Q4 2021 Entergy Corp Earnings Call
Good day and thank you for standing by welcome to the Entergy fourth quarter 2021 earnings release Conference call.
At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. Last quick question joined that session you will need to press star one on your telephone T.
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I will now like to handle conference over to your Speaker today, Bill Abler, Vice President of Investor Relations.
<unk> the floor is yours.
Good morning, Thank you for joining us we will begin today, how much messages chairman and CEO Yoga Health and then drew Marsh, our CFO will review results.
In an effort to accommodate everyone who has questions we request that each person ask no more than two questions.
On today's call management will make certain forward looking statements.
Actual results could differ materially from these forward looking statements due to a number of factors, which are set forth in our earnings release, our slide presentation, and our SEC filings.
<unk> does not assume any obligation to update these forward looking statements management will also discuss non-GAAP financial information reconciliations to the applicable.
GAAP measures are included in today's press release.
Slide presentation, both of which can be found in the Investor Relations section of our website and now I will turn the call over to legal.
Thank you Bill and good morning, everyone.
Today, we are reporting strong results for another successful year.
Our adjusted earnings per share $6, two which is in the top half of our guidance range.
This is the sixth year in a row that our results in Colombia.
Our guidance midpoint.
Underlying our steady predictable results as entergy dedicated robust and resilient organization working day in day out.
Create sustainable value for all our stakeholders.
Because of the solid foundation that we have built in our proven track record.
Confident that we will continue to achieve success into the future by delivering meaningful outcomes.
As such we are initiating 2020 guidance and affirming our longer term outlooks in line with our discussions.
This continued success, it's important to all of our stakeholders, including our customers.
He able to navigate through headwinds as possible only through financial discipline.
It allows us to continue to raise the capital needed to serve our customers.
Without financial health, we could not have raised over $4 billion needed to fund the restoration recent storms, including Ida anymore.
The worst storms that hit Louisiana.
Nor can we manage through the revenues lost as a result of these storms and COVID-19.
Without financial health, we cannot consider accelerating resilience investments to better withstand future storms.
Could we make the investments in clean energy that our customers large and small are seeking.
Okay.
In 2021 by 2020.
We were presented with headwinds caused by the pandemic and weather events.
As in 2020.
We proved we could navigate those headwinds and continued to deliver strategically.
Rationally and financially.
Strategically we stood up our customer organization and appointed our first ever Chief customer Officer, David Ellis.
David just building a team to work with our customers find ways to meet their reliability affordability and de carbonization goals.
They are actively working on unique and significant opportunities to help our customers reduce their carbon emissions.
We created a new sustainable planning development and operations group led by Pete Marshall.
In order to drive greater strategic direction in collaboration and address stakeholder sustainability expectations. We aligned key internal teams to work collectively to implement strategies that will decarbonize, our portfolio and respond to our customers' sustainability needs.
All while maintaining affordability and reliability for customers.
Guided by this holistic planning framework, we updated our long term supply plan to significantly increase renewable capacity.
We now expect 11 gigawatts of renewable capacity by the end of 2030.
More than double the estimate in our previous plan.
As part of this plan, we issued renewable rfps over the last year totaling nearly 2000 megawatts.
We completed the tax equity partnership for Searcy solar in Arkansas.
We designed this unique structure to help facilitate the economics of utility ownership, while better aligning interest the project owner and tax equity partner.
This is an important step to make utility renewable ownership and economic option for our customers.
We propose the Orange County advanced power station in Texas.
If approved this will be our first hydrogen capable plant.
We'll provide efficient power with the flexibility to utilize clean hydrogen.
We sold Indian point and received approval from the NRC to sell Palisades, which is our last remaining EWC nuclear plants.
We expect the sale to be completed around mid year.
We made great progress in our diversity inclusion and belonging initiatives, including creating the diversity and workforce strategies organization.
This team led by <unk> Brown is expanding our workforce development efforts in developing new standards for hiring.
We concluded 2021 with gains in both female and diverse representation towards our goal of reflecting the rich diversity at the communities in which we serve.
Consistent with our progress we received many awards and recognition from multiple aspects of our business, including environmental leadership and responsibility.
Storm response, social responsibility corporate citizenship economic development and workplace excellence.
Operationally, we improved distribution reliability in 2021.
For transmission, Here's a hard work strategic capital investment led to system improvements.
That team achieved its best reliability performance and more than 20 years.
We wrapped up our AI initiatives with more than 3 million meters online.
These advanced meters allows our customers to better understand and control energy usage to achieve their affordability goals.
<unk> meters also represented foundational component.
Other customer and grid technology investments.
Further improve service reliability.
Through continued focus on improved operations Grand Gulf achieved its highest ever generation output in 2021.
In response to the historic damage caused by Hurricane Ida we deployed the largest restoration workforce in our history.
Historic presented unique challenges and we came up with innovative solutions to restore power and help our customers and communities recover on a timely basis.
Portable generators for our key businesses and community services.
So shared materials and supplies from non traditional sources.
For example.
Used pipe from the Keystone pipeline to strengthen the foundation of new distribution structures and areas with soft soil conditions.
Financially our adjusted earnings results were in the top half of our guidance range we.
We maintained solid liquidity throughout the year.
Between driving business risk improvements and progress on our ATM program, we reduced our remaining equity needs through 2024% to $700 million roughly one fourth of what we communicated at our analyst day in 2020.
Made significant progress in storm costs and balance sheet recovery.
We expect to receive more than $3 billion of securitization proceeds in the coming months, which includes a $1 billion down payment toward items costs.
With an uncontested settlement at Louisiana and that case is on the agenda for today's <unk>.
Entire entergy team proved once again to be highly resilient under challenging circumstances and I cannot thank them enough.
We also know that the key to continuing to achieve outcomes into the future is to ensure we are working for all of our stakeholders customers employees communities and owners.
We are committed to achieving meaningful outcomes for each this holistic approach will drive a vibrant sustainable business for years to come.
Our three year $12 billion capital plan will continue to benefit customers with improved reliability resilience customer experience and economic development.
Our plan will also support our commitment to reduce carbon emissions.
These customer centric investments combined with our growth forecast and regulatory mechanisms support 5% to 7% growth in adjusted EPS and a strong credit profile.
Roughly one third of the capital Good tour generation.
In addition to maintaining our highly efficient gas fleet. This capital will continue to modernize and ensure the longevity of our emission free nuclear fleet.
In the planning period, we will increase our renewable portfolio to more than two gigawatts.
That's a 300% growth in renewables.
And that trend will not only continue but accelerate beyond 2024 with plans for 11 Gigawatts in service by the end of 2013.
With this plan, we expect to achieve our 50% carbon intensity reduction goal.
Several years earlier than our 2030 target.
Additionally, our generation capital plan includes the initial portions of the investment in the Orange County Advanced power station with planned hydrogen capability, which is expected to come online in 2026.
As we've discussed our region has tremendous advantages in both hydrogen and carbon capture.
Our distribution utility support capital plan totaled $5 8 billion.
<unk> is designed to deliver improved reliability resilience and customer experience through projects focused focused on asset renewals and enhancements enriched development.
We will also ensure the greatest ready for new customer connections.
Our transmission plan is $2 3 billion and will drive reliability and resilience, while also supporting renewables expansion.
Projects will focus on asset renewal and enhancements congestion relief and new customer interconnections.
We have clear line of sight to the base plan.
But our intention is to do even better.
Our future investment profile, we will increasingly be driven by meeting evolving customer needs.
The two most significant areas of focus for our customers in the coming years, our resilience and de carbonization.
We have invested significantly in resilience for years.
But with the potential for increasing frequency and intensity of weather events.
It's time to review the speed with which we will make those investments.
We have preliminarily identified between $5 billion to $15 billion.
Resilience investments that could be accelerated which will help mitigate future storm damage and costs.
Over the coming months, we'll map out what makes sense for our customers with a goal to share this information with our regulators.
Initially through technical conferences this spring.
Subsequently through filings targeted for late summer.
So that we can with their support proceed to accelerate our resilient investment.
Our customers customers have aggressive decarbonization objectives.
We're doing our part today with one of the cleanest large scale generating fleets in the country.
And as I have previously mentioned the continued operation of our large nuclear fleet and the addition of significant renewable capacity will allow us to further support their decarbonization goals to reduce scope two emissions.
We are working to provide our customers with the products they need such as green tariffs so that they can meet their environmental objectives.
By meeting their clean energy needs, we can further accelerate our renewables deployment.
But a reduction in scope two emissions will not be enough for many of our customers. Some are also looking for ways to reduce their scope one emissions.
Electrification is an efficient way to lower those nations.
Given the size of our industrial base as well as their emissions levels helped.
Helping our customers reduce their carbon footprint presents an exceptional opportunity for Andrew.
This is true for new and expansion customers like U S steel and separate who recently announced facility additions with electrified processes that will drive significant new sales.
These two customers alone.
Could add 850 megawatts of new load.
Which represents nearly 2000 megawatts of renewable capacity, yes, the new sales are supplied with 100% Green energy.
It is also true for existing customers, who need to decarbonize their processes to meet their objectives.
Talks about <unk>, we believe the addressable market could be as much as 30 terawatt hours of additional clean energy by 2030.
Understanding the importance of renewables and attracting new jobs Entergy, Mississippi developed strategy called edge economic development with Green energy.
Mississippian edge in recruiting industry to the state.
Entergy, Mississippi is making its largest ever commitment to renewable resources with plans to replace aging natural gas plants with 1000 megawatts of renewable energy over the next five years.
The plan has drawn praise and support from the Governor and the state's public service commissioners.
We continue to work with our customers to determine the size and pace of their needs.
We will ensure that our resource plans and financial forecasts reflect the latest customer insights and we'll keep you updated along the way.
This is an exciting opportunity for us and one that is unique to entergy.
Okay.
2021 was another successful year for Entergy and benefited from the resilience we've built into our business.
We delivered on our commitments, including steady predictable growth.
Solid plan with significant certainty over the next three years.
And our base plan other significant opportunities in renewable generation clean electrification and resiliency acceleration well served at a minimum.
To extend our runway of growth.
This growth will deliver many benefits for all of entergy stakeholders, which will ensure the sustainability of our business for decades to come.
Before I turn it over to drew I'm excited to announce that we will host our analyst day on June 16th in New York City.
We will continue the conversation on the significant opportunities that we see ahead.
Give you a view of our five year outlook, so stay tuned for more details.
I'll now turn the call over to drew who will review our financial results and our outlook.
Thank you Leah good morning, everyone.
As we have said today, we reported strong 2021 results in the top half of our guidance range.
We executed on key deliverables throughout the year and our results are a validation of the resilience we've built into our business.
Confident that we will continue to deliver on our commitments and we are initiating our 2022 guidance and affirming and longer term.
23% and 2024 outlets.
I'll begin by discussing our results for 2021, and then provide an overview of the key business drivers for 2022.
Starting on slide six.
Entergy adjusted EPS for 2021 was $6 two.
36% higher than 2020.
Turning to slide seven our earnings growth was driven by investments across our operating companies that benefit customers through improved resilience reliability and operational efficiency.
Weather adjusted billed retail sales growth was 2% for the year as sales rebounded from COVID-19 impacts.
Industrial sales were strong at around 6% higher than 2020.
We saw continued growth from new and expansion customers, which helps keep rates low.
Higher than expected demand from cogeneration customers.
Weather effect on billed sales reduced our earnings by <unk> <unk> per share for the year.
Our December temperatures were at record highs and much of those sales are not yet filled before the year end.
When you take into account the negative weather impact for the year with more significant at 11.
Starting with first quarter 2022 results, we will use our AMIA infrastructure to update our weather estimates to be based on the calendar view versus the billing cycle.
To help you.
Of our webcast presentation had updated 2021 estimated weather effects by quarter, which reflects the new methodology.
Coming back to the drivers for 2021, our utility O&M returned to more normal levels. Following last year's significant reductions from our flex spending program.
Used to mitigate the impact of lower revenues from COVID-19.
We also saw higher depreciation and interest which were largely the result of customer centric investments.
The result of EWC or are summarized on slide eight and reflect the continued wind down of that business.
We expect to close on the pilot phase III by the middle of 'twenty two.
Which will complete our exit the merchant business.
On slide nine operating cash flow for the year was $2 3 billion slightly lower than last year non capital storm costs were a large driver at $220 million.
Increased fuel and purchase power payments income tax payments and lower EWC revenues also contributed to the decrease of higher utility revenue provided a partial offset.
Moving to slide 10, we continue to expect to achieve credit metrics that meet or exceed rating agency expectations by the end of 2022.
Solid results with business de risking efforts reflected in Moody's upgraded Entergy, Texas long term issuer and bond ratings on January 28.
This upgrade recognizes the constructive regulation over the past several years, including riders and responsive storm cost recovery.
Entergy, Texas to earn a reasonable return on equity.
The improved credit rating allows the company to attract capital at a lower cost which benefit customers.
At the same time, Moody's moved Entergy, Arkansas, and Entergy, Mississippi to positive outlook, while also siding constructive regulatory factors.
Take a minute to provide an update on the excellent progress we've made with storm cost recovery.
Entergy, Texas has received approval from both the storm cost termination and financing order.
We expect to receive securitization proceeds in March or April .
And in Louisiana, we have submitted a unanimous settlement of the 220.
2020 storm proceeding which includes support for an additional $1 billion as an early prepayment.
Hurricane Ida cost recovery.
The matters on the agenda for todays Louisiana Commission meeting.
Assuming the <unk> decide the matter today.
We expect to issue the securitization bonds before storm season.
We have also refined our estimate for hurricane item and now expect the cost to be $2 7 billion.
Slightly above our original expectation due to additional resilience and hardy investments as well as higher resource costs.
We are completing storm invoice processing Entergy, Louisiana is on track to submit its cost recovery filing in April .
Good Bye Entergy, New Orleans around mid year.
Our goal remains to receive the balance Entergy Louisiana's hurricane Isaac securitization proceeds by the end of this year pending Louisiana commissions procedural schedule for the case.
Another area, we have successfully reduced business risks as our pension obligation.
In 2021, our funded status improved by approximately $900 million or 38% as a result of our increased contributions and actions to accelerate the reduction of a liability over the last several years.
In addition, slightly higher interest rates and strong pension asset returns in 2021 contributed to improvement.
We've also made progress against our near term growth equity needs as you can see on slide left.
In 2021 utilize our aftermarket equity program sold close to $500 million common equity.
The decrease in our pension deficit further improves our cash flow metric, we reduced our remaining equity need by an additional $300 million.
As of today, our many growth equity requirement through 2024 stands at $700 million.
Roughly one fourth of the original expectation.
Looking ahead slide 12 shows that the fundamentals of our industrial customers remained robust.
For commodity spreads remains supportive of continued growth and expansion.
The fourth sector as shown on the slide represent nearly half of our industrial sales as you can see the economic indicators remain.
Near multi year highs in our industrial base continues to be resilient and competitively advantaged.
Our adjusted EPS guidance and outlook shown on slide 13 remain unchanged our.
Our 2022, adjusted EPS guidance range of $6 15.
The $6 45 for the midpoint of $6 30.
Our plant supports steady predictable, 5% to 7% annual growth.
We expect to continue our dividend growth commensurate with our adjusted EPS growth.
The key drivers for 2022 guidance highlighted on slide 14 are straightforward and in line with what you would expect.
Starting with the top line, we will see revenue growth result, as a result of the customer centric investments, we've made as well as decreases in depreciation and interest expense associated with the new assets.
We also expected to increase in retail sales volume of one 8% on a weather adjusted basis.
This reflects increases in commercial and industrial sales and slight decline in residential sales.
Consistent with our disclosures, we anticipate an increase in other O&M due to typical drivers computing inflation.
We also have continuous improvement efforts to achieve O&M efficiency and flex tools that help mitigate changes during the year.
The appendix of the webcast presentation contains additional detail on the specific drivers, including quarterly consideration and earnings sensitivities.
As Leo mentioned 2021 was another successful year for our company.
We delivered results at the top end of our guidance range, Despite significant storm disruption.
We have strong fundamentals that underline our plan, which support steady predictable growth working to do even better.
As Leo mentioned Entergy has a unique and significant opportunity ahead, we're focused on translating that opportunity into a reality for our customers our employees our communities and our owners. We look forward to talking more about these opportunities for you know over the coming months and at our analyst day in June .
And now the <unk> team is available to answer your question.
Thank you.
As a reminder to ask a question you need to press star one on your telephone to withdraw your question. Please press the pound key we ask that you please limit.
Yourself to two questions.
Standby as we compile the Q&A roster.
Okay.
Our first question comes from Shah <unk> of Guggenheim Partners. Your line is open.
Hi, Good morning, Leon team, it's actually Constantine here for Shar, Congrats on a great quarter and a close out to the year.
I appreciate the comments on potential upsides from resilient to spending in the prepared remarks, I believe Mississippi has received an independent consultant recommendation on resiliency do you have any early indications on what the governing factors are on including some of the spending.
Is it bills regulatory construct findings needs many any color on the early discussions that you may have.
Yes. This is rod good morning, I think the the early discussions are are going to be focused.
On the state by state cost benefit analysis, if you think about our desire to accelerate resiliency Lee alluded to it you've got four dimensions that we talked about one of them being storm.
The frequency and duration.
And the location.
The early stages right now.
Statistical analysis around various scenarios each of those scenarios is going to play out differently in each of our jurisdictions. We think the lion's share of that work as you might expect this is going to show up.
Yes.
That's the subject of the technical conference when we kind of zero in on.
On the scenarios and the claiming assumptions, where the regulatory along with the customers would be in a better position to make a decision on what direction. They want to go there.
But as Leo alluded to that the technical conferences the freedom.
To the filings later in the year, when we start to to actually show public.
What we have to believe in order to.
Specific acceleration plan in place new once your speaker state by state.
Great that's helpful. But it's early in the process, which is why you're.
You're hearing us framing it up in general terms.
Okay. That's helpful color and just with the FEMA applications for resiliency funding of $450 million does that kind of play a factor in how those plans get developed and are those projects included in the Capex plan or would you kind of fund those projects yourself with the FEMA applications don't go through.
As we stated before.
Going to come from the fed helped to offset.
<unk> be borne by customers and so we're going to remain actively involved.
Ensuring we could we could maximize whatever input defense might be able to provide that said, we still have to go forward.
With our regulators assuming.
The Feds Jones.
Don't contribute whether it's offsetting existing storm costs or are putting forth.
Federal funds toward future spend but our plans are assuming from a scenario planning perspective.
Both dynamics, but its not its not depended upon.
Okay, that's great color and just a quick follow up on the equity needs and kudos to the whole team for materially kind of mitigating the need from the analyst day curious on your thoughts on the timing for the remaining $700 million in plan is there a threshold or event that could accelerate or do you have some cushion to differ given.
The progress made in 'twenty, one maybe a continuation of the ATM at a modest level.
Yes. This is this is drew.
We are still mindful that we'd like to get this done.
And so we're continuing to work through with the ATM that we put it we put in place before.
Youll continue to see us use that.
And we could knocked us out fairly quickly with that framework will be mindful of any other opportunities.
The right market conditions come along that.
How us to go ahead and finish it off through a block.
So we are paying close attention to that but as you can tell the number has gotten much smaller.
And so the end of sort of insight for us overall.
Thanks, that's very helpful and thank you for taking the questions and congrats on a solid 21.
Thanks Scott.
Thank you.
Okay next up we have underlying Jeremy Tonet of Jpmorgan. Your line is open.
Hi, good morning.
Good morning, Jeremy.
Just wanted to start on load growth if I could just if you could provide a little bit more detail on the significant growth on the industrial side you provided some commentary there on the size, but just wondering how you see that trending I guess relative to pre pandemic levels, and I guess expectations to kind of exceed that.
And then you talked a bit about green demand just wondering if you could update us a little bit more on where does the green tariff demand stand now across this customer base versus where it was 12 months ago, and how you see that kind of evolving over time.
Alright.
So just drew I'll take the first piece on the load growth and I'll, let Ron talk about the green tariffs.
So I mean overall.
Our load growth for the industrial side continues to be robust with through some of the drivers from our main industries in my prepared remarks, those are really good places.
And we do with the announcements that we talked about with U S steel at Sempra, and we are continuing to see demand, but the nature of it is evolving.
And you see that in nuts and.
What's happening there it'd be.
Those customers are looking for.
Bleed green options at low cost and and we are well situated for that and as a result.
<unk> sort of R. R.
Opportunity from a generation perspective, a lot of the other fundamentals that we've had a longer stood their proximity to the Gulf coast proximity to the Mississippi River.
And available workforce support communities all of that is still there.
It continues to attract.
Investments upfront from our customers and for others from outside the area today. So.
Relative to the pre pandemic I would say that's pretty good that post pandemic, we're seeing that shift to.
Wanting that clean.
Electrification opportunity and that is yes.
What we are seeing this year as you go into 'twenty two it's.
A little bit lower but as you look out to.
24, and beyond we certainly expect it to continue to ramp up.
On that clean electrification opportunity.
I'll simply add Leo alluded to to 30 Terawatt hours.
Of an addressable market through 2030, and the efforts that we've taken internally to engage differently with those customers to kind of identify how this demand my might play out.
We saw with U S steel and Zimbra.
We think underscores the thesis that the opportunity for growth is there we will share.
More details.
About how we see the next five years playing out at analyst day.
But the early indicators are that.
We're pretty confident that our our industrial customers in particular, and we're seeing it kind of look down into the smaller commercial commercial sector.
They are they've already made public their plans to reduce their carbon emissions and we think we have a unique opportunity.
Play a role in helping them, helping them get there then that does.
Foreshadow for Ross, a greater demand for our <unk>.
<unk> products also underscoring as Leo alluded to in his comments the significance of envelope.
Being an efficient gas generation.
As well as our nuclear fleet not to mention the up to 11 2034.
So but more to come at the analyst day, but so far early indications are looking really good for our ability to help our customers meet their sustainability objectives.
That's helpful. Thanks for that and kind of range.
Great.
<unk> okay.
That's helpful. Thanks for that and maybe picking up on that point there without front running the analyst day are there any broad strokes that you could provide for us as far as themes or other topics.
We might expect at the analyst day update wise.
But I think as I've mentioned, Jeremy we're going to go out.
A couple of extra years as we always do at analyst day.
And those opportunities that rod talked value and if you think about USD.
Sempra for example, misery 24 in 2017.
Such statements.
So.
Acceleration really picks up as you get out kind of the 24 and beyond timeframe. So I think that will be the as far as the major theme will talk a little bit about what we what we may be seeing in that regard.
So more details.
Hello.
Okay.
One moment please.
You mean on the line the conference will resume shortly.
We apologize.
Yes.
The speakers have returned.
Alright, so I don't know if you want to respond.
I don't know if <unk> got the last answer I know Jeremy you had asked about the analyst day.
And I was mentioning that will go a couple years out farther than 2024.
Current outlook.
And that will be.
Because what we're starting to see from this electrification opportunities in these growth opportunities.
That's about the type of things can start to show up.
Is 2024 and beyond.
Think about USTR sempra those two announcements those are <unk>.
2024, and 2027 in service dates for those facilities.
The opportunity that we're talking about does it start to show up really outside the balance of the current cap.
Capital plan.
So that will be the probably the biggest.
Pieces that we'll be talking about.
Got it that's helpful and just one more if I could.
With regards to Grand golf.
Given stronger.
<unk> operations in 2021, just wondering if you could update us I guess, how things are looking right now operations wise in 'twenty two expectations and has this kind of improved performance in really kind of coming through when when needed improved stakeholder conversations just wondering if you could provide any update there.
Well, Greg Goff has improved operations as I mentioned in my prepared remarks.
Highest generation output in 2021.
And it's our expectation to continue to have that type of performance going into the future all the better.
As we continue to through the outages upgrade the equipment associated with the facility.
Our nuclear plants are going to be very very important.
To the economic development.
Of our jurisdictions.
Got it.
As we talk about electrification I think one thing that goes unnoticed is.
As the already.
The nature of our fleet.
As one of the cleanest generating fleets in the country with some of the lowest rates in the country.
Some of these de carbonization objectives can be met by electrifying processes, just using the grid power that we have today.
Where we build out the renewables.
Because it already meet state scope two needs some of our customers have.
The objectives of the majority of our customers are de carbonization.
So we have a lot of dialogue with them about the nuclear fleet being an important part of that de carbonization.
So I think.
Yes.
The dialogue around nuclear has changed significantly in terms of its importance in the future of the economy of the states in which we operate.
So so it's a <unk>.
Holistic approach to an important part of now the reliability of the system.
But.
Staying ability of the system.
And as more and more customers demand carbon free energy that follows their load.
We're going to be an advantage.
The jurisdictions that have nuclear power.
Got it actually one last one if I could just any updated thoughts that you have on.
Advanced nuclear small modular reactors in.
If you think that this could start to enter.
The entergy plans towards the end of decade here.
Certainly we are we have folks who are following the development of all different kinds of technologies in the nuclear space.
And should we get to a point where were some form of <unk>.
Economically viable.
We'd certainly make it part of the mix.
As I mentioned the nuclear de Carbonization is what everybody is after.
To date most.
Reliable way to make a lot of energy without carbon emitting carbon is through nuclear power. So we're following those.
Those developments across the board to the extent they become economically viable we would certainly pursue it.
And as history has proven our jurisdictions are typically open to the development of new assets to create jobs.
<unk> intensity.
Do you really benefit economic development so.
Too early to say how quickly those will become part of the resource mix.
Certainly there is a lot of development left to be done, but given the focus on carbon reduction people are spending a lot of time and effort has just the federal government on making sure that we're supporting that sorting R&D.
Got it.
Very helpful I'll leave it there thank you.
Thank you Jeremy.
Okay.
Thank you.
And next we have underlying Michael <unk> of Goldman Sachs. Your line is open.
Hey, guys. Thank you for taking my question.
I actually have a couple in there kind of unrelated to each other first of all on the Orange County project.
It seems like it's a long construction timeframe for years.
Brian If you get approval in May June timeframe, but in service now until May of 'twenty six.
Is that due to the hydrogen capability being added or or.
Some other driver normally combined cycles, a little bit quicker than that.
No. There is nothing really I mean by the time, we get the regulatory approval will get into the process.
Little bit more work done at this stage on the hydrogen side, but it's not a significant cost driver or anything like that at these early stages to get to the 30% blended capability.
Now the ordinary it's big it's a big plant.
Got it.
Michael.
Our history of construction Gtt's would come in underneath the expected timeline pretty much every instance.
I wouldn't expect it to be and then June 26, unless there was some other kind of weather related issue or something else going on.
Got it Okay, and then an unrelated topic.
The FERC put out its policy statement about gas infrastructure projects.
<unk> emissions.
And then obviously matters to you youre not building pipelines of material size at all or anything but there are lots of companies in your service territory, who are major customers.
Either or trying to build new pipelines that we're trying to build new LNG facilities or other pet chem related to energy related infrastructure.
Just curious.
How do you see this process changing the permitting for new gas infrastructure and what that means for your Louisiana, and Texas service territory is longer term.
Yes.
Yes, Michael.
It's rod as you might imagine.
Sure.
We are closely aligned with our our industrial customer base as <unk> alluded to in terms of what it might have been four.
For the future.
It fits into our point of view that perhaps this might be a catalyst for the acceleration of the carbonization efforts.
All of which fuels our point of view around are arguably to help them achieve.
<unk> achieved the objectives, whether it's through the Duke spoke to.
Our resources from electrical supply or any any opportunity we have to electrify their scope, one our processes, but with just extrapolating from that FERC.
From the FERC ruling for raws were viewing it through the lens of what what's the implication for the customers.
Faster.
As a condition of permitting.
To take advantage of the other.
Marketing space locating expanding.
His territory. So it is unclear how it will ultimately play out but as you might imagine we are giving for them.
Due to how that applies to other.
Other potential customers like Super most recently.
Because they're working through their permitting process and we are we are stakeholders in those.
Both.
Proceedings for that group.
Got it thank you Brian much appreciate it guys.
Thanks, Michael.
Thank you.
And next on the line, we have Jonathan Arnold of vertical research. Your line is open.
Hi, good morning, guys.
Good morning, Jonathan.
Just a quick one on longer term financing.
Drew I think you sort of talked about being done once you've you've done the 'twenty two to 'twenty four reduced equity.
Right.
<unk>.
How do you think about sort of post 'twenty four period is something sort of similar to the run rate you've effectively been doing here, a sensible assumption or.
Could you be sort of out of the capital raise.
Business for a few years, but you've been in the past.
That's a good question, Jonathan obviously, you've talked a lot about that.
Types of financing available to us.
What what would be good in certain situations.
Yes.
The financing with the equity capital markets is useful because it gives you a firm idea of what youre going to get and it's.
Illiquid markets and you can close quickly.
And so that's what we've been doing here recently, because we have very near term needs as.
And if you are talking about needs out beyond 2024.
There are different options that become available because it is such a long term thinking.
And so yes.
It's not just capital markets some of the other things that are out there that.
We've talked about before.
Might be available to you from a.
A strategic perspective.
Capital markets perspective, but.
But that's longer term.
That's not anything that you would be thinking about necessarily right. This minute, but as you look out beyond our horizon period. There are other options available to you.
And just one.
Alright.
Great.
The $300 million also you did under the ATM with not yet settled.
Those chosen not yet in the share count correct.
That's correct.
Okay.
Thank you and then just on one other thing.
Can you remind us or maybe tell us what went on with the Liberty County Solar project what are there any lessons learned around that.
Outcome next time around or just some reflections that.
Yes. This is fraud Liberty County project.
Was pooled.
Not because the.
The commission didn't recognize the benefits of.
The actual project.
<unk> again was unique delivery county had more to do with where the Texas Commission was.
In terms of how they view the Liberty County project and its implications inside of <unk>.
And so I don't want to I don't want to send a signal.
That that there was anything necessarily untoward with the project we pulled it because we wanted to come back to.
Two the commission one when they actually have full commission I will share with you the lack of a full commission with.
With also influential and they are raising.
Two to approve the.
Approved the deal and so.
It's a short it was a short time timing play for US we have greater needs for capital and we were also recognizing that there was a robust response to.
Two additional <unk>.
Rfps and decided to pull it.
But it does not in any way our belief or in our view the Texas staff belief in the viability of those projects. So we expect to come back.
With more but I did want don't want you to over read anything too do.
Do you expect to come back with that particular project.
Thanks.
Ill.
The timing of that particular, one there is going to be there might be more and more to come there, but there is a.
There is more than a robust opportunity for us too.
To fill our needs with your other projects.
I won't give any signaling to that specific one but the pipeline.
Is quite robust great. Thank you Rob.
Thank you.
And next on the line, we have Paul Zimbardo of Bank of America. Your line is open.
Hi, good morning.
Okay understood.
I wanted to follow up on some of the potential storm hardening acceleration when you talked about some of those data points, leading up to the analyst day should.
Should we think of that as purely incremental capital or could that kind of mitigate some of the capital already in the plan. If you don't need to do some other work around storm hardening.
It's really.
Acceleration of things that we identified could be done so.
So for.
For example, in our current and our current three year outlook.
<unk>.
Two $7 billion T&D investments that you've been considering could consider resilience.
Investments.
$1 7 billion of that T space about $1 billion.
In the <unk> space.
We've been doing resilience spending.
And a combination of new projects that we do and then we do storm hardening after the fact.
When we're repairing after as smart as well to the new standards.
What we'd be looking at with the resilience spend that we put out is our.
There are things, we can do faster.
Then they would've otherwise been on schedule. So it would be incremental timeframes they would be.
Post if that makes sense as opposed to being done five years later.
Or something like that if that makes sense Paul.
Yes, it does not thats clear thank you.
And then the other question I had was just given some of the broad inflationary pressures. How are you. How are you thinking in comfort level about our ability to execute in Arkansas relative to that 4% rate cap.
Yes.
This drew I'll start maybe Rob can add to it.
Obviously, and we're not immune from whatever inflation issues are out there.
So we're monitoring it closely.
Yes, there is different pieces to it there's the fuel piece.
Which gets collected through a separate fueled rider.
In Arkansas.
And that might move to the 4% cap up a little bit.
But it's not going to hinder our investment there.
On the O&M side, we haven't seen the kind of pressures that we've been hearing about seeing in other sectors.
That doesn't mean that we haven't had some we have had some dealing with it on more of a spot basis.
And <unk>.
Ramping up our continuous improvement to help manage against the potential for acceleration of inflation.
More broadly in our business.
And then on the capital side, we are seeing some pressure on the capital side.
Particularly you've been talking about some of the solar projects.
But.
In the Rfps that we've been conducting recently and that we expect to conduct we're still in the very early innings of our renewal pool.
Investments.
And.
While we see some pressure on some of the projects that we've already have sort of underway. The bulk of it has to come and all of those expectations already has built in.
Understanding of the inflation environment.
And the supply chain.
Dealing with and everything else and those projects are still very robust.
They have strong npv's.
The customer and so we'd expect it to get support from regulators.
Great lenders as well.
And.
That kind of offset with fuel costs and other things, we think will fit into.
The caps in Arkansas in particular.
So.
Right now, we don't see any real challenges.
We're obviously monitoring inflation very closely.
Adjusting our business ramping up continues.
<unk> and Merck to manage it but we don't see anything.
Immediately.
Okay.
Okay. Thank you very much for that.
Thank you.
And also on the line, we have Stephen Byrd of Morgan Stanley . Your line is open hi.
Hey, good morning.
Good morning.
I wanted to follow up on Jeremy's question is just on nuclear operations and.
Looks like there's been good improvement there and just wondering if you could speak to just dialogue with the NRC youre not on <unk> four and it looks like operations are improving but is there any additional color you can give in terms of the.
The dialogue with with the NRC on nuclear operations.
Continue to have a lot of dialogue at all levels from the resident and spectrum to the regions to the.
Sure.
Headquarters in Washington.
Certainly.
Around not only operations, but license transfers et cetera. So.
I'd say our relationship with the NRC is strong.
It's open.
With resident inspectors phenomenon site.
I meet with the region on a regular basis.
All of the commissioners when I can.
It had to do a lot of it virtually.
Over the course of the last couple of years, but but.
We continue to have a very robust and open dialogue with the NRC and it's very constructive relationships.
Understood and has there been sort of recognition of the improvements in operational performance of your nuclear fleet.
Yes.
Great and then just one last one for me.
A common question kind of across many utilities, but just given the commodity cost outlook could you just speak a bit to the outlook for customer bill increases, especially residential customer bill increase across your footprint I know residential is a smaller percentage for you all than some utilities, but I am just curious given the commodity outlook, what the sort of.
Bill increase outlook is for you all.
Yes, Thanks drew.
So there's a couple of things going on in our bill and it depends on the jurisdiction in particular.
Yes, I already talked about inflation and what that means going back to the fuel piece of that.
When you're talking about.
Deanna and Texas Winter Storm, Yuri 2021 raised the fuel cost quite a bit in those two jurisdictions for 2021.
Now, let's with fuel curve has come up a bit.
Yes, it's not as much of an impact frankly on customers in those jurisdictions, because we already had some high fuel prices because it's interesting.
And then as you look forward.
Fuel curve is of course a bit.
Backward dated.
And our expectations are.
Typically above the forward curve once you get out a few years and that's still the case, obviously theres a lot of other things besides inflation going on in the price of natural gas today.
But we think we're pretty well situated from a customer perspective there.
And then yes.
Also in Louisiana, and Texas, you have the securitization pieces coming on in the next.
Probably 18 months or will hopefully by the end of the year frankly.
All of a securitization done.
Yes.
So that would probably be by the beginning of next year you'd see the full effects of those that's a pretty big step up.
Particularly in Louisiana.
But once we get past that I think the growth rate in the bills should be.
Fairly reasonable.
We've historically said at or below inflation, obviously that means something different today.
Added below inflation is probably going to still be true based on historical expectation for inflation by less than 3%. So that's what we would expect to see once we got past sort of the securitization.
And the comment.
Higher costs associated with fuel.
Very good thank you very much.
Thanks, Steven Thank you.
Yes.
And our last question comes from the line of Greg <unk> of.
UBS Your line is open.
Thank you.
Assuming all goes well the Louisiana Public Service Commission.
Can you what are the steps.
Sure.
Getting storm recovery.
Youll have theres the securitization that you touched on just a minute ago.
Can you can you walk through the.
The steps and the amounts that you expect to be coming in.
Sure. So in Texas, we've already got the orders and so we are in the process of setting up the actual.
<unk>.
Sourcing.
Amortization funds, which should take place in March or April less I think in the neighborhood of $290 million.
Patients for that.
And then assuming we get the outcome.
The outcome.
With the Hana today, there is approval by the PSC.
And the next few months, we would set up the transaction for that.
It would be around 3.2 ish billion.
<unk> the $1 billion.
Ida.
<unk>.
That's going to be a little bit different than Texas transaction thats going through the state.
I believe we have already approval from the state Bond commission to get that done.
On the first piece.
But we'll be setting that up here.
Hopefully very soon and then of course, the up the remainder of the Ida costs would be hopefully by the end of the year.
Profit.
Okay. Thanks.
Thank you.
Thank you.
And now I will hand, the conference back over to Bill Gabler for closing comments.
Thank you, Chris and thanks to everyone for participating this morning.
Our annual report on Form 10-K is due to the SEC really 25th and provides more details and disclosures about our financial statements.
Events that occur prior to the date of the 10-K filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles.
Also as a reminder, we maintain a web page as part of <unk> Investor Relations website called regulatory and other information, which provides key updates of regulatory proceedings and important milestones on our strategic execution.
While some of this information may be considered material information you should not rely exclusively on this page for all relevant company information and this concludes our call. Thank you very much.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a great day.
Okay.
Yes.
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Yes.
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