Q1 2021 Avangrid Inc Earnings Call

May 4, 2021

Press Star then one on your telephone.

Please be advised the today's conference is being reported if you require any further assistance. Please press star zero and I would now like to hand, the conference of which of your speaker today, Patricia <unk>, Vice President of Investor and shareholder services. Please go ahead.

Thank you, Jason and good morning to everyone. Thank you for joining us today to discuss first.

First quarter 2021 earnings.

Presenting on the call today are Dennis <unk>, our Chief Executive Officer, and Doug Stuver, Our senior Vice President and Chief Financial Officer.

Also joining us today for the Q&A part of the call will be Bob Kump, Deputy Chief Executive Officer, and President of other grade of one one.

Hundreds of president.

President and Chief Executive Officer of ovens, and renewables and Kathryn W and the President and Chief Executive Officer of under the network. If you do not have a copy of our press release or presentation for today's call. They are available on our website at www Dot <unk> dot com during today's call. We will make various forward looking statements within the meaning of the safe Harbor provision.

And of the U S. Private Securities Litigation Reform Act of 1995 based on current expectations and assumptions, which are subject to risks and uncertainties actual results could differ materially from our forward looking statements of any of our key assumptions are incorrect or because of other factors discussed in our and this earnings release and the comments made during this conference call and the risk factors set.

And of our accompanying presentation, Oregon, and our latest reports and filings with the Securities and Exchange Commission each of which can be found on our website <unk> dot com and we do not undertake any duty to update any forward looking statement.

Today's presentation also includes references to non-GAAP financial measures you should.

Refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of non-GAAP financial measures to the closest GAAP financial measure.

I'll now turn the call over to debt.

Well, thanks, Patricia and good morning, everyone. We appreciate you joining our earnings call now over the last 10 months you have heard our team and talk a lot about the importance of execution and focusing on delivering strong and consistent results. These are the elements of the build trust confidence and deliver sustainable long term value.

Now building all of the encouraging directions that and Q4 of 2020, our results and Q1 demonstrates the progress we've made by prioritizing our resources and building a culture of high performance and accountability.

And we realize that the one or two quarters don't make the trim, but you can't sort of trend without a couple of quarters. So I'm pleased with the excellent start of the year driven by ex strong execution and solid operating performance and both of our networks and renewable business.

Our net income and the first quarter was $334 million per.

Per $1 eight per share up 40% over the first quarter of 2020.

And adjusted net income for the quarter was $354 million or $1 14 per share up 50% year over year.

Now, even if we exclude the impact of the Texas weather events. Our adjusted EPS was still a strong 87 per share revenue representing growth of approximately 15% year over year.

We delivered double digit growth in our regulated business driven by our New York rate cases, and solid progress on our roads are authorized ROE and all of our utilities and.

And the first quarter, we started construction of our $1 billion, New England clean energy connect the transmission line, which will be the largest clean energy projects in new England.

And I'm also pleased to officially welcome to the team Kathryn Stepien, as our new President and CEO of <unk> and grid networks and.

Catherine is here with us and Orange, Connecticut safely socially distance and she brings solid leadership experience and the utility business. Her track record of success and innovation are a great addition to our leadership team and I'm confident that she is going to help raise the bar for all of US as we continue to improve our customer service and folks.

On the reliable and efficient operations welcome Kathryn.

Now with regard to our PNM resources merger and we're pleased with our continued progress on the required regulatory approvals, including our all party settlement of Texas, and our multi party stipulation of the new Mexico as well as the recent FERC approval. We are on track to close the transaction and the second half of the year.

And renewables, our adjusted EPS was up by 25 compare with the previous year. Thanks to the strong operating performance and availability of our fleet, including through the Texas weather event.

During the winter storm, we met all of our delivery obligations and produce excess energy contributing to the solution during the crisis.

And offshore wind we received bombed final environmental impact statement in March for our 800 megawatt vineyard wind one project and we're on track to break ground and the second half of the year.

We currently have 690 megawatts of wind and solar under construction with 640 megawatts starting construction in 2022.

Lastly, based on our strong performance in Q1, and our outlook further rest of the year, we are raising our EPS and adjusted EPS guidance by <unk> 10 from our previous range of $2 15 to $2 35.

To our new guidance of $2 25 to $2 45 for 2021.

This guidance assumes that we close the PNM resources merger, along with the required financing at year end.

Now, let me provide a little more detail on our operating businesses and.

Networks, we're focused on operational excellence customer service and earning our authorized ROE at all of our utilities by meeting our commitments and our rate plans and enhancing our operating effectiveness and continuing to focus on enhancing the customer experience.

Our regulated investments during the first quarter were up 40% to nearly half of $1 billion and we're on track to invest about $2 billion. This year. These.

These investments will go towards continuing to improve the reliability and resiliency of our grid, including the investments in automation.

Automation and substation upgrades.

In New York, we're implementing our three year rate plans approved in 2020 for <unk> and our G&A, which are going to enable us to make critical investments in automation and reliability and smart grids and now.

Now beyond the three year rate plans. We're also encouraged by the 10 year resiliency Bill proposed of New York's current legislative session.

This legislation would provide the opportunity to look holistically at the next 10 years, allowing for critical investments to reduce storm impacts and to shorten the duration of outages when they do occur.

And many of them, we have consistently met or exceeded our customer service quality metrics SCM CMP on a 12 month rolling basis through April and we expect to file to remove the 100 basis point downward adjustment in our ROE in the second half of the year.

And I'm also pleased to announce that last week, we reached an agreement with our Union leadership to renew our labor agreement for CMP, We expect the agreements of the voted on by members later this week.

And Connecticut, we've reached a historic settlement agreement in March with five key parties, including the attorney General and our rate reduction the proceeding the.

And the proposal provided through rates the ability for our customers by agreeing to a base rate freeze until may one 2023, which would offset the increase that otherwise would have gone in and to recover planned public policy costs.

On April 26 per of the regulator issued a procedural order suspending the dockets until July.

To allow parties to address comments that they had on specific components of the settlement.

Now, we're going to continue to collaborate with the steadily parties and with pure of staff with the hope of getting the deal that can be ultimately approved by PURA and the good for customers.

Across our networks group, we're actively working with regulators and customers on continuing COVID-19 challenges and providing payment of the support options and referrals to social service agencies for customers were facing financial hardship.

We currently expect moratoriums will be extended and New York.

And I'm really proud of how our employees have continued to focus on their own personal safety and health as well as the safety and health of our customers and the communities we serve.

In addition, we're also making great strides on our transmission and distribution projects, improving the efficiency of our operations investing and the grid of the future and enabling the clean energy transition.

We recently completed and energized our 10 year Rochester area of reliability project of $390 million investment to upgrade the electricity transmission system and the Rochester region.

Close to 1000 people have worked on this site during this projects, which involve the rebuild of 28 miles of transmission lines and the construction of a new $3 45, 115 kv substation and upgrades to five other substations.

And January we initiated construction of our new England clean energy connect project. This 12 100 megawatt project will deliver clean renewables generation to Maine, and new England, while creating 1600 main jobs during construction and contributing over $200 million.

Remains economic development, which will support educational programs broadband heat pumps, EV charging stations and much much more.

We recognize the building any new transmission transmission in this country has its challenges, but we're encouraged by the growing support and we're seeing from <unk> as they learn more about the benefits of this clean energy projects and as we address the misinformation spread by the anti project minority.

Now, let's turn to our merger with PNM resources.

I am pleased with the progress our team is making and getting the key approvals for the merger.

Earlier this year, we received approvals from PNM Resources' shareholders and the Federal Communications Commission as well as regulatory clearance from the committee on foreign investments and the United States recipients and under the Hart Scott Rodino Antitrust improvements Act and then on April 21, we receive federal Energy Regulatory Commission.

Approval of.

The last outstanding Federal approval is from the nuclear regulatory Commission and its expected by June.

At the state level, we recently announced the unanimous stipulation and agreement among parties before the public utility Commission of Texas and.

The merger is on the Commission's agenda, and Texas on May 6th and we could receive a form of approval that day.

The new Mexico, we've made equally positive progress with our multi party stipulation agreement that provides significantly enhanced economic development and customer benefits.

The stipulation agreement was originally signed by key stakeholders, including the New Mexico Attorney Journal General and with the publicly supported by Governor and Michel Dahan Grisham.

Now, while we're continuing to work with other stakeholders to have them join the stipulation and agreement we do expect the approval of the new Mexico public regulatory submission in the second half of the year and for the entire transaction to close before year end.

Turning to renewables are 23 gigawatt pipeline of projects and leadership and offshore wind will drive significant growth opportunity supported by favorable federal policy and strong demand for clean energy.

All of them and greatest pioneer and the emerging U S offshore wind industry by starting with the first large scale wind farm in our country, our 800 megawatt and vineyard wind one project.

In total our lease area represents as much of seven and a half of Gigawatts of offshore wind capacity in the northeast and mid Atlantic, including the one six gigawatt Gigawatts we've already contracted.

And grid share of this total pipeline.

I've gigawatt.

Our strategic offshore wind investments are positioned to deliver growth and financial results beginning in 2024 and 2025.

For vineyard wind the Europe. The U S Bureau of Ocean Energy management of our bone issued the final environmental impact statement in March and the record of decision as expected very soon here and that.

We intend to reach financial close and begin construction and the second half of 2021 and reached full commercial operation in 2024.

The project is progressing well, we have all major construction contracts with the suppliers and contractors secured and we're finalizing the evaluation of optimal financing structures, including tax equity and project financing.

In addition park city wind are 804 megawatts contracted project that will serve the state of Connecticut is also on track.

Now all of them and grid renewables is also developing the Kitty Hawk offshore project, which has the potential to deliver 2500 megawatts of clean energy into Virginia, and North Carolina.

In terms of future opportunities, we expect one auction this year and Massachusetts with an estimated one six gigawatts of demand followed by more than three gigawatts of expected and Rhode Island, New York and Connecticut, starting next year.

Both of them also plans to release new lease areas in the New York by between Long Island, and the New Jersey Coast, we expect to participate and most of these auctions, but as I've noted before we will continue to be disciplined and our bidding approach.

Now, we are equally exciting opportunities and our onshore portfolio.

In 2021, we commissioned the first PPA of our 300 megawatt, while Hoya project and New Mexico and expect to commission, the second PPA and Meg.

We have an additional one three gigawatts of projects under construction of 2021 and 2022 weighted for the first time towards solar.

Approximately 690 megawatts of the one three gigawatts are already under construction, including the Rory and Brook Wind and New York with 81 megawatts Golden Hills, Wind and Oregon, with 202 megawatts Lund Hill, solar and Washington, with 194 megawatts and Montague solar and Oregon.

And with 211 megawatts.

Now as we look forward and learn more about president and volumes ambitious clean energy goal I believe of and grid is in the sweet spot to help lead the clean and connected energy transition and this country of.

Our expertise and business strategy position us extremely well to help lead the charge two of cleaner energy future.

Recently at the Air Earth Day climate Summit, President by the pledge of the United States will aimed at kind of the economy wide greenhouse gas emissions, 50% to 52% by 2030 relative to 2005 levels. Now this is aligned with the administration's target to Decarbonize the power sector.

And by 2035 and reach net zero economy wide by 2050.

We see these environmental commitments as an opportunity to further drive economic recovery and create jobs and.

The cornerstone of the administration's two three trillion dollars of infrastructure plan, including a $100 billion infrastructure plan.

Upgrades and build out of our nation's aging and regionally siloed electric transmission system.

The infrastructure plan includes many beneficial proposals to drive the carbonization, including extensions and expansions to tax incentives support for additional financing tool funding for R&D agitation and workforce Debella development and the creation of the national clean energy standard targeting.

100% carbon free power by 2035.

In addition, offshore wind is taking the lead from concept to reality and the U S with the national goal to deploy 30 gigawatts of offshore wind by 2000 and the.

The new coordination plan direct spend.

Areas of federal agencies to identify wind energy areas for leased and the New York bike the work to complete permitting and reviews of 16 pending projects by 2025 and opened funding opportunities for wind and transmission developers. While also upgrading U S. Ports is definitely our exciting times and are set.

<unk> and <unk> and grid is poised to play an important role and leading the clean energy transition.

And recognition of Earth week, we recently released <unk> and grid fifth annual sustainability report title clean and connected.

The report highlights all of the activities from 2020 that are helping us reach of our aspiration to be Don leading sustainable energy company in the U S F.

Every step of the way our actions are guided by our environmental social governance, plus financial framework of what we call ESG and <unk>.

We believe it's a better and balanced way to do business doing well by doing good for our customers employees communities and shareholders.

And we've got a great base from which to build going forward. We're already of the third largest wind and solar operator, and the U S. Having grown our installed capacity by over 30% to solve and grid was formed in two and 2015.

And throughout the COVID-19, pandemic, our foundation and family of companies of donated $2 5 million to support response efforts nationwide and help our communities recover.

Last year, we strengthened our commitment to diversity equity and inclusion with a number of initiatives, including a focus on increasing gender and racial balance and our senior roles.

And the past 15 months, 57% of our directors and above hires have been women or people of color and we've hired or promoted nine women and the key vice president and above the rules.

We're proud to be of part of both CEO action and paradigm for parity, whose members of committed to 50 50, gender parity and senior operating roles by 2030, and we're also looking to enhance our supplier sustainability and diversity programs, while building a more robust employee volunteer program.

Each of these goals and our commitments will help of and grip deliver sustainable value to all of our key stakeholders and the long term.

And going forward, we plan to more than double our install the clean energy capacity by 2025 compared to 2015 and further reduce our scope one emissions intensity to reach and net zero by 2035 and convert the majority of our fleet the cleaner energy vehicles by 2030, we've made great progress.

<unk>, we've got a lot more work to do.

Now out of <unk> and grid, we're fully committed to our Espns strategy.

True to our long term value proposition guiding our investments and resource allocation and of smarter and cleaner energy future.

Now I've said it before but I think it's worth saying again, we truly are in the right place at the right time and the energy transition.

We've got a healthy balance of growing regulated businesses on the network side, along with PNM resources, combined with strong value opportunity and our renewables business, which will support the assistant to 8% adjusted EPS CAGR through 2025 off of our 2020 reference here, we're well aligned.

The priorities of the New administration and states are moving faster than ever with their own clean energy plans.

Through our investments of over $20 billion through 2025, and our utilities clean generation offshore wind and transmission and new technologies and with our merger with PNM resources and the backing of the EBIT drove the group, we're focused on execution and delivery delivering on our commitments now.

And I'll turn it over to Doug the take you through the financial results. Thank you Dennis Good morning, everyone and thank you for joining us today.

Turning to our financial performance and highlights for the first quarter of 2021.

The report that often grid is continuing to execute on its financial targets with a great start to the year from.

Making excellent progress on our plans to earn our allowed ROE.

And we're realizing the benefits of our efforts to improve the operations and energetic availability of our renewables fleet.

And the first quarter of 2021, we produced net income of $334 million were $1 eight per share our adjusted net income of 354 million.

$1 14 per share and increase of 50% from the first quarter of 2020.

One and adjusted basis Networks' earned <unk> 74 per share for the first quarter, representing solid growth of 16% compared to the the first quarter of 2020.

Key drivers of the strong networks results include the successful rate agreements and the fourth quarter of last year, and our New York Company.

Which added $23 million or <unk> <unk> per share and the implementation of our CMP rate plan in March of last year, which added another $3 million or <unk> <unk> per share.

Outage restoration costs and the first quarter are flat to down slightly compared to the first quarter of 2020.

Although it is still early to draw conclusions. We're encouraged by this result.

<unk> that the higher vegetation management spend and focus on addressing the worst performing circuits may be helping to stem the growth and the outage restoration costs.

The significant quarter over quarter increase in the renewables EPS of <unk> 40 per share and the first quarter of 2021 from 15 and the first quarter of 2020 with.

And was largely due to our focus on safety operational excellence and proactive risk management during the Texas weather event, helping.

Helping us to meet our fixed obligations and deliver excess energy to the grid as we were an important part of the solution for the state.

Wind production during the quarter was lower than 2020 strong first quarter, primarily due to wind resource and fulfillment driving the net capacity factor for the first quarter of 2021 of 36%.

About 45% of these curtailments were reimbursed under our PPA contracts.

And importantly bottom groups first quarter adjusted EPS, excluding the effects of weather event would have been 87.

Of 15% increase compared to the first quarter of 2020 and exceeding our expectations.

And our business contribute to their on going growth and earnings potential net.

<unk> networks, which represents 75% to 80% of our business mix invested over $489 million the benefit our customers by enhancing safety and revised duty and resiliency and the first quarter of 2021, approximately 40% higher and in the first quarter of 2020.

While renewables investments were lower and the first quarter of 2021. This reflects the timing of investments and transition to more solar versus wind project and solutions in 2021 and 2022.

Finally, we highlight the 73% increase and renewables adjusted EBIT and EBITDA, which includes the tax credits.

Reflective of the increasing value of that business and our focus on delivering high quality projects. The produced our targeted returns and contribute to achieving our growth targets.

Now moving on to our liquidity and credit ratings and dividends.

With our financial resources predominantly regulated business mix and clear support for Libre draw and we have the financial strength, the finance our growth, while maintaining a solid balance sheet and credit ratings and.

As we discussed on our fourth quarter earnings call. We plan to issue of approximately $4 billion of equity this year, which will further strengthen our balance sheet and improve our share of liquidity.

Of this amount.

$3 6 billion will be used to fund our acquisition of PNM resources, which we remain confident we will be over 3% accretive the.

Remaining $400 million of equity will be used to finance the attractive investments and our long term plan to support the 6% to 8% earnings per share compound annual growth rate that we outlined on our Investor Day last November.

We also noted that we do not expect the issue and any additional equity and 2022.

And we will add another $2 billion approximately of non debt funding sources and 2023 to 2025 to further support our growth potentially including equity hybrid securities asset sales securitization or some combination of these.

Our ample liquidity also supports our strategic initiatives and the fourth quarter of last year EBIT drill of provided of $3 billion of intercompany loan at very attractive rates that serves as the bridge to the acquisition financing.

And this along with the withdrawal of $4 3 billion funding commitment letter for the PNM transaction highlights the unique benefits to the strong parent and EBIT drove the clear commitment to off grid and the PNM merger.

We also have additional liquidity available through our $2 billion commercial paper program supported by a $2 5 billion dollar of sustainability linked revolving credit facility and an additional $500 million credit facility available from IBRA drove up.

Our robust growth plans will benefit from our liquidity access the capital and credit ratings.

And with our significant networks footprint access to multiple sources of funding strong liquidity profile and the backing of our parent we are committed to maintaining solid investment grade credit ratings.

Finally, our dividend policy remains unchanged and targeting a payout of 65% to 75% that we will grow into of the earnings increase over time.

And our board recently declared a quarterly dividend of <unk> 44 per share payable on July one.

We're pleased with our strong results this quarter and are increasing our EPS and adjusted EPS outlook range by <unk> 10.

The $2 25 to $2 45 per share.

Reflecting the range of net income and adjusted net income of 696 million to $758 million.

As a reminder, our outlook assumes that we close on the P&L merger transaction and the financing at the end of 2021.

The key drivers of our earnings growth that will support the delivery of this guidance are mostly unchanged from what we discussed on our fourth quarter call with the additional impact of our performance during the Texas weather event, and our overall first quarter financial results and.

In summary, we have an ambitious and achievable plan to become the leading sustainable energy company in the U S.

Our focus continues to be on executing on those plans to drive sustainable value.

Thank you for joining us today with our update on the first quarter results and execution on our plan I'll now hand, the call back to our operator, Jason for question and all of my closing remarks from Dennis.

At this time as a reminder, if you would like to ask a question.

The press Star then the number one on your telephone keypad.

We'll pause for just a moment of chicken Paul of the Q&A roster.

Your first question comes from the line of David <unk> from Morgan Stanley. Your line is open.

Oh, hi, Thanks for taking my question.

And.

Obviously very strong earnings quarter.

And it's nice to see the increase and the guidance for the years per for the <unk>.

And I was wondering if there might be any extraordinary benefit that we might see experience.

And even more kind of ex since journeys from this quarter that you could put to use later in the year in terms of potentially accelerating.

And things like the O&M projects into this year from 2022, and and start to help set yourself up for.

Four.

Our strong 2022 as well from here.

David This is Dennis Thanks for your question look as Doug said debt.

We're really pleased with the first quarter I think.

Charting off of.

The strong way here gave us confidence as well as with the outlook that we have with the rest of the against the year gave us confidence to increase of our guidance I think rather than say and how we're going to use the proceeds from the first quarter. This is really still about just the execution. We've got a plan that we've set out.

And we need to continue to demonstrate.

Constraint and we can deliver and our networks business and our renewables business and I think that the solid foundation that we've built here and the first quarter gives us additional room to continue to just the performed well so.

It's early in the quarter early in the year, we've got one quarter under us and will continue to evaluate how the year looks quarter after quarter, but we're really pleased with the start of the year.

Okay got it thanks for that color.

And then separately I was curious if you could comment on the future and how you see the future of the gas system, particularly the New York.

And Dennis appreciating your back.

Background and that area just wondering how you see that falling at the end of the Commission's.

Kind of evaluating kind of think about.

Recovery and long term.

And strategic planning for the cash system.

The heat pumps coming into play over time and that area.

Would be curious your perspective there.

It's a great question, David and I think it really it depends upon who you ask.

And both from a regulator standpoint of legislative standpoint, and I think as we think about the natural gas you can probably break it down into two different markets because the generation side of the business and there is the distribution side of the business. There's no doubt the natural gas on the generation side has been part of the solution and helping the decarbonize.

Yes.

And the energy sources that we have here and the country basically displacing coal and I think that's going to continue to happen. Although we expect that renewables will grow much faster than youll see coming from gas fired generation. If you think about the the distribution side of the business, depending upon where and you are at whether year, and New York or Connecticut.

But all of our main having natural gas distribution is not just the nicety, but and I think in many cases, it's and necessity it's of clean.

And affordable source of energy and so we expect that over.

Over the many decades to come that natural gas is going to continue to be of fuel of choice for those debt that will that want it.

And from a regulatory standpoint, we're going to continue to work with the regulators and each of the states, including New York to make sure that they understand the benefits and what customers want and I think sometimes as the discussion about energy Justice and we think it's important that that also all of our customers be able to participate and the clean energy.

<unk> and we see natural gas as part of that clean energy transition so well.

Will we see more heat pumps. The answer is probably yes, but I think that we actually see natural gas continuing to play an important role and serving our customers and we're looking at ways, where we can further decarbonize the natural gas whether it's through renewable natural gas, whether it's using green hydrogen to blur.

And to bring down the carbon content.

And basically trying to be more efficient with our overall systems and helping customers use whatever energy they use more efficiently, which obviously reduces.

And the carbon footprints as well so.

We're focused on working with our customers working effectively with our regulators, but also introducing new technologies when appropriate.

Okay, great. Thanks very much.

Yes.

Your next question comes from the line of Peter <unk> from Mizuho. Your line is open.

Hi, Thanks for taking my question.

The more attitude.

And a two two point of if that's all right. So first just on the renewables business, obviously the growth year over year is pretty substantial.

Should we be considering any of that one time ish in nature.

As a result of the Texas winter storms.

Peter I think.

We see it we're we like the Texas market, we've been there for quite a while we've got about 250 megawatts of renewable generation in Texas.

Not a huge part of the Texas market, but we are an important part of it and so as we see it. This is part of our ordinary course of business. When you think about the ERCOT framework, it's meant to.

It's of no capacity payments market.

They want and renewables to be of part of their energy mix, and where and important part of that we're a price taker for our non contracted capacity. So it's during times like this where work part of the solution and providing that the on contract with energy to customers and they desperately needed it and we were happy that our.

Our teams to perform extremely well and get our turbine is up and running at a time when the state really hated that energy. So we consider this part of our ordinary course of business.

Going forward.

Okay. Thank you for that and then secondly, the bundle the PNM deal in terms of the approval process and new Mexico can you just give us a sense of what are the issues that are preventing some of the other intervening parties from joining the stipulation.

Sure well first of all we're really happy with the progress we've made we mentioned that and Texas.

On the agenda here on May six and it could get voted out but in the new Mexico. Other multiple parties and I think there were close to 25 different parties and has that had filed for status as the intervenors.

When we look at the progress that we've made with the attorney general with the support of the Governor and several other.

Intervenors were really played.

A lot of the things that people are looking for has to do with governance, how we're going to be treating customers. So we're continuing to have discussions with all of the interveners that are interested and chatting.

We're working towards getting this.

Through the commission with as many intervenors onboard with the with the stipulation of as possible.

And would we like to get 100% absolutely.

Will we be surprised if we don't get of 100% book.

And those that you can and you go through the process, but we feel really good about the.

The the modifications that we made us the get to the stipulation agreement with the attorney General and the other parties and we're confident that this will this will ultimately be approved by the commission.

Okay. Thank you for the color and congrats on the quarter. Thanks.

Thanks Peter.

Your next question comes from the line of Neil Colton from Wells Fargo Securities. Your line is open.

Hi, guys hope all is well.

So a couple of questions on my end first just on the.

I think you mentioned in the prepared comments that ex Texas EPS would have been 87 is that a GAAP and non-GAAP number.

That's a non-GAAP number.

Okay. Thank you and then second on the pipeline on the onshore pipeline.

Looking at things correctly, it looks like the onshore pipeline grew by about 2000 megawatts since the last update a is that correct and b. It seems like a pretty healthy increase is there anything sort of unusual in there that we should be aware of.

Yes, let me, let me hand, it off to Alejandro and he can give you sort of a little more color on the pipeline. Yes. Thank you Danny So yes that is correct same day those two gigawatts of additional.

Pipeline versus phase of the last communication of one gigawatt, we beat the boundaries.

Fundamentally split of our pipeline on what day.

The best reflect our continued interest in the solar and growth.

And in different areas of the country.

The comments also.

Expiration of older a projects of our pipe and of that progressing across the across the pipeline and could be sold out and say what we are progressing on all of the levels of the pipeline not only bringing piping from the bottom and also the progress if you could talk.

And right now in two five gigawatts of the either by natural or shortly.

Cash used for pension the PPA for the next few years.

Got it thank you very helpful.

Your next question comes from the line of and Soo Kim from Goldman Sachs. Your line is open.

Thank you. The first question is on on Vineyard wind do you have.

And so whether it's the record of decision from the department of the carrier is likely.

Debt to be issued evidently are there.

The back and forth.

Between you and.

And the DIY.

And for that decision and it may just trying to gauge when this year, we could we could see EBIT.

Yes.

Thanks.

And look.

And the team has been working very closely and with volume and others that the requested information.

We are very optimistic that this will be coming out soon.

Net.

The predict the specific day, but we're very optimistic it's going to happen very soon.

Got it.

The question just sort of any C C.

Could you give a little bit more color on that.

And we spoke on the various <unk>.

Litigation of the cases that are attached to them and I guess the assumption still that the construction will continue and index.

Throughout the year.

While all of these are going on.

Sure Let me, let me hand, it over to Bob Kump, and you can get the little bit more color on those positions and sue and good morning, how are you.

And we feel I feel really good about the progress we've made here and the first quarter, obviously Dennis spoke in his remarks about.

Completing the the permitting and start and construction, where we are now and construction is we have about a third of the 150 miles of.

Right of way cleared.

And with the call segments, two and three.

And one of the one we still have the temporary injunction, but we hope to have that lifted shortly so we've been focusing on segments two and three both in terms of clearing and beginning to the home.

And so on the construction side of things are going well in terms of.

Consumer sentiment and see what we've done a lot of work.

Through our pack, making sure that debt.

Consumers and main understand the truth about the project I think the acquisition has.

Most of their campaign has been around mist and quite frankly life. So our focus has been on the first.

The bunking of few of those missed but more importantly, the project now under construction people realize and see the benefits of the project will bring domain and I think thats why as we continue to Poland. We continue to see more and more support and as Dennis mentioned in his remarks for the projects being made and do you think is moving.

And the important now there continues to be and I think every permit we've gotten has been challenged debt continues.

But we're moving through that process and we're very confident that.

This will be successful project and then looking at the second quarter of 2023.

And for commercial operation date as of.

The first quarter, we've invested a little over $250 million and puts.

So we feel very good about where we are we had some real milestones here and the first quarter and we're moving forward.

Got it just one additional and do you think the the case.

The Army Corps and that temporary state do you think.

Expect that to be resolved.

And I guess, making some progress over the next few months here midyear.

In terms of the challenge of the Army Corps permit.

And what.

We take a long time and soup.

And the fact is that every permit.

Starting with the CPC and and main starting with the the TSA and in Massachusetts, you named the domain the EEP Theyre, all being challenged and we've been successful and that's because we think the record debt has been made by these various agencies.

And have been very very good and very careful and deliberate full knowing that it's likely to be challenged I mean these types of challenges as you know is part and parcel of the large infrastructure and we feel really good in terms of the quality of the permits and where we are.

Got it congratulations on a great quarter.

Thank you.

Our next question comes from the line of Michael Sullivan from Wolfe Research. Your line is open.

Hey, everyone. Good morning.

Good morning, Michael.

First question just wanted to clarify.

It seemed like the implied Texas benefit just based on the.

Adjusted earnings number you gave was about 28, why the guidance only up 10 for 2020 one.

Yes. It was it was approximately 27.

But look we're one quarter into the year.

And there's a lot of things that we need to do to continue to execute and we're confident that we'll continue to execute but weighted and we can revisit.

Visit and the second and third quarter.

Should it make sense to to increase the guidance I will tell you that personally I would be very disappointed if we.

And don't end up at least at the high end of of the range, but look we've got three more quarters to go and we think its prudent and appropriate at this time just the raise the guidance by <unk> 10.

Okay, and just to be Super clear, though that the.

Range is entirely tied to Texas and the base business.

It's kind of just on track not better or worse is that fair.

No I think if you if you.

And you look at it or.

Our networks business is doing very well are our renewables business, even without Texas, but we're at about 14 say 27 <unk> of that was related to the Texas. So we're at 87 expense.

We're nearly 15% higher than we were and the first quarter of 2020, and the first quarter of 2020 out of really strong renewables quarter. So we feel good about not just the first quarter, but the outlook for both renewables and with the networks, both including and excluding Texas.

Okay, Okay fair enough.

And then just wanted to get a little more color on thoughts on the.

On the PURA.

Order of basically projecting the settlement and.

And what and what else can be done there what are some of the things you guys are thinking about the pad.

And maybe yield and a different type of settlement that they would accept.

Sure listen let me do this let me put it in context and I'll have the.

Catherine and jump in on this.

I think it's important to recognize that this type of settlement before and had not been done with the attorney General with the office of the governor with various other parties. So we feel really good not just about the absolute settlement, but how it came about and the fact that we were able to get together.

With multiple parties and find the solution.

And that we didn't have to do but we were able to through collaboration and I think building trust and building the relationship with these different part of the.

And the fact that it wasn't.

Full heartedly embraced by PURA and I think it was candidly a little disappointing to everyone, but I think that we're looking to and we.

We've already started collaborating and continuing to collaborate with the with the settling parties and having discussions with PURA, but let me say of Catherine do you want to provide some more color of that thanks Dennis.

And I think when we look at the decision and the as Dennis said the important part is our ability to work the car of their stakeholders and will sit down with them and talk about at the hearing decision and talk about whether or not and there are areas.

And that we can take a look at the settlement and and and.

And the credit from their perspective.

Thank you Scott and ambitious agenda, and we're really happy that <unk> got strong relationships with our stakeholders there.

And we can work with them and collaboratively to come up with solution and are better.

Pat is good for the state and good for our margin.

Okay, and anything you could tell us what the.

Those solutions might be just any more specifics there.

We'd rather not negotiate in public other than to say that we want the solution that makes sense for the multiple parties that came together as well as our customers and we recognize the peer.

And may look at things slightly differently than we did at the part of our job is to make sure that and weaken the advocate for our customers and get them up to speed on why we feel strongly for the original settlement.

Got it okay. Thanks a lot.

Your next question comes from the line of.

Demand and Smith from Bank of America. Your line is open.

And can you add.

Good morning, Thanks of the opportunity and the time.

Julian how are you.

Quite well.

And it looks like you guys.

And quite well as well.

It was a good quarter Julien.

Absolutely what was that I wanted to kick things off first of all of the renewable side of the renewable.

And offered side.

<unk>.

Talked about procurement opportunities and we're seeing.

And accelerated the corporate involvement.

The space just curious as to how you think about the opportunity I know you guys gave you kind of Grand vision on the handful of months ago, but I'm just curious how the start of the year is shaping up as well as <unk>.

If the ITC dynamic, the resulting and any shift in your backlog, maybe pushing out projects slightly et cetera.

And as best you understand it today.

Sure, let me start and I'll ask Alex on the adjusted as well and provide some more color.

And I think that what we were seeing even before the buyback administration has only picked up both from a customer standpoint and from individual states I think the.

We're continuing to see more customers want to be part of the clean energy transition.

And it makes sense because of cost continue to come down because.

I think for their stakeholders, it's important for them to represent that theyre getting cleaner. So that's all of positive I think from of stage standpoint, we saw this momentum with renewable portfolio standards start well before this administration, but I think this administration and their ambitious goals is only given.

The shot and the arm.

That's that's all positive.

I'll now hand, the do you want to add any color on just from a.

And what's going on with the the pipeline and conversion from the customer standpoint, yes, sure. Thank you Denny and high.

Julien and.

Funding from our side as you know we have a plan that we presented in November.

Theory of clear objectives for the <unk>.

A few years until late 2025, and we are going to continue delivering on that.

And the <unk> the spend may screw and situation right now the only thing that makes these types of it keeps more search and feed that say, we wouldn't be able to deliver according to the plan and so I have mentioned about our pipeline, we are increasing our pipeline and bringing new projects to increase how do we of course the maturing.

And being good and many of you mentioned two five gigawatts of negotiations faithful and future PPA. We are delivering on day, one gigawatts of projects that will be constructed the skew on the next and so holding all of us.

Solid and solid predictions.

For the coming years sort of globally. The implant that we really believe we can deliver we stay with sort of the biting administration.

And all of them, making sure I think the changes that are probably going to happen and the next day or through the year.

And there can be a true for us.

And you also talked about just what's happening from us from and ITC standpoint, and look we're not necessarily delaying projects just because of that I think if it makes sense to go forward and the customers want it and we have all of the permits and approvals to.

The go forward of the PPA and we're going to do that but I think that the different customers are also going to look at the tax incentives that are being proposed and.

The other thing that we're obviously looking at the could be very beneficial to us and to our customers is direct pay. So there is a lot of moving around which I think is all positive and with the the quality of the pipeline that we have.

We're excited.

Excellent and and if I can can you comment a little bit on the latest.

And may and again on any day.

And obviously the noise again this year again, but how does it differ if you will of how you're thinking about of differently from from last year. If you don't mind I'll leave it open ended.

Yes, let me start and Bob can jump in I think one of the things Thats changed and and candidly we've been spending more time on the ground educating people on the benefits of the project.

We think that it's not only good from a from a clean energy standpoint, but also from the from an economic standpoint, the jobs, we're seeing local businesses, whether its restaurants, whether it's hotels general stores are saying, we're getting more people coming in because of the construction workers that are there and.

When when people were previously talking about well are there going to be jobs coming domain. We're seeing that the jobs are coming to me and there is definitely an economic impact. So we're having to communicate that more effectively and I think as the as people in Maine and the local community to understand that this is.

For real.

It's the main project the benefits, Maine with energy and with economic development, we're seeing people support the project now.

Any type of transmission and this country is difficult and and a wonderful state like vein that has beautiful for us.

And there's obviously going to be some opposition, but I think our job of what's changed from last year as more and more and momentum of recognizing the importance of this to the state the benefit to the local people and Maine and quite honestly I think the oppositions running out of the arguments.

Yes identify agree I think the fact that the project is now under construction and huge in terms of people physically seen the benefits that come domain as compared to.

The promise and the future. The other thing I will say is the the recognition of late both by the by the administration and the country of the whole and Dennis touched on in his remarks about the need for transmission and if we're going to achieve our goals around de carbonization is becoming very well known take a look there was an article actually yesterday.

Day that AP put out just about <unk> and it talks about if you would strange bedfellows between some environmental groups that just like to say no fossil.

Fossil fuel generators that stand to lose millions of dollars a day.

Other transmission and more supply comes online. So there is a number of influences that we think just puts us in a much better position today than we were a year ago.

Excellent. Thank you guys of the time all the best Thanks Barry.

Your next question comes from the line of Richard Sunderland from Jpmorgan. Your line is open.

Good morning, Thanks for the times of day.

Good morning.

And just thinking about your momentum around the <unk> deal and the financial plan upside coming out of the quarter.

Evaluating <unk> for the equity at all or is your timeline and really about aligning and bad debt equity we've got the feedback real close.

Let me I'm going to hand it to.

And Doug, but I just want to be clear again.

For planning purposes, we assumed that the deal closes at the end of the year and the the funding for it happens at the end of the year, we thought that was the easiest way to models for the <unk>.

With the the overall.

The power of our earnings are for Rob and grid on a standalone basis, but Doug Yeah, I would just add Dennis our overall objective with equity as the maintain a strong balance sheet solid investment grade credit ratings.

Things that we think about from a timing standpoint with the equity issuance.

The capital market conditions at the time and also just the status of regulatory approvals.

Those are the two main points.

Got it and your exchange.

Separately, we referenced direct day earlier, and just curious if you could speak more to the potential of impact.

Would you be primarily be around I guess financing flexibility of your work.

And the.

Broader market impact you would expect a mid July.

Yes. This is Doug.

<unk> for us is very attractive and.

Not abundantly clear this time, what form that will take there've been some forms that would monetize existing tax credit carryforwards, the others that would be.

The applied on a go forward basis, but I think.

Just starting with the go forward.

Direct day, it helps quite a bit in terms of.

A very economic substitute for tax equity financing. So I think it can help our overall project returns by having that form of of funding from a historical standpoint, if theres the means to monetize existing tax credits through direct pay we have a large carryforward.

<unk> and that would also be quite attractive for us yes.

Yes, Richard I would say that the only people that probably don't like the direct day of the banks because they don't get the fees from the.

From the tax equity.

And thank you for the color there.

Your next question comes from the line of Michael Gaugler from Janney Montgomery. Your line is open.

Good morning.

Just wondering if you're having any supply chain issues.

Across your various projects and how youre thinking about project costs, and and escalating commodity price cycle.

Well in general I think it's that.

The the supply chain is and as challenging as it was say six months ago or nine months ago.

But I think that depending upon.

What we need three that are on the network side whether.

It's cable or of pipe and everything we seem to be getting everything that we're looking for right now and on the renewable side Alejandro I don't know if you want to comment that.

Yes on the renewable the site.

As of now we are getting what we need.

And in terms of the commodity prices and while it is true that each part of the negotiations with suppliers, but and.

Normally the have reached steady state and transfer to the suppliers by the time, we signed and NTT.

And as.

As of now for our projects for 2021, and 2022 and we are.

Comfortable.

Sure.

Alright, and so all I had gentlemen, thank you.

Yes, Michael Thanks.

Your next question comes from the line of Andrew stores and ski from Seaport. Your line is open.

Okay.

Thank you. Thank you first of all the yen. Okay. So I guess two questions first given the hit.

The recent update from our spent about some excess of lag.

Cable.

The offshore wind farms.

And that's something that.

You guys.

Aware of and how does it kind of be incorporated in your.

On the offshore wind projects.

The volume.

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