Q2 2021 Dominion Energy Inc Earnings Call
Welcome to the Dominion energy second quarter 2021 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 call over to Steven Rich Vice President Investor Relations.
Thank you and good morning, everyone. Thanks 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 X.
Patients. This morning, we will discuss some measure of our company's performance that differ from those recognized by GAAP reconciliation of our non-GAAP measures to the most debt 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 Chair, 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 now turn the call over to Jim.
Thank you Steven and good morning, everyone.
I know, there's some competition for utility investors attention. This morning, a couple of <unk>.
Competing calls on this time slots. So thank you for joining our call and we promise to keep our our call today somewhat.
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Before I report on our strong quarterly financial results.
I'm going to start with a recap of our compelling investment proposition.
And highlight our focus on the consistent execution of our repositioning strategy.
We expect to grow earnings per share 6.5% per year through at least 2025.
Supported by our $32 billion 5 year growth capital plan.
As outlined on our fourth quarter call in February.
Over 80% of that capital investment is emissions reduction enabling.
And over 70% is rider recovery eligible.
We offer a nearly 3.5% yield and expect dividends per share to grow 6% per year based on the target payout ratio of 65%.
Taken together Dominion energy offers an approximately 10% total return.
Premised on a pure play state regulated utility profile operating in premier regions of the country more on that last theme in a minute.
Our industry, leading ESG positioning includes the largest regulated de carbonization investment opportunity in the nation.
As Youll hear in todays prepared remarks is steadily transforming.
From opportunity to reality.
Turning now to earnings.
Our second quarter 2021 operating earnings as shown on slide 4.
We're 76 cents per share, which included a 1 penny hurt from worst than normal weather in our utility service territory service territories.
Both actual result on weather normalized results of 77 cents.
We're above the midpoint of our quarterly guidance range.
So this is our 22nd consecutive quarter. So 5 on a half years now of delivering weather normal quarterly results that meet or exceed the midpoint of our quarterly guidance range.
Note that our second quarter and year to date year to date, GAAP and operating earnings together with comparative periods, our adjusted to account for discontinued operations, including those associated with our gas transmission and storage assets.
Second quarter GAAP earnings were <unk> 33 per share.
And reflect the mark to market impact of economic hedging activities.
Unrealized changes in the value of our nuclear decommissioning trust funds.
The contribution from quest our pipeline.
Which will continue to be accounted for as discontinued operations until divested.
And other adjustments on.
Summary of all of adjustments between operating and reported results is as usual included in schedule 2 of our earnings release kit.
Turning now to guidance on slide 5 as usual, we're providing our quarterly guidance range, which is designed primarily to account for variations from normal weather.
For the third quarter of 2021, we expect operating earnings to be between 95 cents and 1 dollar and 10 cents per share.
We are affirming our existing full year.
And long term operating earnings and dividend growth guidance as well no changes here from prior communications.
Through the first half of the year weather normal operating EPS of $1.86 represents approximately half of our full year guidance midpoint.
So we were tracking nicely in line with our expectations.
We will provide our formal fourth quarter earnings guidance as is typical on our next earnings call but.
But let me provide some commentary on the implied cadence of our earnings over the second half of the year.
While Q3 guidance is roughly in line with weather normal results from a year ago.
We will see a multitude of small year over year helps and Q4.
Such as normal course regulated rider growth.
The impact of the South Carolina electric rate settlement.
Strengthening sales.
Modest margin help including from Millstone Millstone.
Continued expense management and tax timing.
That combined will help us to deliver solid second half result.
We continue to be very focused on extending our track record of achieving whether normal result at least equal to the midpoint of our guidance.
On both a quarterly and annual basis.
Turning now to a couple of macro items.
First overall electric sales trends.
And Virginia weather normalized sales increased 1.2% year over year in the second quarter and 3.2% in South Carolina.
In both states increased usage from commercial and industrial segments overcame declines among residential users.
As the stay at home impact of Covid waned.
Some context on that.
You'll recall that demand and Dom zone last year.
Was despite the pandemic pretty.
Pretty resilient.
Due to robust residential and data center demand.
So it's not surprising to see south Carolina's relatively higher growth in Q2.
Given the larger toll COVID-19 had on sales there last year.
We're encouraged by the strong return of commercial and industrial volumes in South Carolina in the second quarter.
And looking ahead, we expect electric sales growth in our Virginia, and South Carolina Service Territory service territories to continue to a run rate of 1 to 1.5% per year.
So similar to what we were observing pre pandemic.
Next let me discuss what we're seeing around input prices.
As discussed on last quarter's call, we're continuing to monitor raw material costs.
And it seems to be the case across a number of industries right now we're observing higher prices, although we have seen a moderation in the upward pressure over the last few months, especially in steel.
Despite these cost pressures as it relates to offshore wind in particular, we remain confident in our ability to deliver that project in line with our previously guided level on cost of energy range of 80 to $90 per megawatt hour.
On the solar side, we're seeing again, what others seem to be seeing supply is tight.
And prices for steel poly and glass are up.
But our 2021projects remain on track with most material now already on site.
We're beginning to see moderation in pricing and relief for modest shipping constraints, which bodes well, we'd expect for a post 2021project.
So again, we're watching but no material financial impacts at this time.
Let me address a few additional topics on slide 6 first questar pipeline.
Last month Dominion energy in Berkshire Hathaway energy mutually agreed to terminate our planned sale of questar pipeline as a result of ongoing uncertainty associated with the timing and the likelihood of ultimately achieving Hart Scott Rodino clearance.
A few thoughts here first but we obviously felt that a timely clearance and clothing was the logical outcome given the facts and circumstances.
Surrounding that transaction, we did build into the original Berkshire sale contract the flexibility to easily accommodate a termination if needed.
Second we are already at a reasonably advanced stage of an alternate competitive sale process for questar pipeline.
With expected closing by the end of this year.
Third this termination has no impact on the sale of the gas transmission and storage assets to Berkshire, which we successfully completed back in November of last year.
And which represented approximately 80% of the originally announced transaction value.
And finally, neither this termination nor the outcome of the ongoing sale process impacts Dominion Energy's existing financial guidance.
As mentioned Questar pipeline will continue to be accounted for as discontinued operations excluded from the company's calculation of operating earnings.
Briefly on credit.
We've continued to deliberately enhance our qualitative and quantitative credit measures.
Last month, we were pleased to see Fitch upgrade Dominion energy, South Carolina's credit rating from Triple B plus to a minus.
Fitch cited both improved regulatory relationships, including the unanimous approval of the general electric rate case settlement, which Bob will discuss in some more detail.
As well as good balance sheet management.
So let me turn now to a couple of ESG related topics.
In June we announced the successful syndication of sustainability linked credit facilities totaling $6.9 billion.
And we very much appreciate the efforts and support of all the banks, who worked with us on.
What we view as a very interesting new type of financing.
The $6 billion Master credit facility links pricing to achievement of annual renewable electric generation.
And diversity inclusion diversity and inclusion milestones.
And the $900 million supplemental facility presents a first of its cost structure, where pricing benefits accrue for draws related to qualified environmental and social spending programs. So in other words going forward, if we meet or exceed our quantifiable goals in these areas are.
Our borrowing costs decline.
And of course, the opposite is also true if we fail to meet our goals we pay more.
Thus with this financing were very much putting our money where our mouth is when it comes to ESG performance.
And we're looking for more ways to deploy green capital raises as we execute on our fixed income financing plan during the balance of the year.
In July we you shouldn't updated and comprehensive climate report.
Which reflects the task force on climate related financial disclosures or T. C. F D methodology.
We are just 1 of 6 U S electric utilities that have pledged formal support for T. C. F T.
As described in the report which is available on our website, we've modeled several potential pathways to achieve net zero emissions.
Cross, our electric and gas business.
They reflect 1.5 degrees scenarios.
On a consistent with the Paris agreement on climate change.
The climate report shows we are a leader in both greenhouse gas emission reductions over the last 15 years and in our commitment to transparent progress towards our goal of net zero emissions.
With that I'll turn the call over to Bob.
Thanks, Jim Good morning, everyone.
I'll begin my prepared remarks by commenting on our safety performance as shown on slide 7 I'm very pleased that our results over the first 2 quarters of this year surpassed even our record setting results from last year.
Our safety performance matters immensely to our more than 17000 employees to their families and the communities, we serve which is why it matters so much to us and why its our first core value.
Turning to slide 8 I often describe our pure play state regulated strategy is centering around 5 premier states, all of which share the philosophy that a common sense approach to energy policy and regulation puts a priority on safety reliability affordability and increasingly sustainability. We were pleased that C. N D CS.
List of America's Top States for business ranked Virginia, North Carolina, and Utah as 1.2 and 3 respectively. A podium sweep for 3 of our 5 primary jurisdictions with a fourth major service territory, Ohio also ranking on the top 10. This is the second consecutive number 1 ranking for Virginia.
Obviously, an assessment of this variety is just 1 of several possible ways to evaluate state specific business environments, but we're pleased with the independent confirmation of what we observe every day working on the ground in all of our regions. We have strategically repositioned our business around the state regulated utility model in order to.
Offer investors increased stability, which is further enhanced by our concentration in these fast growing constructive and business friendly states.
Next I'd like to highlight the outstanding work, Dan across our operating segments by the women and men of Dominion energy, who exemplify our core values of safety ethics excellence embracing change and 1 Dominion energy our gas distribution. Our colleagues have collaborated across our national footprint to share best practices, resulting in.
On a nearly 20% reduction of third party excavation damage to our underground infrastructure as compared to 2019.
Each instance of damage prevention enhances the safety and reliability of our system, while also reducing the emissions profile of our operations.
At Dominion Energy, South Carolina, our ability to work in close partnership with state and local officials combined with our commitment to meet an aggressive timeline for electric and gas service delivery were key to attracting a new $400 million brewery to the state last year. The facility is expected to create 300 local jobs and it's 1 of the largest breweries.
Built in the United States in the last 25 years being on time, however wasn't good enough for our South Carolina colleagues, whose safely completed the infrastructure upgrades and installation ahead of an already ambitious schedule. We take pride in examples like this the demonstrate how D. E. S. C plays a key role in supporting South.
Carolina's economic and job growth and in Virginia. Despite several days of near record peak demand in June our generation colleagues delivered exceptional performance as evidenced by the absence during those periods of any forced outages across our fleet our transmission and distribution team members kept the grid operating flawlessly.
Demanding load conditions, while also keeping pace with robust residential connects and remarkable data center demand growth, which continues the trend of robust growth over the last several years with no end in sight.
I'll now turn to updates around the execution of our growth plan.
The 2.6 gigawatt coastal Virginia offshore wind project received its notice of intent or N O Y from the Bureau of Ocean Energy management in early July.
Consistent with the timeline, we had previously communicated.
The issuance of an NOI formally commenced the federal permitting review, which based on our previously disclosed timeline is expected to take about 2 years key schedule milestones are shown on slide 10.
Later this year, we'll file our C. P C N N rider applications with the Virginia State Corporation Commission.
In June we announced an agreement with worst at an ever source under which they will charter our Jones Act compliant wind turbine installation vessel for the construction of 2 offshore wind farms in the northeast the vessel remains on track for delivery in late 2023, and will be an invaluable resource to D E V as well as to the growth.
On U S offshore wind industry.
Turning to slide 11, the Virginia training of review is currently in discovery Phase and the company is providing timely responses to request for information all of which generally conform with what we would reasonably expect during a rate proceeding of this size and complexity.
As a reminder, the earnings review applies only to the Virginia base portion of our rate base, which becomes smaller as a percentage of D E V and Dominion energy during our forecast period.
Virginia rider investments like offshore wind solar and battery storage nuclear life extension on electric transmission, which are outside the scope of the preceding represent the vast majority of the growth at D E D.
We've provided a summary of our filing position as well as key milestones on the procedural schedule a few items to reiterate here.
First our filing highlights the compelling value we provided to customers during the review period of 2017 through 2020.
We've delivered safe and reliable service at affordable rates that are well below regional Reggie and national averages all while taking aggressive steps to accelerate de carbonization by pursuing early retirement of fossil fuel power generation units.
Second at the direction of the General Assembly, we've provided over $200 million of customer arrears forgiveness to assist families and businesses and overcoming financial difficulties caused by the pandemic.
Third we've invested over $300 million in C. C. R O eligible projects, including our offshore wind test project, which is the first operational wind turbines built in federal waters in the United States.
Finally, our filing reports a regulatory return that aligns closely to our authorized ROE plus the 70 basis point collar inclusive of arrears forgiveness. This financial result, warrants neither refund nor change to revenues.
While offshore wind on the Triennial review were understandably areas of focus we'd be remiss. If we didn't also highlight the blocking and tackling we're doing to advance other very material growth investments and their associated regulatory processes for the benefit of our customers communities and the environment.
Since our last update we received our fourth consecutive regulatory approval for investments in utility owned rider recoverable solar projects. We've now surpassed 1000 megawatts of Dominion energy owned solar generation in service in Virginia, and there was a lot more to come in fact, our pipeline of company owned solar projects in <unk>.
Danielle under various stages of development currently totals nearly 4000 megawatts, which gives us great confidence in our ability to achieve the solar capacity targets set forth in Virginia law in which support our long term growth capital plans in the very near term about 25 days to be specific we will make our net.
<unk> and largest to date clean energy submission, we expect the filing to include as many as 1100 megawatts of utility on N. P. P. A solar roughly consistent with the 65.35 split identified on the Virginia Clean Economy Act.
It will also include around 100 megawatts of battery storage, including 70 megawatts of utility owned projects taken.
Taken together the filing will represent as much as 1 and a half billion dollars of utility owned and rider eligible investment further derisking our growth capital guidance provided on our fourth quarter 2020 earnings call.
Next the State Corporation Commission approved our inaugural renewable portfolio standard development plan and rider filings.
This annual accounting is mandated under the V. C E and provides a status update on the company's progress towards meeting both near and long term requirements under the state's Rps targets.
We received commission approval for our regional greenhouse gas initiative or Reggie Ryder filing under state Law, Virginia has joined with other Reggie states to promote a marketplace for emissions credits with the goal of significantly reducing greenhouse gases over time and this approval allows for timely recovery of our cost of compliance.
Next we received authorization from the nuclear regulatory commission to extend the life of our 2 nuclear units at the Surry power station for an additional 20 years.
These units currently provide around 45% of the state's zero carbon generation and under this authorization will be upgraded to continue providing significant environmental and economic benefits for many years to come.
We expect to file for rider cost recovery associated with license renewal capital investment later this year.
And last but not least progress on our grid transformation plans, our first phase covering 2019 through 2020, 1 is well underway and we recently filed our phase 2 plan with Virginia regulators covering the years 'twenty 'twenty, 2 and 23.
The second phase includes approximately 669 million in capital investment, which is needed to facilitate and optimize the integration of distributed energy resources, while continuing to address the reality that reliability and security are vital to our company and its customers.
We expect the final C. P C N order around the end of the year.
Our customers and our policymakers have made it abundantly clear they want cleaner energy and they want it delivered safely reliably and affordably were therefore very pleased to be executing on that vision on multiple fronts, while extending the track record of constructive regulatory outcomes to the benefit of all stakeholders.
Turning now to our gas distribution business or.
We're leading the industry and initiatives to reduce the carbon footprint of our central natural gas distribution services.
Our efforts include modifications to our operating and maintenance procedures systemic pipeline and other aging infrastructure replacement.
Third party damage prevention piloting applications for hydrogen blending producing and promoting the use of carbon beneficial renewable natural gas and offering innovative customer programs. For example in Utah, We're seeking approval for a program that would enable customers to purchase voluntary carbon on.
Offsets.
For Amp $5 per month on a typical residential bill customers that opt into the program will offset the carbon impact of their gas distribution use this program, which like our existing green thumb program allows customers to make choices about how to manage and lower their individual carbon profiles is just 1 way we are.
Re imagining how gas distribution service intersects with an increasingly sustainable energy future.
While on those lines, our hydrogen blending pilot in Utah is performing in line with expectations and we're in the planning stages of expanding the pilot to test communities.
We filed for a similar blending pilot in North Carolina.
And are evaluating appropriate next steps for blending in our Ohio system.
And as it relates to our already industry, leading renewable natural gas platform. We're pleased to announce an expansion of our strategic alliance with Vanguard renewables as a result, we expect to grow our dairy RMG portfolio from 6 projects in 5 states to 22 projects in 7 states through the second half of the decade.
And enhance our development pipeline with specific projects towards our aspirational goal of investing up to $2 billion by 2035.
Our current pipeline of projects will result in an estimated annual reduction of 5 and a half million metric tons of C. O..2 <unk>, which is the equivalent to removing 1.2 million cars from the road.
Turning now to South Carolina on July 21st the South Carolina Public Service Commission with the support of all parties unanimously approved the proposed comprehensive settlement and the pending general electric rate case.
We appreciate the collaborative approach them on the parties over the last 6 months, which allowed us to produce this agreement that provides significant customer benefits as shown on slide 14 supports our.
Our ability to continue providing safe reliable affordable and increasingly sustainable energy and aligns with our existing consolidated financial earnings guidance. Further the approval allows all parties to turn the page and focus on South Carolina's bright energy future.
It's also worth noting that the commission also recently approved our modified IR P, which favors a plan that would result on the retirement of all coal fired generation in our South Carolina system by the end of the decade.
While the IOP is an informational filing and does not provide approval or disapproval for any specific capital project. We look forward to continuing to work with stakeholders, including the commission to drive towards an increasingly low carbon future.
Before I summarize these prepared remarks and open the line for your questions I'd like to recognize 3 interrelated organizational changes, we announced yesterday that will affect our team and our investor relations efforts.
First senior Vice President Craig Wagstaff, who has provided over 10 years of exemplary leadership for our gas utility operations in Utah, Idaho, and Wyoming will be retiring early next year and I can say definitively on behalf of all of our colleagues he will be sorely missed.
Greg joined Crestar Corp, and 1984, and we have benefited greatly from his contributions since the Dominion energy Quest our merger in 2016.
Best wishes to Craig and his family and his retirement we've.
We've asked Steven Ridge, our current Vice President of Investor Relations to relocate to Salt Lake City and effective October 1st assumed the role of Vice President and General manager for our Western natural gas distribution operations. Steven has been a valuable member of our IR efforts over the last nearly 4 years and I think has gotten to know.
Most of you pretty well we have every confidence in his ability to follow crags. Longstanding example of serving our Utah, Wyoming, and Idaho customers and communities well.
And finally, David Mcfarlane, Who's been working on our Investor Relations team since October of last year will assume responsibility for our IR efforts as Steven transitions into his new role later this year.
We congratulate David on this new opportunity our investors should expect no change to our aim to provide consistently high level of responsiveness and accuracy they've grown to expect from our current IR team.
With that let me summarize our remarks on slide 15, our safety performance year to date is on track to improve upon last year's record setting achievements.
We reported our 'twenty second consecutive quarterly result, the normalized for weather meets or exceeds the midpoint of our guidance range, we affirmed our existing annual and long term earnings guidance and our dividend growth guidance.
Focus on executing across project construction, and achieving regulatory outcomes that serve our customers well and we're aggressively pursuing our vision to become the most sustainable regulated energy company in America.
With that we're ready to take your questions.
Thank you at this time, we'll open the floor for questions. If you would like to ask a question. Please press the star key followed by the 1 key that is star 1 on your Touchtone phone now is that any time, you would like to remove yourself from the question queue. Please press star 2.
To ask a question. Please press star 1 now.
Thank you. Our first question comes from Paul Zimbardo with Bank of America.
Hi, good morning.
All morning.
Congratulations Steven David on the new roles well deserved.
Thank you.
This gas can.
Can you provide a little more of an update on the conversations you're having around questar pipe sell process, such as what parties, you're talking to and the balance.
Balancing the considerations there.
Additional color you're willing to provide will be appreciated. Thank you Hey, Paul Yeah sure Paul Thanks for joining good. Good question, you'll probably appreciate that that we need to exercise a little bit of discretion as we're in the middle of our.
Our process of more information will come over time, but really high level.
We are of course.
Laid the groundwork for this process with a bunch of.
Preparation.
Prior to the termination of the prior deal so we're in a pretty good spot.
We are as I mentioned in the in the prepared remarks, we're at a relatively advanced stage of that process of an auction process.
We have for example received first round bids.
I can say that the participation and the interest level is certainly robust.
We have a really good number of of highly credible strategic and financial participant there.
And beyond that I'm, sorry to say you know more information will come we'll provide updates when we can but it's very much on track we're satisfied with the progress and we are as mentioned expect that transaction to close late this year, but again no impact.
1 way or the other on.
Our financial guidance of operating earnings for the year.
Okay. Thank you for that.
And also I wanted to check given the relatively unique geographic footprint you have being in Virginia could you discuss some potential opportunities you're focused on from the draft infrastructure Bill.
Perhaps around some of the support for advanced clean technologies renewables procurement things like that thank you.
Yeah. Thanks, Paul.
I think it would come as no surprise, where a philosophic.
Philosophically very much aligned with the intent of the package.
You know we are focus on rural broadband EV charging grid reliability and resiliency. These are all items that are in that package that we're we think make a lot of sense. So we'll obviously be watching as it makes its way through the process.
Pay attention to how the details get work out worked out for appropriations are if the bill passes.
A couple of specifics.
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We're very much in favor of support for R&D on clean technologies like hydrogen small modular reactors. Those are things that we're focused on in and to the extent that there's broad based support that allow our commercialization.
In a way that can be quick and customer beneficial. We think that's a very important and certainly something that we support and obviously our clean energy manufacturing tax credits are which can help enable.
On a U S.
Renewable supply, particularly offshore wind and solar we think are really valuable. So we're very much engaged in Washington and participating in the process, we like the direction that its going details yet to come.
But we think there are some real possibilities there.
Great. Thanks again.
Hey, Paul I wasn't fast enough on the draw there when we started I failed dimension.
Congratulations congratulations to you too on your new role.
At at Bama also also well deserved and we look forward to working with you on this new.
This new context.
Oh, great. Thank you very much on.
We appreciate you're not reporting yesterday with everyone else.
Thanks.
Thank you. Our next question comes from David Peters with Wolfe Research.
Yeah, Hey, good morning, everyone.
Good morning first on Daves question I just have is yeah on the train on review in Virginia, I know you have intervenor and staff testimony due next month, but can you maybe just better frame out some expectations heading into that and you.
And also understanding the downside risk is limited in this case just by law, but could you also touch on or a minus some of the tools for the T to review.
Yeah sure.
Thanks, David So on Triennial, 1 look it's a it's a rate proceeding and we would expect as in any rate proceeding that theres going to be a wide variety of approaches and positions taken by the parties will obviously know more as you said on the question early September.
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We'll hear from Intervenors and then a couple of weeks later, we'll hear from the staff. So we'll get a sense then but it's.
It's a it's a rate case covering a 4 year period.
And then setting rates going forward with that guard rail you mentioned, so I wouldn't be surprised if we see a pretty wide variety of opinions expressed by the parties, but if you take a step back and just think about the bigger picture here in that case, we have rates below our national reach.
Regional averages our performance of our utility is outstanding on the generation and the wire side.
And we're reducing our emissions and improving.
Reducing our impact on the environment and so that's a pretty good place to be in a rate case. So we feel very good about that as to T to.
That's obviously, where you know only a few months into the period that is gonna be reviewed for T..2 so a lot of details yet to go on the second triennial, but the tools are that.
That are in the toolbox like the customer credit reinvestment offset will be available to us in triennial too and then as we pointed out in our prepared remarks and as we've noted for some time as we move forward in this plan are the.
Portion of our earnings that come from Virginia base as opposed to the rest of the business and in Virginia particular, the riders are decreases as a percentage of the overall amount so.
I think those are important considerations to keep in mind, obviously, a long ways to go between now and triangle too, but we've got tools in the toolbox and the percentage of our earnings affected by triangle to as compared to the rest of the company will continue to decrease.
Great and then maybe just 1 more I know you have another filing.
Filing pending before the Corporation Commission for capital related to the grid transformation plan I think.
Last time in your phase 1 plan there was some disallowances for some of the the grid mod related spend but.
Just could you give a sense on how you're feeling about your proposal this time around and there's kind of anything changed.
So we're feeling very good about our proposal this time around.
So last time bear in mind, I think about $200 million of capital got approved and the filing last time, but some things have changed since that last filing. The most significant 1 is that the Virginia clean economy Act has passed and we.
We now have an obligation.
To seek approval for <unk>.
A substantial amount of renewables over the course of the next decade on a half.
Solar offshore wind storage all of that and we're going to need to modify the grid in order to make sure that we keep operating in that environment and that's what we told the commission in that filing.
You know things like our distributed energy resource management system will be incredibly important.
In this new world that we're moving into so the clean economy Act is different that didn't exist. When we filed last time. Obviously, we also had the benefit of what we heard from the commission and the order on the last filing and we can target and we have targeted our what we're doing with this most recent filing based on precisely.
What they told us last time.
And then some of this filing is continuation of programs that they did approve last time as I mentioned, they approved $200 million of capital.
On the last filing so all of those factors lead us to believe that.
That we should have a lot of confidence in that filing will here as I said in the opening around the end of this year, but it's a strong filing it's important for us as we integrate additional renewables to make sure that we operate the system well.
Great. Thank you for the color.
Yes.
Thank you. Our next question comes from Jeremy Tonet with J P. Morgan.
Hi, good morning.
Good morning, Jeremy.
Just wanted to start off with the RMG I know you guys touched on that a bit on flights here, but just wanted to see if you can outline the expanded vanguard Hawaiian spent more on the factors that went behind this expansion how does it fit with the within your overall R&D strategy I guess going forward.
Okay sure good morning, Jeremie, Diane Leopold here.
And so as Bob outlined.
In his prepared remarks, we really see R&D as a great way to intersect the essential gas service that we provide and look.
Reliable and affordable means to our customers and all of our states with our local gas distribution companies and enhance sustainability so while.
This is a very early phase of development with renewable natural gas that we have been on a path on for the last several years, we decided in our investments to focus on agricultural are Angie So our swine in our dairy partnerships and the reason we did that is because we believe that was the.
Most carbon negative carbon beneficial means to capture methane and repurpose that waste stream.
For a more environmentally friendly yes.
So when it comes to the actual investment side of it we now already have between both partnerships 1 project in service what happens to be a swine project and 5 projects under construction and several more under construction by year end. So as we were looking at our Vanguard partnership we were.
Really moving forward with development of a lot of prospects at a good rate and we saw enough interest and the demand for this renewable natural gas multiyear contracts with customers that are interested in ensuring.
On our source of supply for their sustainability targets. So we're really looking to develop these projects in the short to medium term for these customers it could be the transportation market. It could be other local distribution companies it could be thermal industrial users and then long term look.
Our regulated gas customers to help them lower their carbon footprints. So we're working with stakeholders and regulators and policymakers toward that goal and the green thumb programs and Utah.
And we've already ASP on North Carolina is just 1 step on that path to try to move.
Move the renewable natural gas towards our regulated customers.
Got it that's helpful. Thanks for that.
And maybe just wanted to come back to quest or for a moment if I could I know you can't comment too much on the sales process here, but just wanted to hear your thoughts on the overall environment to sell an asset now I think I think oil was approaching negative 37. When you were first marketing it and now it's about 70, just wondering any thoughts you could share about the environment to sell our midstream.
With that now.
Alright, Jeremy I'm, taking notes here on your question I'm going to distribute that to our bidder universe.
Like we're going on.
[laughter] well on the environment is pretty strong.
As you know in the last year equities are up midstream space commodities way up as you mentioned.
Equities are up in part because for true midstream companies you know growth is up so all good make the macro environment is good.
I would mention just to moderate that a little bit debt quest our pipeline. This asset as you know.
It's awesome, it's an awesome asset.
It is though Utah.
Utility like that's the way, we always operated that way it is now.
It it earned money through long term contracts for its capacity.
So it's not really as much as a rocket ship up or down as maybe the overall midstream true midstream market that said, though we're we're pretty happy with where we're going robust interest as mentioned and we'll come back and give updates as soon as we can.
Got it that makes sense on I'll leave it there. Thank you.
Thank you.
Thank you. This does conclude this morning's conference call you may disconnect your lines and enjoy your day.