading margin.
As I mentioned for the quarter of the 20 Nike and results include a one time corporate costs related to hurricane already the impact of Grand Bahamas.
Adding to the positives from their energy and the corporate costs Foreign exchange has been the tailwind for the year and Germany three cents per share.
And lastly share of dilution for the year to date was approximately seven cents.
The 2019, resulting from the result, the 2019 results includes the results of two separate regulatory and rulings and new Mexico that had a positive impact on earnings the recognition of tax benefits related to a change in the treatment of net operating loss carry forwards and.
And secondly, the recognition of tax reform benefits from 2018, collectively totaling $19 million or eight cents per share.
And lastly, I remain utilities, and total were slightly lower than the year to date 2019.
[noise] similar to the quarterly results the other electric utilities, the excluding the mirror me and lower earnings in 2022 of the ongoing impact of co bid on the tours and industry and the Caribbean and the continued recovery from hurricane oriented Grand Bahamas, Our company.
Funny electric utilities and.
The lower earnings year to date and it was.
Scotia power and lower earnings from increase income tax expense of favorable weather and decreased commercial other and industrial sales volumes.
Primarily relates to the impact of profit making these.
The negative impact and also the power partially offset.
Partially offset higher equity earnings again from the Maritime Lincoln Labrador Island link investments.
Within the gas utilities and infrastructure segment earnings increase for the year to date when the when excluding onetime regulatory adjustments of new Mexico GAAP. This.
This increase was due to higher customer growth increased ABDC earnings and higher returns from our cast iron and bare steel replacement investments and peoples gas and lower operating expenses and new Mexico gas and these positives were partially offset by lower.
Based revenues of Peoplescout after the impacts of Cobiz Nike like commercial sales.
So on the normalized basis, the various 2020 year to date EPS was $1.85 compared to $1.70 from 2019, a growth rate of 9%.
And as I previously mentioned the time of the preferred dividend declaration caused the buys and timing difference year to date.
And finally of our main contributors to mirrors the guests. The Q1 2020, so and the interest of transparency, we have identified that separately.
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Moving to adjusted EBITDA and cash flow year over year EBITDA earnings before interest taxes, depreciation and amortization was lower decreasing by $38 million or 2% as expected. The mid Jordi of the decline was related to the sale of the gas plant and the Mirror me.
Operating cash flow from the year to date, 2020 was down $81 million or seven per cent compared to 2019.
Again as anticipated most of this decline was due to the sale of American and Q1, 2020, and our unregulated gas plant and the first quarter of 2019 the.
The quality and growth of the Mers regulated cash flow continues to be a priority for our team.
[noise]. It's got highlighted we are pleased with the $7.4 billion capital program and the growth that this will generate and rate base the future earnings from Europe.
Consistent with the three year funding plan, we outlined at our Investor Day in February we view of the current funding plan as a return to normal of course business. Following the completion of our asset sales program earlier this year.
We have always minister funding programs and maintain our target capital structure of 55% debt, 35% common equity and 10% hybrid preferred equity.
To achieve the target we find the cost of capital letter to minimize our equity requirements, while maintaining the strong balance sheet.
Our funding plan maximizes reinvesting.
Operating cash flows and manages manages our business is regulatory capital structures of the issuance of operating company debt.
And then finally married issues common and hybrid equity capital of the balance of two are targeted capital structure.
Our equity requirements over the next three years is expected to be raised through our dividend reinvestment plan, which is expected to raise two hundreds of $250 million per year.
And consistent with the previous funding plan or at the at the market program of very efficient of cost effective way to issue common equity will be used to complete the common equity requirement.
And finally, the company will continue the managed the hybrid and the preferred capital portion of the capital structure at approximately 10%, which is consistent with our targeted capital structure.
Thank you and with that I'll turn the presentation back over to Scott.
Thank you Greg. This concludes the presentation and would now like to open the call and take questions from analysts.
At this time like the remind everyone sort of the asked the question. Please press star and the number one and the telephone keypad Linda.
Linda Ezergailis from TD Securities. Your line is open.
Thank you good morning.
And I'm wondering if you could help us understand this the Atlantic link opportunity for the region and for America.
Can you give us the sense of what the bookends of possibilities of and timing of development of this might be realizing its and the very early stages.
What the book and the possibilities might be in terms of the absolute sites on a on a total basis as well as what the book and the possibilities might be for a marriage the equity participation in the us.
Yes, and it's it's Scott and good morning, and and like.
[laughter] at this point and I'd say, it's still a little early to get into a sort of mirroring narrowing some some of those items, but I you know I will say this is the this is the <unk> project multiples of the scale of of the Maritime link the project for a force for Us and.
And and to the project overall and I think it's the timing really you know the.
The the center point of this of this strategy and.
And and really you know the the original impetus for this project as a whole is a recognition and as we as we if we can think of both Eastern Canada Atlantic, Canada, more and more is the region.
And and think about the the the clean Hydra resources that exist in India from the Labrador and and and the promise of book.
And where at this juncture. This is more energy the and then they consume natively themselves.
And so can we think of both the region as a whole and look at the provinces of Nova Scotia, and New Brunswick, where additional clean hydro energy can assist with the with the process of the car.
Urbanizing and so for US really when you think of note the coal generation that exists and in Nova Scotia, as you know and pursuant to an equivalent to the agreement has a timeline to 2040 for retirement.
And this project is really the whether we can accelerate that timing can we find the path that would allow us to retire those coal plants earlier and ideally by 2030, which would align with the federal government's objectives around coal generation in the and the country broadly.
And so where do you think about timing the and you know the aspects of this project. If we can make this all come together would be leading to a very ambitious project of that ideally I would have assumed.
And in service and 2030 or or thereabout, and so you know it's possible that we could see some element of of.
Of Capex within the a true.
True your capital plan period, but a lot of it would the would fall between men.
And the and closer to a 2030.
Day spread over that period, so beyond that day, you know, it's tough to get into some of the details until we've got more clarity on the path to that as the head, but it is you know of a project the albeit ambitious I think and we're excited about I'm encouraged by some of the early progress and but.
The project will update you on the incentive programs continues to develop.
Thank you and I realize there's a lot of complexity and moving parts, but can you give us the sense of maybe what some of the initial risk factors to execution might be in terms of the.
The major milestones are sticking points that will be the most challenging to overcome to get this over the finish line or or is that.
To really to even comment on that.
Well I think I think I made reference to it and in my remarks, and you know this is when you start to talk about regional projects. It means there's there's a lot of stakeholders involved and.
And that adds complexity and so you know I think that that really is the is the most significant aspect of of this obviously you know the federal government is engaged and and we're encouraged by the reference in the <unk> and the throne speech, but there's also the provincial governments and of course.
And utilities.
And engaged and so you know it's that front and work when does it really is it is the most complicated and you know as that starts to take shape and.
And and.
If we can line up the stars to to see support broadly true.
Through the regions and and then I think there will be a and ability to speak more clearly and that means in terms of of scale and timing and those aspects. So I think it's really got that the.
The the multi party nature of it.
And what kind of way through the hot so over the next little bit is the is what the watch for.
Well hopefully itself remains a priority for everyone and a and the momentum continues and maybe moving more to AE and question just just follow up with respect to the Q4 outlook.
How has the the opportunities look to date for the energy marketing and trading business and beyond this year any comment on the outlook regarding your fixed commitments or a natural gas transmission and storage and how they might continue the step down or or what.
The 2021 outlook looks like right now with the appreciate it.
So then the Ginny good morning.
So you can see from the M. DNA that.
Currently.
We we set our expectation that we think 2020 will be a better year than 2019, which was obviously, particularly weak.
But that we made the there's the risk that we fell short of the low end of our earnings guidance. You know, it's an unusual year 2020. Obviously, so there has been a little bit of dampening of demand and should result of.
Various economic slowdown and the weather has been.
Unappealing. So the reality is you know we do the best we can to provide those predictions but the.
40% from money off and get your and in November and December so either until the last day of the year, it's really hard to know where it will wind up exactly has been a little bit warm.
And for the first week and a half of November which of course, we don't love that but the forwards are more robust and current pricing some of the market hasn't given up on the winter and either have we so that's kind of where we are you will remember in terms of the or fixed cost for two.
Transportation that there are things that we sat there and positions that we generally acquire kind of and a short term basis and competitive bidding processes and the reality is the kind of tend to recollect last year's market.
So the reason we had a lower investment kind of in Q3 of 2020 was that we were able to acquire oppositions data at a lower rate I don't see any kind of increase and the value of gas transportation looking out into the coming year, So where that's kind of the.
Additions Das is the kind of have the same opportunity set a four day when Ah there's real money to be made but we have a lower cost of entry going and which is which is a limit on the downside risk.
So you know I would never I would never say anything a year and advance other than we would generally expect to be able to earn within our earnings range per 2021 at this point.
Thank you always appreciate the of the context, you provide I'll jump back in the queue.
Rob Hope from Scotiabank Your line is open.
Morning, everyone. Appreciate the comments on the opportunities and development in regards to the.
Atlantic project, but if we take a look at the Florida can you just give us an understanding of how much additional capital it could be put to work I guess and teco related to storm hardening as well as incremental and go girl renewable generation.
[noise] yeah, that's the problem.
[laughter].
Yeah, Rob I think you know as we look at that Billy into of projects under development and I think it's fair to say that probably.
30% to 40% of that would be projects that you know that we're looking at.
And in Tampa, specifically and storm hardening would be part of that so could be any number that's on the <unk>.
I'd say, it's a relatively modest amount on their overall capital program over that three years, but some of those things are still be and fine too.
All right. Thanks for that and then just turning over to kind of your existing a Atlantic of transmission lines and you know saw that your equity contribution into the old got pushed off you know how and how do you view these assets longer term do you have and ability to optimize the them.
The or are they largely kind of government backed bonds.
Yes, I'd, just say Rob that there the core assets for a for US and you know and important part of the.
As the base for for a mirror and and obviously an important part of the.
Energy supply of profile.
For for no social power, so they're attractive financially frankly, and and the important strategically.
And then just to clarify the clarified on ally al and I guess, the will earn on the incremental equity investment until the front half of 2022.
Yep.
It's really yeah. So its really once once units three from Muskrat falls and starts.
Start spinning it provides and of social block.
And the loved around the link is Oh, the isn't isn't service, we're expecting both of those milestones to occur.
And in 2021.
And and so would be and full sort of the school house and.
And for your for 2022.
All right appreciate the color. Thank you.
Ben Pham from BMO.
Your line is open.
Hi, Mark.
I wanted to follow up on robs question, and I did and Maritime Lucky you mentioned that at the courts and it's obviously try and solid cash flows from you guys for a long time and at the carrier.
Average new energy to some extent and at the.
But how do you how do you all had it from me.
More of a messaging standpoint per you look at your rate base and take or pay boasts the rate base. The declining over time the earnings is pretty to make and could decline so there and.
Rob why is there ways to optimize the messaging here your rate base and quite looks a lot higher if you strip out in our kind of like.
[noise], Yeah and <unk>.
What you say, it's not [laughter], Doug and I got to give the same ex venture. So go ahead Greg.
No no I I think that and that's right then when when one of those projects are fully.
Fully operational and and 100% cash returns and.
You know and certainly not going to have an incremental investment requirement going forward and and so you know as we go overtime the.
The based investment and those assets will just mathematically the smaller each and every year as there continues to be amortized.
Okay. So the big there's no there's really no.
So you get your comfort with what really the.
The nighttime like being a net a grind and John here, yes, and and your rate base Kickers.
[laughter] need to come from it's not the right word [laughter] kind of thinking about kind of where do you.
So it sounds like him and the with what your sales right is the you know these are the key.
Contributions from from these assets will reduce overtime. However, you know there is a yeah, Rob referred to it like the like the government body would have the you know and.
And have the same financial profile and as something like like the however, as I said you know these are these are critically strategic assets for us for the province of of Scotia for Nova Scotia power and so we can sort of think of though you know how we're how we're looking at are a rate base growth.
Growth and those kinds of things to make it clear the that those things are a little a little different because the right. Yeah. Those are the those assets will not naturally grow and but but as it relates to.
You know the the the corner of the of.
Of those assets to add to the portfolio and not to to suggest you were thinking we should we should monetize them in some way.
You know that would not that would not be on the table. These are these are core assets for us the contribute positively financially and they certainly contribute strategically we can think about.
How we make sure that there's little transparency to investors and it relates to the the profile.
The they have resulted in as it is around things like like the school.
Okay, and next five cents and and then on Europe, and your financing slightly and it seemed like kind of really much much change from the quarter same capex and how do you. How do you think the about financing the additional.
The top an opportunity the need extra equity to.
The fund that and then there's a reference to I believe hybrids.
The brief as a rebalancing mechanism can you clarify what you meant by that.
Yeah, and it's Craig.
So obviously all of the additional development opportunities, which it and parents to are a little bit back and loaded are are all rate regulated investment. So it would fall the attritional funding approximately half of that would be funded with operating company that.
And and the balance with with a common equity and and the preferred shares of.
To the extent that we needed to and that there wasn't incremental cash flow coming in at the same types of all those things will get into the mix of but.
But.
It would be a relatively modest incremental equity requirement towards the back end of those projects do in fact unfold the way we hope on the preferred share of side, Yeah. I think the way to think of it is we probably have certainly with the balance sheet growing probably have room for.
Well, the $500 million worth of preferred shares or hybrid equity to do over this period and no rush to do it that market's been kind of a.
The pricing of that market doesn't really fit into our capital structure very well right now it looks like it might and starting to open up I think at some point of time over the three year for you might see us do kind of in that range of of preferred shares and hybrid equity.
All right that's great very helpful. Thank you.
Okay.
Robert Kwan from RBC Your line is open.
Hey, good morning, and.
And back to that the capital plan and given a little bit of color here in Florida, and just had huge of the 500 million of opportunities before so the first part is just shy of you slice of any of that into the 21 to 23 base plan and just you guys and specifics on non and then as you think about the 1.2 billion of bots card and Florida are there.
The other.
A couple of hundred million sort of play.
The tight.
Initiatives and the.
It would be and that number.
Yeah, I think Robert I'd say, probably the problem, it's been a little bit of lets call crystallization I think it was the word you use in terms of things and we're under development before the the interface plant probably the most material of that over this period is over the next two years I guess trying to compare plan the plan and would.
I would be able to an additional $100 million of for.
For the store protection plan investments and Tampa electric there's the others from smaller other items, but that would be probably the most significant one.
Interest and the one point of view outside of Florida, what else would be kind of larger piece of that bucket.
Yeah, So I I.
The 40% of it would be targeted towards the tail and a of the forecast period or the Atlantic loop or something like that as we look at various alternatives to accelerate the reduction of coal fired generation, even further and Nova Scotia, and then probably about 30% of the of that total is.
Quite frankly, everything else across all of our other utilities and our portfolio.
Okay, that's great.
And just finished of that question on the dividend and.
Years, you extended the dividend growth guidance, when you announced the dividend increase which wasn't the case this year and now you've rolled out.
Capital plan up to 2020, threes, and just wondering and smashed of thought what's going on internally around matter of valuation around dividend policy.
No I don't I don't I wouldn't read that the into it and don't Robert and I will well, we'll look and probably with her.
Or more traditional schedule again next fall.
And and timing with Oh with it of the dividend discussion and decision that directors will make and then as to the sort of extending out the extending of the timeline and really just the reflection right now the and all of the environment that we're all living and right. Now is and is is a little different.
Overseas and all of US all of US a thought and so you know I think you know the words and I've said before I would repeat as and when we when we sent this dividend growth rate of 4% to 5%.
And you know, while directors will make a decision of down around dividend increases.
And.
And at each moment of time, where they're having those discussions and.
The reality is when we set that we were we were looking to step out of the rate that we believe with sustainable over time and and that continues to be true so and.
So I wouldn't I wouldn't read anything into it will we'll we'll look to us to think about the the timing of extension around the dividend and.
The guidance is.
And as director of go through that process with us on the annual basis, we do and the in the late summer of next year.
And you roll it out next year would be getting two more years are you just thinking about <unk>.
The timing.
Yeah.
And we'll prejudge what the what the this discussion and decision from that is is Robert but but we understand the dividend growth and and dividend growth guidance is is helpful to our investors and so you know that and that will be certainly a front and center and as we have our discussions with directors and.
And the and make sure that we're providing the most helpful and pieces of the of of of guidance to our investors as it relates to what are the growth profile and the like hub looks like but as I said you know the dividend growth rate the to the we established was was one of the we put in place thinking that was the sustainable over a long period of time and I would.
So just to you the two continues to be true and have you.
That's great. Thank you much.
Alright, Jeremy from see RBC Your line is open.
Thanks, Good morning, and one.
And one of the come back to the Atlantic loop and and others.
A lot of work to be done there and a lot of unknowns, but when you talked about and earlier.
Earlier stated of cool and and bringing in the cheaper renewables.
And and not create and do feel pressure from your customers. That's true can you also create a little bit more you know buffer for further investments like I'm thinking of fuel cost come down even more dramatically than you can you phase and coal earlier, plus you know find room for further investments that are non for style.
And so certainly the right Mark.
Mark I mean that that really has been our DNA for.
For a long long time and said I mean are you you would have heard us talk of a killed asset strategies and so to the extent that we're able to you know take and take advantage of of of removing.
Higher cost higher carbon generation and replacing it with the.
And with with renewables the <unk>.
Eliminates the the fuel expense in the operating effectively redirect that towards the towards the cost of capital and.
Of renewables, absolutely, we'll we'll do that and and and look just like you know more more solar is is is absolutely part of the energy future for a forecast the electric.
And more wind is also part of the energy future for a force for Nova Scotia storage is gonna be and important aspect in the in both utilities as we as we put more interest.
And renewables and onto onto the system and and there was scotia's cases mentioned, you know the ability to and hence the existing transmission infrastructure in.
In already talked to most of.
The system all of those parts together is really what will allow and enable and he and earlier retirement of coal and and the trick and the challenge of that is and nature as an inch and Linda's question is is is getting all the stakeholders aligned and in that and that's that's complicated and two is making sure the.
Not putting an incremental cost burden on on Nova Scotia power customers relative to past of doing that to the existing 2040 timeline. So so that's that's really the the the work that we're doing and continuing to frame out and and.
And we look forward to sharing more and that work advances okay, great and.
And my last question is for Greg just looks like a little the deferral and spending I know the squish of power is there anything else. It's moved from 2020 and to the 2021 or or subsequent years and in the in the three are kind of fun.
No I don't think so mark the it was really just the the some of the projects and also should power and mostly because as your volume or another squishes one of the strictest.
And I guess public policies around people coming into our jurisdiction and and so at the beginning of the pandemic projects that we're going to require resources from outside the area and was determined it was probably from two to move those and other than that I can't really think of anything material and any of the other jurisdictions.
And at this point everything else has been pretty much of a plan okay.
Okay, great. Thanks.
Well.
The big because they don't from Raymond James Your line is open.
Thanks morning, guys a question on on Florida, and I guess, the broadly the topic of renewable natural gas I'm wondering if that factors into your plans there part of that incremental capex opportunity or or I guess the even.
Hydrogen as well, what what kind of timeframe do you think for that.
Yes, well certainly of the first on the first one David I'd say, both peoples gas and the Mexico gas or or are working on and and and looking at the noble.
Natural and natural gas and.
I'll pass it to TJ and a second and he can give you the census to his perspective on Florida as to the hydro and hydrogen I'd say.
You know, it's something that we're we're talking a lot of vote and we don't have any active projects on the.
At the moment, obviously hydrogen is is one of those areas and it has had a lot of investor and capital market attention right now and the math is pretty tough today for for hydrogen, but you know that could we've got could change and future, which is obviously why were spent a lot of time thinking about it and talking about it but.
Don't have any any active projects right now and and without T.J. I want to get a bit of color on on RG and Florida.
Sure happy to yeah, we have several projects.
And the development stage now that where we're discussing the opportunity we do see that as a really bright opportunity within Florida per peoples gas and and for the environment boats. So we do have several projects on the.
Drawn board that we're working through with potential of suppliers currently so we and and I agree on the comments regarding the hydrogen and certainly further out.
On the hydrogen and Florida, but but the renewable natural gas is a viable option for US right now we're working through several projects.
Excellent. Thank you for that color appreciate it and then maybe just one.
One question I guess, the uncovered 19 as we the we started to see it seems like the cases are going higher again, especially in the U.S. and and maybe this question is on Florida, specifically as the as the duration of of the pandemic kind of drags out here.
And I appreciate that it's been a minimal impact so far.
As the duration drags out do you expect and it'll still be a minimal impact or is the longer timeframe of it started to me and it's a more material impact.
Yeah, you know what you know I think you know, obviously and 20 2020 day rigid all jurisdictions you know income.
Operating including Florida went through periods of of Lockdowns, and you know that that change the way of it or customers that use use energy, but a change things more for some businesses and for than for others and so for the TJ. The business. The TJ leads for example People's GAAP.
So it had a the had a more dramatic impact because no one important customer base a flow.
The him is the yeah.
Or many commercial businesses the two.
And then obviously, a warts and weren't operating and therefore weren't.
And consuming natural gas during that time the got period.
So you know and.
Thank the it there you know there are pockets, where if this continues Caribbean would be another. Another example, the to you know until there's a recovery of so much of tourism and things are going to be a little a little tougher in Barbados as as an example of until planned start flowing again and tours and activity starts to.
And I started to return from for example of electric and you know.
For sure there aren't there impacts of course, and making sure that we're continuing to stay sensitive to to our customers and supporting them through through the period, the but you know weather impacts frankly have been.
And and material and the in Florida and that no. That's that's been having.
On balance and a more material impact on on changes of of load for Tampa Electric day.
And has no.
The weighted or customers are using the energy and make sense.
Yeah, absolutely. Thank you that's that's great color appreciate it and I'll get back in the queue.
[noise] and drew Crum from credit Suisse. Your line of open.
Thank you good morning, and I guess, the questions, maybe and the spirit of Badger points and kind of wants but when you think about storm hardening some.
Some of the expense samples structure that you have how.
How do you think of the thought just on the regulatory mechanism of the clearly outline in Florida, and just more broadly and from an MPV basis.
Building more resilient to the structure of the last through the storm cycles.
The first since the build rebuilds on the more regular basis, just because of some color on that and how the deliveries through the franchises and the loan.
Yeah, So so and let me let me try this and I'm trying to get the herd of your part of your question, Andrew So and so let me know and if I don't want her well the record Greg can and can't help help me, but you're right you know the the.
The the regulatory mechanisms as it relates to or the storm hardening of reliability and.
Cash and server and a little different jurist. It just the jurisdiction by jurisdiction obviously, the most different right now is in Florida and with.
And with Tampa electric and the and the S.P.P. the start of protection plan and I'm.
The team is now in place.
In place there with a you know the something that arose as the result of.
You know underlying need and recognition of the impact of of major hurricanes in past years and.
But also with significant.
Government support and initiative to to ensure that there was actions being taken and.
In order to accelerate those and those efforts and most other jurisdictions you know storm hardening of reliability investments become part of the the capital plan and the profile and that did each business and conduct and reviews with its regulator in some cases before the capital of spent and other case.
Just after the capital and spend depending on on the jurisdiction and they're always needs to be and lens of regulators will apply the lens of prudency as it relates to and as it relates to those investments and so you are right.
As you know thinking about how those investments are made and and the cost of of rebuilding force.
For the storm damage the infrastructure versus making them harder. So the you don't need to rebuild the it's often is a really important part of the analysis of the teams.
And and review as and as part of that work and and you know the the environment that we're in is changing here no. So share the the instances of of higher Windsor and more frequent and then they have been in the past and so the team works through the hot as well and we're going to make sure that they're planning.
From a system and that is going to experience more frequently frequent levels of of higher wind and and that would you know that would be true in terms of the work and analysis of that goes on the across a across the system.
Scott, maybe maybe I could add.
Just just a bit of color too and Andrew and.
As Scott mentioned outside of Florida, each of the utilities have transmission distribution investments that include.
The improvement and reliability the range that a storm hardening and the ability for the system the stand up and the severe events.
Each of the utilities habit within the normal investment programs, but also a key component of it is you're you're of replenishing with newer technologies. They are slightly more expensive. The give you better reliability. So the investment profile as an example, and Nova Scotia power for Ti and D is is.
About 40% of the overall capital program for 2021 captures a significant portion of the focusing on reliability and enhancements and the system.
I appreciate the color and then the maybe just a follow up on that you what role do you see batteries play and.
Within your your kill the footprints and your and Nobody's quite sure quite a good example, and there's lot of radio lines due to the opportunities to really put batteries much closer to load and you are maybe the non individual how sales basis to improve reliability and and it would be by your times and put the system back.
Scott do you want me to address and please so yes, it's terrific and Andrew you know batteries, we have battery system in Barbados in Nova Scotia, as well and on Peter.
Most of the development right now is focused on trying to figure out how to extract the highest benefit from battery systems were deploying so we know the technology the costs are coming down and technologies, improving and within E. T. L. The mirror technologies also they are developing the micro grid of.
Proche with the D.C. system that that has battery components embedded so a lot of work within the mirror out each of the utilities and.
Tackling different challenges within each of the utilities and how to deploy them, but will will be a big part of it. We're just watching to make sure we're deploying the capital cost effectively.
Okay. That's great. Thank you.
Andrew its Nancy I'll, just I'll just add if you look our tenure site plan here in Florida, and and the work that we did last year on on the IR P and that served as the basis for it and we'll lot and and in our next 10 your site and you will see similar <unk>. It's solar of course ongoing investment solar but with battery we think the.
The key and we think the prices will be such that the that will make sense for us.
Very helpful. Thank you net.
Again, if you ask the question Please press star and the number one and your telephone keypad.
Oh, yes.
So Scott Lewis from industrial.
And why it's your line is open.
Hi, good morning, everybody.
Most of my questions have been asked but I'm, probably one of broad question, probably initially directed towards that and they may be Ryan and TJ display.
Despite the economics or some of you have cities of been making headlined by the ban and natural gas and the buildings.
I can't find anything sort of related to that and Florida, but but maybe you can give that and outlook on on that.
And then maybe of a broader question to take back.
And Greg or Scott.
And you know do you consider yourself relative we hedged and if that occurs.
Sure as the only was when it comes on the Mexico perspective.
Sure, Yes true Scott.
I think here in new Mexico, we have not had any cities or anybody come force Oh request and those types of changes. So we feel pretty good here, but we also know that theres environmental groups out there pushing.
Putting this all the time, so we're very aware of that the.
The Mexico's and interesting state because and natural gas and oil are a big part of the state so very important to the state's economy. So we don't see a huge push and that direction.
Anytime soon and.
With the abundance of natural gas here and the affordability. We think it's the that's a good source of energy for customers.
Yeah and on the Florida side very similar you know, we do have environmental groups and.
Actually in terms of cities you mentioned, we actually have a there there are a handful of cities that over the last several years of me proclamations or resolutions to be clean by 2050 north of carbon neutral that type of thing. The when you look at kind of the grass root.
Roots demand for natural grass gas across Florida, it's really strong and both residential and commercial and and.
And and so we see it as as with Ryan we see the demand for natural gas continuing in Florida, and we do hear those voices across the safe from the fear of club and others that that you know are promoting no fossil fuels and it's just that that is not practical nor affordable.
This point for customers and and certainly the natural gas.
And Florida has been has been a a.
One of the reasons that weve had reduced to two and across the state and over.
Over the last 15 years and the continued and use of natural gas for the foreseeable future is is really critical I think that to have and continued advancement.
Advancements in terms of of the environment and and so we're certainly part of the answer they're not part of the issue and I'm working closely with with the electrics to be a partner with renewables is where we see ourselves and and and again all of that combined with a very strong and use demand for natural gas by customers I think we will.
The natural gas and Florida for a per sometime to come.
Yeah, and and I don't know.
Look I don't I mean, I understand the point us to do we see it as a as the hedge and I you know I wouldn't I wouldn't say, that's the driving force strategy, but the but I would say the you know and.
Understand you know people are asking different questions about gas ldcs no within within capital markets from our perspective.
You know, we're happy with the castle the seeds that we have I think the new Mexico, and Florida, both I'll use my own words, and and that's what I think broadly both of those states. He the natural gas LDC as an enabler of Decarbonizing the electric side and therefore, an important part frankly of that Ive got journey.
True to carbon reduction, we agree with that premise frankly.
And so you know today, we're you know we're happy we're happy with the with the rules of those gas so the cheese or are playing and the jurisdictions, we're happy with the role the playing within the portfolio as well.
Great I appreciate that color. Thank you very much.
There are no further questions at this time of turn the call back over to the per centers.
[noise] well I'd like to thank you for joining the call today and and your interest in America and I Hope you enjoy the rest of your day.
This concludes that concludes today's conference call now disconnect.
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