Q1 2021 Xcel Energy Inc Earnings Call
And ladies and gentlemen, please standby and good day and welcome to XL Energy's first quarter 2021 earnings Conference call. Today's conference is being recorded there will be a question and answer session. Following the prepared remarks questions will only be taken from institutional investors reporters can contact media.
Relations with inquiries and individual book individual investors and others can reach out to our Investor relations at this time I would like to introduce your host for today's call Paul Johnson, Vice President of Investor Relations. Please go ahead.
Thank you good morning, and welcome to Excel energy as 2021 first quarter earnings Conference call. Joining me today are Benfold, Chairman and Chief Executive Officer.
Bob Frenzel, President and Chief operating Officer, Brian Van Abel Executive Vice President and Chief Financial Officer, and Amanda Rome, Executive Vice President and General Counsel. This morning, We will review our 'twenty, one and 2021 results and share our recent business and regulatory developments.
There are slides that accompanies today's call are available on our website as a reminder, some of the comments during today's call may contain forward looking information.
Factors that could cause results to differ from those anticipated are described in our earnings release and our SEC filings.
Today, we will discuss certain.
Metrics that are non-GAAP measures, including ongoing earnings and electric and natural gas margins information and the compatible and comparable GAAP measures and reconciliations are included there and our earnings release and I'll turn it over to Ben.
Well, thank you Paul and good morning, everyone. Today, we reported strong first quarter earnings of 67 per share compared with 56 cents per share last year, we're off to a good start and we are reaffirming our 2021 guidance range.
So I want to start out by thanking our employees for their outstanding work to ensure that our customers did not experience and immaterial outages during winter storm, Yuri and proud of our strong performance of our power plants, and our electric and natural gas systems and that serious event.
I think there are a lot of lessons learned from Yuri the need to invest and resiliency the increased interdependency between the gas and electric sectors and the need to have 24, seven dispatch will generation available are a few that come to mind.
So despite strong operational performance, we incurred $1 billion of incremental fuel costs door and went during the winter storm.
It's important to recognize that we followed all the policies and procedures regarding natural gas purchasing and hedging as approved by regulators and are states where.
We're in the process of seeking recovery for incremental fuel cost and we will propose to defer the cost recovery over a year or two to mitigate the impact on our customers.
Turning to our investment plans in February we filed a proposal to buy out and a re powered 120 megawatt win P. P E from elite for $210 million, the buyout will save our customers money, while extending the life of a renewable energy resource.
We also filed a proposal to build 460 megawatts of solar facilities near our retiring sugarcoat coal plant.
And estimated investment of $575 million.
The project takes advantage of existing transmission and will bring good high paying local construction jobs to our economy.
We requested a commission decision on both projects later this year and are confident the commission will see the customer and economic benefits.
And March we filed a resource plan, and Colorado, which details our plans to reduce carbon emissions by 85 per cent and increasing renewables to 80 per cent of our fuel mix by 2030.
The plan includes the early retirement of two coal units at Hayden and 2020, seven and 20 and 28, the conversion of Paul need to natural gas and 2020 eight.
The early retirement of Comanche, three and 2040 with reduced operations, beginning and 2030.
And I wonder the plant, we will add 2300 megawatts of wind.
1600 megawatts of Universal scale solar 400 megawatts of storage 1300 megawatts of flexible resources and 1200 megawatts of distributed solar resources to our renewable energy programs.
In addition, we have continued to make progress on and Minnesota resource plan and expect a decision later this year.
Between the Minnesota, and Colorado resource plans, we anticipate adding nearly 10000 megawatts of renewables to our system to meet our 80% carbon reduction goal by 2030.
We also filed our pathway transmission expansion plan and Colorado. The proposal request approval to build 560 miles of 345 kv transmission lines, creating a backbone that will enable 5500 megawatts of incremental renewables and help Colorado achieved its 2030.
Carbon reduction goals.
The estimated cost of the backbone is one $7 billion with an incremental investment of up to $1 billion for network upgrades voltage support in addition transmission line and interconnection work we expect.
Decisions from the Colorado pathway project later this year.
Turning to the NSP system MISO recently presented its long range transmission planning and roadmap, which identified potential scenarios for future system development based on constrained areas and options for regional transmission expansion.
This conceptional roadmap highlighted and an initial set of projects and the MISO footprint, which could drive $30 billion from investment and a full rollout could result in up to $100 billion of investment.
Paul This is very preliminary or high level conceptual framework. It does highlight the need for significant transmission over the next 15 years.
The transmission expansion and resource plans, we'll provide transparency and to our long term opportunities and will likely lead to robust capital investment and the second half of this decade.
Now as you know one of my highest priorities is ensuring excel energy as a positive force for racial justice and reconciliation.
We are deeply committed to supporting our communities and events and racial equity rebuilding following civil unrest and addressing COVID-19 impacts, which continue to disproportionately affect black communities I'm proud of our company is that our company is engaged and our community dialogue and then we are investing and organizations that are having a real impact.
We've got more work to do as a company community and our country and towards creating a more just society, but by working together, we can all be part of the solution.
We're also proud of the recognition we're receiving for our actions for example, excel energy was named among the world's most admired companies by Fortune magazine for the eighth consecutive year ranking second among gas and electric companies.
And we continue to be cited as a top company for LGBTQ equality, earning a perfect score and the human rights campaign's 2020, one corporate equality index and a bus a best place to work for LGBTQ equality does destination for the fifth consecutive year.
So with that I'll turn it over to Brian.
Thanks, Ben Good morning, everyone and thanks for joining us.
And a good start to the year bookings 67 cents per share compared with 56 cents per share last year.
Most significant earnings drivers for the year include the following.
Higher electric and natural gas margins increased earnings by <unk> 18 per share, primarily driven by riders and rate outcomes to recover our capital investments and increased margin from our small trading operation, reflecting higher market prices.
In addition, our lower effective tax rate increased earnings by six cents per share.
As a reminder, though production tax credits lower the E. T. R. P. T. CS are flowed back to customers through lower electric margin and are largely earnings neutral.
Offsetting these positive drivers were increased depreciation and interest expense, which reduced earnings by nine cents per share, reflecting our capital investment program.
Lori if you do see decreased earnings by two cents per share largely due to placing several large wind farms into service last year and.
In addition, other items combined to decrease earnings by two cents per share.
Turning to sales weather and leap year adjusted electric sales declined by one 9% and the first quarter. Our sales forecasts assume that there was a lingering impact from COVID-19, and we expected a slight decline in Q1.
However, the adverse impacts of COVID-19 on sales were largely felt starting in the second quarter of last year. As a result, we anticipate a positive quarter over quarter sales comparison next quarter and for the year. We continue to anticipate modest weather adjusted sales growth of approximately one per cent.
Shifting to expenses.
Oh and M increased slightly for the quarter, we expect annual O&M expenses to be relatively flat in 2020, one reflecting incremental cost for new wind farms offset by a decline and base O&M.
Now turning to our regulatory filings.
In January we filed a new Mexico electric rate case, seeking and net rate increase of $48 million after reflecting fuel savings and PTC used from the Sagamore wind farm.
A commission decision and implementation of final rates are anticipated in the fourth quarter of this year.
In February we follow a Texas electric rate case, seeking and that rate increase of $74 million after reflecting fuel savings and pizza sees from the Sagamore wind farm.
A commission decision is expected in the first quarter of 2020, two with a surcharge back to March 2020 one.
The Texas and new Mexico rate cases are driven by the Sagamore wind farm.
Investment in transmission and distribution due to significant growth.
The loss of a wholesale customer changes and depreciation to reflect the planned early retirement of our coal coal plant.
Requested ROE of 10, three five per cent and an equity ratio of 54, 6%.
And November 'twenty, and 'twenty, we filed a request and north Dakota to seeking and electric rate increase of approximately $19 million.
And our requested ROE of 10.2 per cent and equity ratio of $52 five per cent.
Interim rates were implemented in January and a decision is expected later this year.
As far as future filings Gulf, we anticipate filing a Colorado electric rate case, this summer with rates going into effect and the first half of 2020 two.
We are working with parties to reach settlement agreements regarding our plans for our Wisconsin rate case.
And finally, we also anticipate filing and Minnesota electric rate case, and November with interim rates going into effect in January of 2020 two.
Shifting to renewables, we continue to achieve important milestones and our PPA buyout strategy in March we close and the acquisition of the 99 megawatt Repowering Mauer wind farm Recycler mower will provide significant customer savings and carbon reduction for our customers.
We've gotten off to a great start for the year and are reaffirming our 'twenty to 'twenty, one and earnings guidance of $2.90 to $3 per share.
The updated our guidance assumptions and we expect incremental interest expense due to the lag and recovery of the $1 billion of unplanned fuel costs associated with associated with winter storm Yuri.
As we work with our commission to recover the fuel costs, we're not seeking to recover the carrying cost from our customers as we help to manage the overall bill impacts we continue to expect to deliver earnings around the midpoint of the guidance range.
With that I'll wrap up with a quick summary, we continue to execute on our PPA buyout strategy with the acquisition of Tomorrow and farm and filing of the elite P. P. A repowering dialogue.
We saw our solar proposal and Minnesota.
Fowler, Colorado resource plan and transmission expansion plan, which will provide transparency into our long term opportunities and will likely lead to a robust capital investment and the second half of the decade, we reaffirmed our guidance range.
And finally, we remain confident we can deliver long term earnings and dividend growth within our 5% to 7% objective range.
This concludes our prepared remarks, operator, we will now take questions.
Ladies and gentlemen, if you would like to ask a question. Please simply by pressing star one on your telephone keypad keep in mind, if you're using your speaker phone and make sure. Your mute function is released to a lot of that simple to reach our equipment. Once again star one for questions. Today, we will pause for just a moment to allow everyone an opportunity to signal.
And we will begin with Jeremy Tonet with J P. Morgan.
Hi, good morning.
Learning and Jeremy.
I was just wondering how does your Colorado generation transition impact our transmission needs overall and <unk>.
Given the national attention and transmission currently and what type of receptivity do you expect to this proposal and are there similar investments you are evaluating cross the rest of your footprint.
Well, Yeah, I mean, I think the response has been very favorable and you know I think there's a recognition that that if we're going to achieve and and the case from Colorado and 85 per cent carbon reduction with almost 80% of it coming from renewable energy that we're gonna need a strong backbone to a to be able to.
Do that and you know Jeremy when you factor and you know the price of all of that it still comes out and an incredibly affordable price point for our customers, which quite frankly might be made all the more affordable with some of the policies and that are coming out of the bite and infrastructure planning and if you think about it.
You know if we are if the extension of P. T sees the direct refundable day, the normalization opt out for solar and I T C for transmission and.
And that promises to make our plan, which of course includes 210000 megawatts of renewables that much more affordable for our customers and when you keep your product affordable you create headroom for additional investments and the grid like the transmission, you're referring to so I'm really optimistic that you know we've got a.
Tremendous opportunity in front of us with transmission aided by the policies that I mentioned that'll keep the price point low and that's and that's and all of our regions. You know that the MISO studies are preliminary but I think you can see that that's an enormous investment opportunity and hopefully the slides we've attached for you our health.
Paul and demonstrating whereas some of that build could happen.
That's very helpful. Thank you and he outlined a lot of great capex opportunities out there you know over a long period of time and just wondering how we should think about this capex as you've laid it out there and.
As it relates to your growth rates do you see this kind of firming up the five to seven over a longer time period or do you think that there could be upside at some point just wondering how this all kind of comes together in your mind.
Well you know, we we firmly believe we can be and the upper half of that five to seven per cent range. The things I'm, describing and only are helpful for that but I mean, you've made a great point when we talk about our long term growth rate, we're not talking about three to five years, we're talking about you know a long time so.
You know I'm quite confident that the opportunities we have in front of US we'll give you.
Should give you comfort that we've got transparent plans to hit that and again, we believe that we can be and the upper range.
Of that range.
Upper half from got it.
That's helpful. Just one last one if I could if you could speak to our recent sales trends are across territories, particularly S. P S and.
How do you see reopening trends impacting sales over the balance of the year here.
Yeah, Hi, Jeremy Yeah. Good question I think from a you know if we talked about and I'll talk about Sps specifically, when we talk about a little bit broader no. We're in touch with our major customers and the oil patch area and I would I wouldn't say, they're cautiously optimistic and we monitor some of ours.
Substations that serve those load, specifically and and they're reaching pre pandemic levels. So that's a good sign. We're also hearing from them that there's there's a from the oil majors that says there's a big focus on electrifying rigs and pumps as they look at ways. They can improve their carbon footprint.
I would say you know optimistic with what we're hearing down there and overall I think our territory as you know, we're starting and commodity COVID-19 restrictions and we have no restrictions and the Dakotas, and Wisconsin, and Texas, and Minnesota, and Colorado or are starting to ease up and Minnesota here, we're at about a 75% and capacity for bars and restaurants, though.
No we look at all the leading indicators and our economies and I would say, there's no positive growth and signs for this year and you know I think we feel pretty good about you know are well, 1% year over year sales growth on the electric side.
That's a very helpful. That's it from me thanks.
Thank you.
We will now hear from Stephen Byrd with Morgan Stanley.
Hey, Steven.
Hey, good morning, how are you all doing.
Good.
Great well. Thanks, so much for taking the time to address my question. So I'm thinking more on transmission just building on some of the prior.
<unk>, just you laid out and in MISO, you know some potential additional growth and and I was just curious if you could just talk a little bit about the the sort of the process steps and MISO from here how will this develop over time, how might this impact your thinking and your capex over time.
Yeah, Hey, Steve and its Bob here good to hear from you.
Look with MISO and and there are empty and 21 plan you know we expect all transmission owners to work through the process MISO over the course of 2021 ultimately with a goal of by the end of the year coming out with a series of recommended projects are all over the territory.
And obviously being one of the largest T OS and MISO transmission owners, we'd expect a lot of those projects to be in our service territory areas, particularly since those are the high density renewable areas and the territories as well.
So that goes forward you know what those projects are generally long dated items and we don't have you know capital for new make major transmission lines in MISO and our five year forecast, but when bill talks about the elongation of our growth and the investment that this industry needs to make the clean energy transition and we see that as the back half of the.
Decade, that's going to perpetuate the growth profile that we shared earlier.
Yeah, So David and I feel bad that I I would just add that you know the the throttle has always been the cost to the consumer.
And as I mentioned and to a question earlier, you know, we already had and affordable plan I mean taken advantage of very low cost renewables, which even with transmission built into that still is the Ah is great for our customers you make that even less expenses are more.
More affordable lifts the tax policies that are that that I think have a pretty good shot of getting past and that's creating a lot of headroom for our investment while keeping our product affordable, allowing us to then focus on things like electrification, which is also going to get ramped up with you know under the buy and administration.
Proposal and it really is I think very very bullish for excel energy and great for our customers and I'm really excited about it.
And obviously, what you're saying.
And one more opportunity right and on the on the S. P P side.
You know, while they haven't been as outspoken and it probably aren't as long as the process as Ben mentioned earlier, you know that region of the country as renewables rich and the opportunity to be a a energy export or to the country and that's gonna need transmission investment. So we think the MISO studies will provide some I'll call. It no regrets projects early.
<unk>, but by so and STP also going to have a lot more longer dated capital projects to enable the resource rich regions of this country to exports to either the east or the West coast.
And now we have a lot of road person in place. So that's the other thing we really we have right of first refusals as you probably know and some of our key states. So.
And excited up yet so.
Adding these together I guess, the it's a combination of if you get federal support and the four rather and extension of tax credits for wind and solar maybe new store tax credit that really helps reduce the cost and the second half of the decade anyway, because you already have kind of a visibility on those tax credits and the first half and that lines up with potentially for example, more transmission spending and place like.
MISO and so that can kind of work together, yeah, I mean, I think we had some pretty conservative numbers and.
And I resource plans on how you know what the price point would be by 2030, and it's very affordable now if you have this it becomes that much more affordable, creating the headroom to again make those investments in the grid that that we'll be able to do and keep our product affordable, which opens up electrification opportunities and other sector.
<unk>.
And that's really helpful. One just follow up.
You've and your resource plans, you've often talked about sort of the role of energy storage versus the role of peaking generation and you've raised a lot of good points about you know storage has a kind of a limited duration.
And you really do need you know, peaking generation due to ride through extended periods, where renewables output might be low for example, but I was just curious as you think about the evolution of of cost per store has the potential for a federal tax credit for storage would that sort of tip, the balance a little bit more towards storage, a little bit less peaking or Harry.
Are you all thinking about sort of the tradeoffs between the two technologies.
Well I think it's one of the reasons why for example, and the Colorado Resource plan, we I think we'd Paul for 1300 megawatts of flexible resources. That's in addition to identified 400 megawatts of storage. So you know, we'll let the economics aside if it's gas or if its batteries.
That said you know there are still gonna be limitations to how much you can rely on batteries for longer term durations, you know like winter storm Yuri.
You need more than four hour battery storage or even eight hours, but to the extent that it becomes affordable I mean, we will definitely have more batteries on our system.
You know Stephen there's legislation and Colorado that that's moving around innovative technology and for pilot programs on the spatula zero carbon assets long duration storage and any one of those can solve the reliability and affordability needs of our customers you know right now and we look at.
And it's available and the market and that's you know short duration storage and a four eight hour stuff or gassy teas, but you might find a hydrogen and fight fired and opportunity or a long dated energy storage opportunity that comes out of work you know that we're working on with <unk> and other organizations over the next day.
So we can be flexible at this point, we don't have to build that stuff today, but over time, you know, we're betting with technology and not against it.
Great. Thanks, so much appreciate it.
Thank you.
And now we'll take a question from drew Geis Chopra with Evercore ISI.
Good morning.
Hey, good morning. Thank you for taking my question I just wanted to clarify one thing Brian on the 2020.
One guidance slide that the lower depreciation expenses.
And I think you explained it well, but just so I have it correct. So youre essentially.
You know you you're deferring the.
And the depreciation expense and the balance sheet.
And that's that's what's driving the the expense lower and you're going to get recovery of and you know over the longer term is that what's going on.
Yeah, and you base. It really is just a timing you know previously we thought we'd get the Texas rate case order by the end of this year. So you would recognize the revenue and the expense with it now given that procedural schedules and Q1 and next year or so we just defer that expense for this year whoever relate back date to March so earnings neutral, but just to change and are in our.
Expenses are.
Got it Okay and then maybe just can you comment on you know the the timeline for recovery sounds like Youre, not asking book gathering costs.
And the storm you impact, but maybe just timeline for recovery of those dollars I mean, you've got a I believe authorization and one of your articles, but just what to look for there in terms of timeline and recovery.
Yeah, So yeah, you're right and in Wisconsin, and that's over the nine month period, but generally what we proposed and Minnesota and Colorado is over two years and really looking to help mitigate the the bill impacts and I'm honored customers. So think of that over the next couple of years, we'll work through the proceedings here and the summer.
Our and we're also you know not asking our customers to recover those carrying cost because we're really trying to overall helped mitigate the bill impacts and so we have a slide in there and where it's and over two years, it's anywhere from two to $10. So I'm really looking at how we can help our customers here.
Got it and so you said a decision on sort of the Colorado and Minnesota when summer.
And it should be yeah. Yeah later this summer.
Okay perfect. Thank you so much.
Thank you.
Moving on to a question from Travis Miller with Morningstar.
Good morning Travis.
Hi, Thanks for taking my questions.
Back to the Colorado pathway and I saw earlier this week that it was.
Put on and I don't know what I think about it as the anointed list of Okay Nathan.
Nathan wise and top transmission projects.
And I don't know what I'd call it.
But yeah.
How does that change.
And then how you.
Discussions with regulators the probability of getting the project approved and and even beyond that the probability of getting that incremental investment and being on that list.
Well I mean, I think it I don't know how much it helps but I mean, the reception as I mentioned before has been very favorable to the project and its very much tied to our ability to hit it was I think remarkable interim goals that we're shooting for and Colorado, So Brian or Bob I don't know if you have anything to add.
No I look I think the initial reception to the filing which was well received we expect.
And that filing to proceed alongside our resource plan, which has been mentioned calls for you know more than four or 5000 megawatts of renewables and the state of Colorado.
You know and when we filed that plan, we had transmission owners in the state of Colorado along side of US are very supportive very excited about the opportunity not only for us to hit our goals, but we're going to help the state and its goals with other other energy providers and the state being able to access the transmission for their renewable.
<unk> at this point I think we're gonna be.
We're going to build and own that pathway right now is our expectation that our owners are the other transmission owners are supportive but at this point I think they have declined to participate and the construction and ownership and operation of that asset that can change over time, but right now that's how we expect to move forward.
Okay.
Just real quick one clarification on that additional investment. So the plan would be 1.7 is that again.
And maybe Thats, what you filed for and then there could be another billion or does the extra 1 billion included and that one point and seven.
Yeah, the way I think about it Travis is.
I'll call it the base double loop 345 circuit on the eastern planes and Colorado is about $1 7 billion. There's an additional extension on that loop that would drop it down into the south Eastern most part of Colorado. That's another couple of hundred million $300 million and and then once we.
Get the resource plan approved and we know where assets are going to get firmly located and we need to come back and look at how much voltage support we might need for those assets, where they're gonna be specifically located and that comes with incremental capital costs, but again as Ben said you take the renewables you take them.
Pathway and its probably and 8 billion dollar initiative and Colorado, all going to keep our bills at or below the rate of inflation and Colorado are really excited and be able to transition that stage, two and 85% carbon reduction and 80% renewable penetration.
At that low cost.
Okay and then.
If I could sneak one more and they're on the project what are your thoughts on suggestions about investment tax credits for certain high priority transmission projects or federal backed loans what are your thoughts in terms of that.
Yeah look I think been captured it early and the conversation, but you know we've got a play and that's very affordable and reliable for our customers any incentives that come with that plan and make it more affordable and moral and and the opportunities and then look at other opportunities to accelerate either our own portfolio or potentially accelerate stuff like <unk>.
Trick vehicles, and the states and and keeping customers energy bills lower so I think on balance it's helpful.
But we think we can do it at a very affordable price with or without it and its not contingent on legislation passing at the federal level.
Great and I appreciate the time and the answers.
Thank you Travis.
Yeah.
Now, we'll take a question from Julien Dumoulin Smith with Bank of America.
Hey, good morning team. Thanks for the time I'll make it quick and Oh, Hey morning.
Just a just a rehash this transmission point I just wanted to just make sure I hear you clearly on this with respect to the MISO process. What's your level of confidence on this looking more like N V. P of the last decade versus being you know this teacher one proposal being the start of a fairly protracted effort to get these discrete projects underway.
Obviously, you've been fairly contentious at times and I, just want to understand your sense of confidence around.
Sort of and near term reflection and processes and these projects.
Well, I mean, I'll, let Bryan and and Bob comment Julien, but I mean, it's going to take time I mean, that's part of you know that's you know in Colorado and that's the advantage of we will ultimately might be and and RTL, but you could definitely move quicker when and when you're not in and RT O process. So I recognize and it's gonna take time, but the need is compelling and it.
And we'll get done and.
And you know how it gets built and.
How it's allocated I think it's important to keep in mind that we do have a right of first refusal and Minnesota and that I think that's very helpful. And I think we've got a demonstrated track record of building transmission and a very good cost.
So.
I don't know if I'm answering your question fully so I don't know, Brian and Bob have any additional commentary they like Hey, Julien It's Bob I think about it is and in tranches theres, probably some no regret stuff that come out of M. <unk> 'twenty, one I think we'll probably see more transmission expansion planning through MISO that'll get to maybe some of the harder stuff.
As you were mentioning.
And you know the N V. P projects were a point and time and and lined up very well I think that there's some projects that MISO and the transmission owners in MISO and recognize our needed sooner rather than later and I think that's the stuff you'll see come out of <unk>, 21, and I and I am hopeful and and working with the the MISO that.
We will see those by the end of the year I think there's more when they talk about the large numbers of $30 billion.
Dollars, a $100 billion that stuff could take a little longer it might be a little bit more a contentious, but as Ben said, absolutely positively need this to meet state skulls and company's goals and and I think it'll happen.
Alright, excellent and guidance one further follow up if I can it might be somewhat evident, but the decision to file and Colorado here and you want to walk through that a little bit.
I'll leave it open and it.
Yeah, Hey, Julien and earning our way and go for yeah.
Yeah, Yeah, Julien and I think we look at it at a couple of things right. Now we had originally filed for it and they just rider and a wildfire rider you know we still have our deferral out of her age of C. P C and costs and we have a deferral on our wildfire investments, but really you know, we're putting those are and our balance sheet and <unk>.
And one of those deferrals they get too large so that's one piece of it but also know we have some regulatory lag and the Colorado electric jurisdiction and.
So as we look at it and and and look at that and look at you know kind of how the economies are really coming out of COVID-19 and and in terms of the strength. We're starting to see there that are I think it's really the time to file and I'd add to that you know we talk about our advanced meter investments that we're making and Colorado are really ramping that.
This year with deploying about 400000 meters is the first large deployment and again and it's about getting that that cash and the door versus you know deferral on it and putting it on our balance sheet and kind of kicking the can down the road.
Alright, great, but I'll put it this way you expect to be able to earn.
Relatively close to your authorized us into the future wherever that mainland.
I would expect we'd close that GAAP rate. This I mean, we will file. This case here this summer, but we won't get and outcome until next year, So you'll see us from regulatory lag and Colorado This year and and improvement next year as we get to those rates into effect.
Got it. Thank you guys best of luck.
Thank you.
Okay.
Moving on to a question from Paul Fremont with Mizuho.
Hey, Paul Hi, Paul.
And congratulations and number one number two.
If I look at our Colorado pathway.
How would you allocate the $700 million of investing it would it be fairly even for the period and 21 through 25 is it backend loaded.
And I just wanted to get a sense of when that $700 million would head.
Yeah, Hey, Paul.
And give it more kind of and a little bit more backend loaded you'd have a little bit of spend as we go through the recover we go through the proceeding and get an approval late this year and so you start to spend next year, but really the ramp up is in the back half of our five year forecast.
So like the last two years is most it would be that the lion's share yeah. That's a fair way to think about it.
Perfect.
That's it for me. Thank you so much.
Thanks, Paul.
And.
Next question from Ryan Levine and Citi Go ahead. Please.
Good morning.
And I was hoping to just follow up on from the comments on the PPA buyouts curious how those potential future transactions have been progressing and what pieces and in the context of the body and infrastructure plan and that.
And the white and Bell.
And if any of the tax provisions there could accelerate or decelerate some of the opportunities for PPA back.
Hey, Ryan Yeah, you know good question, and I think I and I'll take a step back and say you know we've delivered if we look at what we've delivered or have pending approval is about $750 million of of Capex related to PPA buyouts and and now that's and we've if you look at them on a customer saving is copper.
Horrible to that so spend a great strategy for our customers and the growth strategy for us.
And you know you've heard me talk about you know we'll continue to stay in contact we continue to stay in contact with our Counterparties and still think now up to a 500 million to a $1 billion of PPA buyout opportunities are are absolutely possible.
And you know I think about what we could see coming out of the potential infrastructure plan with a longer term extension of credits no I look at what we've been to two wind farm PPA buyouts that we have and approved and Minnesota. They were a PPA buyouts with the Repowering and that Repowering with the and additional 10 years of.
P. T C. Just helps us to deliver affordable projects and customer savings and so I think that absolutely presents an opportunity over the longer term if we get it and is it a long term extension of credit. So you know, we'll continue to look for the opportunities and will transact when we find oh and an opportunity where it works for our customers and works for our shareholders.
And Ryan, it's Rob I'll, just say that.
As we move through the resource planning process, and both Colorado and Minnesota those are other opportunities that present themselves during those proceedings and so as Brian said, we still got a goal to execute on this strategy and we think theres opportunity.
Thank you for that and then and similar vein and the context of some day.
Our incentives are federal build out I'm curious your thoughts on how that could impact your business and and impact to some of the service territories and some of those broader federal mandates where it would be rolled out.
Well I think it's very supportive of the goal we have for getting Evs on the road and and.
And you know everything that comes with that and you know one of the things and we all know is that you.
The the range anxiety.
Consumers have justifiably so.
And certainly be diminish.
Diminished if you had 500000 and charging stations you know.
Out there as proposed under the plan so it's only going to be helpful.
You know and Oh, Evs are great load for us and they benefit all customers and I really.
I think we're pioneering subscription rates and other things that I'm encouraged not require but encourage customers to charge off peak.
And I think you know that minimizes the.
We'll have infrastructure needs, but that'll minimize it again for the benefit of all customers keeping prices low and you know.
I, just think that the economics associated with.
The electrification of transport are pretty compelling and this is only going to help accelerate that so it's very positive.
Is there any numbers you can put around the potential capex around additional infrastructure that excel and may have to deploy to support the federal EV programs.
Programs, if they were to be passed.
Pat.
Yeah, right and the way to think we think about it right. We have you know our our stated goal for excel as Oh.
You know, one and a half million Tvs and our service territory by 2030, and that's about 20% penetration of Evs and and with that you know we have $500 million of capital and our current five year forecast and I would say, we have some industry, leading EV programs with what we're accomplishing and Colorado, and Minnesota and really helping our states.
Reduce carbon emissions and the transport sector, and then we kind of pivot to the back half of that forecast is another about 1 billion and a half dollars in terms of estimates and and that's for that 20% penetration and if you know the federal incentives helped drive that penetration faster you can kind of Ratably I'd say scale that up so we viewed as a really good.
Unity here longer term as you know, we pivot and help take out the carbon emissions from the transport sector with how clean our fleet is.
All contributed it can't be price as well too I mean, because again he vs. Even if you don't own one of somebody that does that helps with our.
Programs.
All customers will benefit from that and that tends to.
Increase the denominator and keep costs low, which again, that's a virtuous cycle allows us to make other investments.
Yeah.
Great. Thank you.
Okay.
Ladies and gentlemen, this will conclude your question and answer session I will turn the call back to Brian Van Abel CFO for closing remarks.
Thank you all for participating in our earnings call. This morning, please contact our Investor relations team with any follow up questions.
And ladies and gentlemen, and this does conclude your conference for today, we do thank you for your participation and you may now disconnect.
Yeah.
Okay.
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