Q1 2021 Algonquin Power & Utilities Corp Earnings Call
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Good day, and thank you for standing by welcome to the Algonquin power and Utilities Corp, first quarter 2021 earnings webcast and conference call.
Of course time, all participants are in a listen only mode of.
After the speaker's presentation, there will be a question and answer session.
I ask a question during the session you will need to press star one on your telephone.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Amelia Tsang.
The other Investor Relations. Please go ahead.
Good morning, everyone. Thanks for joining us this morning for our first quarter earnings conference call presenting on the call today is the Roomba and Scott <unk>, our president and CEO and Arthur Kasprzak, Our Chief Financial Officer.
Also joining us this morning for the question and answer part of the call will be Jeff Norman Our Chief Development Officer, and Johnny Johnston, Our Chief operating officer to accompany our earnings call. Today, we have the supplemental webcast presentation available on our website Algonquin power and utilities Dot com.
Our financial statements and management discussion and analysis are also available on the website as well as on SEDAR and Edgar.
Before continuing the call we would like to remind you that our discussion during the call will include certain forward looking information, including but not limited to our expectations regarding future earnings and capital expenditures at the end of the call I'll read a notice regarding both forward looking information and non-GAAP financial measures. Please also refer.
Each of our most recent MD&A filed on SEDAR and Edgar and available on our website for additional important information on these items.
On our call. This morning of Rune will provide an overview of our Q1 performance Arthur will follow with the financial results and then the Rune will conclude with an update on our strategic plan for the business.
We will then open the lines for questions and I ask that you restrict your questions to two and then re queue. If you of any additional questions to allow others the opportunity to participate and with that I'll turn it over to of room.
Thank you Amelia on.
Very good morning to those who've been able to join us on the call and online.
I'm pleased to report solid year over year of growth.
The key financial metrics for the first quarter of the year.
Q1, adjusted EBITDA was $280 million to $90 million of <unk>.
17% increase year over year.
And our Q1 adjusted net earnings per share was <unk>.
An increase of 5% compared to last year's 19 six.
You also of note that our board has approved the 10% increase in the dividend the.
Beginning with the Q2 dividend payable on July 15 of this year.
This increase marks the 11th year of consistently increasing dividends by 10% each year.
This demonstrates our collective confidence in.
And the resiliency of our business model.
This dividend increase is supported by the groundwork that has been laid down in 2020.
As you would expect to benefit from the addition of approximately 1400 megawatts of new renewable generation projects.
That were in construction in 2020.
Our additional investment in atlantica of sustainable infrastructure.
And the acquisition of our interest in the portfolio of Texas coastal wind facilities.
On the regulated side.
We expect to benefit from the first full year of operations from our Bermuda electric utility.
As well as the <unk> water utility in Chile, which both closed the need.
Last year.
Despite the year over year of growth and financial metrics.
This quarter's adjusted net earnings fell slightly below our expectations.
This is Brian the really the result of increased costs relating to winter storm worry.
And warmer than normal weather in the central region during much of the quarter.
With respect to COVID-19.
The company's operating results were not materially impacted by the pandemic this quarter.
Generally speaking we have not seen the negative impacts from COVID-19 on our LOE.
Woods at this day is as business conditions in the regions, we operate in slowly return to normal.
Approximately 65%.
Of the company's workforce continues to work remotely.
And we continue to employ operational measures intended to protect the health and safety of our employees and customers.
Our team continues to focus our efforts.
On the Algonquin three strategic pillars.
Growth.
Operational excellence.
And sustainability.
And we should spend some time on each of these.
For an update.
We operate through two primary businesses.
The regulated and renewables.
Both businesses have multiple levels of growth that support them and.
And gives us high confidence in executing our growth plan.
On the regulated side.
One lever of growth is our organic investments.
And improving the safety and reliability of our mission critical infrastructure.
Our solid earnings in the quarter.
Demonstrating the ongoing investments we are making.
To improve service for our customers.
While managing the affordability of the are built.
In our central region.
For the end of the quarter.
We have completed the installation of 172000.
Of the 182000 EMI.
For advanced metering infrastructure users.
That we are installing.
And we are on track to complete installations by the end of May.
These meters will not only give our customers much better information to manage the UCITS.
They will allow us to implement time of use Darius Doug will further help us to more economically balanced supply and demand for them.
<unk> further benefits for our customers.
Another lever of growth is acquisitions.
And we completed two utility acquisitions in Q4 of 2020.
As Sal.
And ascended.
Q1 marked the first full quarter contribution from both acquisitions.
The integration of these two utilities into the Algonquin Liberty family has gone well.
And the outperforming in line with our expectations.
Growing and investing in these two utilities is of key initiatives.
Our balanced approach of operating of local model with central governance.
Can use to be of focus.
As with all of our previously acquired utilities, we strive to share learnings and best practices among our utilities.
The aim of driving consistent improvement in our key performance metrics that drive value for our customers.
And investors.
With the New York of American water.
We submitted our regulatory application for the New York PSC last year.
We are currently going through the settlement process.
And the hearing date is scheduled for mid June.
As important work continues to determine the best path forward on resolving issues related to the special franchise tax.
We remain confident.
That Liberty is the best long term owner of the utility.
And we continue to expect this transaction to close in 2021.
Okay.
An important lever of growth on the regulated side is our greening the fleet initiatives.
We continue to make investments.
<unk> service.
Our customers as we accelerate our transition to a clean energy future.
I am pleased to report that we have successfully completed.
Our Midwest Greening the fleet initiative.
As all three projects have been placed in service.
And have been acquired by the Empire District Electric company.
During the first quarter.
Our construction team at the Kings point.
Wind site Cummins.
As I mentioned the final wind turbine.
Marking the end of major construction of the three wind sites with a total of 600 megawatts.
While construction has taken over a year.
The planning and development of work began in earnest more than four years ago.
And had many of achievements along the way.
The wandering around the 50 megawatt north for grid wind facility reached full commercial operations in December 2020.
While the 150 megawatt King's point.
And 300 megawatts, new assure ridge reached full commercial operations in April and.
In early May of 2021, respectively.
The related closer of the Asbury coal plant in March 2020.
The expected to reduce emissions by nearly 1 million metric tons of carbon dioxide.
As we work to generate and deliver more cost effective.
Diverse.
And sustainable energy solutions to our customers and communities.
We intend to file our Missouri electric rate case with the commission by the end of May.
Which will include these wind generation facilities.
2020, and marked the company's largest construction program in our history.
With approximately 16 100 megawatts of renewable energy projects.
We are under construction.
After 600 megawatts.
Nearly 14 of 100 megawatts have reached commercial operations.
And the remainder of iron track to the completed by year end.
In addition to the 600 megawatts commissioned on the regulated side.
In the renewables business the.
For the 492 megawatt Maverick Creek wind facility in Texas.
Completed last month.
While all of our Vista solar.
Is nearing completion with over 90% of its 80 megawatts.
Based on service.
The Maverick Creek wind facility has long term power purchase agreements with general Mills and.
And Kimberly Clark.
And although this the solar has the power purchase agreement with Facebook.
These two projects showcase of our relationships with key C&I customers.
The demand from C&I customers.
Helping to drive an acceleration towards clean energy.
Is expected to be an attractive source of growth for Algonquin in the coming years.
And the Algonquin is well positioned to help them advance there on sustainability targets.
At the Investor day.
We spoke about our 3400 megawatt pipeline of.
Potential new Greenfield opportunities.
Of which at least 500 megawatts includes our partnership with Chevron.
And I am pleased to report that with Chevron.
The recently advanced for Permian projects.
Free in Texas.
And one in new Mexico from the evaluation phase to.
For the development phase.
Under our framework agreement.
This means that development activities are moving towards a final investment decision.
Scale of the projects will also be defined at this stage.
At our Investor Day, we included.
PGM solar projects that were incremental additions in 2020.
We have now completed acquisitions of these two Ohio solar development projects with an expected combined capacity of 245 megawatts.
With the first 100 megawatt project just the beginning construction.
Demonstrating the ongoing execution of our development portfolio.
Moving on now to operational excellence.
In a mission critical industry.
Safety and reliability are always key areas of focus.
Or you can read the response to storm you really.
Is a testament to our employees, who work tirelessly on the very challenging conditions.
To keep our customers and communities safe.
And to maintain our system reliability and resiliency.
Staying on the topic of safety.
I am pleased that we of fast the impressive milestone of 6 million 50 hours.
Without a single lost time injury.
Our improved safety scores also translate into financial performance.
As this has led to over 90% of reduction in the number of work related insurance claims over the past two years.
Our efforts on work safety.
Are being recognized.
As the American Gas Association recently awarded Liberty the.
Safety Achievement award for employee safety for the third year in the low.
The customer is at the heart of every good operational excellence strategy.
In 2017.
We introduced J D power surveys.
To benchmark and evaluate our customer experience.
As expected.
Safety and reliability is what customers value most.
So it will not surprise you that this has been the key investment focus area for us.
I am pleased to report that in Q1 hour of J D. Power score was up 17 points from the end of 2020 to an overall score of 703.
The highest ever for Liberty.
However.
We know we have a lot more to do.
And are excited about the new digital experience, we will be launching for our customers through our customer first program.
The team is making the final preparations for our first deployment, which starts in Massachusetts next week.
And we will be rolling out in a phased approach across the rest of the organization over the next couple of years.
And finally.
We remain firmly committed to sustainability.
Through the inclusion of environmental social and governance values in our broader corporate strategy.
And day to day operations.
I want to provide a few highlights from this year.
Including the recent inclusion of Algonquin shares.
The S&P global clean energy Index last month.
On diversity.
Equity and inclusion.
We are committed for these values and on.
Our continually striving to be better.
We are pleased.
That Algonquin was recently recognized in the Bloomberg gender equity index for the second year in the road.
And in the growth on males women need here of benchmark.
Also at the end of Q1, we welcomed Garo Leland to our board of directors.
Gary brings a wealth of experience and the startup and technology space.
And our knowledge of and background will help strengthen the skills and diversity of our board.
With guidance appointment.
The board composition now stands at 40% female.
While our executive team is 38% female.
These ratios are.
John Quinn amongst the leaders of diversity in the utility space.
I'm also pleased to share that our sustained Olympics ESG ratings improved significantly as.
As we continue our efforts on progressing and advancing our ESG disclosures to our stakeholders.
Last year.
We released our 2020 sustainability report.
Which not only the outline of progress on our ESG goals, but also provided a higher level of detail around nine priority issues.
This year, you'll see us, adding incremental ESG linked goals.
Our compensation program metrics.
Before turning to Arthur.
I wanted to provide an update on store <unk>.
And the Midwest X gene weather event, which occurred earlier this year.
The severity of nature of the storm was unusual in the level of of impact across the very large geography.
And temperatures fell to six degrees Fahrenheit near our Senate wind facility.
Nor by 90 degrees compared to the previous lowest reported temperature and the last 100 years.
Also unprecedented.
The length of time the market rates were at the capped $9000 per megawatt hour.
Store, where he presented us on.
And other participants in the region with a significant challenge.
We are proud of how our teams responded to minimize the impact on both of our customers and operations.
The diversity of our fleet.
And contracting strategies, both of the archive and across the rest of our geographically distributed portfolio.
Also served as well and the.
Helping to mitigate the impact of storm free on our results.
The most significantly impacted facility was our Senate wind facility in North Central Texas.
Which has the financial hedge in place that imposes an obligation to deliver energy.
Due to ICD 10.
And Stuart market disruption during the storm worry the.
Facility was unable to produce the energy to satisfy the quantities required to be delivered under the hedge.
And on the forced to settled in the market.
At the elevated pricing.
We have a solid force majeure on.
For the hedge contract.
In our regulated services group.
Which comprises approximately 70% of our portfolio.
We are diversified by modality and.
And the operating 16 jurisdictions.
Despite the extreme weather conditions.
Overall, our businesses performed well from an operating perspective.
The utilities did incur incremental commodity costs.
During the period of record pricing and.
And elevated consumption.
Due to the extraordinary nature of these costs.
We are working with our regulators to spread the cost over a longer period, the make the impacts more manageable for customers.
We do not expect any material financial impact to our regulated business from the storm.
With that on.
I'll pass it over to Arthur.
We will speak to our first quarter 2021 financial results.
Arthur.
Thank you Arun and good morning, everyone.
Our Q1 financial results continued to demonstrate the benefit from our Gulf of diversified from a resilient business model consisting of stable regulated utility services provided in the cross 50 jurisdictions.
Long term contracted renewable power assets.
And on the extensive development pipeline.
Our first quarter of 2021 consolidated adjusted EBITDA was $282 9 million, which is up approximately 17% from the $242 2 million, we reported in the previous year.
The regulated services group delivered $204 8 million in operating profit from the current quarter, which compares to $172 million in the same quarter last year.
The improvement primarily reflects the first full quarter contribution from <unk>, our Bermuda electric utility NSO, our Chilean water usage.
As both acquisitions closed in Q4 of us.
As well as from the contribution of multiple bridge the first of our three wind facility.
Based on the service as part of the Greening The fleet initiative for the routes.
For two earlier.
Results also benefited from new rates implemented on our energy North gas Peach state gas granite state electric and our people electric system.
But were partially offset by higher operating expenses.
The regulated services group was also negatively impacted on warmer than usual weather in the central region for the majority of the first quarter.
The renewable energy group reported Q1, the divisional operating profit of $96 3 million, which compares to $88 4 million from the same quarter last year.
The increase was primarily due to the addition of the Sugar Creek and Maverick Creek wind facilities. The Green day, two solar facility in the Texas postponement of portfolio.
This was partially offset by increased costs incurred at the Maverick Creek and incremental <unk> cost of the Texas wind portfolio growth related to the extreme weather experienced during February.
The results also include the impact of the market. The results do not include the impact of the market disruption related to the strong early onset of the wind facility with.
The facility was forced the subtle in the financial hedge but highly elevated price as a result of extended disruption in the.
On the electricity market.
The streamlining conditions, which impacted the operations.
Due to this impact of the unusual and not reflective of the ongoing operations.
For Q1, adjusted net earnings per share of <unk>, 20, which is up 5% from last year.
But the increase the results were slightly below our expectations.
Again, primarily due to the on average warmer than expected weather conditions experienced during the quarter.
And a regulator group as well as the incremental cost partially related spend of three.
Moving on to provide some updates on our financing activities and progress on our 2021 capital.
But as you heard me say before we are highly committed to maintaining our triple B flat capital.
Total structure, which we believe optimizes, our cost of capital benefiting shareholders and maintaining our competitive position.
The benefits of the balance sheet discipline, we demonstrated this quarter, but the renewable energy group issued the fifth fund under its well established financing platform, leading Canadian $400 million of the.
Coupon of 225% for 10 years.
This was also of the second one on those qualified as green on the group and the third by the company showcasing our ongoing commitment to environmental and sustainability targets.
During the quarter of Volcan reestablished the ATM program.
Allowing for cost effective and opportunistic issuance of our common stock.
The three of establishment of the program last year, we have issued $11 2 million of our common shares for total proceeds of $178 million.
With respect to our capital plan during the quarter of open deployed approximately $1 9 billion of capital pertained to previous and discuss the issue.
The renewable energy group completed the volume of the Maverick Creek and sugar treatment facilities from our joint venture partners as well as food the ACA.
Position of three of the for Texas coastal wind projects from R. W.
The regulated services group of acquired from our joint venture partner with Wind project, which.
Which is part of the greening of the feed initiative.
From left to say the subsequent to the quarter, we completed the acquisition for the remaining two projects the key point and the ultra which for mutual growth wind facility.
Also subsequent to the quarter.
We completed the acquisition of the 80 megawatts of Orthosis for solar project from our JV partners.
The preponderance of the financing of growth of the financing for these initiatives is being funded by tax equity investors.
Of all kind of balance sheet remains strong from approximately $1 5 billion of available liquidity at the end of the quarter.
We continue to monitor the debt and equity capital markets and expect to fulfill our remaining capital needs for the year through a combination of the areas.
Equity or equity like instruments to maintain our target capital structure.
Before turning things over to Andrew I'd like to provide a brief update on our 2021 guidance.
As discussed we have already delivered on our plan of adding approximately for 200 megawatts of new renewable generation capacity, which will benefit 2020 of our results.
We expect the benefit from the first full year of operations for adult women of cell and the effects of course, the wind portfolio.
Excluding the impact of the market disruption on the Senate wind facility that I discussed earlier, we expect our 2021 adjusted net earnings per share to be within the range of $71 76 as communicated previously.
With that I will now hand back the route to outline of our growth plans.
Thank you Arthur.
Before we close out our prepared comments this morning.
I want to give an update on our growth initiatives.
Which society.
On economies working hard to minimize carbon emissions and.
And many countries coalescing around the net zero carbon by 2050 goal.
All of <unk> regulated.
And renewables businesses.
Are very well positioned to contribute to and benefit from the decarbonization transition.
We remain encouraged by the by the administration's focus on clean energy and the infrastructure Bill.
And the potential for expanded investment opportunities.
Several of climate bills are pending in the house and Senate.
And we see exciting potential opportunities in this legislation.
On the administration's commitment to opinion energy economy.
The potential extension of ITC and PTC credits.
With the benefit our 3400 megawatt pipeline of Greenfield opportunities.
Looking at long term growth.
Nine 4 billion five year investment plan from 'twenty, one 'twenty one through 2025 has identified projects that make up the entire nine $4 billion with.
With most of them now in operations.
Under construction.
Or in advanced stages of development.
This core nine 4 billion dollar investment plan does not include.
Any further M&A beyond the previously announced transactions.
Or any success from our 3400 megawatt pipeline of Greenfield opportunities.
We have multiple levers of growth across our two businesses that I've spoken throughout today's call.
Which gives me further confidence.
On our ability to execute and deliver on our fiber investments and growth plan.
Before we open the lines for the question and answer period.
We remain very excited about Algonquin businesses and prospects.
We welcome you to hear more at our upcoming annual General meeting.
Similar to last year, and given the protocols related to the ongoing pandemic.
We will be hosting our AGM virtually this year.
We welcome your participation on June 3rd at four P M Eastern.
In closing.
2021 has been a very productive start for the year.
As we continue to execute and deliver on the company's largest construction program in its history with nearly 40 to 100 megawatts of the 60 to 100 megawatts already placed in service.
Our three strategic pillars of operational excellence.
Growth.
And sustainability will be of key foundation.
As we continue to build the business.
And deliver steady earnings and dividend growth create.
Creating long term shareholder value.
With that.
I will turn the call over to the operator for any questions from those on the line.
Yeah.
Thank you as a reminder, ladies and gentlemen, if you would like to ask the question. Thanks guys.
So let's open up the one on your telephone keypad.
Our first question comes from Nelson <unk> with RBC capital markets.
Your line is open.
Great. Thanks, good morning, everyone.
My first question just relates to the best display manufacturing era. So can you just give a bit more color in terms of I think there was like 30 for 83 turbines that were impacted I did did you have to like shut all of those turbines down.
Or do they still can.
And of its still partly operate and then can you just give more color in terms of.
What the financial impact is the weather.
The downtime in Q1 and through through the rest of the share would be covered by divestments.
Nelson good morning.
With me and also this morning I also have a <unk>.
Johnny Johnston, our Chief operating officer, and Jeff normal or normal on our Chief Development Officer, and I think.
Johnny will respond to that question one.
Yeah, Good morning Nelson.
Probably the most important part of the question is.
Despite the impact from the turbine we don't expect that at the financial impact that we've got availability guarantees of.
The turbine supply agreement.
That's the sort of cover the financial aspects I think from an operational perspective.
On the impact aside of the Mapper consider we have plans in place and are expecting that the turbines with the up and running again.
At the end of it.
Okay.
Okay are you able to give a bit more color in terms of what the.
Some instances, but just replacement.
And others.
Effects of again for repair.
Process too.
Yeah.
At the operations.
I think youre aware of this is the safety related issues until later either replace the repair type of.
The.
Out of the fridge.
Okay. Thanks.
And then my second question relates to the.
Of the Senate facility.
The force measure debt declaration.
So.
I presume the counterparty Hasnt I.
I guess kind of give some color as to whether the counterparty has.
Except that the force measure of declaration on.
Presume the.
We're now but.
That could just be there of default response, but we're there.
For the.
Hedges.
Settled.
Cash out the door on Youre looking to get some back for.
Or.
Or is that still pending.
Yeah.
So.
Nelson Thanks.
There seems to be a lot of static on the line for some of them.
So the to respond to your question.
We have obviously.
Uh huh.
And submitted our force majeure.
On the counterparty.
And obviously since this maybe.
And the certainly into a dispute.
Potential litigation.
But there is only so much.
And talk about it.
But in any case.
What we have the earlier talked about is a maximum of $45 5 million.
Of the exposure and any litigation.
The.
Debt.
The level of it.
Okay, that's great and if I can.
Okay.
Yes.
Yes.
Our next question comes from Julien Dumoulin Smith with Bank of America Merrill Lynch. Your line is open.
Hey, good morning team can you hear me.
Loud and clear Julien good morning, how are you.
Excellent. Thank you so much looser of I suppose I'll, let me start with the high level question for you.
Obviously, we've seen from M&A of late across the space at of perhaps more elevated valuation than perhaps was perceived coming into the year.
Especially for gas utilities.
Do you think about your own positioning for for M&A at this point and in light of that and I'm thinking of specifically year of set of points gas LDC deal, but the.
Any opening comments there I know you once again at least put it on the table of being upside, but curious on your latest perspectives here.
Are you still of buyer, maybe said differently.
Okay.
And Julian is your question, particularly only of for gas utilities oriented of general growth.
Broadly certainly the observation of at least the empirical ones are on GAAP. The context of Julian as the idea of you are very aware that the acquisition is something that one of our big growth of reverse and I believe.
In the last 20 years and we've in fact completed exactly <unk>.
You do the acquisitions.
And we're always in the mix when there's the discussions around M&A.
At the two specialty we respond to your question yes.
You have seen the elevated.
Pricing.
And the but again that's.
I think there is a lot of capital out there right now choosing.
To achieve the targets. So I think it remains a fairly frothy market.
With respect to your other question on oil and gas LDC.
<unk>.
We are as you know in all fee.
Sectors the modalities.
Water electric and gas and.
When you do look at the potential acquisition of across all three modalities.
But on the gas side.
We will be disciplined in terms of making sure that it meets our sustainability goals as well.
Excellent. Thanks.
I'll go for it.
No no go ahead.
Great No I was going on here a little bit more detailed question that youre thinking about the latest impact from the the by the tax efforts here. How are you thinking about that specifically to your company.
Debt, there's a lot of different puts and takes here how would you frame the tax side as well.
Julien good morning.
In general the comment is on it.
It's obviously positive for the renewal.
The proposed both of the.
And the by the end of the the other proposals.
On the tax rate.
Besides that we've talked about.
The tax rate is the.
Flow through for for our utilities of those basically neutral in the public a little bit of the <unk>.
The slight negative from the.
On the renewable side of the business, but but the.
But in general of its basically.
From a tax rate perspective, some of the other proposals that are floating out there.
The way too early to tell but we're monitoring it.
The receivable, which.
Which one of them actually prevails.
Jeff you might want to comment also on the some of the tax proposals on how the.
Could potentially benefit for us as well on on the growth.
Yes happy to.
Secondly, the ton of excitement in the industry.
The.
American jobs plan in particular in terms of the ITC.
PTC extension for potentially five years and also the extension of debt to potentially impact.
Storage without generation has seemed to be co located so although it's a little early to tell.
Its certainly exciting at the site can't help but think there has been a deposit of developments that do make it through into the legislation.
Got it alright fair enough guys I'll leave it there have a great weekend.
Thank you Julien.
Our next question comes from Rupert <unk> with National Bank. Your line is now open.
Hi, good morning, everyone.
Good morning Rupert.
Maybe if I could start with the housekeeping question for Arthur.
Can you remind us how much of a financial benefit do you expect to see from the 600 megawatts of of when you'll have in the regulated utility and maybe you can give us a little color on on the EBIT of our run rate changes you might see in Q2 and Q3 relative to Q1 some of those assets.
Good morning.
Most of the most of the benefit from the 600 megawatts.
Of generation.
As of yet, but it will be true basically our piece of adjustments. So it will be put in place.
We look to get these projects approved through through rates of over over the net the.
Zero sales.
Okay I'll take the.
Quantitative when we could see for the remainder of the year.
The other piece of adjustments.
Okay can I forget that for you on our can provide the charter with more of a qualification of February okay.
Okay very good and then secondly, then more of.
The high level.
On the organic growth on maybe the question for Jeff So you've come through this the state growth spur the six to 800 megawatts and give us a little more color on what we can anticipate the next couple of years and what pace of growth can we expect to come from from the organic development I know you've got of 34 100 megawatt pipeline.
And we had some.
Some goals laid out in the Investor day.
Can you kind of exceed the targets from the Investor day on should we look at the Investor day is as.
The good proxy for what we can expect next.
Well actually maybe Tony and before turning the over to Jeff. The first thing I would say debt.
We are very confident in moving the $9 $4 billion of five year plan like I said in my prepared remarks.
It is very front end loaded.
And many of those projects are actually already in.
In the commercial operations already.
So that gives us high confidence and again as we said in the Investor day on after that $9 $4 billion program does not include the 3400 megawatt of Greenfield pipeline or any incremental M&A activity. So we are confident in moving annual.
Again from the exceeding the about $9 4 billion dollar capital plan, but Jeff do you want to add more color.
Yes, certainly and Robert you mentioned the 3400 gig.
Gigawatt megawatt.
Megawatt pipeline and we continue to advance the fee opportunity.
With the number of C&I customers, who have set the sustainability targeted the renewable targets.
Ed.
The need to be on.
Contract at the 'twenty three 'twenty for 25, and if you look back at the $9 4 billion pipeline. It was fairly light on controllable in.
In that section and so we don't have anything that we can announce at this time, but the film.
For the team is certainly focused on originating projects populate that part of it the environment right for business.
Great. Thanks for the color on I'll leave it there.
As a reminder, kind of lies please mute your line of when listening to the answer after you have asked your question.
Our next question comes from David Keith on that with Raymond James Your line is now open.
Thanks, Good morning, everyone.
My first question here just on.
On your on your capital plan and appreciate the comments around the growth opportunity over and above it Im curious on the on the regulated side of things now that the initial round of greening the fleet has happened.
How do you see things developing on the regulated side in the in the outer years of your Capex plan.
When when the capex spending of debt lower than the pace today.
So the day.
Very good morning to you.
But the first thing I will say is that on the regulated side of the business as well, we do have multiple users right and so when you look at.
Some of the numbers on the regulated side. The biggest one in fact is organic growth and when we see organic growth that really for us to more of our regular.
The improvement in infrastructure.
The leading to better safety and reliability and security right on that is really the bulk of that debt.
The other one is obviously some of the some of the M&A.
We have the New York of American Water Index, and I think the third one that you're referring to we've got the greening the fleet and the new really proud of the team to say that the.
All of the 600 megawatts.
Other was part of that the Greening. The fleet initiative are now fully commercial and online.
Lot of work for them from a lot of people on the teams to get that on and as part of that we also pulled down our ashbury 200 megawatt coal facility.
So and reducing our carbon intensity by almost a million tons of yet.
Now the Greening the fleet initiative is something that is.
Somewhat unique to us I believe we are getting that out in our GAAP you go utility as well.
And that we will be looking at places like Bermuda and others for some of those other greening the fleet initiatives as well.
The balance of Mexican data.
Absolutely. Thanks for that are in and then maybe just one other question for me.
Looking at the Missouri rate case.
I'm curious if youll look to revisit.
Certain items like like revenue decoupling or do you prefer to just go forward with the Pisa accounting that you have in place now.
Let me turn that over to Johnny.
Yes, David in the.
The way that we effectively.
Opted to go down the pace of the route following the last rate case means that with that through.
Certainly until 2023, the stand on opportunity set and the extended through two.
2028.
So for now revenue decoupling.
It's something that we'll have to wait in Missouri that suddenly.
Making the most of the.
Of the piece of legislation and when you think about some of the investments we've been making through the central region and the loss.
The.
A few months.
Excellent. Thank you for that I'll get back in the queue.
Our next question comes from Stephen Byrd with Morgan Stanley. Your line is now open.
Hey, good morning.
Good morning, Stephen.
Thanks for the really thorough ESG update at the at the beginning of its really helps the kind of go through through everything.
A lot of has been covered I wanted to perhaps go back to the.
For the potential for U S tax reform and focus a little bit more specifically on.
From corporate tax elements the impact to all of our prior corporate tax rates potential for things like the minimum taxes guilty of et cetera. Those sorts of dynamics would you mind just talking about in a little more depth about the sort of corporate taxation elements and the impacts to you.
The other.
Good morning, Stephen So on the tax rate of the mentioned on my previous the.
For the previous question, it's basically of pass through on the regulated side, maybe it's a slight negative on the on the.
The renewable side, but I mean, as we look of some of the other noise that is getting a proposed there whether it's the shield the ore.
Looking at it with a deep remains or some of the other proposals.
Really early to tell which one is going to to wait out how they're going to interact with the.
Between themselves whether it be the minimum tax will be put in on the peak will be repealed what's going to be creditable the ESP.
It really really is too early to make the determination in terms of.
What the impacts will be let's say on the guilty workloads generally not non impacted plus of any of the guilty of proposals that have been put forth, but everything else. We continue to watch closely.
That's fair we have a lot.
To figure out in terms of what this is kind of really look like.
And then maybe just one other for me on renewables growth. There you gave us a thorough update the than the number of questions around that.
Net.
When you think about kind of the the biggest limiting factor sort of a sort of risk that you think about when with respect to renewables growth curious just whether that supply chain availability of financing tax equity whatever it might be how do you kind of see I mean, we're obviously in a very supportive environment overall, so debt completely respect that I'm, just sort of trying to think.
About we often get asked about.
Some practical issues in growth, whether it's shortage of people of shortage of equipment or the increased costs. Just any other color you might be able to provide on sort of what you see as some of the limiting factors.
Yeah.
Jeff do you want to take that.
And.
I'm happy to Steve on it I think is of great questions, because I think that excitement obviously comes with the downside I would say a couple of the stress points.
We would be one there probably will be.
The battle for talent and resources.
Our location with a lot of development activates the here.
So as being the strategic advantage of demand.
Wilson.
The good team.
Because of the team being very attractive to other.
The key filters.
That would be one the other one is on interconnection.
There is such.
Demand in it.
For for renewable buildup in the.
Key markets.
It's always been important but it is going to be either for important over the.
That's really for me.
It's really the pace right.
What I like to point out of that.
In 2020, which was.
Normally the most friendly.
For Renewables administration was where we saw our largest the construction progress.
But on the strength in our history of $60 a megawatt. So we're obviously very excited now of the all of the deal wins, we're seeing for from this the bite in the.
Administration, and its really that as debt.
The scheming the challenge of I was going to be across the board in terms of.
Supply chain in terms of for meeting.
The speed in terms of the interconnection.
Access how fast that can move so it's really going to be felt throughout the different parts of the value chain, but again.
We have been very good at managing that isn't true globally last year on moving through that.
The largest in the construction period of United History. So we were confident.
Confident that we're going to be able to manage our way of food.
So that's a fair point on lease.
Kinds of issue strike me as high class problems. So the point.
Exactly right.
Great. Thank you so much that's all I had thanks, thank you for patient.
Our next question comes from Sean Stewart of TD Securities.
Thanks, Good morning, guys.
Just a couple of questions.
Arthur I'm wondering following up on the last question can you speak specifically to tax equity availability, how thats changed in recent months if at all.
And every one of your predecessor used to talk about all of them.
The ocwen, becoming its own tax equity partner once you get that taxable position any day.
Any thoughts on that horizon.
And.
How that impacts your funding considerations.
Yes.
Good morning, Chuck.
So in terms of the tax equity availability, we have not seen of constrained from a.
On our side I mean, the part of it probably speaks to the fact that we have well established relationships strong balance sheets.
So far from what we've seen tax equity is there.
For good projects.
Instead of I would also say the tax equity market is the <unk>.
Some instances the even.
Lightning up on looking at loosening some of the rules whether it be continuous efforts.
And yet.
The specialty financing those type of projects and so forth. The tax equity is there and I think it continues to be there for.
For strong sponsors.
For the second part of your question with respect to the self monetizing.
Attributes.
That's something that continues to be on the table in the.
With respect to.
Even some of the tax changes.
There is always beneficial.
The company, that's able to generate.
It's on tax attributes and be able to use it to offset the interest income the intrinsically sets of.
For for US the continues to be.
On option.
And we also look at from some of the other things that are out there.
Obviously direct pay of endeavor.
For some of the approaches as well so all in all I think the positive developments in this area.
Thanks for that Arthur.
You gave a little bit of an update with respect to New York American water.
Can you just review the hearings that are upcoming and update on on your comfort closing that acquisition.
In advance of the state.
Completing its review.
With respect to the municipal ownership potential.
Any updated thoughts there.
Sure.
There is obviously a lot of political noise around debt, but at the end of the day.
We're really focused on two things right.
The first is.
We continue to believe that we're the best owners and operators of.
New York of American water and so we are focused very much on closing that transaction.
Second of all there is something unique.
In New York, the with regards of the special franchise tax which is a burden on.
On New York on bringing the Waters' customers and we've been working with different parties to try to see and make that much more equitable for our customers right. So.
Beyond that really of our discussions with the with the commission have continued as usual.
We have now of hearings.
Slated for for a mid June.
That's the target accordingly, and in the midst of that Theres been a lot of other activity on both of the legislation from around the municipal libraries on studies.
Think of the sword.
But at the end of the day I think what is also very important to focus on is on the largest.
Based on the customer.
As in the handset and the town of MCA, that's come on very strongly.
Against the Union Supervisors, So I think with all of that we do continue to have a high degree of confidence in being able to close this transaction.
Johnny The thing is there anything you want to add to that.
I think because of the bulk of it.
<unk>.
That's great detail I appreciate it thanks.
Thanks, Sean.
Our next question comes from Richard Tien Tsin Huang of Jpmorgan. Your line is open.
Hi, Good morning, just two questions on Missouri here curious for the first one on which could provide more color around the proposed recovery timing and impact of the incremental commodity.
Commodity costs out of.
On the February weather.
Sure Jamie.
Yes, good morning, Richard.
So the.
The normal process of fuel adjustment clause, where all of our.
Fuel costs get passed back over six month period, whether the defense of the.
The new normality.
Cause of the materiality.
The the impact of <unk> on energy cost I think if we were to pass those breakthrough in the normal fashion due to raise the customer bills.
The north of 60%.
As a result of <unk>.
It would've been on a huge burden for them. So we have filed with the commission to have.
Hi.
Take the over longer period of time to address that through our upcoming rate case, so there'll be more to come but clearly our ambition here is to try and find a.
Between.
Ladies and the cost out covering up costs of managing that but making it manageable for our customers as we go through that.
The more conversations to the App with the.
Regulation of stakeholders in terms of the exact timing.
But thats sort of where we are in the growth.
Okay.
Guidance for the color there and then separately around the the reassure wind facility could you speak to the.
The network upgrades required for that facility, maybe just provide a little bit more color around the performance there, including the if there are any kind of performance obligations owed around.
Pharmacy General.
Sure Richard the Jeff Happy to take that question and you are referring to the day for us to results which came out.
Impacting North Park Ridge, pinpoint and Neosho I would say that we're quite pleased that for king.
Kings point, and North Fork rates for both confirm that there were no upgrades for.
For Neosho it is.
Process, they are indicating the is it needs to.
Upgrade of about 18 miles of line.
But we are currently generating on there.
In terms of interconnection agreement.
Net.
For the facility, we expect to continue doing that.
Moving forward and we know that there are some of air.
<unk> reported.
Pointed out.
We will continue.
Moving forward.
We expect GAAP results in terms of.
In terms of.
Financing.
Okay.
Moving forward.
The projects and the operations of the sales prior to the flood separately.
Okay.
Happy to answer other questions on the right.
Thanks for the hub of your growth of your question.
Okay.
None of that's great. Thank you for the time today.
Thank you thank you rich.
Our next question comes from Rod Hall from Scotiabank. Your line is now open.
Yes. Good morning, everyone. Two questions for me first one just on the Chevron agreement moving from evaluations of development can you just maybe add a little bit more color on kind of of the potential timeline for you can see on on those projects from the Permian and then also just given.
How are these agreement structure do you have any kind of set going in price is there a targeted to return that you both agree with just from the fact that.
Yes, it does seem like that number of these projects are still of oil and flex.
Sure. So let me start out on alcohol on the plans of Jeff.
Just to give you a little of the context, Rob So first of all we.
We signed a framework agreement with Chevron just the last year in July.
And it goes for over 500 megawatts right.
And so.
That was just the framework agreement that we need the.
Governs our partnership will be will absorb the who takes the lead on what all of those kinds of details around all of our framework agreement and.
And for now.
Ever since that time, we have been scooping each of their facilities.
And looking at what is the best technology, what is the best size all of the kind of thing the running the numbers and now we really moved from that for us fee to much more of a development sales because we now have.
Much higher level of confidence that on these for sites, we're going to be able to come to you on agreement on all of the things like pricing and all of those kinds of things at.
At the end of the day, obviously in the both parties need to be able to have confident debt.
The project, we're doing the needs both.
The hurdles and other requirements on both sides.
And that's what we're working towards.
We are also working towards.
What we're calling the metal agreement of final investment decision which of them.
Ben start construction on these projects and we are hoping to get to that sometime towards the end of the universe of sort of timeframe, Jeff anything you can any further color on that.
I think it covered.
Everything except maybe one item, which is just a little bit of color on on the discussions in terms of returns and so theres certainly been exchange of the.
The expected cost of the facilities and the rich.
That would be required.
For both earnings and sales.
The bookings confirmed for the final investment decision of the discussions around those of golf.
Alright. Thank you I appreciate the color and then.
And just to give you of some of them some more comfort around that.
We've even started procurement activities right.
The safeguard the safe harbor and those kinds of elements.
We remain most hygiene.
As you know fairly confident that we're going to be able to execute on that the framework agreement. Okay. And then maybe just a follow up question just in terms of kind of cash.
Capital of the Dart for Q1, the MBNA says that you've you've done $1 $9 billion of Capex. So far this year cash flow statements quite a bit below that as we look through the rest of the year. How are you thinking about your cash requirements. The <unk>.
<unk>.
The rest of the capital plan to get to true that for the $4 $5 billion.
As well as is there of timing mismatch share or is it mainly just related to.
On the accounting treatment of tax equity.
Thank you good morning growth.
So.
The simple answer, it's an accounting treatment and the.
The real the.
On the real reason the COVID-19 is the investments actually had been held prior to us being thought of as we held of as a joint venture the.
Joint venture partners and these investments of the biodiesel to become the on.
Equity buyouts.
What we're bringing on two of our balance sheet through the cash flow statement is really the net investment.
So there is plenty of projects.
Construction financing for that.
As of what growth brought on the net basis and the.
We will look to repay the on construction financing for sure.
Growth from bond platforms.
And overall in accordance with the capital structure.
I don't know.
Sponsor of our hopeful.
Thank you.
Our next question comes from Andrew Kuske with.
Credit Suisse. Your line is open.
Thanks, Good morning, and thanks for squeezing me on.
Maybe two related questions. When you look at the construction program EBIT on the renewable side in the lifestyle, while what you do for non core and what were the lessons learned from the program.
Great question, Andrew I'm going to pass it over to Jeff.
[laughter]. It is of Great question. It is how do you how do you exceed the six to 800 megawatts and all of the 2020 with COVID-19.
Hopefully, we will not have to repeat the COVID-19 construction Europe of that magnitude, but I do think there's a great deal of opportunity going into this 'twenty two 'twenty three 'twenty for that just look at the C&I customers of the demand.
We've already seen a push up at the C&I PPA rates.
Is that demand starts to.
The deal with the <unk>.
<unk>.
Product out there to meet it.
I think it's going to be pretty exciting going forward, but it wont be as exciting as 2020.
Yes.
Bye bye.
Exactly I think it's really the combination of our C&I strategy, coupled with our of 3400 megawatt.
The Greenfield pipeline and I think that's what we're really excited about.
And then maybe just a follow up to that how do you think of the pipeline replenishment and clearly one of the year to date, there's been a lot of turmoil as far as market prices go on renewable stocks for what are you seeing on pipeline replenishment of opportunities in particular, among the private developers.
If you could give us color on that that'd be great.
So there has been on consolidation of some of the larger developers, which are pushing forward with new projects that we think it's important in our 3400 megawatts.
The growth of 3400 megawatts and two to make sure that there is a focus on.
And because they are the smaller subset of developers to acquire mid and late stage projects from on.
On the solar side, we're actually still seeing quite a robust pipeline of of opera.
So.
Going forward of solar will probably see more.
Acquisition and Greenfield.
When that will be slightly skewed towards greenfield from.
From acquisition.
Okay. Thank you very helpful.
Back on here.
Our next question comes from Maggie banking with <unk> capital markets.
Your line is now open.
Hi, Good morning, I appreciate it's a bit over time, but just a couple of quick questions on.
Can you just remind us for your 2021 guidance how much of the baked in for the New York American water acquisition.
Hey, good morning, guys.
So while the existence of our guidance.
On Investor Day.
We didn't provide a range of the guidance some of assumptions with respect to the guidance. So with respect to our assumptions when we did the biggest factor in the.
On the upper range, we were cash.
We would consider of closing of Europe.
<unk> water.
The.
The third quarter or so.
The lower range one of the factors was the the later in the year closing.
So those are the only assumption so I wouldn't read of the startup of the entirety.
Of the entire range of differentiating we had other things such as the.
The on the low as the COVID-19 impact similar to the this year.
And then on certainly helps the hasn't taken place.
For the various assumptions of do go into that range.
Okay I appreciate that answer.
Just another quick question more on sustainability.
The SG I guess on all of us very close down and on.
All of the ongoing renewable projects here.
Well on your way of achieving a 75, the renewables target by 2023, I get to talk about C&I appetite for clean energy.
Which is being a tailwind for growth I'm wondering about your own targets.
Maybe you can talk to us about potentially shifting about revising that target going forward and what the implications would mean in terms of new renewable buildup.
Okay.
Okay.
Thanks, Great question I mean, the sustainability one of our three pillars, we certainly focus on that of law and just to tell you. I mean, we are already starting from a very good mix right I mean, our carbon intensity. When you look at that for a dollar of revenue is that 0.0017.
Well among the lowest among our peers in the industry.
And even.
Even when you look at the.
The fact that given the when we acquired Empire district that came on.
With some thermal assets just since 2017 day now we have reduced the carbon intensity by 31% alright, and so some of the other growth we have our debt.
75% renewables by 2023, which is a pretty aggressive goal, but the we are confident in the <unk>.
And as we start now.
The meeting some of the growth that we had set out in past years targeted towards 'twenty to 'twenty three we are internally working towards okay.
All of these are the next set of goals. So so.
Keep your line's open I mean, we are working on those and we will be coming out of more goals as we continue to meet and exceed our current set of <unk> growth.
Okay. Thank you everyone. We look forward to hearing more about that.
Absolutely.
There are no further questions in queue at this time of I'll turn the call of the Q I ran out of for closing comments.
Okay.
Thank you very much for for all of the questions. Thank you for joining of the Investor call again, we remain extremely excited about the.
The Algonquin platform and all of the opportunities in front of us and with that I'll turn it over to anemia for the disclaimers.
Thanks for joining us today in our discussion during this call contain certain forward looking information, including but not limited to the expectations regarding earnings capital expenditures and commercial operations date.
This forward looking information is based on current assumptions, including those described in our most recent MD&A filed on SEDAR and Edgar and available on our website and is subject to risks and uncertainties that could cause actual results to differ materially from the historical results or results anticipated by the forward looking information forward looking information for.
<unk> during this current only as of the day of this call and as day on the plans belief estimates projections expectations opinions and assumptions of management as of today's date, there can be no assurance that forward looking information of proved to be accurate and you should not place undue reliance on forward looking information we discuss.
Any obligation to update any forward looking information or to explain any material difference between subsequent actual events and such forward looking information, except as required by applicable law.
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Method of calculating these measures may differ from methods used by other companies and therefore may not be comparable to similar measures presented for other companies for more information about both forward looking information and non-GAAP financial measures, including a reconciliation of non-GAAP measures the corresponding GAAP measures. Please refer to our most recent MD&A.
<unk> filed on SEDAR in Canada, and anchor of enhancing and have ample on our website and that concludes our call. Thank you for joining us.
That concludes today's conference call you may now disconnect.
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Okay.
Hum.
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Yes.