Q2 2021 ALLETE Inc Earnings Call
Good day and welcome to the all late second quarter, 2021 and financial results call today's call is being recorded.
Certain statements contained in this conference call that are not descriptions of historical facts are forward looking statements such as terms defined and the private Securities Litigation Reform Act of 1995.
Because such statements can include risks and uncertainties actual results may differ materially from those expressed or implied by such forward looking statements.
Factors that could cause results to differ materially from those expressed or implied by such forward. Looking statements include but are not limited to those discussed and filings made by the company with the Securities and Exchange Commission.
Many of the factors that will determine the company's future results are beyond the ability of management to control or predict.
Listeners should not place undue reliance on forward looking statements, which reflect management's views only as of the date hereof.
The company undertakes no obligation to revise or update any forward looking statements or to make any other forward looking statements, whether as a result of new information future events or otherwise.
I would now like to turn the conference over to your host Ms. Bethany Owen All ALLETE Chair President and CEO you may begin.
Thank you good morning, everyone and thanks for joining US today with me are ALLETE Senior Vice President and Chief Financial Officer, Bob Adams, and Vice President Controller, and Chief Accounting Officer, Steve Morris.
Also with US. This morning are Jeff citizens ALLETE as director of corporate development, and Frank Frederickson, Minnesota powers, Vice president of customer experience.
Corresponding slides for this mornings call can be found on our website at ALLETE dotcom and the investors section to follow along we will call out each slide number as we go through todays presentation.
This morning, ALLETE reported second quarter 2021 earnings at 53 cents per share on net income of $27.9 million. These results are generally in line with our internal expectations for the current quarter and we remain confident and our ability to achieve our original earnings guidance range of $3 to $3.
And and 30 cents per share for the year.
And a few minutes, Steve and Bob will provide additional insights into key financial drivers for the remainder of the year.
At the highest level I'd like to provide a few comments and updates on our strategy.
As we've shared previously 2021 is a positioning year for ALLETE. Following the challenges of 2020. We are full on executing our strategy improving the returns of our businesses focusing on our customers positioning for additional growth and advancing sustainability and all its form.
This transitional year will serve as a strong foundation for further clean energy transformation, while supporting our growth objectives. We're excited about the future as it is increasingly clear that clean energy is the place to be.
ALLETE is in the front end of the curve when it comes to sustainability and we're confident and our strategy.
We're actively working to address climate change and our elite companies with all stakeholders in mind, our customers our communities, our coworkers and our shareholders.
We anticipate significant investments and ALLETE regulated and nonregulated businesses in the coming years, all to continue serving our customers with excellence.
We believe we're in a good position to align with yet to be finalized national and state clean energy goal, our sustainability and action strategy provides optionality and allows time for advances in technology, and and equitable transition of our communities to a secure and carbon free energy economy.
Turning to slide 3 as we highlighted earlier this year a significant step forward and our commitment to sustainability is Minnesota, Power's recently announced vision to provide 100% carbon free energy to customers by 2050.
This bold vision and its timing reflect how seriously we take our responsibilities to the climate our customers and our communities.
Minnesota power is the first and only Minnesota utility to provide 50% renewable energy today to our customers and we're continuing to move forward to address climate change, while advancing systems and programs that will support all of our customers and this critical journey.
Starting with our most vulnerable customers and Minnesota power truly cares for those individuals and families who are economically challenged and especially during these difficult times, we're grateful for the support and approval of the Minnesota Public Utilities Commission as we've enhanced our programs that provide outreach and affordability.
Discounts to support those who are most in need and the regions we serve.
And as transportation and Electrifies across the country, Minnesota power has launched programs to support residential customers with electric vehicle charging and sought regulatory approval to deploy fast charging stations throughout our service territory to facilitate easy travel across the region.
Minnesota power and superior water light and power are also leaders and the deployment of advanced metering infrastructure and the related system to utilize these investments to benefit our customers.
Again, we appreciate the close work with our stakeholders and the recent approval by the Minnesota Public Utilities Commission of Minnesota Power's plan to incorporate a dynamic rate design that supports engagement from our residential customers and the clean energy future and we're proud to be the first and the state to do so.
And finally, Minnesota powers and renewable energy supply includes a diverse mix of wind and hydro solar and biomass resources we.
We believe that diversity is important and so many ways and when it comes to energy, having a diverse supply of renewable resources is the most responsible way to transition to a clean energy future because customers and communities expect reliable energy around the clock. This.
And this is especially true for Minnesota, Power's industrial customers as they progress on their own sustainability journey, while maintaining 24.7 operations for their customers.
As for those largest customers. We're so pleased that they've rebounded and that the steel industry is strong and in fact, both Cleveland cliffs and U S. Steel recently increased their guidance for the year driven by strong ore and steel markets.
In addition, we're excited to welcome 2 new industrial customers to Minnesota Power's region last quarter S. T paper, a quiet acquired the Duluth, Minnesota paper manufacturing plant with plans to produce recycled tissue products and Huber engineered wood announced their plans for a new state of the art or.
Re-entered strand board manufacturing facility and Cohasset, Minnesota.
These are important signals that Minnesota is open for business as the economy recovers and all of these customers are important to the economic health of our entire region, we look forward to serving them well into the future with reliable competitive and increasingly clean energy.
Minnesota power sustainability journey won't stop at 50% renewable as described in our last conference call, Minnesota Power filed its integrated resource plan with the Minnesota Public Utilities Commission in February This I R. P outlines our plans to further transform Minnesota Power's energy supply to 70 per se.
And renewable by 2030 and to be coal free and 80% lower carbon by 2035.
Throughout this I R. P process, we'll continue our close and transparent engagement with our many stakeholders and we anticipate a commission decision and the first quarter of 2022.
Finally, as mentioned previously, Minnesota powers finalizing its plans and forecast and support them in early November rate case filing.
Meanwhile, ALLETE clean energy recently celebrated its 10th anniversary and this short time it has become the second largest business in the ALLETE family with 100% renewable generation and serving some of the largest utilities and C&I customers and the country.
ALLETE clean energy is focused on successfully executing its current projects, including Caddo Red barn, and northern wind.
Improving financial returns by optimizing its existing portfolio and advancing its strategy to move into additional clean energy spaces, such as solar and storage building on the company's strong track record and reputation.
This strategy has been well received by key stakeholders and we look forward to sharing more details and the near future.
ALLETE clean Energy's investment growth and improved financial returns will add earnings growth and will position. The company for continued success and the decades to come.
ALLETE family of businesses offers unique value to our investors, we're committed to achieving our 5% to 7% average annual EPS growth objective along with an attractive dividend.
We're answering societies call for increasingly clean energy and our businesses will continue to grow while delivering the services that are essential to the quality of life of our customers and our communities.
<unk> has been recognized by external research firms as a top tier company and several ESG dimensions, and we couldnt be more proud of the fact that we are making a difference and the things that truly matter.
Now I'll turn it over to Steve and Bob for additional details on our 2021 second quarter financial results as well as ALLETE growth outlook Steve.
Thanks, Bethany and good morning, everyone and we'd like to remind you that we filed our 10-Q. This morning and I encourage you to refer to it for more details.
Please refer to slides 4 and 5 for significant variances and other items for comparison considerations.
A day ALLETE reported second quarter 2021 earnings of 53 per share and net income of $27.9 million.
Earnings in 2020, or 39 cents per share and net income of $20.1 million results and the second quarter of 2020 included and $8.3 million after tax charge or <unk> 16 per share for the Minnesota power 2020 rate case resolution.
A few details from our business segments.
<unk> regulated operations segment, which includes Minnesota power superior water light and power and the company's investment and the American transmission company recorded net income of $21.5 million compared.
Compared to $11.1 million and the second quarter of 2020.
Results and the second quarter of 2020 included the $8.3 million after tax charge for the Minnesota power 2020, and rate case resolution of which $6.5 million related to the first quarter of 2020.
Earnings reflected higher net income at Minnesota power as compared to 2020 and also due to.
Higher kilowatt hour sales to commercial and municipal customers.
Cost recovery rider revenue and the timing of income tax expense. These increases were partially offset by lower margins, resulting from the expiration of power sales contract in April 2020, and higher operating and maintenance and property tax expense.
ALLETE clean energy recorded second quarter, 2021, net income of $5.1 million compared to $4 million and 2020.
Net income in 2021 reflected earnings from the Diamond Spring wind energy facility, which commenced operations in December.
'twenty.
Others, and the industry of ALLETE clean Energy's wind energy facilities were negatively impacted by lower wind resources, especially in the Midwest, which were approximately 15% below our expectations during the quarter.
The impact of lower wind resources was mostly offset by lower operating costs, resulting from ALLETE clean Energy's expense management efforts.
Our corporate and other businesses recorded net income of $1.3 million and 2021 compared to net income of $5 million and 2020.
Net income in 2021 included lower earnings from marketable equity securities and higher income tax expense as compared to 2020.
It varies quarter to quarter based on an estimated annual effective tax rate.
These decreases were partially offset by earnings from our investment and the nobles 2 wind energy facility, which commenced operations in December 2020.
I'll now turn to our 2021 earnings guidance.
We remain confident in achieving our 2021 earnings guidance of $3 to $3.30 per share.
As noted in the previous quarter, the timing of expenses and the first half of the year negatively impacted results. The majority of which are expected to reverse and the second half of the year consistent.
Consistent with the robust steel market recovery, we expect production for Minnesota, Power's taconite customers to be near full production for the remainder of the year a significant increase from our projections earlier this year.
Primarily driven by this positive development and we anticipate our regulated operations will be at the higher end of our guidance range of $2.30 to $2.50 per share.
Also as disclosed in the first quarter ALLETE clean energy and our corporate and other businesses are expected to be at the lower end of our guidance range of 70 to 80 per share.
This is primarily due to the negative impacts of the extreme winter weather event at the Diamond Spring wind energy facility, and the first quarter and lower than expected wind resources at our other wind energy facilities.
In addition from a guidance perspective due to the broader trend of lower than expected wind resources. So far and 2021, we are factoring and approximately 5 cents per share for the impact of lower projected wind resources for the remainder of the year.
ALLETE financial position is supported by a strong balance sheet that includes a cash balance of $63 million and our debt to capital ratio was 43% as of June 32021, and.
And I'll turn it over to Bob for comments on our longer term growth outlook.
Yeah.
Thanks, Steve and good morning, everyone.
As Bethany and Steve highlighted.
Financial results from ALLETE businesses were generally as expected for the quarter with half of the year now behind US we are reaffirming our consolidated earnings guidance range of $3 to $3.30 per share.
Our financial results are expected to improve and the second half of the year, primarily driven by robust large power production levels at Minnesota power.
Our taconite customers are taking advantage of very unique and volatile market conditions, and enabling them to sell a significant amount of output and to non domestic seaborne markets.
ALLETE sustainable clean energy growth strategy, having been established years ago remains a key differentiator to a broad audience of stakeholders.
Especially the expanding ESG focused investment community.
Consequently, I believe the stakeholder interest will continue to increase and expand.
Driven by supportive federal clean energy policy and significant infrastructure plans yet to be finalized by Congress.
We were pleased with the recently announced safe Harbor extension and improve continuous construction rules for wind and solar equipment.
Adds even more confidence to our view that clean energy opportunities remains strong and ALLETE to strategically advantaged to further benefit as it executes on key growth initiatives.
We are laser focused on achieving and Lee its average annual growth objective of 5% to 7% over the long term.
We are advancing and many key initiatives to get there.
First 1 of the most important initiatives underway our efforts to ensure Minnesota power is positioned to achieve.
Reasonable rates of return.
Earning competitive financial returns is critical to sustain our business and attract the equity and debt capital needed to continue.
And our clean energy transition ultimately.
Ultimately decarbonising, our energy system, while insurance service and reliability for our customers.
We continued to execute on business efficiency improvements and with that we are advancing our preparations for Minnesota power rate case.
Which will be filed in early November of this year.
Sustainable rate raise rate base growth and our regulated businesses will be driven predominantly.
But clean energy and infrastructure investments.
Minnesota Power's energy forward initiatives as detailed in our <unk> filing earlier this year.
Include transforming and investments in renewables and storage.
Well as supporting transmission and distribution investments.
We believe the IRS once approved will provide the enabling foundation.
And to successfully reach clean energy goals, while balancing our unique power system on behalf of customers with cost competitive and reliable power delivery.
There remains a critical need for power transmission and delivery improvements and our MISO region as key quarters are not sufficient to handle the rapid expansion of renewable energy on the grid.
Likewise, Minnesota Power's region of operations has a high degree of grid complexity.
And modernization requirements.
Our planned expansion of our 550 megawatt DC transmission line participation and the grid North partners initiative and.
And our accretion investment and the American transmission company.
Just a few examples of our significant transmission and distribution growth opportunities and.
In aggregate, we believe this part of our business will be able and second fastest growing segment and the next decade.
Our second largest business ALLETE clean energy is hard at work executing that strategy focused on portfolio optimization efforts, new projects and plans for expanding service offerings beyond wind to include solar and storage solutions.
At the same time the company continues to seek opportunities to optimize its existing PTC safe Harbor wind turbine inventory.
And enhance returns of the existing portfolio.
We are highly confident that with the expanded scale and suite of service offerings, we will be able to maintain very high levels of average annual earnings growth approaching 30% over the next 5 years.
ALLETE clean Energy's investment and Safe Harbor wind components remains a competitive advantage and the development of new wind projects and then further optimization efforts.
And 92 megawatt Red bar and build own transfer project with Wisconsin Public Service Corporation, and Madison gas and electric not only provides an opportunity to utilize our safe harbor turbines, but also expands our customer base and presence and another geographic region of the country.
ALLETE clean energy is working with landowners and local governmental jurisdictions finalize development and plans to begin and complete construction of the facility.
And 2022.
And extension of this project and a testimony to our strong relationships with optionality to serve the CNI and our utility space. The 67 megawatt white tailed development project is advancing.
With advanced transmission queue position landowner relationships and for either a long term PPA or build own transfer project.
Regarding the northern wind project with Excel energy, we were pleased that <unk> sales cost recovery petition was approved in June by the Minnesota Public Utilities Commission.
This project entails the Repowering and <unk>.
Spansion and planned sale of our chat channel around the Viking wind facility.
This project remains on track to advance with completion expected in late 2022.
Cash received from the transaction will be deployed and to new opportunities related to our solar and storage expansion strategy, reducing the potential for future equity needs.
On another note our 303 megawatt Caddo project construction continues to advance on plan for a year and 2021 completion.
All 110 turbines have been installed and tax equity financing is on track for the closing.
Upon commercial operation.
We are contemplating funding and the remainder of the completed project with cash flow from operations and a modest amount of equity financing through our internally managed at the market program.
Please refer to slide 6 which provides a high level summary of new projects currently underway at ALLETE clean energy.
In summary from all stakeholder views ALLETE remains uniquely positioned for success.
And our early action on establishing a unique clean energy strategy over a decade ago will continue to reward and ever broadening and stakeholder base for years to come.
I'll now hand, it back to Bethany.
Thank you for the updates Steve and Bob as you heard we at ALLETE are executing our sustainability and action strategy and coupled with the economic recovery underway. We are confident we will have much more progress to share in the coming quarters. We're proud of all we have accomplished and we look forward to the future.
On slide 7 there are several links to important information about our companies work to advance sustainability, we're especially proud of the second link document ALLETE first comprehensive corporate sustainability report, which we issued earlier this year.
This CSR aligns with the reporting requirements of the sustainability accounting standards Board and the task force on climate related financial disclosures.
I encourage you to review this document as it describes in detail ALLETE strong commitment to sustainability and all its farms, including advancing diversity equity and inclusion and our strong partnership with our communities best practice governance, as well as reducing carbon and increase and clean energy were.
Proud of ALLETE track record and we're already planning and update to our CSR and the coming weeks and we'll update it regularly along the way.
Sustainability is the very foundation of ALLETE strategy, we're committed to working with all of our many diverse stakeholders to provide value for our customers growth for our investors opportunities for our coworkers and to make a difference and the regions, where we operate and the communities we're proud to serve.
You for your interest and your investment and ALLETE at this time I'll ask the operator to open the line for your questions.
Ladies and gentlemen, if you have a question at this time. Please press the star and the number 1 can you just touch tone telephone and fair.
Question has been answered or you wish to remove yourself from queue. Please press the pound key.
And your first question comes from Richard Sunderland with Jpmorgan.
Hi, good morning, Thanks for taking my questions, maybe starting at a high level here, just curious about Asia and evaluation of the new clean energy opportunities how is that progressing.
And how is it worth tracking towards project announcements.
Yes.
Good morning, Richard and thanks for the question.
We continue to evaluate opportunities across the spectrum and solar and storage.
And so how our approach was on the wind side, we're looking at both operating assets all the way too and the early stage development.
So I would say that.
We see this as a critical focus for as we see it as an important diversified and growth engine is the solar markets growing exponentially and more to come in future quarters.
Okay understood. Thank you and then.
Then real quick on the 'twenty, 1 guidance sounds like taconite upside offsets some of these <unk> and <unk> is that a fair summary, and just are there any other moving pieces to think about since the <unk> update.
Yeah, Hi, Richard Steve Morris, or yes, I think you've characterized that.
Accurately so the diamond spring.
Fuller vortex event is going to be offset by air.
Positive outlook on Taconite production of course, you know our original guidance has 35 million tons an hour.
And we're seeing full production, so that's going to offset that of course.
Got it and maybe just squeeze 1 more in here.
And as the 2022 outlook do you need to see and Minnesota interim rates before addressing that I'm, just curious because I believe the build transfer opportunities remain outside and the outlook.
Yeah, I think youre right on that.
The build own transfer opportunities of course are related to ALLETE clean energy and.
And we're certainly working on our rate case right now we don't have the.
Rate case pulled together enough to estimate exactly what that will be but it is factored into our guidance. Our preliminary guidance for 2022 that we came out with earlier and the year.
So sorry, just to be clear there.
And build transfers are outside of the outlook, but.
Our view on interim rates in Minnesota the hours is incorporated.
And the interim rates are and that number so those build own transfer projects were announced after we came out with that preliminary guidance. So they are not and that number.
Understood. Thank you for your time today alright. Thank you.
Your next question comes from Peter burden with Mizuho.
Hi, Thanks for taking my question.
Morning.
Morning, So just to focus on industrial sales a bit so it sounds like you're tracking above the 6% to 6.5 million kilowatt hours you had originally projected for the year.
So just just curious how you or if youre seeing that as progressing on the trajectory back to.
More of the pre pandemic kind of over 7 million kilowatt hours per.
Per year of load.
It is it is Peter Peter Steve Morris. It is for 2021, so our guidance had $6 to $6.5 million.
Megawatt hours, if you will were probably around that 7 for.
For 2021.
So keep in mind, when we had full production and versa. When there were 1.7% to 7 and a half.
And of course <unk> is not running this year. So we're we're looking more around that 7 mark.
Okay and is the expectation that that sustains into 2022.
Okay.
Thank you Peter Frank Frederickson here so.
And we're looking ahead and.
And to the future here we have.
As Steve mentioned, we came out of a pandemic here in 2020, where we saw about 30 million tons of taconite sales and we issued our guidance for this year around 35 million tons on a recovery and we are very pleased with.
And how the steel markets are both domestically and internationally and.
In terms of driving demand for taconite from Minnesota, which is leading to that robust sales outlook that we have here in 2021.
We do know a portion of.
And the taconite is going into that seaborne market, which.
Historically has a fair amount of volatility to it.
And as Steve mentioned, we did.
Luiz.
<unk> and verso and.
Also.
Very pleased as Beth and he stated in her remarks that we do have some economic rebirth here and Minnesota with SPE paper acquiring that mill.
Converting it to a.
With plans to convert it to a recycled tissue operation and Huber engineered wood products.
Planning to break ground on a new Greenfield oriented strand board facility and the region. So really kind of partially offset some of those lost sales that we had.
Coming out of that pandemic.
Okay, Great and then just as.
A follow up can you just remind us.
How does the industrial sales load get set for the upcoming rate case I know, it's a 2022 test year. So just curious if that's more management discretion or based on actual volume from 2021.
Alright, thanks, So Frank again here.
So we do we do.
And put forward our forecast for the test year and the rate case utilizing information, we know about our customers and the markets and.
And then that does get debated throughout the course of the rate case and I know Steve has mentioned on past calls too that we are considering a sales adjustment mechanism here and the future to address the volatility that is involved and some of these industrial customer sales.
And anything more to add and that Steve and that's good thanks Frank.
Okay. Thank you for taking my questions.
Thank you.
And again, ladies and gentlemen, if you have a question at this time. Please press the star and then the number 1 key on your Touchtone telephone.
Your next question comes from Chris Alan Halls, with Siebert Williams.
Hey, everybody how are you.
Yes.
And Frank can you talk about the tax situation.
I understand the international market is pretty strong.
As the industry sort of filling in a GAAP here with the exports while the domestic steel industry is still is ramping up and as a temporary measure and.
And do.
And do you see that transitioning more towards taconite production for domestic use next year.
Thank you Chris.
And so we do and.
I think you summarized it right and that we do see and our customers have been public about.
Leveraging the seaborne markets for sales and they've also been sharing too that there is a robust domestic demand for steel and our and our country and.
And is supported both by strong durable goods demand and with customers and consumers.
But also supported by some infrastructure, that's coming as well and.
And there's also the dynamic that's happening with value added iron units as we've seen with.
And the customers of ours like Cleveland cliffs, where they've made.
<unk> technology investments in terms of making our products called Hyatt Hot Briquetted iron that originates and value added.
Dr Grade taconite pellet here in Minnesota Iron range. So so we are seeing.
Overall.
Transition of the <unk>.
Steel market and the taconite does its adapting to the future.
And we are seeing also.
And you pointed out to do some of that.
Little bit of leveraging of the seaborne markets to get to that full volume production. This year.
This is Bethany I would just also add that where we've been really pleased to see that the.
And bipartisan infrastructure deal.
And some measures that really focus on utilizing domestically sourced materials and we think that's going to be really positive for <unk>.
All of our mining customers and northern Minnesota.
So it seems like the underlying fundamentals for iron ore are particularly strong.
And there is steel shortages.
So do you envision.
A market, where there is domestic and export and does that suggest that you would see potentially volumes mined and a rising back to that sort of $39 and 40 million ton a year kind of level and time.
Okay. Thank you for that follow up Chris So and so on a historic average and over the past 10 to 20 years. It has average closer to 35 million tons throughout all the ups and downs over the past 15 years to 20 years in terms of taconite production.
And 1 of the things that we do know and we do see is that steelmaking and America is the cleanest steelmaking and the world and some of that.
It comes back to the fact that our steelmakers utilize value added taconite pellets from Minnesota Iron range, as well as Michigan, and and we know that as the as the <unk>.
World focus is.
Not just domestically, but also internationally on carbon emissions and cleaning up basic industries.
There is there is a trend for some demand.
Increase in terms of a pelletize product because it is a much cleaner form of and lower carbon intensity form of manufacturing steel.
So there is some benefits to that happening, but as I pointed out there and in overall historical average it has average around 35 million tons and and.
And we are as I mentioned pleased with the robust demand and that's happening both both domestically and.
And with that international market right now and it bring us to approximately 40 million ton rate operating rate this year.
Okay.
And Steve can you talk a little bit about the reduced wind output that you've been seeing is that coming from.
The the heat or is there some other dynamics that.
Affecting wind output.
Okay.
It could be a combination of all that cash.
Chris and it's not just certainly ALLETE clean energy its across the spectrum across the country and especially.
And the Midwest here that we're seeing lower than expected wind, it's about consistent with last year, It's just slightly lower.
Lower than our expectation was during the year. So I don't know if I'd blame it all on the wind.
Or excuse me the heat and certainly could be a part of it.
But we'll.
And then wait and see what we see the rest of the Euro and as we said, we probably expect a little bit more of that.
Throughout the rest of the year, particularly in November and December and.
And so that preliminary 2022 guidance you are assuming more like what you have whatever you consider normal conditions.
Have you got any thoughts on whether this year's conditions might.
Some read through to next year.
Yes, I think for 2022, we have factored that into our guidance.
A little bit more.
Normal wind as we've seen in the past 3 to 4 years versus using say the model that a P 50 and.
And some of that is reflected in the guidance that we came up and our preliminary guidance for 2022 that we came out with earlier and this year.
Yes, Chris This is Bob Adams. So if you think about that 2022 guidance range of $3.70 to $4. So you can imagine we go through a lot of sensitivities.
Around the horn for our business units and wind output is 1 of them and so that range would capture some of the down sensitivity that we've been experiencing.
Okay.
Bob can you talk about we've sort of been anticipating that <unk> might have some more.
Acquisitions over the last couple of years can you talk about what youre seeing and sort of the project.
Existing project acquisition market.
Yes so.
A couple of fronts I would speak to first of all.
Our focus on acquisitions outright acquisitions of existing.
Portfolios that remains a focus.
We're.
We're very mindful of the characteristics of the portfolio. We are building as you know so back to the tenor of it and credit quality.
The.
We're taking continue to take a hard look at sort of what the future price forecasts are going to be et.
Et cetera, So we're going to we're going to keep that discipline.
And that May mean.
I think we're going to get projects done there, but I think I think they're going to be we're going to be very selective about it on the acquisition front and.
So the other focus of course are and these new developments and I think youre going to see a lot more activity again, we have remaining safe PTC Harper and harbored turbines.
Which have increased value again because of the extensions that we just got so youre going to see us a lot of activity optimizing those into new projects.
Might be a long term PPA that it might be billed order transfer similar to the ones that we've just recently announced.
We.
By the way the fact that they extended the qualification of the 100 per or the 80% PTC and a 100% means that we can potentially back to optimization place some of those existing 100% PTC harbor turbines into projects that we thought were going to be 80.
And that's going to improve returns and so theres some activity around that.
And then as Jeff spoke this solar and <unk>.
Storage area is actually quite exciting.
I will tell you that I think the opportunities to wrap some of our existing wind projects with storage.
And the solar element.
There's a lot of activity there in terms of the team and I am very confident that youre going to see some new investments and those arenas.
Okay.
Obviously theres been some re.
Regional interest here and wood and paper products.
Is there something about diverse so plant that makes it harder to convert.
Is it merely coincidental that youre seeing some kind of resurgence and.
The industry, there and maybe versus so gets redeveloped.
For paper purposes later.
Thanks, Thanks, Chris that question, Frank Frederickson here again so.
And the.
Company that acquired the Verso Duluth Mill is S. T pay per their intention is to.
Leverage and what that site has been attacked already and our recycled fiber facilities.
And make a recycled tissue products. So they will they have announced that they are planning to convert the pay per machine into into a tissue manufacturing machine utilizing recycled fiber.
And the broader announcement by hubris.
Engineered wood products to bring a new state of the art oriented Strand Board facility to the region is.
And really leveraging the additional capacity and Minnesota for us in terms of ability.
The ability to supply.
More more wood and the region as we grow grow much more wood and the region and we harvest and and.
And they're looking to that resource as well as <unk>.
Location Ali.
And the Midwest market. So so a couple a couple of good announcements that came forward and the quarter.
Okay. Thanks for the color I appreciate it everybody.
Thanks, Chris.
Im showing no further questions at this time I would now like to turn the conference back to Bethany Owen.
Thank you we appreciate your time today.
So we appreciate your joining us and for your investment and interest and ALLETE. We look forward to speaking with many of you and other investor venues throughout the remainder of the year and I Hope you enjoy the rest of your day.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.
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