Q1 2021 Dominion Energy Inc Earnings Call
Ladies and gentlemen, welcome to the Dominion Energy first quarter 2021 net earnings conference call. At this time each of your lines is in a listen only mode. At the conclusion of today's presentation. We will open the floor for questions instructions will be given for the procedure to follow if you would like to ask a question I would now like to turn the conference over to Mr. Steven Ridge Vice President.
Investor Relations.
Thank you David and thanks to everyone for joining today's call earnings materials, including today's prepared remarks may contain forward looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings, including our most recent annual reports on form 10-K.
And our quarterly reports on form 10-Q for a discussion of factors that may cause results to differ from management's estimates and expectations. This morning, we will discuss some measures of our company's performance that differ from those recognized by GAAP reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measures, which we can calculate.
Are contained in the earnings release kit I encourage you to visit our Investor Relations website to review webcast slides as well as the earnings release kit joining today's call are Bob Blue Chairman, President and Chief Executive Officer, Jim Chapman Executive Vice President Chief Financial Officer, and Treasurer and other members of the executive management team I'll turn.
The call over to Bob.
Thank you Steven.
Before we provide our business update I'd like to take a moment to remember our friend Tom Farrell.
Tom is passing on April 2nd was heartbreaking to those of us who loved admired and respected him.
We've heard from so many people, including many of you about Tom's impact on the industry and the people who work in and around it it's quite clear that while Tom Lister professional accomplishments was law.
A list of people, whose lives he touched was much much longer it.
It could be graph occasionally many of us participating on this call may have experienced that from time to time.
More often we experienced his generosity as loyalty is dry sense of humor and his focus on improving our company our community and our industry.
We should all seek to emulate his example are.
On a consistent commitment to ethics and integrity excellence and perhaps most of all to the safety of our colleagues he cherished as friends and family most of all I can't think of a better example of a leader and we will miss him dearly with that I'll turn it over to Jeff.
Good morning.
Thank you for those words Bob.
I'd also like to express my thanks for the messages of condolence that we've received from across the country.
From around the world. Thank you all.
As Bob said, we will very much Miss Tom.
Let me now turn to our business update.
Following the in depth review and roll forward of our capital spending outlook, we provided last quarter.
Our prepared remarks today will be relatively brief.
We're very focused on overall execution, including extending our track record of meeting or exceeding our quarterly guidance mid points as we did again this quarter.
I'll start my review on Slide four with a reminder of Dominion energy is compelling total shareholder return proposition.
We expect to grow our earnings per share.
Six 5% per year through at least 2025.
Supported by our updated $32 billion five year gross capital plan.
Keep in mind that over 80% of that capital investment is emissions reduction enabling.
And it was over 70% is rider eligible.
We offer an attractive dividend yield of approximately three 2%, reflecting a target payout ratio of 65%.
And an expected long term dividend per share growth rate of 6%.
This resulting approximately 10% total shareholder return proposition is.
This combined with an attractive pure play state regulated utility profile.
Characterized by industry, leading ESG credentials.
And the largest regulated de carbonization investment opportunity in the country.
As shown on the next slide.
Our 15 year opportunity is estimated to be over $70 billion.
With multiple programs that extend well beyond our five year plan.
And skew meaningfully towards rider style regulated cost of service recovery.
We believe we offer the largest the broadest and scope the longest duration and the most visible regulated de carbonization opportunity among U S utilities.
The successful execution of this plan will benefit our customers.
Communities, Inc.
Employees and the environment.
Turning now to earnings our first quarter 2021 operating earnings as shown on slide six.
Were $1.09 per share, which.
Which included a one penny hurt from worst than normal weather in our utility service territories.
This represents our 20 <unk> consecutive quarter, so over five years now.
Delivering weather normal quarterly results that meet or exceed the midpoint of our quarterly guidance range.
GAAP earnings for the quarter were $1 23 per share.
The difference the difference between GAAP and operating earnings for the three months ended March 31 was primarily attributable to a net benefit associated with nuclear decommissioning trusts and economic hedging activities.
Partially offset by other charges.
A summary of such adjustments between operating and reported results is as usual included in schedule two of the earnings release kit.
Turning on the guidance on slide seven.
As usual, we're providing our quarterly guidance range, which is designed primarily to account for variations from normal weather.
For the second quarter of 2021, we expect operating earnings to be between 70, and 80 cents per share.
We are affirming our existing full year and long term operating earnings and dividend guidance as well.
No changes here from prior guidance.
Turning to slide eight and briefly on financing.
Since January we've issued $1.3 billion of long term debt consistent with our 2020 one financing plan guidance.
At a weighted average cost of 2.4%.
Thanks to all who participated in these important offerings and as a reminder.
We will have additional fixed income issuance of debentures on energy, Virginia a.
Our gas distribution at Dominion Energy, South Carolina, and their parent company during their mind the remainder of the year.
For avoidance of doubt there is no change to our prior common equity issuance guidance.
Wrapping up my remarks, let me touch briefly on potential changes to the federal tax code.
Obviously, it's still early days with a lot of unknowns, but at a high level, we see an increase in the corporate tax rate as being close to neutral on operating earnings based on as is the case for all regulated entities the assumed pass through for cost of service operations.
An increase in parent level interest tax shield.
And the extension and expansion of clean or Green tax credits, all of which will be offset by heart by higher taxes on our contracted assets segment earnings.
We also expect modest improvement in credit metrics.
We're monitoring the contemplated minimum tax rules closely.
And we'd note the administration's support for renewable development suggests the ability to use renewable credits to offset any such minimum tax rule.
More to come over time on that front.
With that I'll turn the call back over to Bob.
Thank you Jim.
I'll begin with safety.
Shown on slide nine through the first three months of 2021 we're tracking closely to the record setting osha rate that we achieved in 2020.
In addition, we're seeing record low levels of lost time on restricted duty cases, which measure more severe incidents of course, the only acceptable number of safety incidents zero and we will continue to work toward that critical goal.
Let me provide a few updates around our execution across the strategy.
We're pleased that the 2.6 gigawatt coastal Virginia offshore wind project has been declared a covered project on her title 41 of the fixing America's surface Transportation Act program also known as fast 41.
The federal permitting targets now published under that program are consistent with the project schedule that we shared on our fourth quarter call in February.
Keith schedule milestones are showing side by side on slide 10, we continue to be encouraged by the current administration's efforts to provide a pathway to timely processing of offshore wind projects in the meantime, we're advancing the project as follows well processing competitive solicitations for equipment and services to achieve the best path.
<unk> value for customers and in accordance with the prudency requirements of the V. C E interest in those Rfps has been robust.
We're analyzing performance data from our test turbines, which have been operational for several months now and are to date generating net capacity factors that are higher than our initial expectations recall, we had assumed a lifetime capacity factor of around 41% for the full scale deployment.
Further evaluation of turbine design in wind resource. In addition to the data we're gathering in real time suggests that our original assumption is too low higher generation would result in lower energy costs for customers.
We're monitoring raw material cost and it seems to be the case across a number of industries right now we're observing higher prices in the case of steel for example, the return of pandemic idled steelmaking capacity hasn't yet caught up to global demand will continue to monitor raw material cost trends as we move towards procurement later on.
Our project timeline.
We're moving into the detailed design phase for onshore transmission as we observed within the industry recently utility systems are only as good as they are resilient, which is one of the reasons that we made the decision in 2019 to go the extra distance to connect to our 500 kv transmission system to ensure that the projects power will be available when our customers need.
At most.
We believe the decisions, we're making around onshore engineering configurations will ultimately result in the best value for customers.
And finally, our Jones Act compliant wind turbine installation vessel is being constructed and is on track for delivery in late 'twenty 'twenty. Three we expect the vessel will be an invaluable resource to D. E V as well as to the U S offshore wind industry, we expect to announce further details on non affiliate vessel charters and the near term.
In summary, lots of very exciting progress, which will continue through the summer, including our expected notice of intent from Boeing on June <unk>.
As is typical for a project of this size at this phase of development there'll be some puts and takes as work continues taken as a whole there's no change to our confidence around the project's expected L. C O a range of 80 to $90 per megawatt hour.
Near the end of the year, we'll file our C. P. C N N rider applications with the Virginia State Corporation Commission and will be in a position at that time to provide additional details around contractor selection in terms project components transmission routing project cost capacity factors and permitting.
Turning to updates around other select emissions reduction programs on solar on Friday, The Virginia State Corporation Commission approved our most recent clean energy filing which included 500 megawatts of solar capacity across nine projects, including over 80 megawatts of utility owned solar the fourth consecutive such approval we.
<unk> also recently issued an RFP for an additional 1000 megawatts of solar and onshore wind as well as 100 megawatts of energy storage and 100 megawatts of small scale solar projects and eight megawatts of solar to support our community solar program.
Our next clean energy filing, which we expect to include solar and battery storage projects will take place later this year.
Since our last call we continued to Derisk our plan to meet the V C. A solar milestone by putting another 30000 acres of land under option, bringing the total day nearly 100000 acres of optioned or exclusive land agreements, which is enough to support the approximately 10 gigawatts of utility owned solar as called for by the Virginia Clean Economy Act.
On nuclear life extension, just this morning, the NRC authorized 20 year life extensions for our two Surrey units in Virginia.
Suri station provides around 15% of the state's total electricity and around 45% of the state zero carbon generation. This authorization is a critical step in ensuring the plant will continue to provide significant environmental and economic benefits for many years to come we expect to file with the FCC for rider recovery of really.
The sensing spend late this year for both Surry and North Anna stations.
At our gas distribution business as we've discussed in the past our gas utility operations are enhancing sustainability and working to reduce scope, one and three emissions with focused efforts around energy efficiency renewable natural gas and hydrogen blending operational modifications and potential changes around procurement practices.
For example, as part of our recently filed natural gas rate case in North Carolina, We ask the North Carolina Utilities Commission to approve five new sustainability oriented programs hydrogen blending pilot, it's part of our goal to be able to blend hydrogen across our entire gas utility footprint by 2030.
A new option to allow our customers to purchase our Angie attributes and three new energy efficiency programs.
Finally in South Carolina.
The South Carolina office of regulatory staff recently filed a report finding that our revised I R. P met the requirements of the law and the public service Commission's order requiring the modified filing as a reminder, the preferred plan in the revised filing calls for the retirement, all coal fire generation and our South Carolina system by the end of the decade.
Which helps to drive our projected carbon reduction of nearly 60% of 2030 as compared to 2005.
While the IOP is an informational filing does not provide approval or disapproval for any specific capital project. We look forward to continuing to talk with stakeholders, including the commission about an increasingly low carbon future and.
An order is expected from the public service Commission by June 18th.
Turning to the regulatory landscape, let me provide a brief update on our Virginia Triennial review filing, which we submitted at the end of March.
As shown on slide 12, the filing highlights Dominion energy, Virginia is exceptionally reliable and affordable service the state's careful and thoughtful approach to utility regulation has resulted in a model that prioritizes long term planning that protects customers from service disruptions and bill shocks consider these facts 19.
9.9% average reliability delivered at rates that are between eight and 35% lower than comparable peer groups. We're proud of our record and the work we do to serve customers every single day.
Our filing also reflects over $200 million of customer arrears forgiveness as directed by the General Assembly relief that is helping our most vulnerable customers address the financial impacts of COVID-19.
The filing also identifies nearly $5 billion of investment in rate base on behalf of our customers over the four year review period, including $300 million of capital investment in renewable energy and grid transformation projects that we believe meet the eligibility criteria for reinvestment credits for customers.
The Commission's procedural schedule is shown here. We've included additional details regarding the case is filed in the appendix for your review and look forward to engaging with stakeholders in coming months.
It's clear to us that the existing regulatory model is working exceptionally well for customers communities and the environment in Virginia, we're delivering increasingly clean energy, while protecting reliability and safe guarding affordability.
In South Carolina, we continue to engage in settlement discussions with the other parties as highlighted in our monthly filings before the commission, we aren't able to discuss specifics of that process, but can report that all parties appear committed to working towards a mutually agreeable resolution.
Finally, let me highlight noteworthy developments in the legislative landscape for our company and Virginia. During the now adjourned session. The Virginia General Assembly passed House, Bill 1965, which adopts low and zero emission vehicle programs that mirror vehicle emission standards in California.
The law, which has been signed by the Governor ensures that more electric vehicles are manufactured and sold in Virginia will likely take a few years before we see the significant and inevitable ramp up in electric vehicle adoption in our service territory.
But we're taking steps today to be prepared for the incremental electric demand and associated infrastructure.
That includes regional coordination with other utilities to onshore highway quarters than it is for seamless charging networks support for in territory EV charging infrastructure, which includes a significant investment in a variety of grid transformation projects as well as the rollout of time of use programs.
At the federal level, we're encouraged by the support we're seeing for our offshore wind project, we applaud efforts to increase funding for the research and development of technologies that will allow the utility industry to drive further carbon emissions reductions.
Philosophically aligned with the current administration and wanting to accelerate de carbonization across the utility value chain. While also recognizing that the energy, we deliver must remain reliable and affordable it is.
Still early but we're engaging in the process of policy formation and monitoring developments closely and continue to believe we are well positioned to succeed in an increasingly decarbonize world.
I'll conclude the call with the summary on slide 13.
Our safety performance year to date is tracking closely to our record setting achievements from last year, we reported our twenty-first consecutive quarterly result, but normalized for weather meets or exceeds the midpoint of our guidance range. We affirmed our existing long term earnings and dividend guidance, we're focused on executing across the largest regulated <unk>.
<unk> investment opportunity in the nation to the benefit of our customers and we're aggressively pursuing our vision to be the most sustainable energy company in America with that we're ready to take your questions.
Thank you ladies and gentlemen at this time the floor is open for your questions. If you would like to ask a question. Please press the star key followed by the one key on your Touchtone phone now if at any time, you would like to remove yourself from the question queue. Please press star two again to ask a question. Please press star one now our first question comes.
Sharp, whereas <unk> with Guggenheim partners.
Hey, good morning, guys.
Sure.
Just a couple of quick questions here first we've seen others revised estimates on Youree.
Any update on how kind of euro impacted your customers and fuel cost are you still okay. There and how are you sort of thinking about maybe in Brazil, and she spent for renewables.
Just on maybe some of what you've observed as a result of Gary any incremental spend associated with that that would be that we should be thinking about there.
Shar, it's Bob I'll, let Jim take the first part of that question and then I'll answer the second half good morning Shar.
Good morning, So yeah. Good. Good question. We're here, we're hearing a lot about this topic across the industry. This quarter of course for US Let me, let me walk through it. So there's no there's no impact for us at all on our electric operations of course.
Given our geographic location location.
On the gas side, very minimal cost impacts in Ohio, and West, Virginia, North Carolina, those businesses kind of leveraged their storage assets to minimize purchasing during that during that week.
In Utah, it's interesting, though we did see increased gas purchases, we saw price spikes in the Rockies region for gas during that week of course, and we saw we had increased gas purchases of our own during that period in the range of about $60 million six zero.
Now as a reminder, those those costs are covered by customers, but we think it's modest cost to customers. So no no financial impact to the company from that but what's interesting is the strength of the operational and the regulatory design, they're really saved customers.
Very significant costs during that period and those are those are twofold, one is westborough.
The regulated fuel supply arm.
So during that week customers got the benefit of that cost of service supply so insulated from price spikes.
And then second contracting Costar gasses, I think it's the largest contractor for a storage capacity or clay basin, there on the Rockies region.
So without those features that $60 million would've been multiples to many multiples higher.
So pretty positive reflection of the operational and regulatory profile, there, but overall big picture pretty pretty manageable and scale for us.
As far as we are.
Sars, where looking forward I think it's important to remember that the regulatory models on the states, where we do business and particularly our electric states in Virginia, and South Carolina are very well suited to operate a reliable system for our customers and that is absolutely on the number one priority for our customers is key.
Keeping the lights on and so on the generation side that means.
Things like having diverse fuel mix, making sure the design basis for equipment is right for the circumstances under which it is kind of operate a consideration for fuel security firm transportation for natural gas and on the on the T&D side. It would be advanced simulations are of the effective events on the grid innovative equipment and engine.
Hearing no new voltage control devices for example.
And it means a robust communications infrastructure and in Virginia, all of those types of investments that I was just described on our comp contemplated in both the clean economy Act on the grid transformation and Security Act from 2018 things like grid Mod strategic underground storage. So we feel very good about that now.
But we're reviewing to see whether any of our resiliency efforts need to be expanded or we need to add new resiliency programs and we do that all the time by the way, we we learned from experiences on our own system and other systems.
I would just sum up by saying nothing changes on the clean energy capital investment front. We're confident we will continue that investment and operate reliably and the scope of any additional reliability investments.
And resiliency investments remains to be seen but we're studying what is best for our customers right now as we've been doing for decades.
Got it and then just two very Super quick ones on South Carolina on first obviously Santee next.
Nextera pulled their off or you know the Senate passed a bill that's more focused on internal.
Restructuring do you does dominion have any stance remaining air, including maybe an MSA opportunity or <unk> or is that sort of behind us.
Yeah, our position on that is that Hasnt changed its the same we have offered a we've worked cooperatively with Santee. We continue to work cooperatively with Santee I and we look forward to other opportunities to work cooperatively with Santee Cooper, So no no change there shar.
We're where we want to do what is best for South Carolina.
Perfect and then just the Trc I appreciate the comments that you made but is there any sort of sense of timing, maybe just some of the pushes and takes is there kind of a point on overturn we should be thinking about as we think about maybe a breakdown of settlement talks just maybe a little bit more visibility and then that concludes thank you.
Yes said the pause was for six months from January So it comes to an end on the 12th of July I believe and and so the case would resume on July 12th so little more than two months from now, but as we said in our prepared remarks that everyone appears to be approaching this now looking for a.
Trucked of outcome and that's what we're focused on.
Terrific. Thank you guys and I Echo your comments around around Tom is going to be greatly missed and he was the true gentlemen, so I. Appreciate your comments thanks guys.
Sure.
Thank you. Our next question comes from Jeremy Tonet with J P. Morgan.
Hi, good morning.
Good morning.
So you know just wanted to start with the caveat granted we're very early innings here and things will change, but are there any thoughts you could share on how the current version on the Biden infrastructure plan might impact D. Such as the tax credit front could this potentially impact a wider spread deployment of storage in Virginia.
Yeah I am you your preface to the question what is exactly right. It is indeed, a early days so we don't know.
What's going to come out in the final analysis.
So I think the best way to think about it is we're just very well positioned very we think the approach to.
To Decarbonize as quickly as we can reliably and affordably makes all the sense in the world, We're very well positioned to do that this is not something that's new for us and we see.
To the extent, we see opportunities.
With the Biden plan will take advantage of them, but at this point, we don't exactly know we just net of the atmosphere is really good we think it's smart for customers. We're excited about it.
Got it that makes sense and and then also I guess under the New administration you can touch on this a bit but maybe you could just comment a bit more on your interaction on boom here and how you kind of feel about things progressing moving forward you know through the process now versus before.
Sure we've had the opportunity to be involved in a couple of different industry conversations with.
Boeing leadership and other leadership and the administration I.
I think it's very clear that they see the advantages to our offshore wind development.
And I think the best evidence when when it comes to US is as we mentioned earlier the schedule for.
The notice of intent and for the record of decision line up exactly with what we talked about on our fourth quarter call. So.
We have a very good sense that the professionals at belden as they always have are going to move forward efficiently. The leadership of the administration clearly thinks on offshore wind is good economically and to meet carbon goals.
And we're looking forward to sort of taking advantage of the experience that we have.
With the only a wind farm operating in federal waters off the coast of the United States today, as we expand that to something much bigger.
Got it and just one last one if I could and I think you've touched on this a bit but just wondering what you're learning from initial hydrogen efforts here. How does this informed debt balance of opportunity between hydrogen and RMG for your gas distribution system, you know going going into the future.
Hi, Good morning. This is Diane Leopold So just as a reminder, on our hydrogen pilot where in our very early stages in a day is our gas distribution business is implementing some blending programs that day.
Training facility starting in Utah.
And we just commissioned it and it's.
Started testing just a couple of weeks ago.
So we're really moving forward with that we're.
We're looking to expand that if it's successful to a small customer use application.
And then follow the pilots in our other service territories. In fact, we requested a similar pilot at a training facility as part of our North Carolina rate case. So we're starting small very important on hydrogen blending. So we see a combination of moving forward with continued.
Our pilots and testing of hydrogen blending throughout our L. D C system.
Including putting it into the L. D C production and even met the nation in the future as well as an increased percentage of our energy into the system, which is really a one for one offset with methane so increased R&D.
<unk> increased hydrogen blending possibly towards him at the nation as we move to continue to Decarbonize. The L. D C system.
Got it that that makes sense. Thank you Tom will be Mr. Thank you very much.
Thanks.
Thank you. Our next question comes from Steve Fleishman with Wolfe Research.
Yes.
Yeah, Hey, good morning, and best of Toms family and all of you.
Thank you Sydney, well you bet well, while we are heard.
<unk> heard from Diane there just.
You have been kind of early investor in R&D projects.
I think I'd just be curious kind of.
Where where that stands and do you see a lot more coming over the next few years.
Hi, Good morning, Steve Diane again.
So yes, we have been an early investor we announced our intention to spend about $650 million on two main partnerships, we've been focusing on the agricultural R&D. So the hog farms with Smithfield and the dairy farms with Vanguard.
Renewables.
We have one project that's in service as of.
In the second half of last year, we have three projects under construction now and expect to have about five more under construction later this year. So we're really ramping up on actually bringing forward the projects on the demand side, we really see a significant.
On demand right now from a variety of customers you can see the people like the refiners that have a L CFS obligations to make.
And we see more states looking to implement L. CFS standards, we see utilities are both on the power generation side and direct customer use side and then we see a lot of colleges and universities and other corporations that are kind of comp carbon conscious fires that.
We're looking to offset their fossil usage. So we really see a lot of demand starting to pick up for a multi year contract terms at attractive prices.
So long term, we're still looking at these projects as critical supply sources for our L. D. CS as an important tool for our customers to achieve net zero and so starting to access through our green thumb tariff that we already have in Utah on now and if requested.
In north.
North Carolina, and we will continue to do so, but we're really continuing to see strong demand and our projects are ramping up.
Hey, Steve It's Bob I will mention that I had the opportunity last week actually visit our operating site in Utah.
Utah, it's quite something with the scale of the farming operation and it's also interesting that it happens to be not too far from one of our solar farms as well as there's a wind farm there too. So it's come a center of renewable energy and we just think debt in the scope of what we're doing.
In our de Carbonization investment there are a lot of opportunities as Dion described and our N G.
That will serve us well for the long term.
Okay.
And then just one quick question just sales trends and.
Virginia, South Carolina any quick thoughts there.
Thanks, David Good morning, it's Jim.
Sales trends are our occurring kind of like we expected I'll I'll share with you a few stats.
In Virginia year to date still pretty resilient like we saw most of most of last year.
So your debt year to date up a little over 2%.
Residential is still strong up almost 4%.
C&I also up almost 5% so pretty good keep in mind that the one underlying trend. We mentioned this a lot is the continuation of data center growth.
That number is up like 25% of course, it's a small but growing as a third of our commercial segment as data centers.
We expect to connect another 20 or so data centers on her service, Georgia This year.
We COVID-19 last year, so that trend is very supportive of overall sales.
And continues to be strong.
Great. Thank you very much.
Thank you. Our next question comes from Julien Dumoulin Smith with Bank of America.
Hey, good morning team thanks for the opportunity.
Morning, Julien Julien.
Hey, excellent on perhaps if I can pivot off that last question on on sales, perhaps can we talk about the next clean energy filing later this year three we expected more of the same in terms of you know on resources versus Ppas, but also how are you thinking about that filing against sales trends and also against some of these other headlines.
From from independent IPP is just looking at accelerating their procurement efforts in and around your service territory maybe volume.
Shall we say corporate procurements of various flavors and sorts.
If you can speak to sort of the overall backdrop.
Michael.
Yeah, Thanks, Julien so.
I think the answer it should it look similar to the filing that we just got to prove the answer to that is.
No and that this next filing will be larger in scale.
And I think you, particularly as the split between P. P E and utility owned and that will be different going forward. That's what the clean economy Act as it's quite specific on this point.
That.
For the new solar build 65 percentage to be utility owned and 35% is to be a third party a P. P. A M.
And sort of the total amount of that is on the order of 1000 megawatts a year for the next day 15. So that's what you should be thinking about really long term for US is we will match the V C a proportions and the magnitude going forward.
That the sort of second part of your question, where our focus our growth is in regulated renewables to the extent that we and if I'm understanding correctly to the extent we have.
Customers important customers, who were looking for are.
Contracted approaches we expect to do some of that but our focus on growing our solar portfolio is on the regulated side.
Alright fair enough and then with respect to South Carolina here I know that you are coming up on the July timeframe for broadly approaching and I know, we got some updates here in the interim but.
Still confident that perhaps by that point in time, we can we can reach on some sort of resolution. If you will is that is that is that fair as far as it goes.
Yeah, Julian I used to be a lawyer and as a profession, we seem to be procrastinators.
So I wouldn't read too much into the fact that there's there's two months left you can get a lot of work done in two months.
And as we said in the script everyone is approaching this constructively. So yeah. We think we can get it done.
Got it and if I can squeeze on one last one just LNG I know you guys are obviously still then.
On a chunk here, but.
You've seen some pretty elevated valuations here in the space of late.
Any comments reactions not just wanted to throw that in there quickly.
Hey, Julien as Jim Yeah, we we Oh I'll repeat what I think we've said many times before we very much like our new look in our asset mix.
The dynamics, you're speaking to we're not we're not blind to that that someday that could be an opportunity to raise capital and replace what are what we have on our plan for modest continued equity issuance, but no current focus on that topic. We're aware following but that we're focusing on executing our plan with our current asset mix.
Excellent all right all the best.
And.
Okay.
I Echo your sentiments with respect to Tom.
Thanks Julien.
Thank you. Our next question comes from <unk> Chopra with Evercore ISI.
Hey, good morning team. Thank you for taking my question.
Just a quick clarification, James on 2020 one guidance.
What are we assuming in terms of the timing on the South Carolina rate case, if you could just clarify that please.
Yeah, Hey, guys. Good morning, so on the South Carolina rate case, we've been again here consistently saying a couple of things one is that given the size of that business in relation to Dominion of course, that's just the electric part of D. E. S C, where we're talking about base rates on the electric side any reasonable outcome is not is going to be within our guidance.
And within so no no no material impact.
And then as far as the impact of a delay.
We've seen some folks suggesting that a delay of a year would be kind of in the five cent range. So take half of that for six months that you're talking about a couple of pennies, that's probably in the ballpark, but still not material and within our within our guidance.
Got it okay. So so basically regardless of the on the timing of a final decision. There you sort of the guidance 'twenty one guidance isn't debt.
Any reasonable outcome should that should lead to that that's right.
Perfect and just a quick one on the nuclear plant extensions.
Does that change who will give you an opportunity to deploy more capex or kind of is this is this is in line with your thinking.
On your sort of develop the Capex plan for five years out.
It's in line with our thinking when we developed our Capex plan.
$1.3 billion of spend related to the nuclear licenses in our five year plan that we went through and on the fourth quarter.
Understood. Thanks, guys and it's really a loss.
Losing Tom So my best for Tom and his family.
Thanks for your thoughts thank you.
Yes.
Thank you. Our next question comes from Michael Weinstein with Credit Suisse.
Hey, guys good morning.
On them.
Okay.
On the triennial filings.
The revenue deficiency that you guys have your debt.
Is that mostly related to.
Our rate base.
Or is it.
Investment or is it more operationally related.
So I think you're asking about are the 22 test year.
And our measurement versus a 10 eight Roy.
And the answer is just with the way the law works, we project forward sort of known and knowable for the year 'twenty, two and we calculate what the return is and in this case that return is slightly below the 10 eight.
That we believe is the appropriate authorized ROE. So I don't know that I can identify any one specific thing theres a number of sort of components that go into that but it's you do that analysis compare it against.
What we believe is a inappropriate ROE and that's how we end up with that.
<unk>.
Revenue deficiency in the regulatory speak.
Got you on combination of everything.
Dan on Orangey, just one other question on that on that subject do you anticipate a time when a.
Blending RMG and maybe even hydrogen to into the system would enable a utility in your utilities, specifically to say that they are.
Greenhouse gas neutral or greenhouse gas.
Zero or even negative.
And you know when do you think that'll happen on how many how many years do you think in the future.
Would you have to wait for that.
Well, absolutely and in fact that was part of our thinking when we committed to net zero by 2050 across both our gas and electric businesses was blending renewable natural gas and hydrogen into the system as part of a component of that so.
It certainly already worked into the plans I believe of numerous utilities and their net zero plans, especially R&D and the agricultural R&D, which is why we're trying to attract so much of that into our LDC systems and working with regulators on investing in it to get it in the.
Net works is because it's so much more carbon negative than a lot of other forms. So instead of just being carbon neutral you just got a lot of bang for the Buck out of a smaller quantities of it to help meet those net zero goals.
Yeah.
Got you one last question on on <unk> on the solar business.
Are you seeing any impact from a chip you know as a result of supply global supply demand.
Tightness in that in that segment.
Shipping is like shipping logistics issues chip shortages, you know we're hearing in the solar industry.
The supply is tight and prices are up I'm just wondering if that's affecting you at all.
Yeah, Michael Jim where we're seeing the same I'm not in a material way and the shipping and logistics issue. We're not we're not seeing as much as just some upward price pressure on poly on glass on steel.
But it's something we're watching but it's not you know for our business is not a material issue, but certainly there is upward pressure on on cost right now.
Okay. Thanks, a lot guys.
Okay.
Thank you ladies and gentlemen, this does conclude this morning's conference call you may disconnect your lines and enjoy your day.
Yeah.
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Yeah.