Q3 2020 Eversource Energy Earnings Call

Welcome to the Eversource Energy Q3, 2020 results Conference call. My name is John I'll be operator for today's call. At this time all participants are sounding board later.

Later, we will conduct a question and answer session. During the question and answer session. If you have a question press Star then one on your Touchtone phone.

Please note that this conference is being recorded.

I will now turn the call over to Jeffrey Kotkin.

Thank you very much John good morning, and thanks for joining us I'm, Jeff Kotkin, Eversource Energy's Vice President for Investor Relations.

During this call well be referencing slides that we posted last night on our website.

And you can see on slide one some of the statements made during this investor call may be forward looking as defined within the meaning of the safe Harbor provisions of the.

Well the private Securities Litigation Reform Act of 1995.

Forward looking statements are based on management's current expectations and are subject to risk and uncertainty, which may cause the actual results to differ materially forecasts and projections. These factors are set forth in the news release.

Yesterday I guess.

Additional information about various factors that may cause actual results to differ can be found in our annual report on form 10-K for the year ended December 31st 2019, and our form 10-Q for the three months ended June Thirtyth 2020.

I guess finally, our explanation of how and why we use certain non-GAAP measures and how thats reconciled to GAAP results is contained within our news release and the slides we posted last night and in our most recent 10-K.

Speaking today will be Phil Lembo, our executive Vice President and CFO.

Also joining us today are Joe Nolan, our executive Vice President for strategy customer and corporate relations, John Ferrara, Our treasurer, and senior VP for finance and regulatory and Jay Buth, Our controller now I will turn to slide two and turn over the call to fill.

Thank you John good.

Good morning, everyone I hope everyone on the call remains healthy.

And that families are safe and doing well. This morning, I'll cover a variety of areas I'll review the results of the third quarter discuss recent regulatory developments, including the acquisition of the assets of Columbia gas of Massachusetts.

Providing an update on recent developments around our offshore wind partnership with worth it.

I would like to noting that recurring earnings were one dollar or two cents per share in the third quarter of 2020.

Compared with recurring earnings of 98 cents per share in the third quarter of 2019, GAAP results, which included a charge of one cents per share relating to the recently completed acquisition of the assets of Columbia gas of Massachusetts, total a one dollar and one cents per share in the third quarter.

Oh 2020.

In the first nine months of 2020, our recurring earnings excluding Columbia gas acquisition cost total $2.80 per share compared with recurring earnings of $2.69 per share in the first nine months of 2019 and excluding the.

What impact transmission impairment charge.

GAAP results for September of this year were $2.76 per share.

Turning to our business segments, our electric transmission distribution segment earned 60 cents per share in the third quarter 2020, compared with earnings of 61 cents per share in the third quarter of 2019.

Hello earnings were a result of both higher storm restoration costs and property tax expense as well as the impact of thoughts on share dilution.

Our electric transmission segment earned 36 cents per share in the third quarter of 2020 compared with recurring earnings of 33 cents per share in the third quarter of 2019 improved results were driven by the continued investment.

Reliability in that transmission facilities.

Partially offset by share dilution.

Our natural gas distribution segment lost four cents per share in the third quarter 2020, compared with a loss of five cents per share in the third quarter of last year improved results were due to higher revenue.

I should note that because we didnt close on our acquisition of Columbia gas of Massachusetts assets.

Until October nine.

The transaction had no impact on this like the gas segment the segment during the quarter.

Each quarter. This year, we booked acquisition related costs, a parent and have segregated though for increased transparency.

Beginning in the fourth quarter of this year ongoing results of our new gas franchise, which is named Eversource gas company of Massachusetts.

Will be reflected in the natural gas segment.

Integration related costs, However will continue to be reported separately at the parent.

Excluded from our recurring GAAP earnings.

Our water distribution segment earned seven cents per share in the third quarter of 2020 compared with earnings of six cents per share in the third quarter 2019 improved results were.

Were due to a three three and a half million dollar after tax gain on the sale of our Massachusetts area facilities.

For the time.

Eversource parent or three cents per share in the third quarter of 2020, excluding the Columbia gas of Massachusetts asset acquisition costs.

Equal to our earnings in the third quarter of last year.

As you probably noted in our earnings release and can see on slide three.

We are reaffirming our 2020 earnings per share guidance of $3.60 to $3.70 and aggregate EBITDA.

Excluding the nonrecurring costs related to the purchase of Columbia gas of Massachusetts assets.

We are also reaffirming our long term EPS growth rate of 5% to 7% from our core regulated business.

For the year 2024.

We continue to be to expect to be somewhere around the middle of that range lastly, due to the investments we need to make on behalf of our customers as we've outlined for you earlier in the year.

As a reminder.

While we fully expect the Columbia gas assets to be accretive to our earnings per share starting immediately in 2021, we have not yet updated our long term financial outlook to reflect the acquisition of Columbia gas.

Assets in our capital, our Capex or our earnings growth.

In addition, as we disclosed previously earnings from offshore wind would be incremental to our core.

Business growth will provide comprehensive update of our regulated capital investment forecast.

Adding in Amazon with gas company, Massachusetts, projections and provide an update of our offshore wind partnership.

During our year end call in late February.

For the third quarter results I will turn to slide four and our experience restoring power. After tropical storm you say, yes ravaged Connecticut on October four we.

We serve a 149.

Cities and towns in Connecticut, and every one of these communities suffered damage I mean, I guess, how much of it catastrophic as.

As you can see on the slide we had nearly 22000 damage locations that we have to address.

Brought in an army of electric restoration entry crews to restore power.

All the while working on the restoration and a pandemic setting.

The restoration process lasted nine day mean.

Meaning we completed our work from one to two days faster than we had in the last two tropical storms that hit can add again.

Even though we had 30% to 35% more damage location.

And most importantly, we completed that work safely with no serious electrical contact and no Coleman exposure among the enormous workforce, we brought the Connecticut, just a tremendous effort by all of our employees from across all parts.

Of Eversource.

At this time, we estimate that the current cost across all three states will total more than $275 million, but the vast majority of that.

Incurred in Connecticut.

That figure will be adjusted as the actual invoices are received with no. We're still actively pursuing invoices from hundreds of vendors that says that EPS during the state why restoration efforts.

Where we were setting new polls are hanging miles of new lines of replacing hundreds of trends Mormons these related costs to be capitalized.

The ultimate recovery of storm costs, and the evaluation outperformance in safely and expeditiously restoring power to our customers.

His pending an ongoing review by the Connecticut public utilities regulatory authority or PURA that.

Review is scheduled to be completed in late April of 2021.

Sticking with our regulated business.

I will turn to slide five and a review of this year.

Fusion rave reviews.

This past Friday, the Massachusetts Department of public utilities issued its decision in the end start gas rate review that we filed last year.

It supports our continued investment in the NSTAR gas system on behalf of our 300000 customers.

Decision allows us and star gas the increased distribution revenues by $23 million on an annualized basis.

A deep you approve the narrow we have 9.9% and a capital structure with a 54.77% equity.

It also permits us to implement performance based rate, making for a 10 year term that would sound operating performance by yes, we'll target annual base rate increases of inflation plus 1.03%.

This is an earning sharing mechanism that would return at 75% of the benefit to customers should we see the ROE of 10.9% and sharing mechanism on the das side, our hourly falls below 8.4%.

Also exciting is the decision also improves our first ever geothermal pilot program.

Our other line standing rate proceeding involves public service of New Hampshire.

National last month, we and all the parties to the PS and age rate case filed a proposed settlement in the rate review.

That is preparing for nearly a.

Year and a half.

You can see from the slide we settled on a $45 million annualized rate increase that includes a 9.3% return on equity and a 54.4% equity layer.

Should regulators approved the settlement the permanent.

Increase would take effect in January January for EPS of 2021.

You may recall that the new Hampshire public utility Commission allowed us to implement a temporary rate increase of approximately $28 million back.

Back in July July for 2019.

The final approval rates would be retroactive back to that day 18 months.

We would recover that in a true up over the course of the year 2021.

We can sell consider the settlements would be a constructive outcome to SNH is first general increase in about a decade.

And about the new Hampshire, PC to approve the settlement before the end of November.

From the rate review reviews, I'll turn to slide six and our recently completed acquisition of the assets of Columbia gas of Massachusetts.

For $1.1 billion of cash excluding working capital adjustments.

Most of these assets were assigned to EPS with GAAP Company, Massachusetts, New subsidiary I mentioned that we formed in May of 2020.

As you can see on the slide much of EPS with gases service territories adjacent to and star gas or Yankee gas service territories. Additionally, NSTAR.

Our electric already provides electric service to about 20 of the communities that Everest with gas service with natural gas.

As a result, we expect to realize operational benefits brand, new with 330000 natural gas customers and the communities where where they live.

To finance the transaction, we sold approximately $500 million of equity.

In in June and we financed the debt portion of the transaction in August and again, we are very confident that this transaction will be accretive to our earnings per share in 2021, an incrementally accretive in the years ahead.

A critical factor in ensuring that this transaction brings benefits to all stakeholders is an eight year rate plan that we negotiated with the Massachusetts Attorney General and other key parties prior to our filing with the Massachusetts Department of public utilities.

The key elements of that plan a listed on slide seven you will allow us to make the necessary investments in our episodes gas of mass system and reflect those investments and rates in a reasonably timely manner.

Thanks, Paul that the deep you approve the settlement in the acquisition very quickly.

Yes, Steve so the property.

That's our plan in place, where we have focused.

In providing our new efforts with gas customers with the same high level of service that we provide our other 550000 natural gas distribution company customers that we have in Massachusetts and Connecticut.

As I noted earlier, we plan to integrate Eversource gas of Massachusetts into our updated five year projection that we will provide you in February.

We continue to project approximately $3 billion of regulated company capital investments. This year. Despite the challenges caused by the pandemic and the need to take crews off of capital projects for a significant part of August to deal with the aftermath of tropical storm years through.

Through September our capital investments totaled approximately $2.2 billion that.

Thats approximately the same level as this time last last year in 2019.

We made considerable progress on our transmission capital program in the third quarter, putting seven projects into service at or below budget as.

As these benefits of lower costs will flow through to new hit New England electric customers.

From the regulated business I will turn to offshore wind partnership with horse dead on slide eight.

We've had a few developments since our July 31st earnings call.

The most significant development was that in August the Bureau.

Of Ocean Energy management posted a Coke fleet review schedule for our 130 megawatt South for project on long Island.

Schedule culminated in a decision on a construction and operations permit or CCOP as it's known in mid January of 2022.

We're also making progress on the other permits in September we filed a settlement proposal with the New York Department of public service to resolve much of the stakeholder feedback related to the construction operations and maintenance of the project that lives within New York jurisdiction.

In October several of New York State agencies signal that support for this proposal by signing on to the agreement.

Weve structured in agreement on host community payments in the necessary real estate ranked with the town of East Hampton with the offshore capable of land and will be connected to the long island grid.

New York Public Service Commission siting hearings for South work is scheduled to commence the first week of December.

We continue to expect the state siting process to be completed in 2021 before BOEM issues the cost.

Based on that schedule, we now expect the project into service in the fourth quarter of 2023. This is consistent with the expectations. We disclosed during our May in July earnings calls, while we were still waiting for the review schedule.

Turning to our other projects you recall that we filed our bone application for resolution wind in March.

We expect phone to establish a review scheduled for that project in the first quarter of 2021.

We do not expect to provide an updated in service date for this project until the schedule is issued but at this point it is unlikely that the project delivery service by the end of 2023.

Also we filed our Sunrise wind application with bomb on September 1st and expect people to establish a review schedule for the project next year.

Once we receive that review schedule, we'll be able to better estimate more up to date in service schedule.

But again at this time it would seem that the end of 24 in service is not likely.

We are very optimistic about our offshore wind business and expect to have many opportunities over the coming months and years.

To expand our offshore wind partnership beyond the 1700 14 megawatts currently under contract.

As we mentioned before we have enough lease capacity to construct at least 4000 megawatts on.

On the 550 square miles of Ocean tracks that we have under long term lease office off the southeast cost of Massachusetts.

To this point product.

On October Twentyth, we submitted a number of alternative bids into the second New York offshore wind RFP, where the state is looking for between 1020 500 megawatts.

New York State officials have indicated that they expect to announce the winner will winters before the end of the year.

Our Sunrise project as a reminder, one the largest portion of New York first RFP last year 880 megawatts.

Additionally, just last week, Rhode Island Governor Gene Orlando announced that first day, we'll target early next year for issuing an RFP has 600 megawatts of additional offshore wind as.

As you know the majority of our Revolution wind capacity 400 megawatts will be sold to Rhode Island with with the balance going to Connecticut.

Thank you very much for joining us this morning, and I'll turn the call back over to Jeff.

Thanks, Bill and I'll turn the call back to John just to remind you how to enter questions in the queue and eight Q.

Thank you if you do have a question press Star then one on your Touchtone phone once again Thats Star then one on your Touchtone phone.

If you wish to be removed from the queue. Please press the pound sign or the hash key.

Thank you John our first question. This morning is from Shire from Guggenheim Good morning Sharp.

Good morning, Jeff Good morning, Phil.

Good morning, Chuck.

So couple of questions here.

Justin Sutil some of your language around sort of the growth rate.

Obviously, which still excludes Columbia gas and offshore wind. Obviously these are very accretive and you are already conservatively kind of well within your band. So should we sort of be thinking about these incremental items as potentially raising your growth rate to maybe 6% to 8% or something that will hit either the top end and then sort of excess.

And is that runway with your current trajectory I mean, the reason why I ask is 6% to 8% seems to be certain that new top quartile bucket in our space, where 5% to 7% is becoming a little bit more typical secures how you're sort of thinking about this do you see value to be a top to be in the top quartile or units beginning in rewarded for it.

So curious on that as we think about the layering its plants.

Sure sure. Thanks for the question.

You guys are doing well.

Certainly the addition of Columbia gas and will be.

Additive to our existing forecast so.

We're working through all the details of that so we were able to provide you with a follow up.

Update in February, but we expect to get.

Significant benefit.

At from that franchise and.

Say, we also expect as those offshore wind projects come online.

Online to also be additive to remind folks I know et cetera, but and you did that the five to seven.

That growth rate is from from the existing core business with doesn't include Colombia.

Colombia assets I'd also doesn't include.

Grid modernization activities that are currently pending in Connecticut, and New Hampshire, R.R. and by that.

Could could be a potential.

Move forward in time relatively soon in Massachusetts in terms of taking a look at that by the by the regulator. So.

I see that we have a number of levers to grow and grow and to have.

And even a higher rate than we had expected before.

Got it that's helpful.

And then just lastly from me can you just maybe talk a little bit about your expectations for the legislation in Connecticut, I mean, the legislation that passed was more constructive than the draft legislation, but obviously some disappointment with the refunds and penalties offset by the potential upside from like PBR, So sort of how are you.

Just thinking about this entirely.

Sure. The energy legislation, we've said consistently that PBR is a is a formula and a template that we.

We think is the fact that we have PBR structures and other states and we think that.

Having up.

Our robust discussion on PBR in Connecticut makes a lot of sense and we're very very supportive of that provision.

Really.

Energy legislation.

Directed PURA to to evaluate that and open a docking by the middle of next year. So June of.

2021, and if it authorizes.

PURA to establish storm standards and potential penalties as you as you mentioned there isn't there was an increase potential.

Of penalties car.

Currently those penalties are 2.5% of our distribution revenues in Connecticut and that goes up goes up to 4%. So yes, and also just pure some additional time to review cases, so which is also something that.

EPS to be appropriate so.

The legislation as you as you indicated is out there.

And pure is working through the details of it and we expect to be.

Working through that in a constructive way with them over the next several months.

Got it terrific Thats all I have today, thanks, guys right.

All right. Thanks, Thanks are.

Our next question is from Steve Fleishman from Wolfe Good morning, Steve.

Good morning.

Hello can you hear me yes.

Yes, Steve I can yes.

Okay great.

So.

Just a question on the delays in your offshore wind projects could you maybe talk to.

No we don't know the exact timing.

How should we think about the.

Impact on the economics of those projects from.

From delayed art art.

Or puts and takes and is it hurting the economics of the projects are already have signed up to.

Yes.

Thanks for your question, Steve and I Hope you unit and we are doing well.

I guess the two to go through the puts and takes.

Peace.

No I don't think that folks should automatically think that.

Schedule changes result in ups or downs, there is some benefits or.

That people may not.

It may not consider in that so certainly.

If you are looking at.

Adjusted schedules, you might be able to adjust your installation vessel optimization better.

You know.

Turban sizes themselves are getting larger so you could move to larger turban sizes if you.

Projects are due at a later time period versus an earlier time period and certainly.

The costs.

Supply chain and availability of materials and supply chain is only getting better so so I'd say that.

There is opportunities for improved cost.

Economics as you move into a schedule that.

You may not think of I think people generally think of projects. As you know is a delay it's a cost increase but that there are other elements at work here on the offshore wind business that offset that.

How about how about any negatives.

How about like do you lose we're going to lose any tax credits or anything else, yes, certainly I guess just time value yes.

Yes.

In terms of the schedules were looking at we don't expect to have any impact on our tax.

Assumptions, but certainly significant delays.

The waste could have impacts on on your tax assumption delays could also have.

Impacts on contract that you have with Counterparties, but.

In our specific case, so thats the general case in our specific case.

We are confident that we have the ability to work within both of those impacts area and the contract area in an effective way with where we see the schedules going in the future.

Okay. Thank you.

Thanks, Steve.

Our next question is from Angie from Seaport Global Good morning Angie.

Good morning.

Question about the Massachusetts, you did have this very constructive.

Thanks, Jen and thank God.

But the goal is clearly looking at the future gas LDC.

And so how do you guys see it especially in light of the fact that you just.

Acquired an additional gas utility.

Hi, good.

Good morning, Angie and thank you Steve.

Your question and book is doing well.

Yes.

The way that I would have positioned into the way that I think people should think about it is that there's nobody first of all who's more aggressive in terms of looking at that clean energy strategies and carbon reduction and eversource in terms of having.

Carbon neutral goal by 2030, we have worked effectively with all parties in in all states, but in Massachusetts, where.

Turning general and others want to take a look at.

Sort of the.

Sure on the outlook in terms of the the gas business.

We've we've been working with these intervening parties for for many years and we'll continue to work with them on what we think an appropriate strategy is there so.

This is a long term.

Outlook in terms of that the state wants to be have aggressive clean energy and carbon reduction.

Targets with fully supportive of that and we look forward to working with all the parties there, but we don't see it as a.

As a threat to the.

Got distribution business.

In the region at all.

Okay, and then in Connecticut.

This this lease and back and forth between you guys and poorer about the extension.

Yes, the lack of key disconnection on the back of that.

I mean it.

Sounds a bit concerning that core EPS pushing back the strong debate on to sign off on that extension.

I mean, I would assume that.

Actual practice normal practice once a regulated utility to see.

Covering update that on the recovery.

Revenue I mean can you give us a sense how you see it in Connecticut.

Given the latest.

On the legislative changes and also from deterioration and then.

Get the relationships in the state.

Yes, so we are not doing shut offs.

Across all any of our franchise at this point and specifically we're working we're working with customers we're working with.

Fuel agencies assistance agencies on.

Next year that works that work best for customers. We've also engaged with PURA.

As you mentioned and other government.

Officials.

On this issue so I'm I'm confident that we will get to.

Good place here nobody wants to burden.

Burton customers with anymore than than we're all ready all of us are burdened with in terms of the economic conditions.

And covert et cetera. So.

We are working through the issue, we're working with customers as I say in some of the systems agencies.

And.

I'm sure, we'll get to a good outcome here.

Okay. Thank you.

Thank you Angie next question is from Julian from Bank of America, Good morning Julien.

Hey, good morning team. Thanks for the time I hope all of you doing well as safe families as well.

Perhaps just to pick up.

Or perhaps clarify I can't remember the last rounds of questions. When you talk about the Fourq you roll forward you give me Rolling 2025, and then more specifically, how do you think about including or excluding offshore wind in light of the uncertainties described should we expect that offshore wind should continue to be at least.

Are those projects, where there isn't on.

Determined data continue to be excluded there.

Thanks for your question your comments and I Hope I Hope your view in Europe, and we are doing well too.

Just to clarify we will.

Our history has been too.

At another year into the into the outlook. So 2025 would be that that year since our forecast goes through 2020 or time period. So that is something that you should expect to see.

And really our our view on how to look at offshore wind it doesn't change by by any of the schedule items, we talked about today or it we've looked at it as.

Showing the core business as the as the driver and the foundational element of the of the growth rate and then to show that wind is additive to that in what way so that would be the intense going forward I think that.

What I've been asked this question before the answer is yes was and still is as as more years.

Of wins come in to the actual results of that particularly year then to me it makes more sense to them. So.

Roll it all together, but at this stage the expectation.

Especially in this upcoming February update would be to have the core business extending that through 2025, and then show offshore wind in in addition to that.

And if you don't mind elaborating a little bit further.

I know that there is a certain degree of uncertainty on exactly the permitting schedule that inhibit your ability to say when these projects in the region service can you at least try to put some more parameters around what each of these pieces of the process could take such that there is a window. If you will it may be too early.

Yes, so in terms of.

Yes, there is.

People.

Realized out there and Weve been asked questions I think you back off.

The questions in terms of.

With delays on vineyard wind and other things there's been some delays in terms of volume notice of intent.

Of intent and to prepare there.

Environmental impact statement, and frankly move we would we would have expected in our original schedule.

Schedules that some of these.

And our wise to prepare the the environmental impact statement would be would be out by now. So these are expected I believe.

You know that planned schedule for reviewing.

And the leasing nieces is underway so I wouldn't expect.

A significant change in the schedule, but.

At this stage it would be prudent to wait to see that the schedule that comes on Pall and before we.

Commit to a final instead.

In service date.

I wouldn't expect it to be significant.

Got it excellent all right I'll pass it from there. Thank you so much.

Okay, great. Thanks Julien.

Next question is from Durgesh from Evercore good morning Durgesh.

Hey, good morning, guys. Thanks for taking my question.

Just just following up on.

The the offshore wind here.

What to expect.

Yes.

Decision I suppose that is going to be out or you asked David rather this month or early.

Early December what to expect there and then how does that impact your your future project timelines.

Yeah the.

These known as a bit of intense they contain.

A planned schedule that in the analyze they have contained bones planned schedule for reviewing each of the comps so that would be an important.

Piece of information to have available so that's really the.

What's included in that is always a planned schedule for reviewing the cost that that comes out with the the notice of an intense.

Right. So I guess, maybe im talking about the environmental impact statement isn't there an environmental impact statement that Bowman supposed to.

Sort of put out here in the in the next few weeks.

Youre talking about the one for vineyard right.

Yes, yes, yes.

Okay Im not.

I apologize.

You probably have to ask.

When it went on about that okay.

Okay, but that doesn't have a read through for you or your offshore wind projects I guess, that's what my question was.

Well certainly.

All of the developer as off with coast.

We've been going through this channel cumulative impact study and looking at spacing and.

Of wind turbines and we came up with a one nautical mile by one not a mile spacing. So certainly there could be components that come out and in any decision for.

Wind that you'd have to take a look at to see if it has any impacts.

The other developers including us.

But in terms of what might be in that or the exact timing.

I think they need might might have a better perspective of that.

Okay perfect. That's all I had guys. Thank you so much alright, thanks Durgesh.

Next question is from Jeremy from JP Morgan Good morning, Jeremy.

Good morning, Thanks for having me.

Yes.

Just wanted to start off with.

What are the benefits of looping con Ed into the proposed Sunrise too.

Sunrise win to RFP here Eversource has the experience of building transmission make curious what additional competitive advantages cannot provide tier to this specific project can.

Can you provide details on potential ownership interest for each entity in does ownership interest change once construction is complete and the project is in service.

Hi, Thanks for your question Jeremy Hope is doing.

Doing well I guess I would say on the first part of the question.

Sure, obviously con Ed has local knowledge of.

Of New York in their service territory in the network and the operation of the transmission and delivery system.

That.

Better valuable.

To to any party, if you're if you're operating in New York, So I'd say.

Jay they bring a knowledge and skill set of the area that certainly we don't have.

As as depth knowledge as they would so certain skill sets there that local.

A player with Brent.

So in terms of what the.

Components of a relationship would be those things are all.

To be discussed as we as we move through but it certainly.

Beneficial I think to the project to have.

Company with.

Con Ed skill sets involved.

Got it and as far as potential ownership interest is there any kind of thoughts on how that could develop.

Not at this time.

Got it.

And then.

Well the delay in offshore wind permitting have any impact on current financing plans is it fair to assume the 700 million of equity in your current five year plan.

Moving to the back end here and how is offshore wind capex spending track, Peter Dave persist to $3 million to $400 million range that you expected.

We haven't disclosed a range that we've expected we've we've talked about how much we expected to spend.

This year.

Just for the year 2020.

Thats tracking somewhat close that I'd say, it's probably a little bit under what we expected it at this time.

In terms of the financing.

You're right that we.

We announced a year ago. This $2 billion of equity needs that would support the forecast that we we issued 1.3 of that so this $700 million.

Remaining that.

And I would say the same thing as I've said, all along as we'd be opportunistic and consider what our capital forecasts are and what the market conditions are.

As we look to.

Fulfills the rest of that.

Offering that we discussed.

Got it that's helpful I'll leave it there. Thank you. Thanks.

Thanks, Jeremy.

Next question is from Paul Patterson from Glenrock Good morning, Paul.

Good morning, guys.

Good morning, Paul.

I just wanted to follow up on the the the draft decision in Connecticut.

On Monday and.

What's your thoughts were on it.

In the.

If it were back to become a final order what the.

What the potential impact.

Could be.

Are you talking about the draft.

Information on on rate. So what can you be more specific sure. There was a draft decision on on Monday in the.

The per case associated with the with the rates right the rate review that.

That was reversed.

That proceeding.

I can tell you that the specific name.

Okay.

I just wanted to.

I just wanted to be specific as somebody else mentioned has been a number of different yes.

Yes.

So the.

So as you recall the pure suspended the rates that we had implemented over the summer both we and you like to take an additional look this is what you're referring to so we did receive the draft order and really it's kind of hot off the press were currently.

Evaluating that and.

And we're going to.

See what comments, we might have and comments on the draft or do.

I think it's the Twelveth of November so we have some time to flush out anything but consistent with.

On first blush, I'd say, it's consistent with.

Pure a desire to have.

Some rate changes move instead of implementing rate at peak times of usage, maybe such as July implement online.

Change the timing of it to implement it maybe in a shoulder month like like may or something.

And move to annual reconciliations as opposed to semi annual so this this would.

It does it does delays this could have effectively is a cash flow items could have an impact on our.

Deferrals.

We have in place there but.

I think it generally is consistent with the desire as we said to move off of these peak periods for making rate changes in the shoulder periods and.

So when we go from there, but we are where we are actively reviewing that last night and today, we will be and have any comments that we would have a view as I said on the 12.

There was one part of it that would reduce the carrying charges.

From the.

From whack to a prime rate on a variety of reconciliation mechanisms.

Is there any.

Do we have any I know this is off the press and everything but do you have any sort of forecast as to what the.

Those reconciliation mechanisms like how much capital might be tied up in those.

On.

You did that that is a point to.

The.

The carrying cost at prime which is.

Consistent in some of the jurisdictions I guess so.

No that is not that significant.

Yes item, but it is certainly one that PURA had put out there in the draft is to recover the deferred balances with the prime prime rate.

Versus.

A whack.

Okay, but.

And then just.

We don't know who the president is going to be it seems but if there was a change in administration.

Do you think that could have or not have maybe.

A significant impact on the OEM permitting process with respect to offer win.

The debt.

The permitting process I mean, when when we meet with.

With both the OEM the the the Bureau of Ocean Energy management.

That people are active we are actively working we're actively having.

[music] meetings or teams calls or whatever.

The.

Yep.

The video capabilities are that we're using but we are actively working that and I can assure you that the people in the agencies are working full speed regardless of.

Hello.

President there, but the election results are but certainly it would be good to have.

The results of the election, I think we've all as a as a country.

That.

The election results or something that we've all targeted out there and wherever you fall on the.

The political spectrum, it's good to have certainty as opposed to uncertainties I think we're all looking forward to what the final outcome is there. So we can we can move forward book.

Okay. So just to provide clarity the process at the B. OEM, it's pretty much the the.

Agency, the sort of bureaucratic process thats going on really you don't see a significant change one way or the other.

Regardless of the outcome of the presidential election is that.

Right understanding.

Yes, I'd say that the work at the agencies is going on there we've been meeting regularly going through questions.

Working through.

Various state agencies, so no I would say that the work is continuing.

As you say that.

That level.

Okay awesome. Thanks, so much.

Thank you well. Thanks. Paul next question is from Mike Weinstein from Credit Suisse Mike.

Hey, good morning, Phil.

We are.

Hi, good how hospira hope you're doing well.

Maybe you could just give a quick.

Two second update on what you think the outcome at first might be for trying.

Its mission are always.

Considering I don't know where if the election outcome maybe.

Has any effect on any of this.

Accelerating an outcome.

Well, Mike that's a that's a very big crystal ball that you're asking.

So.

But again, thanks, and I hope you're doing well thanks for your question.

Thanks.

I wish I had a.

A better answer than to say that.

Its working its way through we don't really have.

A specific clarity as to.

When FERC Mike.

Come up with something on the new England for pending New England cases, and certainly.

Impact of the election, one way or the other what what that could have in terms of commission.

Commissioners and that type of thing so.

Right now the only thing I know for certain is where were booking at.

10.57 rate.

Reserving to that level and an 11.74 cap.

And.

We'll just have to wait and see what the final the final outcome World will look at but I don't really have a.

And the answer I know in years past and I've tried to what I've tried to think that one was coming or it was going in a certain way Emily hen.

Hasn't materialized. So I think it's best to wait for the final. The final order comes out at this point our borders as it may be.

Right and.

Bigger Crystal ball question would be.

No that hydro Qubec has a pretty big long term construction plan for hydro generation.

They are and I know that their long term plans included lots and lots of northern pass type transmission lines.

Do you think there is ever a time at some point, where there might be another.

Another whack or another go at transmission at some point you know big transmission projects.

I think a lot of that is dependent upon what the states want to get right. So this this these are going to be processes now that have driven by state.

The state's clean energy policies in the states desire to.

Have either offshore wind or solar or hydro in the mix. So.

There are certainly there's a lot of activity at the states now I mean, the states in our area of what.

Yes.

Carbon reduction targets. So it wouldn't be asked the question to see a state.

On to.

Contract for more of that but there's nothing there's.

Nothing planned on our end as there is nothing that I see at this stage on the state's agenda that we would say that but when you say the word ever you know that's a long time.

Right. So it seems like the offshore wind program really is kind of us plants at that.

At least for the time being.

I'd say, that's a that's a.

Good.

Looking at it.

Okay, great. Thank you very much okay.

Okay. Thanks, Mike. Our next question is from Insoo Kim from Goldman Sachs. Good morning Insoo.

Hey, Good morning, guys. My only question is and I apologize if I missed this but can you give just an update on the Connecticut grid mock filings and any updates on expected to show its decision from the commission and timing of investments et cetera.

Thanks, a question too and I hope Youve family doing well.

You Didnt Miss it.

I mentioned.

In terms of what items could be additive to our 5% to 7% core business growth rate I alluded to gratified Inc.

In Connecticut, our new Hampshire or potentially additional ally.

[music].

Dockets in Massachusetts, but there's really been no change that we.

All the parties filed comments and plans back in July and certainly you can understand there's been a lot has been a lot going on and I think I may have said EPS was in October, but we all know that he EPS was in August.

So since August there's been a lot of.

You know there's been a lot of focus on on on storms. There has been a lot of dockets and somebody else mentioned, we have dockets going on in terms of.

Moratoriums and whatnot. So this.

Expectation was there was going to be another sort of go round and another process in Connecticut towards the end of the year I really haven't seen anything that would indicate.

Indicate specific schedule.

On that so I guess, our best guess is still.

While it's still in the in the pipeline and you may see more activity on the Green line. They are in Connecticut, as we move over the next several months, but in terms of.

In being in our forecast.

I want to be clear that there is currently no.

Zero Theres no grid by spend.

Spending in our capital forecast.

For any grid mod programs that have been approved like in Connecticut, or New Hampshire. So once they are approved and once we see what what our role would be in them.

Once we see what that looks like then we have more confidence and putting them in the plan. So.

That could be something we have information on by the time, we get to the February update so.

We'll have to stay tuned on that.

Yes makes sense, that's all I had thank you guys stay safe.

Right.

Thank you next question is from David Arcaro from Morgan Stanley Good morning, David.

Good morning, Hey, Jeff Hi, Phil Thanks, so much for taking my questions.

Thanks.

Hey, a quick call quick follow up on offshore wind in light of some of the recent delays I was wondering if that changes how your strategy around other bids that you're putting into future RFP at like peaking in more contingency anything that might give a greater level of comfort around the economic.

It's a future projects that you might win.

Thank you, Dave comment and I Hope, you and and we are doing well.

Certainly.

Every piece of information that you get.

This isn't just offshore wind.

This is Sean.

On all our business, but I'll focus on offshore wind since that's the question.

Every every month that goes by every quarter that goes by we gain more insight and information about.

Destruction about.

Hello.

Rates about about lots of factors that all those things.

All those things are factored into subsequent bids so the information that we have available to us as we are moving into a bid.

Recent bid in New York is different than we had from bids that we made in knowing what I.

Excellent or Connecticut, or Massachusetts. So every every data point is important to us and we factor that into the next bid so I'd say that absolutely that so.

Schedules and hi, how do you make it through the siting process and all of that informs.

Subsequent bids and so I can assure you that all those things get get.

Up to the minute attention before because it.

Okay got it.

That's helpful and I just wanted to touch on just on M. costs in the OEM, but you could you remind us.

How you see that trajectory just for the overall business going forward you've been you've got a great track record of controlling them. So what are the key levers.

In your.

Given your tool belt, Phil you would focus on going forward for managing own them.

Digital we've got people process and technology rents all those things are.

Our levers to help our capital program as well as our operating program. So.

We continue to implement so.

Systems and technology that.

Improves processes that makes it more effective efficient and effective workforce. So we.

We have.

Still a robust I'd say series of technology improvements.

If you if you.

I'll start off by just setting the stage that in the guidance. We gave we said that we expected OEM cost to be down this year and then just for the forecast period kind of flat going going forward.

So how to how we able to do that.

It is by some of these technology changes and we've been implementing more productivity management tools and tools for our individual line workers and gas fitters and in the field.

The work to update their work that we can then take that and automatically update drawings and files, we don't need the hand, it off to somebody else. So this still.

These productivity technology changes that are happening some went in last year some going in this year and more planned for next so that that will be I'd say the lever of the under the.

Underpinning for us to have the ability to continue to improve processes and take.

On the cost side of the business.

Okay, Great. That's helpful. Thanks, so much for the color.

Youre welcome. Thank you David.

Next question is from Travis Miller from Morningstar good.

Turning Travis.

Good morning, Thank you.

But one quick clarification on the storm cost at 275 million number if I heard you correctly.

How much did you expense in the quarter and how much was either deferred or capitalized or it will be pending that.

The regulatory filing that you mentioned.

Sure that amount that you.

Repeated with a different that's how much of a storm costs that we deferred in tropical.

Storm Dcs and that was across.

All states, but primarily in Connecticut, So thats, our deferral that would be what's a storm gets to a certain level. It triggers a deferral. So we.

That that all is deferred storm costs right now in terms of.

Our other storms certainly we had.

We had an active quarter for storms in general, but there are other storms other than these ideas that did impact the quarter I mean, our storm costs were up about $10 million for the for the quarter that went through.

I would now so.

Quarter, it's it's at that level and then the 274 or five that you mentioned this is the differed across the system.

Okay, Great Thats very helpful. Thank you and then a quick follow up to the discussion on the Connecticut legislation and there are some.

Language in there as I understood. It is about the general Assembly of income.

Review power there what's your thought in terms of the scope of what the general Assembly separate from pure.

Could do in terms of either taking back some earnings are.

Rate changes stuff like that separate from what's going on on the PURA.

Well certainly the general Assembly can enact legislation that it feels is appropriate and any.

Matters so.

I do think specifically to the the energy legislation that was enacted.

Recently in Connecticut that most.

Things.

All were.

The most part move to PURA so.

The regulators of the I guess I'd look at it as the legislation would provide the intent the framework that direction and then PURA is the one who is going to be implementing they're going to be the one to evaluate the performance based rate they'll they'll be the ones who.

Initiate the storm.

Standards and things like that and and look at.

Should we be penalties or should it be food.

No penalties and things like that so I think that effectively.

The General Assembly can certainly enact.

Any and all legislation.

Reals it.

It should and the way that this legislation seems to have.

Turned out was that the implementation of that legislation is in the hands of PURA.

Okay. So the potential for a day or the risk for any kind of claw backs would likely go through pure instead of go through the general Assembly based on that.

Got to get legislation that you talked about.

[music].

Yes, as I said, the PURA is the dockets.

We are active in and we'll be active over certain time.

Date that the legislation has given PURA. So I would expect that PURA will have.

Half the Pan on this but again as I say.

Legislation can can always be enacted in any in any area.

Yep, Okay, great I appreciate it.

Alright, Thank you Travis our next question.

EPS from Andrew Weisel from Scotia, Good morning, Andrew.

Hey, good morning, Thanks for squeezing me in.

First question is with the two rate cases, now completed can you remind us which subsidiaries might be next to file general rate cases, we have plenty of regulatory items of course with grid not in other initiatives, but for general rate cases.

Well according to.

Requirements in Connecticut, Connecticut could be.

The area that is required to file by the existing.

Framework, there and that would be something that would be sort of a.

Next year sort of event, but other than that.

Pretty much out of the regulatory arena.

Okay great.

Then on offshore wind.

Can you just thinking Oh, sorry can you share your latest thinking on how big you're willing to let that business get you've talked a lot about the opportunities that you are pursuing beyond the three existing projects any thinking as far as from an earnings mix perspective. If there is a limitation or would deep will you plan to just be bid bid it can get.

As many projects is your leases will support.

Well I want to be clear on this because I think it's a very important point that big.

Big bid bid isn't that strategy. Our strategy is to have a financial discipline about growing that business in a way that provides appropriate levels of of returns that benefit our shareholders. So just by winning a bid.

That doesn't do it it has to be we have to and we continue to maintain financial discipline in terms of the amounts that we bid and the returns that were looking for so.

As as long as the returns are at an appropriate level that.

For that business it makes sense to make the bid win the bid and.

Spanned the business there.

The what we've said is we are track what we owned off the coast of.

What we have access to in terms of the lease areas.

We could do about 4000 at least 4000 megawatts of offshore wind. So this kind of yes. That's the maximum capability that we have so its not an an infinite.

Growth type of thing.

We had indicated that when leases were available that are not in our region that we were not interested in them. So leases in our region like the ones. We're involved in are are good but on the lease areas.

That's that's not for us in other parts of the of the mid Atlantic et cetera. So it's a we're constrained by the lease area and where we had guided by the financial discipline to.

On our bids and our returns.

Got it that's really helpful. I guess I should have said bid bid bid responsibly okay.

Hey, guys footwear effect and I Hope you said that.

All right Andrew Thank you very much that's a wraps up today.

If you have any follow up questions.

Please give us a call or send us an email and we look forward to speaking and seeing many of you during the virtual EEI Conference next week.

And thank you ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.

Thank you.

Right.