Q2 2021 Eversource Energy Earnings Call
Good morning, and welcome to the ever source energy second quarter 2021 results conference.
From spread and I'll be your operator for today at this time all participants are in a listen only mode. Later, we will conduct a question and answer session during which you'll be Dallas star 1 if.
2 questions.
Please note. This conference is being recorded I will now turn the call over to Jeffrey Kotkin you may begin Sir.
Thank you Brandon good morning, and thank you for joining us I'm, Jeff Kotkin ever source energy as Vice President for Investor Relations. During this call, we'll be referencing slides that we posted last night on our website.
And as you can see on slide 1 some of the statements made during this investor call maybe forward looking as defined within the meaning of the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995. These forward looking statements are based on management's current expectations and are subject to.
Site, and uncertainty, which may cause the actual results to differ materially from forecasts and projections. These factors are set forth in the news release issued yesterday additional information about the various factors that may cause actual results to differ can be found in our annual report on form 10-K.
Risks are ended December 31, 2020, and on our form 10-Q for the 3 months ended March 31.2021.
Additionally, our explanation of how and why we use certain non-GAAP measures on how those measures reconcile to GAAP results is contained within our news release and the slides.
<unk>, we posted yesterday and in our most recent 10-K and 10-Q.
Speaking today will be Joe Nolan, our president and Chief Executive Officer, and Phil Lembo, Our executive Vice President and CFO also joining us today are John Moreira, our treasurer, and senior VP for finance and regulatory and Jay Buth.
<unk>, our VP and controller now I will turn to slide 2 and turn over the call to Joe.
Thank you, Jeff we hope that all on the phone are safe and well and we look forward to seeing you in person weighted this year I.
I will cover a few topics. This morning, and then turn over the call to Phil to discuss our mid year.
Financial results in some new and important grid monetization and Ams developments in Massachusetts.
I know the most recent months have resulted in weather challenges across the country in the west our peers have needed to deal with heat and wildfires in new England with that increased level of thunderstorm activity.
Topped off by a glancing blow from tropical tropical storm Elsa.
Crews have worked around the clock many days restoring power to our customers from tree caused damage to our overhead system, while our implementation of new net new technology and vegetation management has limited the scope.
<unk> many of the resulting power outages are dedicated crews continue to be on the frontline completing a large amount of emergency restoration work.
And humid conditions over the past month and half is doing so in a safe and effective manner.
Their work has been excellent and we continue to receive notes of appreciation.
<unk> for both our customers and municipal leaders.
I was out all day in Connecticut, the day al surpass through and I cannot say enough about our team in preparing for and responding to storm damage in coastal regions of Connecticut, and Massachusetts. We greatly appreciate the recognition of those efforts.
<unk> received from Connecticut, PURA Commissioners at the July 14th meeting.
As I mentioned during our first quarter earnings call, improving our relationship with Connecticut, policymakers and customers is my top priority as CEO.
Earlier this week, a number of Connecticut legislators joined several states.
Community Education, and labor leaders at our bromine, Connecticut campus to celebrate the first class of students who are completing on new wind worker certification program in partnership with the Hartford based capital Community College.
We continue to see steady monthly improve.
Improvements in our customer favorability ratings and we appreciate the positive feedback we're receiving from municipal leaders.
But we have to prove ourselves during the next major storm I.
I strongly believe that the changes we are implementing to our communications systems and processes will put us in a much better place.
The next time, a multi day storm cleanup effort occurs.
Next I want to provide an update on the offshore wind partnership with <unk> over the past few months, we have continued to make significant progress on the 3 projects that are noted on slide 3.
Perhaps.
<unk>. The most significant development was the agreement we reached with Dominion energy to charter the U S. Built Jones Act compliant wind turbine installation vessel currently under construction in Brownsville, Texas.
Once construction of the vessel was complete in late 2023, it will seal to new London.
Connecticut, where it will be used to install wind turbines for revolution wind and Sunrise wind.
The vessel will be 1 of the largest most advanced of its kind in the world and will provide a more efficient approach to construction and the use of feeder budgets.
Work has recently begun a new London.
London at the state on Ocean facing deepwater peer to convert it into a major staging area for offshore wind.
As you know the primary variable in our construction timetable is siting approval, we continue to be on a good path to secure for.
Federal Bureau of Ocean managed.
Management, our boom approval of 132 megawatt South Fork project in January of 2022, which will enable construction to begin early next year.
And be completed before the end of 2023.
During hearings this spring that resulted in Rhode Island coastal resorts.
Cost management Council approval of the project, we indicated that we would install 12.11 megawatt turbines in connection with this project.
We are making progress on the 2 larger projects as well.
State permitting applications in Rhode Island for Revolution wind.
And in New York for Sunrise wind.
Were filed last December in.
In April the Rhode Island Energy facility Siting Board issued a preliminary decision and order on Revolution wind schedule.
With advisory opinions for local and state agencies to be submitted by August 26.2021.
Evidentiary hearings are.
Due to begin by mid October.
The Sunrise wind application was deemed complete by New York officials on July 1.
Initiating the formal review process for the project.
As we noted in May boneless targeting the completion of the review of Revolution wind for.
Wind quarter of 2023.
Based on that review schedule, we now expect to be able to achieve commercial commercial operation in 2025.
We have not yet received the schedule for.
For bombs review of the Sunrise project, but we are on a good position with our new London staging.
Beijing area, our turbine installation ship and our suppliers so depending on the boom review schedule that we expect to receive within the next few months, we expect Sunrise will reach commercial operation in 2025 as well.
These states are consistent with the vision of the by the administration, which.
Continues to accelerate the review of offshore wind projects proposed for the Atlantic Coast.
It is also consistent with the administration's target of having 30000 megawatts of offshore wind operating in the United States by 2030.
Offshore wind is 1 of several initiatives underway to help us states achieve there.
Yes reduction targets.
On July 14th Pure took major took a major step forward and furthering the state's clean energy goals when it approved a comprehensive program to support the states push.
For having at least 125000 zero emission vehicles on.
Green held by the end of 2025, the auditor as described on slide 4.
We appreciate a number of the changes that pure made to the draft decision to enhance the program's expected success, we will submit an implementation plan based on the pure order by October 15th.
Also.
So on that slide is a description of a proposal that Massachusetts utilities submitted on July 14 to further develop the infrastructure that is needed to support rapid conversion of the state's vehicles to zero emissions.
As you can see on the slide by the end of this year we will.
On a relative $55 million in our Massachusetts Electric vehicle program, helping to connect about 4000 charge ports.
However, since transportation is responsible for more than 40% of the state's greenhouse gas emissions significantly more support is needed to help the state meet.
Its targets of reducing greenhouse gas emissions by 50% by 2030 and 75% by 2040.
Massachusetts had only 36000 electric vehicles registered as of January 1.2021, and a 2020 only 3%.
<unk> of the light duty vehicles sold in the state where evs, while that percentage is above average for the country as a whole it needs to be enhanced significantly going forward.
Since at the current pace, we will have fewer than 500000, Evs in Massachusetts as of 2013.
We need more than 1.
Million Evs by then for the state to reach its targets.
We have proposed spending more than $190 million on EV support from 2022 to 2025, including $68 million of capital investment.
These investments are described on the slide and include the expanded.
Cadre of infrastructure investment.
Some rate incentives in new opportunities to add the EV infrastructure and environmental Justice communities.
Also our support for our state's greenhouse gas reduction efforts as discussed at length in our 2020 sustainability report.
Which was posted on our website earlier. This month are linked to the New report is included on slide 5.
The revamped report has incorporated a number of enhancements to provide you with more visibility into our environmental social and governance efforts.
We're also pleased to share updates on our 2000.
30, carbon neutrality goal, including our first third party verification of our 'twenty 'twenty greenhouse gas footprint.
We have a number of teams within other source cash with making our 2030 goal a reality.
I included team focusing on reducing ambitions.
And 5 principal areas on.
The other team working on developing a strategy to offset emissions that cannot be eliminated by 2030 and another team that is encouraging all 9300 ever source employees to contribute to their best ideas on how we can achieve our 2030 goal.
They.
I've already develops from truly innovative proposals that we are evaluating.
Their enthusiasm is just more evidence on why I am so confident about.
About <unk> future.
Now I will turn the call over to Phil Lembo.
Thank you Joe.
This morning, I'm going to cover 3 areas our second quarter.
<unk> results the status on several of the regulatory dockets pending and some exciting opportunities ahead for us in terms of grid modernization and Ami that Joe alluded to.
With our results for the quarter in slide 6.
We earned <unk> 77 per share for the quarter.
Excluding <unk> <unk> per share of costs, primarily relating to the transitioning of ever source gas company of Massachusetts into the ever source systems.
Excluding these costs, we earned <unk> 79 per share on the second quarter and $1.87 per share in the first half of.
Of 2021.
So let's take a look at each of the segments performance in the quarter.
Our electric transmission business earned <unk> 40 per share in the second quarter of 2021 compared with earnings of 39 cents per share in the second quarter of 2020.
A higher level of necessary investment.
In our transmission facilities was partially offset by higher share count there.
Our electric distribution business earned <unk> 35 per share in the second quarter of 21.
<unk> with earnings of 34 cents per share in the second quarter of 2020.
Higher distribution revenues.
<unk> were partially offset by higher O&M depreciation and property taxes.
The higher O&M was largely driven by increased storm activity in the second quarter of 2021 and higher employee medical expenses. The higher medical expenses was mostly due to the fact that in the second quarter of 2.
'twenty.
In the midst of the worst Covid AR in new England, the worst of Covid in new England. Many routine medical appointments were being canceled but this has largely returned to normal now are in our area.
Our natural gas distribution business earned 1 cent.
On a per share in the second quarter of both 2021 and 2020.
As you know natural gas utilities in new England tend to have a relatively neutral results in the second quarter.
Our water distribution business aquarian earn 3 cents per share in the second quarters of both 2000.
2021 and 2020.
Beginning next year, we expect aquarian revenues to be bolstered by our previously announced acquisition of New England Service company.
Or any S. C. N S. C owns a number of small water utilities that serve approximately 10000 customers.
In Connecticut, Massachusetts, and New Hampshire.
We continue to expect to close the transaction before the end of this year.
State regulators are currently reviewing the acquisition and its benefits to customers.
Our parent and other company segment had modest second quarter losses in Boe.
20 <unk>.
Turning to slide 7 you can see that we have reiterated our amended earnings guidance that we issued in May we continue to expect ongoing earnings towards the lower end of our $3.81 to $3.93 per share guidance.
This.
This incorporates a $28.6 million pre tax charge relating to our performance in Connecticut. Following the devastating impact of tropical storm Aesop E. S last summer.
We recorded the charge in the first quarter of this year.
We also continue to project long term EPS growth.
Yeah on the upper half of the range of 5%.
5% to 7% through 2025.
Excluding the impact of our new offshore wind projects.
From a financial results I'll turn to the status of various regulatory initiatives and I'll start in Connecticut.
We have updated a summary of various proceedings in the appendix of our slides I mentioned earlier that the public utilities regulatory authority or PURA had finalized the $28.6 million civil penalty associated with our store performance last summer.
That followed the April 20.
Growth in <unk> release of a final storm performance decision.
We discussed on our first quarter call.
As you know we have appeal that April 28th decision in Connecticut Superior Court.
Do not have a full schedule for those court proceedings, but expect the case to take many months.
<unk> 'twenty before the court renders a decision.
Scheduling conference will be held later next month.
The April 28th Storm border also required a 90 basis point reduction in Connecticut light and Power's distribution Roe.
On top of the $28.6 million penalty.
<unk> that pancaking of penalty forms 1 of the principal basis of our appeal since we believe it violates the state law that was in effect at the time of the storm.
Additionally.
Hearings in the temporary rate reduction docket commenced in May will continue next month.
A supplemental hearing.
Hearing is scheduled for August the ninth at which time additional testimonial evidence may be presented on certain issues, including the applicability in term of the 90 basis point penalty.
Pure just this week notified parties that written testimony on the applicability.
Ability in term of that penalty may be filed in advance of the August 9th hearing no later than August for.
<unk> distribution on ROE for the 12 months ended March 31, 2021 was 886% and.
And it's authorized distribution return was 925 per cent.
The schedule for this proceeding currently indicates a decision date of October 13th.
We will continue to update you as other stock proceeds.
Regardless of the status of this rate review.
We and our regulators share a common goal of providing nearly $1.3 million, Connecticut electric customers with safe reliable service.
And to help the state meet its aggressive carbon reduction and clean energy goals.
Turning to Massachusetts, Joe mentioned, our electric vehicle initiative earlier on.
First we submitted 2 other proposals to the department of public utilities.
As you can see on slide 8 the first was an extension of the grid modernization plan that we began implementing with initial GPU approval back in 2018.
The investments we've made on this first phase.
On July have allowed us to reduce the scope of outages monitor power conditions much more closely and assist in the installation of distributed energy resources throughout the Massachusetts Service territory.
The program, we submitted to the Massachusetts TPU earlier this month called for the investment of another.
Phase $100 million from 'twenty 'twenty, 2 through 2025 to further improve substation automation wireless communications and expand other programs that would have a number of other benefits, including reducing peak demand and line losses.
Reducing line losses.
<unk> 2 an important element in achieving our 2030 carbon neutrality.
Neutrality goal.
In the same docket, we're asking the deep you to take the first steps to allow us to embark on a 6 year effort to implement advanced metering infrastructure for a nearly $1.5 million, Massachusetts electric customer.
<unk>, along with a new communications network meter data management system and customer information system.
We project capital investment associated with the full program to be in the $500 million to $600 million range over the period of 2023 through 2028.
These technologies are critical enabling investment that support the state's 2050 clean energy goals.
And as I've mentioned previously, Connecticut is looking at how am I should be introduced for C. O M P customers.
Although PURA has acknowledged the potential.
There's 2 for substantial benefits that <unk> can deliver.
Currently there is no full schedule for the docket at this time.
Finally, I just wanted to cover our recent financings and rating agency actions in recent months, both Moody's and standard <unk> Poor's have changed seal on PS outlook.
Outlook to negative.
Moody's changed ever Swiss parent outlook to negative as well, where we're not happy with these developments. We understand these changes are primarily related to the ongoing regulatory proceedings in Connecticut.
Such as the temporary rate reduction docket, and the arrow penalty stemming from the Isa E S reported.
For it we were pleased that Moody's recently affirmed.
On H public service of New Hampshire rating and outlook.
Igniting the constructive outcome of last year's distribution rate proceeding in new Hampshire.
Also we recently filed an application to issue up to 725 million.
Of long term debt at every source gas company in Massachusetts.
Since we purchased the former Columbia gas assets last year every source gas of Massachusetts has been borrowing long term exclusively through the every source parents, we believe that borrowing at the subsidiary level ultimately.
There's less costly for customers and we expect a deep your decision on this application later this year.
Like in Star gas and Yankee gas, we would expect every source gas in Massachusetts to borrow in the private markets.
Thank you very much for joining us this morning, and I'll turn the call.
It will be low for the Jeff for Q&A.
Thank you felt and I'm going to turn the call back to Brandon just to remind you how to enter your questions.
We will now begin the question and answers.
If you have a question. Please press star 1 on you for keypad, if you'd like to be removed from the queue. Please press the phone line, where they had.
It's going.
Uh huh.
You can pick up your handset first before daily Whats the guidance do you have a question. Please star 1 on your full keep it.
Thank you Brandon or first question. This morning is from sharp Rosa from Guggenheim Good morning Shar.
Good morning, Jeff Good morning team.
Good morning.
Morning, Sean.
Just starting with the PURA.
And sort of the 90 basis points or where your reduction it sounds like you know 1 of the more recent notices.
<unk> opened the door for parties to petition for a defined penalty period versus something more perpetual.
Now how do we how should we sort of think about kind of this opening if you will to a you know a fixed length reduction versus indefinite.
And then just remind us again, what we should be watching for here going forward.
Sure sure this is Phil.
As I mentioned, the the docket Ah is open.
Open and recently pure did notify the parties.
That they could submit testimony on the applicability of the term of the penalty side.
For me that indicates there there's a consideration of what a term would be as you know the initial language was.
The word indefinite so I think that's that's a positive development in terms of setting a specific.
Term for the penalty so in the docket. The information that came out last week sort of indicates that could could file information there.
So you know what what we should.
And for the areas. There is a you know there is a process that will continue on on that on that docket.
It is our expectation that order would be issued in October with any changes out of there effective November 1st is the current timeline.
Got it. Thank you for that and then just lastly, and maybe just shifting to offshore wind in and starting with the with the logistics side.
You know redevelopment of the Connecticut State here in New London has had some cost increases right from 93 million to roughly $235 million.
Obviously paid by the state.
But it sounds like everything else is kind of proceeding is there kind of any supply chain issues, you're kind of keeping an eye on or logistics that remain kind of unknown unknowns.
Yeah. Thanks, Shar. This is Joe I'll take debt. So water work is underway at the new 1.
What we were just out there for some inspections, we do have all our onshore permits is going very very well.
Last week the state finalized the funding.
Any of those increases the state is absorbing so we feel very very good about debt and now with regard to supply chain and there are no issues that are impacting any.
London 3 projects all of the projects.
Have have everything locked down so we feel good about debt.
Okay perfect. That's all I had pretty clear cut quarter. Thanks, guys. Thank you. Thank you. Thanks. Our next question is from Jeremy Tonet from JP Morgan Good morning, Jeremy.
Hi, Good morning, guys. This is actually Ryan on for Jeremy Hey.
Hey, Ryan.
Just wanted to start on the offshore and maybe on from the kind of the siting process. You guys are kind of talking about during during the script and.
Thinking about the progress you guys have been making me with some on some of the fishermen I know this is kind of an issue.
With South Fork in England eye on specifically, what kind of wanted to just kind of get a latest on any kind of progress you're making in terms of you know.
Other stakeholder kind of agreements and kind of the process for making those relationships.
So thank you for the question Ryan we've had a lot of dialogue down there.
And I think we've got some.
A good path forward and we've got a obviously a positive decision we received in July from the.
CRM see down there in a positive decisions in New York as well as is in Massachusetts. So.
And we think a lot of the concerns or at least the the path is pretty clear and we feel good about.
Yeah.
And then maybe just just 1 on Connecticut, we saw you I kind of get their settlement over the finish line there.
Kind of wondering prospects, you're kind of seeing in the savings from stakeholders in terms of maybe potentially settling some of these issues and what kind of timeline, we might be thinking about in terms.
At somebody coming out on that front.
Sure. So you know generally speaking you know a broad multiparty settlement is something that's obviously attractive to us we have a long history of of settlements whether it's the <unk> merger in 2012 on the C. O M P rate case.
Are the Yankee rate case so.
So we feel good about that I have been spending most of my time in Connecticut, we've been out with multiple parties and I think that the temperature has certainly has has reduced and folks are in a good place I think we need to prove ourselves on them, we know that.
Tropical storm the.
On the recent 1 with Elsa.
Which pass through was really a good exercise for us to to show that you know a lot of things have changed from our business. So biologic settlement is something that's attractive to US we were pleased to see that United Illuminating settlement was was approved so we see some possibilities there.
Got it it makes it makes sense I'll stop there and take my question.
Thank you Robert Thank.
Thank you next question is from their guests Chopra from Evercore good morning their cash.
Good morning debt.
Just going back to the Connecticut docket, the temporary rate reduction that's about it.
No.
Except for 1 year on the equity layer.
I'm, just wondering where that stands and do you guys expect this final over enough or the right production. If I remember that you know that's addressed as well or that's finalized as well.
Or cash that you broke up a little bit on the questions are you talk.
It's about the the testimony from the intervenor Ah that debt.
Went in.
That's correct the equity layer, Jeff that's exactly right.
Yes. This is Phil.
During the course of that proceeding there was testimony and certainly.
We are.
Provided our own input to that testimony and as well as question the witness so.
But by the nature of it being part of the questioning I would expect that somehow it could be considered in that proceeding.
Going forward. So there's no there's no specific.
Talking about debt is to be decided there I think it was just a testimony that was filed by the interest by the E. L E E.
We witnessed a section of the of the Connecticut PURA. So.
Got it. Thank you that's helpful. And then maybe just a quick clarification.
Air email.
Yeah, My filing in Massachusetts, what.
For some of that 500 for $600 million that you mentioned would be incremental to the current capex plans.
We have currently no capex in our 5 year forecast for a M I in Connecticut.
For in Massachusetts.
She sits so any spending in either state would be incremental.
Got it and do you do we see a final decision in mid 'twenty 'twenty, 2 or is that just sort of like what what are what are the response means like is this a for malls sort of yes, or no or just feedback from the Massachusetts.
GPU.
So we expect a decision in 2022.
Mid year is as good an estimate as any at this stage so.
This has been a.
You know a long standing sort of desire I think of the of the commission you know, we certainly have a need to make a decision.
On our metering infrastructure. So the timing is good so we fully expect a decision.
In mid year 2022.
Okay perfect. Thanks, guys much appreciate the time thanks.
Thanks for your cash.
Next question is from Julien <unk> from Bank of America, Good morning Julien.
Asian [noise].
Hey, good morning team, thanks for the opportunity to connect them.
I mean, maybe to pick up a little bit off the last question in and flip it a little bit when you think about the various scenarios. So you you you have a history of executing well you talked about upper half of 5 to 7 there's a variety of different pieces that are moving.
Let's and takes.
How do you think about your confidence level under various scenarios in the upper half year and I'll, let you answer that accordingly, because there's a lot of probably too many scenarios to talk about and point out here, but I'd be curious as you think about the sort of the decision tree here or pathway potentially.
Thanks Julien.
You put them as we see our 5 year or long term for what cast I'm very confident in our ability to achieve our growth expectations as you mentioned.
There are always puts and takes that's what we do as a as a management team and that's what any company would do is is managed through that process.
Anderson and address issues that that don't go your way in and look for other opportunities. So.
There are various puts and takes that can occur over the course of any forecast period, but I am confident in our ability to achieve our target.
Yeah.
Got it excellent I'll leave that subject, there maybe coming back to us off for wind subject.
It was the highest level observation or question back to you. After a short question would be given the more coincident in a construction of these projects here.
Any considerations around logistics that we should be focused on here.
Process, just given that they're now increasingly lining up against each other.
Yeah. Thank you good morning Julien.
Yeah, we feel we feel great about the timing on projects are a really scheduled in a perfect formation. So we do think there's a lot of opportunity there on mobilization.
I S T mobilization to allow these projects to be able to be constructed in a very orderly fashion and that's what really excites us so yeah definitely opportunities the other timing is perfect.
For actually all 3 of them.
Right excellent and then lastly, just.
She is coming back to this question on settlement and I and I know I appreciate your comment from earlier.
Curious to the extent to which you can resolved perhaps in a comprehensive manner, Oh, all variety, including potential rate case filing next year in the context of some sort of settlement here just wanted to.
On push on that subject just a tad more if you don't mind.
Yeah, Yeah, you know Julien we have.
If you've.
I had an opportunity to see our success in the past.
We can do settlements that are quite comprehensive we feel confident that if you know if we get to the the table. We've got obviously at the.
Parties that we have great relationships with our debt.
Debt a comprehensive settlement is definitely possible here and its something that obviously.
Obviously, it will be attractive to not only to watch, but I think due to a number of the parties is obviously very very busy times on a Connecticut right now and so.
I'm optimistic.
All right excellent well, thank you very much and best of luck on those efforts.
Thank you. Thank you Julian Thanks, Julien next question is from Paul Patterson from Glen Rock Good morning, Paul.
Hey, good morning, guys How're you doing.
Good Paul how are you all right, so just to sort of them pick up on Julian.
<unk> question there on the on the and Joe You said you were optimistic about Connecticut.
And the potential for Soma could you give us a feeling for what the the.
The key sticking points on.
Cause.
No I haven't grid due to some months ago and I'm just wondering how should we think about what the.
What parties or.
Are the might be the key issue or what.
What specific issues are the ones that probably are the ones for us to focus on being resolved.
Sure I mean, it's the same parties that we've dealt with it you've got the attorney General's office. She got the OCC you have deep I mean these are the parties, obviously debt with dealt within the past and.
You know that that would be the same folks that we would see if we if we get enter into some settlements.
Okay and is there any key points for key issues that.
That are the sticking points.
The debt.
That are the key things that people are focused on that day.
That's causing more of an issue.
Or there's no no I wouldn't say, there's any there's any sticking points, there's no specific issues.
And in terms of timing.
You know you guys gave a very detailed sort of a rate case, you know regulatory proceeding outlook and stuff, but how should we think about which except for before the hearing.
Ring or.
Hmm.
How should we think about that well.
Well you know settlement can occur at any point you know as you know on the process, So and I. It's hard for me to say, we need to let certain things run their kind of regulatory course.
And then on the you called out the ratings downgrades potential.
If you guys are downgraded other than obviously you know.
I mean, obviously impacts the cost of borrowing but other than that is there anything else. We should be thinking about is there any other sort of potential trigger on.
Covenants or anything we should be thinking about or anything else.
Okay.
I know Paul there's no is there is there are no other triggers that that come into play here and just for clarification I think we all know that being on negative outlook. It doesn't necessarily mean that you're going to be downgraded are I think that the agencies like to see certain progress and in particular areas. So.
You know in the area that they they they sort of highlighted in terms of lowering the outlook was sort of the Connecticut regulatory area. So there are a lot of dockets going on there and if if those move in a direction that the rating agencies view as credit positive then that.
Doesn't mean, you're going to get the downgrade rate they could put you back onto a stable outlook. So.
But nonetheless.
If something were to happen there are no other triggers that would that would be in effect.
Okay, Great. Most of my questions been asked it takes so much guys. How good we can act upon Youtube channel.
Our next.
That is from Andrew Weisel from Scotia, Good morning, Andrew.
Hey, good morning, everyone.
Maybe I'll start by following up on that last question about the ratings agencies.
I don't expect specific numbers, but I know there the agency's concern as the regulatory risks not exactly the balance sheet, but if they were.
Question downgrade, how would that affect your plans for the mix of debt for equity in the coming years.
Well, there's a lot of hypotheticals there I mean, it's you know if that happens you know I'd have to see what.
Was there something in a regulatory decision what the impact of that.
<unk> T. So I I'd I'd.
I'd say, we don't have any plans at this stage to make any really adjustments in our approach to our capital structure of what we're looking to do in terms of our debt financings as you know we identified that we had $700 million of additional.
Additional equity.
The financing that we had identified a couple of years ago debt is still out there that we plan to do over some longer term period on a periodic a T M or something basis.
And then we're issuing.
$500 million about $100 million, a year is a better way of.
I'm, saying it out of our dividend reinvestment plan. So we are continuing to take to do some dribbling out of equity and then we're doing a long term financings, but don't have any specific changes that I would highlight at this stage the capital structure.
Okay. Then next question.
You opened your prepared remarks talking about the positive feedback to your preparation for in response to the storms can you give some specific examples of ways that you've changed your protocols and strategies since its a us and if there are any additional new initiatives that you're planning to roll out to help minimize storm driven outages.
Yes sure. Thank you Andrew.
What are the I think the.
Most impactful.
The system rolled out as a community based portal that allows communities to put their priorities in terms of public safety are blocked roads for those types of items are in there. We also have crews in each of the communities thats allow communities to have their.
Priorities addressed so those are just some of the.
Some of them I will tell you the other the other piece that really goes back to what we had done prior to say, yes, because of the pandemic as we have folks that are located in each of these cities and towns. That's something we were not able to do what you say is as you know at that point in time, everybody was on lockdown.
Locked down it was a very complex recovery effort, because we needed double of everything we had to have single work is in vehicles. We had to have single work is in hotel rooms, and it was it was a very very challenging matter. So when we had this last event there Elsa things are a little more back to normal and we had a lot of kind of.
Apology portals that we hit deploy which.
Very very well received I mean I was out on the system I had an opportunity to talk to several of the cities and towns and all the feedback I received was very very positive.
Okay, Great. That's helpful. Best of luck going through the next 1 hopefully you won't be tested anytime soon but hopefully it wont be too.
Thank you.
Thank you Andrew on.
Next question from Sophie Karp from Keybanc Good morning Sophie.
Hey, good morning, guys. Thank you for taking my question.
I wanted to take a stab on Connecticut, again, but from maybe from a slightly different angle.
It sounds like the boomer, but.
Too bad as far as becoming more frequent than some may even say in your normal is there room for a dialogue there that goes beyond just kind of sorting through the penalties than the past them for months and establishing a regulatory framework for dealing with can stagger. These forums as a new norm.
Yes.
1 is.
We've seen in the states and the hurricane vouch for it.
Alright for a while right.
No.
It's the nature or on the commission level, where you have.
Securitizations or trackers for that type of stuff and you really like mechanisms that are predictable.
Don't have.
Have to sort through each for them individually as we go forward.
That's all I have.
Thanks, all for some.
Some of those items have been discussed securitization certainly wasn't topic of debt.
That's come up from time to time.
In Connecticut in terms of storm.
Storm costs, but.
Usually in a rate proceeding.
Where you are looking at all your your costs and what what's in your cost of service et cetera.
In our last.
Settled rate proceeding.
<unk>, we spent a lot of time on.
On on storms and what the right level of storm activity was to collect and rates.
What appropriate deferral mechanisms might be there so there's long been.
Recognition that these costs can move around and what's the best way of making sure that customer rates.
We remain.
As stable as possible, but there's still an opportunity for.
For for collecting these costs going forward, so those kinds of discussions.
We will continue and the dialogue will continue there's nothing specifically on the on the table per se in terms of.
Storm cost recovery.
At this stage, but we.
We've had discussions on various topics.
We spend.
So before you get to storm recovery 1 of the areas. We do is try to not have to recover right. So that means we try to do an effective job on our vegetation management and in the capital.
Anything that we do on technologies to restore customers quickly and remotely so in the.
I mean, we spent $200 million a year on vegetation management.
Just to.
Across our system to remove trees and open up rights of way et cetera. So the best the best outage to have.
<unk> spent.
Not to have it I guess, that's the best possibility.
Possibility. So we do things and the commission has been receptive to our requests for additional funding, but there's still a lot of tree work that can be done in Connecticut.
As in other states, but that's an area that.
We continue we'd like to continue to have a dialogue on.
Thank you.
Alright.
On next thank you Sophie next question's from David Arcaro from Morgan Stanley David.
Hey, good morning, Thanks, so much for taking my questions.
And a quick follow.
Follow up just on that last line of thinking is there a capex opportunity you can look for more of a liability kind of system hardening investments in Connecticut, you mentioned vegetation management tree trimming, which seems more on the O&M side of things, but wondering if there was more capital to deploy.
2 more.
The impacts of storms going forward in Connecticut.
Well, we do have an approved capital tracking sort of safety reliability.
Program that we have in Connecticut right now.
That we operate under so as we do in the other in other states to so there is it that would not be new.
We do spend money on.
<unk> technologies to again.
Enhance our ability to prevent outages or in the event that you do have an outage to recover quickly. So there is an opportunity and we currently have a mechanism in place to do that.
Okay got it thanks.
Shifting to offshore wind I was just wanted to clarify what gave you the comfort this quarter to put.
Specific years specific dates out there for revolution and Sunrise was at the progress that you saw at both of them on the <unk>.
Schedule that let you kind of crystallize those years.
Yes, I'd say that that's the primary.
Mary driver we've said.
You know when we first moved off the date, we said as soon as we get more clarification.
We would go back and work with our partners with the worst day and develop a schedule. So in the case of our Revolution wind, we certainly we have that in place.
For Sunrise.
<unk>, it's soon too soon to get in place, so where where I guess.
Cautiously optimistic on that on that date, and we'll have to wait until we see more information out of bond to be more certain but that that is it we've seen a movement and we have much more clarity now on dates than we did.
Did a year ago.
Got it that makes sense.
Just kind of a last quick 1 just wondering if theres any thoughts you might have on the Massachusetts, RFP and your competitors.
Positioning there for for the next offshore wind project.
Are there advantages that you might be able to bring to the table is especially.
Infrastructure comes on line for your other projects that you could potentially lean on.
Sure you know like all state Rfps for.
When we're evaluating it right now we'll look at how it fits into our plan. There we expect our other states as well to have it so it's under consideration.
Great. Thanks, so much.
Thank you thanks, David our next question's from Steve Fleishman from Wolfe Good morning, Steve.
Hey, good morning. Thanks.
Apologize if this was asked.
But just.
There's a lot of different issues in Connecticut.
The kit a debt.
Debt you might be.
You know cable broke you know settle on I guess, if you get to that point on the settlement just curious if there's a way to deal with.
Kind of the need to file a rate case every 4 years could that be part of this or.
Is that something that has to happen no matter what.
Yeah, Steve Good morning, Steve Joe I'm, absolutely that could be part of any type of a comprehensive settlement. If that was something that was important to the parties Thats something we would we would definitely put on the table.
And I'll add to that.
Debt, that's really more of a legislative mandate, Steve and it requires you know it.
Pure to review them to review the rates. So if if if the settlement if there's a if there's information there that would be deemed as a review you know.
That could take care of that requirement, but the.
That 4 year sort of review as more of a in the legislative space.
Got it.
That's helpful color Phil Thank you that was it.
Alright, Thank you Steve and it.
It looks like we're all set we don't have any more folks on the Qs that we want to thank everybody for joining us today, if you've got any.
That's why I, please you'd give us a call or send us an email and have a wonderful weekend.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for joining you may now disconnect.
Yeah.