Q4 2020 Entergy Corp Earnings Call

Renewable energy is also a key part of our strategy to achieve. Our sustainability goals are clean energy efforts of escalated over the past few years. We now have more than 500 Megs of renewable resources and operation. These resources come in many forms small and large owned and contracted.

And some are innovative solutions like the New Orleans residential rooftop project where we own the solar systems that are installed at low-income customers homes. Those customers get a fixed income credit on their bill providing economic benefits to those who need it and renewable energy for all customers.

We have approximately 450 megawatts of solar projects currently being installed. We have another 880 megawatts of solar resources either and Regulatory review or rfps package plan to solicit another 800 megawatts of solar this year. This is only the beginning and we will continue to grow the number of renewable energy facilities across our region.

Almost half of our Capital was for distribution and utility support Investments that are closest to the customer experience a portion of these cost is for our Advanced meter project. We have now completed the installation of 70% of the three million Advanced meters. We are deploying across our service area. This is an exciting Milestone as we enter the Final Phase of your journey Advanced meters help our customers better manage their energy usage and bills and it lays the foundation for new technological capabilities over time.

The billions of real-time data points available will be able to gain new insights that will drive fundamental change in the way. We serve our customers while consuming the least amount of energy resources.

We invested $800 in our transmission infrastructure, excluding storms, our transmission Investments benefit our system and our customers as they reduce congestion strength and surfing liability enhance system efficiency and resiliency and support economic development in our jurisdictions by enabling service to new customers.

We completed several important projects some of which proved critical during the active storm season these new structures built to Modern standards withstood. The record wins from that came Laura and were critical to restoring power following that storm. These projects are all part of our plan to improve the resiliency of our infrastructure and provide a higher level of serving our customers.

In 2020, we continue to work collaboratively with our Regulators for the benefit of customers.

In the face of difficult times due to COVID-19. We collaborated to find Solutions early on suspended disconnects and work to set up payment plans for customers who couldn't pay their life in all our jurisdictions. We received accounting orders deferred costs associated with COVID-19 including bad debt expense from accounts that we don't expect to collect as a result of the pandemic. We also work with our commissions on rate recovery mechanisms that give us the opportunity to recover costs that are benefiting our customers Public Utility Commission of Texas finalized the new generation Rider which provides for full And Timely recovery of capital costs associated with new generation.

We're timely recovery helps us create value for our stakeholders in Texas and ensures that the communities we serve remain economically competitive.

Texas commission approved the use of this writer earlier this year for Recovery of Montgomery County Power Station.

The city council of New Orleans approved to unanimous settlement that resolved Entergy New Orleans rate case in FRP filing. We will make the first of three annual filings later this year. We also had annual rate actions in Arkansas, Louisiana and Mississippi.

We plan to submit filings in Louisiana and Texas and the first quarter of this year and in New Orleans and the second quarter to request recovery of twenty-twenty storm costs as we have done in the past. We will seek to securitize these costs with current low interest rates. This will result in significantly lower cost to customers as compared to typical recovery.

Louisiana and Arkansas is FRP is expire with the 2020 filings and we've requested renewal. Both discussions are ongoing and we will provide updates as we get them.

In spite of the positive outcomes in 2020 the Arkansas commission's order for our 20 21 FRP rate change fell short of our expectations.

We believe the order in correctly applies the law and results in an unreasonable outcome. We requested a rehearing on the commission's order and we expect to receive their decision on a request off and the FRP Extensions by March 15th.

You should note that our guidance and outlooks today reflect the commission's December order and extension of the FRP.

Our leadership and sustainability and environmental stewardship has been a long-standing Hallmark of who we are in his lid to measurable undeniable results.

For the past two decades, our admissions rate has been well below the sector average. Our utility CO2 emissions rate has decreased nearly 40% since 2000. And today. We operate one of the cleanest large-scale power generation fleets in the nation.

Our Fleet is one of the cleanest as we have not only set meaningful reduction targets, but we continue to exceed them the most recent example is our environment 2020 gold package. We committed to maintain carbon dioxide emissions through 2020 at 20% below year two thousand levels are actual 20/20 emissions were 27% below 2000 levels beating our reduction goal by 33%

Looking ahead our business plan supports our 20-30 commitment to reduce our utility carbon emissions rate by 50% below year two thousand levels.

Achieving this objective calls for continued transformation of our portfolio.

To that end by 2030 we anticipate that our generation portfolio will include at least 5 gigawatts of Renewables with potential for more during that time frame. We also plan to deactivate approximately 4 gigawatts of Legacy gas along with the remainder of our coal assets going forward. We will not build any large-scale generation that isn't hydrogen capable.

as we transform our portfolio, we will work with our Regulators to do so within a framework that balance is reliability affordability and environmental stewardship while enriching the economies of the community we serve

To support our longer-term Net Zero gold. We're exploring emerging Technologies through a partnership with Mitsubishi power. We will develop innovative solutions that include large-scale battery storage carbon sequestration and hydrogen-based strategies while we are not relying on hydrogen to meet our 20-30 commitment. We believe it will be a part of creating a carbon-free future months.

Hydrogen is an important technology that will allow utilities to adopt much greater levels of Renewables to meet growing sustainability needs hydrogen storage transportation and utilization. I will allow us to leverage today's pipeline in generation Technologies in a manner that supports a highly reliable and fuel diverse electric grid

indigo

South we have a distinct locational advantage and we are uniquely positioned given the existing hydrogen infrastructure in Texas and Louisiana.

Existing infrastructure today in our service territory includes more than 3.5 billion cubic feet of hydrogen capacity two of the three hydrogen salt Caverns operating in the United States and more than 1,100 miles of hydrogen pipelines, which is 60% of the United States infrastructure. In addition to of the largest hydrogen producers in the world are our customers.

We also have more than eight hundred and sixty miles of pipelines in our service area, which would facilitate carbon capture and sequestration.

These are just a few of the advantages for our service area which presents us with unique opportunities.

To advance our work on hydrogen. We were working on a few projects that I'd like to share.

Orange County Power Station was selected in Texas is request for proposals that facility will have the capability upon commercial operation to utilize up to 30% hydrogen long-term determines can be configured to operate on up to 100% hydrogen at modest incremental cost.

Facility is conveniently located near existing hydrogen pipeline infrastructure that can be connected to the plan to utilize hydrogen when feasible and economic.

We own a storage facility with three taverns. We are evaluating converting one of these Caverns to hydrogen.

You're taking advantage of the existing hydrogen pipeline infrastructure in the Texas industrial Corridor near the Orange County power station, and we are developing a four-phase plan support access to hydrogen fuel across our Fleet of hydrogen capable plants.

We're also in the very early stages of developing a green hydrogen demonstration plant Montgomery County hydrogen Innovation Center. This project will teach us important lessons about electrolysis operations and ultimately lay the groundwork for future full-scale projects. We're excited about these projects in our collaboration with Mitsubishi as we lead our industry to make hydrogen reality that will create green jobs in the Gulf South Region will provide updates on these initiatives as we have new developments.

Being the premier utility means doing our part to create a more sustainable future for our customers our communities and the World goal. We continuously strive for in everything we do in 2020. We were once again named the Dow Jones to the Dow Jones sustainability North American index. We are the only electric utility received this honour nineteen years in a row. We are very proud of this recognition as djsi is one of the most respected independent sustainability measures in the world. We aren't perfect scores in the areas of climate strategy water-related ring materiality environmental reporting social reporting and policy influence.

Past year our employees demonstrated. Once again by Entergy is best-in-class and storm response during a storm season unlike any other in our history our commitment to health safety and preparedness. The one of our proudest achievements. Our teams worked around the clock to safely restore service to rebuild infrastructure and to help our communities recover while following a virus prevention protocols.

For employees extraordinary efforts, we received broad support from local state and federal officials. We also received five to Emergency Response awards for me. I smarts the 23rd consecutive year is recognized Entergy employees for their emergency response.

2020 was another successful year for our company everything we accomplished gives me confidence in our ability to meet our goals and commitments going forward. We've proven that are resilient company prepared to respond to adversity and deliver on our mission to create sustainable value for our stakeholders. It's what our stakeholders expect from us, and that's what it takes to be the premier utility.

Despite obstacles imposed by the pandemic mild weather and storms our employees found ways to connect innovate Drive growth and build toward the future all while meeting of commitments.

The fundamentals of our company are strong in the driver's that uniquely positioned us to be the premier utility remained firmly in place.

We consistently meet or exceed our guidance expectations. We have line of sight on five to seven percent adjusted EPS growth and by the end of the year, we expect the same for our dividend growth rate of subject to board approval.

And just we mature in our continuous Improvement efforts. We aspire to permanently reduce costs and redeploy those resources for the benefit of our stakeholders. I am as excited as ever about our faith.

Well now turn the call over to Drew to review our financial performance.

Thank you Leo. Good morning. Everyone. Today. We are reporting strong results for 2020 is Leo mentioned. We successfully managed lower revenues by lowering our own expense by wage accidentally a hundred fifty million dollars, which exceeded our one hundred million dollar cost reduction Target for the year.

Our results today are validation of the strong resilient company. We are as a result. We are confident in our continued success going forward and are initiating our guidance and affirming our longer-term outlooks.

I'll begin with a review of results for the full year and then provide an overview of guidance for 20 21.

Starting on flight 6 and she adjusted EPS for 2020 was $5.66 26 Cents higher than 2019 and the top half our guidance.

moving to

5-7. There were many drivers that are straightforward and laid out in the release the key area focused for us in 2020 with o&m.

We offset the negative impact of Storms COVID-19 and unfavorable weather with approximately 150 million dollars of cost reductions and to do this. We identified a number of cost-cutting measures in a year and deliberately executed on our plans slide eight list. Some of the actions taken we are proud of what we've accomplished yet. We are not surprised. Our employees have Black Culture processes and resources to successfully deliver on our commitments to all of our stakeholders even during extraordinary times and that's been important this year more than ever.

Results further strengthen our confidence in our success going forward as we affirm our earnings expectations from 21 through 23.

Results for ewc summarized on slide. Nine are generally in line with our expectations. We continue to make good progress on our exit of that business.

Full-year operating cash flow shown on slide ten was approximately two point seven billion dollars as you would expect storm costs were a large driver.

As we're lower collections do to COVID-19 decrease collections for fuel and purchased power costs and unfavorable weather also affected affected the metric.

lower unprotected x s a d i t return to customers partly offset the decrease

Are cash and credit metrics as of the end of the year are shown on slide eleven apparent that the total debt is 21.6% and our ffo debt is 10.3% off mentioned last quarter are episode of debt is temporarily lower in part due to the financial impacts for the storms expect the metric to return to Target levels as we receive storm securitization proceeds next year. As you know, we have strong precedents for storm cost recovery. We have plans to submit initial filings over the next few weeks.

Will also pursue off-balance-sheet treatments in Louisiana and, Texas.

We remain committed to maintaining our investment-grade profile and the supporting credit targets including at or above 15% for episode of next year and Below 25% prepared at the total debt.

Moving to slide 12 with the resiliency we've demonstrated in 2020. We are confident in our continued success in 2021 and Beyond.

A 2021 adjusted EPS guidance range is $5.80 to $6.10 and our current plan puts us firmly at the $5.95 midpoint this and our 2022 and 2023 Outlook ranges. Remain the same as the Outlook. We presented at analyst day.

And you to Target a 5 to 7% annual growth rate for adjusting for adjusted earnings-per-share. We also expect to grow our dividend commensurate with our EPS growth rate starting in the fourth quarter of this year subject to final board approval.

Flight eleven, excuse me on slide 13 going backwards. We've outlined a few of the key drivers for 2021 earnings growth. We also include more dtg2 the appendix of the webcast presentation.

Beginning with the top-line a full year of 2020 rate activity following significant Investments to benefit customers who contribute to twenty Twenty-One growth. We will also make annual FRP filing during the year.

Re project utility o&m a little under two point seven billion dollars in line with our disclosures from analysts day.

Depreciation expense is expected to increase and that interest is expected to decrease do to lower as new plants came online and 2020. We also anticipate that are effective income tax rate will be higher.

Our guidance and outlooks reflect the December apse order in Arkansas and assume an FRP extension in both Arkansas and Louisiana and Arkansas. We are reprioritize Thursday our own M and capital Investments to more closely aligned with the ordered recovery structure.

To the extent. The order is reversed. We will plan to readjust our own Emma Capital to deliver the customer benefits of those Investments would produce

We continue to monitor risks. We have already identified flexible spending levers in the event needed. We were also exploring permanent upside opportunities through solar Investments and further continuous impact.

As we all mentioned twenty-twenty with a strong year for our company. We exceeded our one hundred million dollar cost reduction Target and delivered on our commitments to each of our four key stakeholders in the mid, press it at times looking ahead the fundamentals that underlie our study predictable growth or strong our guidance and outlooks remain the same as we presented at analyst day and provide clear line of sight to the 5 to 7% adjusted EPS growth rate. We have among the lowest retail rates in the country and are solid strategic operational and financial plans will upgrade the service level that we offer to our customers.

Approve it a discipline flexible spending program helps us adapt to financial headwinds or Tailwinds so we can meet our financial commitments and in the fourth quarter of this year. We expect to grow our dividend come back with our five to 7% EPS growth rate.

We have significant opportunities ahead and we are well-positioned to be the premier utility before returning the call over to Q&A. I want to take a moment to acknowledge and thank David board for his great work as vice president of investor relations is built solid relationships with all of you. And the good news is he will not go far. He will work with Rod to help bring our vision of the future utility to life.

For the next few weeks, you will reach out to many of you to introduce Bill a blur who is taking over leadership of the investor relations team still has a strong Commercial background in both Commodities and utilities off the he will be an excellent representative for us with you.

and as you

No, both David and Bill are backed by a very strong team with discipline processes. So you should not expect any change in the level of service you will see from up there. And now the energy team is available to answer questions.

As a reminder to ask a question, please. Press * then 1 if your question has been answered and you'd like to remove yourself with you, press the pound key. And as a reminder, we ask that you offer yourself to one question and a follow-up. Our first question comes from Jeremy Tony with JPMorgan. Your line is open. Hi, this is actually Ryan Elder Jeremy. I just wanted to kind of start off with kind of the order in Arkansas and you guys, you know, we're very clear about, you know, reaffirming the guidance and central office with with capital. I just want kind of dig a little bit more. I kind of what what some of those offsets you thinking about Arkansas to kind of offset this potential negative order and then if you kind of get a positive kind of outcome on the rehearing and should be thinking about maybe top end of the range for 20 21

That's true. I'll I'll take that and then Rod can confirm I'd any other framework elements as needed. But so we are adjusting as I mentioned in my comments. We are investing our Capital to to prepare for or respond to I guess the order that we gotta December and you can see that at some of our Capital disclosures found some other just normal timing Capital elements moving around some of the jurisdictions, but the main thing is in Arkansas, that's the primary thing that we are we're taking action to adjust with in terms of potential upside. As I also said in my remarks, you know to the extent that we were able to get the order reversed. We would anticipate put a motion not all depends on what the order would say back into our Capital plan so that our customers can benefit from the Capitol and or whatever that we are planning to deploy in Arkansas so dead.

That's that's what's going on there. That makes sense. And then just I mean as a follow-up, I mean, obviously the the stock price has kind of been at depressed levels recently just bought a wondering if you kind of have any thoughts on you know, what's kind of required to kind of, you know, get the stock moving or you know, kind of reassure Market confidence and then you know, if it's kind of stays at the Press levels you'd think about any type of transaction at the maybe sell down to some of your your utilities to maybe offset some of the equity needs going forward.

Well starting all that talk about the last part of that Ryan but the you know, the best thing we can do is continue as we have over the last several years to come to continue to execute to meet our commitments to our customers and to meet our commitments to all of you, you know, which just means being disciplined about our capital and o&m spending about where it is and and what level it is continue to improve the level of service that our customers receive from us and continue to hit hit or exceed the numbers off that we committed to all of you and that's what we intend to do.

I'll just I'll just talk about.

Given a n sales possible portions of utilities, you know, certainly, of course, we are always open to anything that would be value-creating for our stakeholders, which is always our number one role in m&a anyway is that we would want to make sure that we're creating value of our stakeholders are other considerations our execution and distraction from the things that we are doing to to further create value for stakeholders already underway. The second one is probably the the one that makes it perhaps a little bit challenging for us in the sense of trying to do that for Equity raises because we would likely require approval from regulatory commissions in order to do any sort of m&a activity. Goes. And so while we might be able to find good value if you're if we were counting on that for an equity raised and we had to go through the regulatory process that would create a lot of uncertainty in that month.

Right, so probably not the best path for us. But certainly if there is value creation opportunity out there then we would be looking at it. That sounds good. Appreciate the color and all that. Thanks guys. Thanks. Thank you for next question comes from Steven bird with Morgan Stanley your line is open. Hey, good morning. I just wanted to I guess step back and talk about the impacts to the system from just really unprecedented weather impacts that that you all noted as you think about sort of lessons learned from Texas and just from your other utility businesses. I know you're spending a lot on sort of making your system more resilient, but are are the Lessons Learned sort of faith in you know, the potential for further either acceleration of spending or changes to plans Weatherby generation plans Renewables plans, etcetera, or is this just sort of consistent with you overall? Yep.

Gaston resiliency and these recent data points just kind of reaffirm sort of the existing approach that you're that you're taking. Well, I guess, you know, I'll start out with the others chimed in but Stephen Colbert certainly every event that occurs has unique attributes that allow us to have lessons that we learn and so whether it's the the, you know, the hurricanes and tropical storms, you know, Harvey's different than lower for example, in terms of what the impact it had on, you know, reasonably similar areas of our service territory and what we've experienced. Obviously, you're still in the process of of getting the lessons learned about the the events that we saw last week. So so we always, you know, I wouldn't say that it's inconsistent with the plans we have for resiliency, but certainly every time we go through any kind of event we will learn something that we will apply to the next events. So, yep.

Things we learned in Katrina that have really served as well.

For every event that occurred after that both in terms of what we do to our system and how are capital shapes up but also as well as our processes and our operations and our interactions with the industry et cetera. So so there will be Lessons Learned and they will direct our activities potentially differently. I wouldn't say that it's going to create an incremental Capital spend or anything like that song potentially redirection of it. Now, it could provide some incremental Capital spend if it wasn't working with our Regulators. They determine you know, we jointly determined that there are things that we need to do more quickly than we otherwise would have done but I wouldn't I wouldn't say right now that there's some anticipation of a change in the size of a game plan going forward because of these events might be a change in direction for some things just to prioritize differently, but everything's a learning experience and will continue to do that and and Thursday.

Events last week. We're still unpacking everything there.

That's helpful. Maybe just one last for me just on nuclear operations. Just curious more broadly. You know, how are you feeling in terms of operational progress performance just Trends and any recent developments there or is it sort of Fairly consistent with with prior messaging there in the majority. It's consistent with where we've been, you know, I would say that that we continued to work with grand Gulf. We have some work to continue to do there to get that plant into the space where we want it to be but but majority of it back on track.

Understood in the Grand Golf work is that sort of just general operational improvements? How would you sort of highlight the the work needed there in the equipment reliability space for the most part as you know, we've gone through a couple of major outages with big equipment modifications the most recent equipment modification determine control system. We've had some issues coming out of that out with some of the equipment associated with that modification. So we're going to continue to work through those get those knocked out and and get the plan up to the level of Excellence that we desire.

That's great. Thanks. Thank you so much.

Our next question comes into sharper with Guggenheim Partners your line is open.

Hey, good morning guys Morning Show just a couple of questions here, you know firstly just on the cost savings, you know, you presented hundred fifty million dollars. I was five fifty million dollar and savings that was obviously executed in 2020. That was well in excess of your original hundred million, right? So just curious to the level of recurring cost savings. You think you can walk you said you can take it to Twenty-One and sort of continue on that momentum and can you find sort of incremental opportunities, especially on the corporate side, you know, we've seen several Piers generate significant cost savings from for instance real estate optimization. So wondering if this is also a potential leverage you guys go through Covent and the learning curves there.

hey Charlie, this is

This is Drew. So most of the savings that we saw in 2020, I would I would characterize as more one-time in nature. They're part of our flexible spending efforts. And those are typically looking for ways to to take action to to to manage to to the outcomes in that particular year. And so we would not necessarily see those as recurring but this year we've identified new ones that we would be able to use to to manage this year if needed and we can head continued on you know, last year after we said we got to a hundred million booking form or in the event that we needed its and it turns out as as you know that we needed all of it. They're having said that there were some things that were identified as a potential continuous Improvement elements and and sort of fit into those other buckets. Although they were you know, relatively small I would think you know in the 20% range and and those are now accounted for Thursday.

In our outlooks as part of our own em expectation and there are other things that we are looking at. We you know are driving our continuous Improvement efforts forward things, like real estate optimization are you know in the spotlight for us as we think about you know, how we manage our Workforce of the future and and that's a that's an easy one to consider them as as we go forward. So those things are part of what we're looking at and some of those expectations are now getting baked into our outlooks God and then just maybe of timing on when a update around the on the additional levers

Well, I think they're just I think they're just part of our ongoing process. And so we don't have anything today. We don't have any specific timetable that we're working towards. It's just an ongoing element bulb.

Got it. And then just on Arkansas. It's it's good that you're confirming or reaffirming that you know, depending on whatever Outlook happens in the in the FRP order that you're comfortable with the plan midpoint of guidance embedded there, you know, it sounds like you're obviously shifting or optimizing capex and o&m, you know away from Arkansas. So I'm curious what have you had any dialogue with the commission around sort of that strategic move and and I'm wondering where you redeploying the the the capital spent.

Charts Rod, good morning. Hey ROTC morning the conversation the conversation as you know, what the stakeholders is ongoing and we won't comment specifically talked about any aspect of the other give-and-take but it is known in Arkansas that that one of the consequences of us not having Clarity just around the the FRP and the extension is is just that that we would have to revisit how we deploy capital in Arkansas and those conversations have been ongoing since December order and it's it's part of the motivation why we're we're working the various Avenues to turn that that conversation around but they they are aware off of our point of view around the capital plan. We're not talking about specific puts and takes that said our point of view that we shared with you earlier about wage.

We thought the FRP.

Provided us the best opportunity to create sustainable value for customers as played out during the pendency of the of the f r. Why we feel so adamant about the the propriety of the extension. And so I think that that message, you know will will resonate there's more to come in terms of plays out and but that's about all I can I can speak to it, but you're raising you're raising a great a great point, you know, we're all motivated to create value and and the question about going at this point. It's not really going anywhere, you know to the extent that we are optimistic that we can get some reversal of December order. We are waiting to see if we would want to put that Capital back in place.

Got it. Got it. Congrats on sort of the new leadership position Rod. Make sure you working really hard. Thanks guys. I don't think you have to worry about that off. Our next question comes from the gas top row with evercore. Isi. Your line is open.

18 good morning. Thank you for taking my question morning. Good morning. Can you sorry if I missed this but have you Quantified in terms of financially wage impact if any do sort of last week's event, you know have for you.

Yeah, so this is this is Drew. So we do is remarks mentioned, you know, some of the the cost elements up to 140 million in terms of restoration costs in a mental four hundred million, in terms of fuel costs the I'll give you a little bit of color and then we'll be more specific numbers in the K which will file in a couple of days off but the but on the fuel costs, I think it's you know all in it's about five hundred million. I would say about a hundred million is kind of what we would normally have expected and that gives you to the four hundred million that the Leo was talking about of the five hundred million about 200 of it is in Louisiana. And that is about ninety-eight percent e l l and the rest of New Orleans about 150 is in, Texas.

And these are all round numbers as I mentioned you'll have specific ones later. There is a positive fuel balance in taxes of about 90 million that will help offset Thursday. And then in the neighborhood of a hundred million in Arkansas and around fifty million in Mississippi, so that's kind of how that would all breakdown.

Understood that super helpful, really? Thank you. So it's essentially a hundred million increment to what you may have otherwise expected, you know in a normal basis. Yeah. Yeah. Yeah in in February and I'm I'm talking about the month of February really.

Yep, okay.

Perfect. Thanks. And then just quickly. Can you hold a sort of so so the slide here says the the arcades FRP extension first quarter, right? Just can you remind me what the date is of that final order and then you know in terms of like what to look for could that get extended just any color on when we may get resolution on that front page? Yes. This is this is Rod March 15th is the date that the commission has set for itself to issue the order for both the 20 21 months apart p and the renewal of the

wfrp extension

got it. Thanks a lot. I appreciate the time guys. Thank you. Thank you.

Our next question comes from Steve fleischman's with both research. Your loan is open.

Yeah, thanks. Good morning. So this was a helpful update. Thank you. And just the the Louisiana FRP extension and I think you continued settlement talks there. Could you just maybe give color on your confidence and be able to to settle that case see if I can what is fraud but I can tell you that the the conversations in Louisiana or going perhaps consistent with our expectations slowed only by the by certainly the storms and occasionally covet but the types of issues that we've been working through with our our stakeholders and The Regulators have been consistent with expectations. We're targeting we're targeting the the resolution of the Louisiana Renewal by the end of month.

March and that said will be will be monitoring that that progress as we as we have others, but marches I is our Target to to resolve that all things.

Okay, great and then separate different question just drew on your financing plans is there I might have missed it. But is there any update or changes in your life your Equity issuance plans for the for the 3-year.

No, no new changes from what we described an analyst that we have made some progress. We got the at the market program up and running in January and June and we will have the proxy filing coming up will have a request to have get the authorization to issue preferred Equity. So that should be coming up soon. Those are yeah. Those are the only two things that are noteworthy since our last disclosure.

okay, and

Just on the at the market. Is there like a timeline for that part of the financing you're targeting or? No? There's no there's no timeline. We don't have any additional information there.

Okay.

Great. Thank you.

Our next question comes from Paul Fremont with Missoula Carolina's open.

Thank you very much.

I guess if I heard you correctly in Arkansas you your guidance is essentially contingent on an FRP extension packs. Are you expecting that to come through a negotiation or through a final Arkansas Public Service Commission rate order?

The answer the answer without being sounding trite is yes. So whatever progress were able to make but today in through the 15th, which is only 2 and 1/2 weeks away will incorporate whatever progress we make the assumptions. We're making in our guidance and Outlook assume the December order and and and not presumptively with a December order but it's it's it's our confidence and our ability to manage to expectations with whatever would be the likely or Reserve components of a of a of an Arkansas order. And so that's really the the the commitment we're making today that that our outlooks are tied to to those two months to primary assumptions, right, but would you please hold if if the FRP were not renewed?

If the FRP was not renewed then we would likely have to see what what the circumstances were. Obviously we have the ability if if needed to for instance file their rate case or take some other remedial action and so from a planning standpoint, we're contemplating all of those all of those scenarios, but it's too early for us to know which level ultimately pull but our commitment is to manage manage to those those likely outcomes.

Okay.

and

I think that's it. That's all for my questions. Thank you very much.

Our next question comes from Julian Smith with Bank of America. Your loan is open. Hey, thank you team. Good afternoon. Good morning, brother. Did you get for having a twenty-four-seven shop as you don't know what time of day it is filled with that way, but if I can let me get back to the planning scenario we talked about it's not going to go. So you're talking about cost reductions capex levers and also a series of of mass flow charts. If you will around what you could do. Can you elaborate a little bit on all on all these levels? Like if you were to pursue this out. Would you file a rate case later this year in Arkansas now is is litigious and appeal strategy the first way to go how quickly when you think about the difference in our would you pursue one over another and how quickly could we come back with a cost-saving program and Club?

It's program to preserve at least the Integrity of return. I suppose, you know, Julian appreciate the the the the question I guess.

Yeah, we're in the midst of discussions and and these orders and we're only a couple of weeks out from resolutions. So I think it'd be best for us to just defer commentary around all of that.

Until until we get get the outcome since it's pretty pretty prompt.

Yeah understood but to be clear about this. It sounds like you've got contingencies already running on both costs and capex levers Pakistan's today. And then the second question if I can probably relate it on the subject of of of Bill impacts and how you think about cumulative Bill impacts. How do you think about the total trajectory knowing what you know about storms and otherwise as well as the pace of cat backs and sales trajectory and Twenty-One onwards are you anticipating at this point in time, you know across your service territories.

So so let me make sure I I we get everything that was in there. So you're correct. Right. We've we've made adjustments to our plan to anticipate what we think is the likely outcomes in the FRP renewals or any regulatory process going forward. So that that is Incorporated in a in in our our thinking and obviously in our outlooks based on the on what we told you today and certainly from a bill impact standpoint. We're obviously I'm not going to work through all of these processes whether it be the storms from last year or the or the storms our last week and try to make recovery works for for you know, keep the company in the right space as it relates to our our credit profile and earnings as well as to keep our customer bills.

Mitigated as much as we possibly can which is what we've always done. So the tools that we talked about whether it be securitization or or you know normal ways that we handle fuel cost recovery or six of the options that we've taken of those in previous times all that will be on the table to where we can make it as as as as minimal an impact on customers as we possibly can while we connect to meet for example our credit earliest commitments.

Got it. Okay, fair enough sounds like things are up in the air appreciate the time.

Our next question comes from Jonathan Arnold with vertical your line is open. Good morning guy. Hey Jonathan. Could we get maybe an update on where you are on our yeah on a rear and the only incremental bad debt since you updated last quarter.

This is Drew. So as of the end of the year, you know, we had recorded bad debt expense of a hundred twelve million dollars off our normal bad debt expense and you given years about twenty-five million dollars. So in that incremental 87 was recorders of regulatory asset because we have our orders in each of our jurisdictions that would allow us to to recover those costs of the arrears is typically runs about three times higher than the back at expense. And so that number is pretty consistent. We've seen it begin to level off but we need to see where it goes with this latest round of Storms and a little bit of backtracking on disconnects because of the storms and we never did get off of disconnects in Arkansas and or New Orleans. So those two jurisdictions are have continued on page.

Not for a little bit longer, but that's that's kind of where we stand right now just to be clear. I understand that for the rear numbers more like a something in the three hundreds and correct and and everything else reserved to you know, or written off so pretty sure recovery searching, you know, roughly.

That's correct. Okay, thank you for that. And then just if I may the quarter and just understanding the numbers a little better than and the full year. It looks like you had $0.23 of of tax-related, you know benefits as for the year, but you were sort of shooting for 15,000 when you last updated guidance on Q3. And so that would be a sort of $0.08 incremental Health versus what you were expecting and and maybe another $0.07 or something. You know, am I am I reading that right or is a there are better ways think about that. No, that's correct. There's some details in the appendix which talk about those things took twenty twenty and and show where they are on the fourth quarter. Most of that is in the fourth quarter of is related to just annual true Ops that happened to work out in our in our Direction. There was a dog

Item that we found which was an opportunity for us, but that's consistent with what we've been doing. You know for a long long time. Obviously the big item we adjusted out which we committed to you all we would do and so going forward, you know, any of those annual through UPS. They might break for us. They might break against us. We have to manage within that we do expect to find something that's going forward, but we're not counting on it. If you look at our tax rate for twenty Twenty-One. It's it's a 22% and I think we're not disclosing it but in our plan, we actually have them drifting back up to around 24 24 and half percent beyond that. We've had it lower for the last two years as you know, because we had all the if you'd be from the whole projects all you pretty much all of which went online in 2020. So that that positive tax effect isn't as strong going forward the fastest. Say the Dead

Sort of helped you 50.

in Q4

It did we also weren't planning the $0.16 regulatory provision from the Arkansas border. So it kind of balanced out. Yeah, I've got it and then I I may have missed it. I just don't know. I hope she noticed your car facts down at the 21 $300 million invest part of you know, 9% It was is is most of that sort of dialing back in our school or some other things going on. That is that is primarily Arkansas, you know, we've we've taken some Capital out of 21 and 22. We put a little bit back in twenty-three and Arkansas there were some other timing elements of the other jurisdictions, but the main impact is is is Arkansas right? Thank you very much. Thank you.

Our next question comes from James delleker with BMO Capital markets. Your loan is open.

Thanks so much. Good morning guys real quick follow-up and I think I know the answer, you know, you you reiterated the your pages, I guess, you know through 2023 as well as the midpoint and I think in relation to Steve's question Drew doesn't sound like you're financing plan is changed. Is there been any change I guess in in the Cadence of that financing and we've looked at it as fairly radical, but just kind of given where the ffo metrics are. Should we assume that maybe some of the inequities a little bit more front end loaded or still credible.

So we we haven't we don't have any additional information provide timing other than what we've said previously we do expect to to issue some Equity this year off and then we have the two and a half billion by Twenty twenty four, but outside of that we don't have any other timing or amount items that we would dispose right now.

Got it and the billion-dollar ATM that you were mentioning. I think you guys put that in place in December that was part of that original financing plan to just to clarify. That's correct. It's one of the tools that could be putting in place with the other being the authorization request for preferred equity.

Okay, great. Thank you so much. Thank you.

Our last question comes from Ryan Levine which city your line is open. Thank you for taking my question. I just wanted to follow up on some of the bad debt items. Can you remind us exactly what's in your 2021 earnings guidance is around bad that assumption and if there's any incremental off of initial assumption from the events from last month, we appreciate the four hundred million dollar of incremental fuel costs number for curious. If you've adjusted any or bad data such assumptions on that regard we have not adjusted are bad data package options for that right now. I believe it's probably fairly normal, you know around the 25 million dollar amount that I was talking about earlier. Obviously, we'll be monitoring that closely and not seeing where all the cobit rears actually fall out. We have an estimate as we were discussing earlier there about a third ultimately we would expect to be able to recover of those costs.

through

Do the right of toy process but we don't have exact numbers yet. This is that Parts a little bit Uncharted Territory. We'll see where it comes out.

Are there any regulatory approaches or tools that you have for any potential political responses to help mitigate have potential incremental bad debt expense?

I don't know about regulatory tools. I mean we have the orders that are already in place. We are working closely with customers to try and mitigate the the impact on customers. We've done a number of things to put new deferred payment plans in place. We've been working hard with our customers. We've renegotiated thousands of plans with our customers already took try and help them out. We've invented new ways to get light funding to our customers and other community tools that are available. We've actually worked with some of our regulars to do some of that money in New Orleans is in other jurisdictions. So there are a number of things that we have underway to try to mitigate the impact and we are trying to work hard and communicate very closely with our customers to make sure that they know where we are and with our retail Regulators at the same time.

Okay, and in fact it a squeeze on one last question in terms of what's the regulatory approach to enable a path forward for Louisiana and some your other jurisdictions to fuel pump seized with with hydrogen and white of your hydrogen strategies that you have.

Well from a regulatory process standpoint, it would be the the same process we use to with our resource planning. So, you know, whether it's an RFP process of recovery of of those of the Investments we make for those resources would go through, you know, our existing recovery recovery mechanisms, but to the extent there's some nuances office where the current mechanisms don't account for some of the really forward-looking aspects of of the of the of the hydrogen or any New Age Technology will be talking without Regulators about closing whatever those gaps are. But but we have an existing process as far with the key and the writers and what happened.

And I'll just remove it. Thank you are a very small piece of our overall business. I think the rate base is only about two hundred million or so overall.

I'd like to turn the call back over to David board for the closing remarks.

Thank you, Michelle, and thanks everyone for participating this morning. Our annual report on form 10-K is due to the SEC on March 1st and provides more details and disclosures about our financial statements about events that occurred prior to the date of our 10-K filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles. Also as a reminder, we maintain a web page as part of entities investor relations website called Regulatory and other information which provides updates a regulatory proceedings and important Milestones on our strategic execution while some of this information may be considered material information. You should not rely exclusively exclusively on this page for all relevant company information and this concludes our call. Thank you very much.

Well, ladies and gentlemen, it says include the program. You may all disconnect everyone. Have a great day.

Yes.