Q1 2022 Avangrid Inc Earnings Call
Beginning on slide five.
Now, there's obviously a lot of things going on in the world right now that are impacting the energy markets, including the Russian invasion of Ukraine, We're seeing a number of factors such as record inflation rising commodity prices supply constraints, a tight labor market and an ongoing pandemic, they're all intersect and you can't control most of these factors.
We have been proactively taking steps to mitigate their impact.
To the extent, we can and are.
Cost and cash management and risk mitigation has never.
<unk> been stronger or more important.
Now I'll mid these industry and.
Economy wide challenges I am pleased.
Up 33%.
From the first quarter of 2021, and our adjusted net income was $450 million.
For year and in just two years, our first quarter adjusted net income has grown by approximately.
We're continuing to execute on our strategic plan and as a result, we're affirming our 2022 guidance of $2 20 to $2 38 per share which includes the common shares we issued last year.
Our first quarter results and outlook for the year are driven by.
I have a strong and predictable foundation of our regulated networks business, which in 2021 accounted for approximately 80% of our company's earnings and over the last two years networks has recorded successive double digit growth in net income and adjusted net income as a result.
Results of our ability to drive operational excellence throughout our electric and gas utilities.
Additionally, we are executing on our rate plans and meeting our regulatory commitments to deliver excellent customer service and safe and reliable energy and.
And through technology investments and process improvements, we've made important enhancements to our customer service, resulting in a better experience for our customers and better outcomes for our business, including the successful removal of central Maine, Power's Rcmp's 100 basis point Roe adjustment.
Now, while there's still more work to be done we've made very good progress.
In renewables, we completed the strategic restructuring of our offshore wind joint venture partnership.
This restructuring and allowed us to take full ownership of our largest new England projects and created immediate accretive value through a post tax gain of $181 million, which we booked in the first quarter and as we explained our fourth quarter call. This gain represents the incremental value of future cash.
Cash flows related to our highly competitive initial investment.
I'm also pleased to report that we recently executed Ppas with the Massachusetts utilities for our one two gigawatt Commonwealth Wind project and we will soon submit those contracts through the department of public utilities for final regulatory approval.
We're also advancing the construction of one eight gigawatts of new capacity on and offshore.
Across networks renewables and our corporate functions. Our employee led every day better journey is in its second year and it continues to enhance our operational effectiveness and enabling us to better deliver on our commitments mitigate pressures on our business and create sustainable long term value.
We expect everyday better to generate incremental value of at least $30 million in 2022, with approximately $15 million to $20 million pretax falling to the bottom line.
Now and into the future our ESG Nf focus is essential to our success.
File that were recognized by third parties like Ethisphere for our leadership and corporate governance and our partnership with the Department of Energy's better climate Challenge aims to accelerate innovative solutions for tomorrow, demonstrating our continued commitment to the clean energy transformation.
Often grid aspires to become the leading sustainable energy company in the U S and we will continue to step up to the plate.
Turning to slide six.
Bob and grid is first and foremost a regulated networks company. We are laser focused on prioritizing the basics driving operational excellence safety, improving the customer experience and meeting our regulatory commitments.
A challenging macro environment puts pressure not only on our business, but also on our customers and while rising commodity costs are recoverable through periodic adjustment mechanisms, we still need to do everything we can to help our customers. This includes running our operations as effectively as possible.
We've improved our storm response and rate recovery mechanisms over the last couple of years and this has help remove storm restoration expenses that impacted our earnings in the past.
In addition, we've increased the productivity of our crews by up to 30 minutes per person per day.
We're also improving the customer experience by enhancing digital tools accelerating <unk> adoption and providing self service payment options. These tools help increase customer satisfaction, they reduce cost to customers and they improve cash flow and over the last year, we've increased our E bill enrollment by them.
Approximately 25% to $1 1 million customers.
Through the pandemic and now with current inflation and commodity cost challenges. We've actively worked with state and federal partners to help reduce bill impacts by securing nearly $150 million.
Of direct government assistance in 2021 and 2022.
Identifying eligible customers and ensuring those customers are connected with available funds in.
In addition, we work individually with customers to arrange flexible payment and balanced billing agreements to promote energy efficiency measures and to select a more affordable supply path plan.
As a regulated business, we're working to meet our commitments to regulators by delivering on our existing rate plans in New York and achieving our customer service quality obligations, which is reflected in the Maine Puc's removal of a 100 basis point ROE adjustment at CMT.
We've also been working to resolve open CMP matters at the public Utilities Commission such as closing the original management audit investigation and working through the narrower the narrow review of the planning process.
Looking ahead, we're focused on making the necessary investments to strengthen our system and address safety and reliability needs as well as minimizing the gap between our rate plans.
We plan to file rate cases in all of our utility jurisdictions over the next 12 months to improve the quality of service to our customers and enable a clean energy future and where required we will be releasing notices on these filing shortly.
Let's turn to slide seven.
We remain focused on working toward a successful outcome for both the PNM resources merger in New Mexico, and the <unk> transmission project in Maine, and we are executing on our legal strategies regarding.
Regarding PNM, we filed our notice of appeal in brief at the New Mexico Supreme Court earlier, this year and the briefs may be followed by oral arguments at the new Mexico Supreme Court's discretion.
For any CDC, we are continuing to challenge the unconstitutional referendum that passed last year and hope to get a decision this summer.
We were encouraged by the substantial number of amicus briefs filed on March 30th which demonstrated the support of this project continues to have and we have from a diverse and distinguished set of stakeholders, including leading law professors environmental groups local municipalities policy leaders and former regulators and legislators.
Sure.
Later, we also received additional continued support on April 20th two filings by our main customers are union labor and our partners.
We remain confident in the significant benefits both the PNM merger and any CEC would bring to customers at PNM, our merger would bring at least $300 million of benefits and support new Mexico's clean energy transition.
And in Maine.
<unk> would deliver clean energy cost relief and stability to new England as families continue to shoulder the cost of high energy supply prices, which in many cases have risen 80% to 90% or even more in fact, the delivered cost of energy from <unk> would be about one.
One half the current standard offer rate in May.
Turning now to slide eight we're proud of Avon grids offshore leadership position in new England with all three of our new England projects totaling two four gigawatts owned directly now contracted and our partnership restructuring complete.
Construction of vineyard wind, one is underway and we're tracking well with our key milestones in 2022 and as we've discussed previously basically all of the supply chain elements have been contracted for and vineyard wind one and the projects labor costs are either fixed or capped.
This is the third area, we're being ahead of the curve in offshore wind has paid off as our early execution of Capex contracts for this project has helped US get ahead of the present supply chain and inflation challenges.
In turn we have three key advantages when it comes to addressing these types of challenges for park city wind and Commonwealth wind.
First scale, our strategic decision to advance Commonwealth and Park city as a single two gigawatt project, which would be the largest in new England and one of the largest nationwide will allow us to tap into synergies and unlock greater economies of scale when it comes to permitting and procurement and the project.
As co location within contiguous lease areas will add further efficiencies when we get the construction and operations.
The second key advantages technology.
We're seeing significant advances in turbine technology to drive greater cost efficiency and optimization and project design.
We'll be looking to leverage this improved technology to further enhance our projects.
And lastly timing.
In periods of general market uncertainty flexibility is essential.
The <unk> for these projects are still several years out and therefore, we don't have pressure to immediately execute supply contracts in the current environment. Instead, we have headroom to assess the macro situation engaged with key suppliers and make strategic decisions on when to act.
And because of these factors we're confident in our return estimates for these projects, which we expect to reflect the levered IRR in the low teens.
Now outside of New England. We also continue to make progress on our Kitty Hawk project off the coast of North Carolina and Virginia.
And earlier this month, we filed the construction and operations plan our comp for the projects one seven gigawatt second phase <unk> Kitty Hawk style.
We have an exceptionally strong and growing offshore team at often grid renewables backed by the expertise established track record and the purchasing power of one of the largest utilities in the world <unk> rollout.
<unk> has one three gigawatts of offshore wind currently in operation and projects that were delivered on time and on budget with production exceeding the original expectations.
Offshore wind is a proven technology that has been successfully deployed for years on a global scale and often grid has the right skills and the right support to lead this industry in the U S.
Now, let's turn to our onshore renewables business on slide nine.
Overall, we have approximately one four gigawatts of projects with contracts, including approximately one gigawatt under construction.
All of our planned 2022 projects are on track for this.
This year, our 201 megawatt Golden Hills Wind project is fully constructed and will enter commercial operations very shortly.
In the second quarter, we will begin an energized <unk> for the 194 megawatt <unk> solar project and we expect to reach Cod.
In the third quarter.
In 2023, we expect to add Midland 106 megawatt wind project and.
And Additionally, we have approximately 535 megawatts of D C and in advanced development.
The issues around supply chain potential tariffs and higher labor costs are generally impacting all participants in the market.
And we're working hard with our customers and suppliers to minimize the impact to the extent we can.
When necessary, we will adjust the dates of those impacted projects to reflect the realities in the market.
As we move forward our top priorities on our onshore wind will continue to be operational excellence disciplined growth and risk management.
The supply chain supply chain challenges inflation or potential anti circumvention tariffs are issues generally facing all of us in the industry.
And in some cases, we've heard that some of our competitors are entering into ppas before completing development or arranging for supply.
Now given the current environment, we have been taking what we believe is a much more prudent and disciplined approach to evaluating new ppas and keeping to that strategy will help us mitigate the current market risk, we will not pursue growth at any cost, but instead, we are aligning our PPA execution with supply contracts.
Certainty and working with customers and suppliers on the right projects with the current market conditions. We're also working to address anti circumvention circumvention risk through our trade organizations.
And before I hand, it over to Patricia I'd like to bring you back to what we call Espns and our aspiration to become the leading sustainable energy company in the U S. Because this is really our north star as a company.
We've seen a lot of uncertainty and disruption in the world over the last couple of years, but we're certain our ESG Nf strategy puts us in the right places at the right time to continue to accelerate the clean energy transformation.
Aman grid was the first utility to set a goal for carbon neutrality and even as our peers begin to follow the past path. We set years ago. We remain one of the nation's cleanest utilities with an emissions intensity six five times lower than average, we've said bold goals with committed actions to.
<unk> them and our leadership in this area has been continuously recognized by organizations like Ethisphere, just capital and CNBC.
And most recently <unk> and grid was the inaugural Investor owned utility to join the Department of Energy's better climate Challenge. In addition to our previously announced commitments and as part of this challenge we pledged to reduce scope one and for the first time scope two emissions at least 50 per.
<unk> over the next 10 years and to reduce our facilities carbon footprint at least 20% also by 2032 and.
And through this process, we're going to work alongside the Doa <unk>.
Leveraging the deep technical expertise of its national labs, and a diverse group of participants representing a range of sectors to share and accelerate innovative solutions and successful de carbonization strategies.
We know that an economy wide energy transition will require collective effort and we are committed to providing a leading voice and driving real world action.
And with that I'll turn it over to Patricia to take you through the financial results.
Thank you Dan Good morning, everyone and thank you for joining us today.
Turning to our financial performance and highlights for the first quarter of 2022 on Slide 12, I'm pleased to report that I Havent greatest continuing to achieve its financial expectation.
In the first quarter of 2020 can we produced net income of $445 million or $1 15 per share an increase of 33% from the first quarter of 2021 and 85% from the first quarter of 2020.
Adjusted net income was $450 million or $1 16 per share an increase of 27% from the first quarter of 2021 and 91% from the first quarter of 2020.
In the absence of a restructuring transaction that occurred in the first quarter of 2022, adjusted net income would still be up 14% from the first quarter of 2020.
These results demonstrate strong earnings growth year over year.
And with the foundation for the year, we are affirming our 2022 earnings guidance of $850 million to $920 million and $2 and $22 30 per share.
As you can see on the next slide each of our networks and renewables businesses realized double digit growth in net income and adjusted net income from the first quarter of 2021 for the first quarter of 2020.
For the first quarter of 2022 networks, our largest business segment produced adjusted net income of $254 million, representing growth of $25 million or 11% compared to the first quarter of 2021.
The key driver of our strong networks.
The successful implementation of our rate plans.
Our company, which increased adjusted net income by $16 million for the first quarter of FY 'twenty, two compared to the first quarter of 2021.
Note that we also successfully Mac power customer service metric targets and mean and we were able to lift the 100 basis point kind of effective in February .
The allowed ROE of nine 5%.
While the rate increases were the primary impact and increase in capitalization of personnel expense.
Okay.
And our expense and a lower effective tax rate also had a positive impact in the year over year comparison, offsetting higher depreciation and labor cost primarily related to a great commitment and investment.
The significant quarter over quarter increase in renewables adjusted net income of $88 million to $211 million for the first quarter of 2022 compared to the first quarter of 2021 was largely due to the restructuring of the partnership agreement for our New England onshore wind lease area, which as we discussed on our February earnings call close in January of 2020.
Two.
A gain of $181 million within our expected range of 175 to 200 million was generated from the Remeasurement of our previously held interest in the park city wind in Panama wind projects.
Sale of our interest in lease area of $5 22 above book value, which will be depreciated over 25 years.
In the year over year comparison, the benefit of this restructuring.
Somewhat reduced by the strong performance in the first quarter of 2021 by our wind assets during Texas, formulary, which contributed $83 million.
Additionally, the production of our wind fleet was marginally higher during the first quarter of 2022 with an approximate 7% increase in gigawatt hours across most regions, adding $7 million year over year.
The production included depreciation Germline asset management personnel and other costs.
On the next slide we wanted to highlight that we are closely managing the macroeconomic relevant elements driving the environment that we operate in including impacts of inflation and commodity costs.
On our expenses and our customer bills.
As we highlighted in this presentation and network, while commodity costs are passed through in each of our utilities.
Also supporting customers to educate them on energy efficiency measures and available payment plans and we have directly assistant assisted in facilitating their access to federal and state government.
In renewables, we are securing supply contracts early to mitigate the exposure to project returns from legislation and we are putting each new project with a disciplined focus and not just seeking to add megawatts.
We closely work with active buyers to ensure availability and leveraged the global economies of scale, we have to EBIT.
With respect to financing we have pre funded our equity in 2021, and we have been funding the utility with the issuance of bonds that allow for pricing with the delayed draw feature which effectively security interest rate in advance of the issuance.
Importantly, as we highlighted last quarter, we are continuing with our everyday better program. We started in 2021, which is a value creation in our cost mitigation program in 2021 everyday better delivered $40 million to $50 million in value with approximately $30 million of pre tax earnings contribution and as Dennis noted, we expect to generate an incremental <unk>.
<unk> million dollars of value in 2022, with approximately 15% to $20 million of pre tax earnings.
Last year, we successfully delivering improvements in field productivity and of this program.
30 minutes per day.
Right now those energetic availability and we also.
Executing on cost savings attributed from examples such as the contract claim.
Claims improvement in O&M process improvement.
Moving on to updates to our financing liquidity dividends and credit ratings on the next slide.
We continue to finance our growth.
Cost effectively with our access to diverse <unk> financial resources and January United Illuminating close underfunding of our $150 million Green bond that was priced in 2021 at a fixed interest rate of two 5%.
Including all of the ovens with Green bonds issued at the parent and the utility grid.
Currently ranks as the third utility and outstanding Green and sustainable financing in the U S.
Nice said recently reissued at 67 million tax exempt bonds, which closed in April at a yield of three 3%, which we estimate to be about 40 basis points below the benchmark for tactical bond.
And I'm also excited to report that vineyard wind one financial close with was completed in 2021, which is another award for North American renewables deal of the year awarded by <unk> Global a recognition of our position as the first mover and absolutely financing.
As you know we issued $4 billion in equity in May of 2021, which we have been using to fund the capital investments in our networks and renewables businesses.
As we noted in February our February capital investments for 2021 were $3 3 billion and we expect similar spend in 2022.
At the end of the first quarter, we had approximately $650 million of cash, which along with our ongoing cash from operations debt at the utility level ex <unk>.
<unk> financing at renewables and our 2 billion commercial paper program.
We will continue to fund investments and dividends and the remainder of the year.
With our predominantly regulated business mix access to multiple sources of funding strong liquidity profile and the backing of our parent we are committed to maintaining solid investment grade ratings at the oven grade level. Our ratings are all on stable outlook and at the utility level. Moody's recently increased <unk> outlook to positive and affirmed cmp's.
Ratings with a stable outlook and S&P maintained its ratings and outlook on UI, P&G, SCG and Berkshire gas.
Finally, our dividend policy remains unchanged targeting a payout of 65% to 75% and our board recently declared a quarterly dividend of <unk> 44 per share payable on July <unk>.
In summary, we've had a strong start to the year with our financial results, reflecting the execution of our rate plans in our core network business and the value generated by the Optionality in our renewables business. We are closely monitoring the macro environment and the impact to our company and the industry and have taken actions to mitigate risk where possible to support.
Our customers to drive cost out of the business and to maintain a disciplined and diversified investment strategy. We believe this thoughtful process complements our strategic plan supports our aspirations to become the leading sustainable energy company.
Thank you for joining us today as we update you on our progress executing our plan and.
And before I turn the call back to the operator I just want to thank Dennis Arriola for his service to this company and all of the contributions. He has made this is his last earnings call him and we wish him well.
I'll now hand, the call back to our operator for questions followed by closing remarks from that.
If you'd like to ask a question. Please do so now by pressing star one on your telephone keypad. If you change your mind and wish to withdraw your question from the queue. Please press star followed by Jay.
Turning to ask your question. Please ensure that your device and you'll microphone unleash it nicely.
Our first question comes from Richard <unk> from JP Morgan Richard Your line is open.
Hi, Good morning, Thank you for the time today.
Starting with the renewables comments and.
I guess sort of growth at any cost commentary you offered.
Just thinking about anti circumvention inherited alpine around 2023 projects, where youre, either extra renegotiate ppas or otherwise walk away just trying to think about that relative risk to those projects. Thank you.
Thanks, Richard This is Dennis look I think that as I mentioned in my comments and you guys. Obviously are following this industry wide.
This impacts everybody and so we've been spending a lot of time.
Talking to customers talking to suppliers, making sure everybody is up to speed on what's going on there as I mentioned in my opening comments, we've got approximately 535 megawatts of DC projects that we were looking to do.
Let's start the construction and then potentially bring into.
Onto the portfolio in 2023, depending upon the overall timing, obviously, we're going to have to talk with customers on what happens from the department of Commerce's final investigation I know from discussions that we've had in Washington that the Biden administration is very.
Focused on trying to get this resolved.
As soon as possible because.
Any holdup in a decision is going to impact the President's plan to continue to grow renewable and clean energy here in the United States. So I think theres a lot of interested parties and trying to get this thing resolved as quickly as possible, but I'll ask Jose Antonio to see if he wants to provide a little bit more color on just how we're thinking.
About our customers and those projects. Thank you Denise and thank you for the question Richard well first I would like to reiterate that.
Thanks to our disciplined and prudent way of investing outputs and all the projects with respect to series in 2022, that's not going to experience any delay because of unfavorable convention and this is I think good news of all the projects for 2023, we are expecting conversations with our customers and our suppliers so far the response.
As being very positive and understanding the dynamics of this issue. It's an industry wide issue that is affecting all of us and we have to navigate together and no one is showing.
Any willingness not to do that.
So far as I said the response in defense of going on with employers.
And.
We will see what is the responsible for the department of Commerce.
<unk>.
The claim that was filed our expectation is that they will and resulted in decent selected to video for the industry.
The other thing Richard and we're not going to get into the particulars of every contract and what.
The fees there may be for delays I think it's pretty clear that customers want the power.
Whether you're a commercial industrial customer whether you are a utility.
You want the power you want the clean power as soon as possible and there is cognizant of what's going on in the industry and the potential impact of higher tariffs. So I'd say that everyone's kind of holding hands on this thing trying to.
Waiting for the decision to come from the Department of Commerce, and I'd say, so far we've found.
A very open minded customers that we're working with want to get through this period.
Great Thats very helpful commentary, having efficiency networks.
It looks like the capitalized labor rates are changing I'm curious if you could speak to sort of what's going on there in the backdrop of an existing actually <unk>.
<unk> rate plans right now just any color on the change that'd be helpful.
Yes, I think.
Like most companies we review our capitalization policies on an annual basis to make sure that they are.
There are consistent with the work that's being done and obviously proper from a from a U S. GAAP perspective, but Catherine I don't know if theres anything that you want to add to that.
Extraordinary that that's driving additional capitalization expense sure Dennis and thanks for the question Richard you're right on with respect to.
The comments that you made on our capitalized investment.
<unk>, we're making more investments to comply with the commitments that we made in New York.
Those are capital projects and so it's natural to see our labor and reflect increased capital that we're spending throughout the network.
Got it. Thank you that's helpful and maybe just a final question.
The offshore we gain the.
Taxes on that we get cash taxes on the quarter for the game.
Yes, Thats correct there'll be in the first quarter.
Alright, great.
Hi.
Thanks Richard.
Our next question is from <unk> Kim from Goldman Sachs.
Please go ahead.
Thank you first question just on your slides on considerations for different cost inflation in managing that process. Just could you give us a little bit more color, whether it's on the network side of the business or other renewable segments.
<unk> when you provided us with the guidance for the year on 2022, how much.
Management do you think is necessary to offset.
That's what we're seeing now that's already.
When considered when you gave guidance.
<unk>.
Amounts that may be more impacted going forward.
Yeah, Let me, let me touch on that kind of generally I think that as we put together our original guidance for 2022, we were obviously looking at what was starting to be a much more inflationary environment I think most of us in the industry had already started to experience.
What's going on from a supply chain standpoint, so I don't think anyone's overly surprised there, but if you try to break it up the impacts between our networks business and our renewables business I'd say in our networks business.
We are going out to bid were getting the bids for the contracts that we've made there reflected in.
Sure.
What we're spending and put it on the balance sheet.
I think we're cognizant of the fact that costs are going up but its all falling within the for the most part the ranges that we've given.
So far I mean, Catherine I don't know if you want to share anything else on the network side that you see the inflationary pressures, yes, no I think that's right first of all the commodity prices whether or not that.
Natural gas prices for our gas business or our prices for our customers this or flow through costs.
So any inflationary impacts.
Just a pass through to customers.
With respect to execution of the projects that we have.
Dennis is right within the range of our expectation on our ability to keep those projects I'll also mention that that's exactly why we look at programs like efficiency like everyday pattern that has provided us with opportunities to.
Offset some of the inflationary pressures that we see.
We continue to meet our overall targets with the networks and I think on renewables and Jose Antonio can jump in on this I mean Ford.
For the projects that are under construction here that will reach cod in 2022, we've got the nearly all of the panels and the turbines that we need.
I think like everyone else, we are seeing some pressure from contractors on labor rates and there are some challenges on getting the right people in the places where we need them, but again given.
Given the range that we've given for 2022, it all kind of falls within there. So Jose Antonio I don't know if theres anything else you want to <unk> comment.
The cost point of view of inflation.
<unk> is not keeping us because most of the materials that we use and the construction of that already there. We're already purchases most of all I want to signal here that the patient has a positive side.
50% of our PPA.
With you with inflationary indexes also the Ptc's I'll review up because of inflation.
Even you relay designs will have a larger exposure to merge embraces both admission price, especially notable after your tendency.
To be up so all in all we don't see any concern on a six months getting over that comes in with Dunhill.
And I want to make sure that we clarify with Catherine's comment even though the cost of the commodities are a pass through to customers.
Still focused on what we can do to help our customers reduce their bills and I talked about the fact that we've been able to help a range through light heat funding up to $150 million to help customers reduce their their bills. We're doing what we can from an operational effectiveness standpoint to run our systems more.
More efficient play which reduces costs. This is all about customers.
We know that in these times, our customers are being impacted and we're focused on what we can do to help them.
Okay. That's helpful.
So just my second question is on <unk>.
Balance sheet, and I guess thinking about potentially what happens with PNM next year if it is.
First of all in terms of you guys acquiring it you have $600 million of cash on the books as of the first quarter.
Ben I think whether it's a combination of paying down debt.
Debt or using that for your investments.
Utilizing that PNM acquisition does go through sometime next year, let's say, how do we think about the financing the deal at that point.
Hi, Anthony This is Patricia first of all I guess, Charlie first though we don't have any plans to issue equity in 2022.
And we're actually efficiently deploying the equity that we issued in 2021.
As I mentioned during the prepared remarks.
But I think I'd make it broader than that I mean, not just to fund PNM, but as we look at PNM. Another attractive growth projects that we have from 2003 through 2025, we're going to consider a whole range of funding options. In addition to that we will look at non-GAAP financing alternatives and we talked a couple of times that that could include.
Not only what you would typically consider statistic.
Equities in preferred stock and hybrids and tax equity, but also we're going to look at asset recycling opportunities as we evaluate our onshore and our ocular development pipelines and we create value through monetization and partnerships.
The other thing I would add to Patricia his comment that we saw this in the New York bite auction. There are a lot of players whether they be <unk>.
Operational companies financial companies institutions pension funds that want to be in the renewable space and I think now that we control our own destiny by having 100% of Commonwealth win and Park City and we also obviously have a 100% of Kitty Hawk, which could be up to two five gigawatts.
We have the ability and we.
I talk to people about coming in as partners and we'll consider that and if it makes sense. We will do that at the right time, which will also reduce our overall capital outlays, but as we're looking at onshore we know that theres, others that want to grow in that business as well and if it makes sense to go into partnerships to monetize certain assets.
That may make more that have more value to others than they do to us those are things that we're going to look at so I think I feel like we've got a lot of arrows in the quiver to be able to look at our capital needs for the future.
And then I just wrap got it on highlighting.
PNM.
When we are successful with that that will that project not only are we looking at funding that we have to consider it will contribute positively to our earnings.
Yes.
Alright.
Got it.
It's been a pleasure good luck with the next phase of your career.
Thank you Anza.
Okay.
Our next question comes from Michael Sullivan with Wolfe Research Michael Your line is open.
Hey, good morning.
First question any update.
<unk> you could give on when the timing might look like for our refreshed long term outlet outlook or potential investor day.
Let me take that.
Hi, Michael it's against Patricia.
We're evaluating that right now and I don't have a date for you at this time, but I would focus you on a couple of points that are driving our long term expectation.
First I'd say that too.
To consider we are strong ongoing execution and achievement of our financial.
<unk> results.
As we've demonstrated today, we have 91% increase in our adjusted net income and <unk>. So we have been performing well against the targets that we'd already laid out.
We will continue to manage the network business to achieve success.
Through investments in our <unk>.
Safety reliability, and resiliency and to facilitate connection of renewables to the grid.
We'll be filing rate cases in all of our utilities over the next 12 months and we will continue to drive efficiencies in that business.
And renewables remember we have over 23 gigawatt pipeline and while we are focused on.
Disciplined growth that we have strong prospects for growth.
Growth in that.
Not only onshore for wind and solar but also in offshore.
And then again on any CEC and PNM those projects have obviously shifted.
We still see them as great projects with significant support and we look forward.
Moving forward as both of them.
And we believe that they will successfully contribute to our earnings. So I think those are some of the key things to focus on.
On what how we would look at our long term.
In addition to some of the funding.
Potential in the partnership opportunities and value creation opportunity that we have but other than that we'll let you know that clinically.
The other thing Michael that I would say there is if you look at the opportunities for the company in the future. They're primarily organic there are identifiable we've got the rate cases that were going to be filing as we said and all of our jurisdictions over the next 12 months and I think that with the continued focus.
On increasing the resiliency and reliability in all of our systems and all the states, where we do business I think there's going to be opportunities to two <unk>.
To invest there.
Patricia touch again on PNM in <unk>, we're going to have more information, we believe on any CEC.
This summer.
And based upon our expectations.
That's going to be a project that should get started again here relatively soon.
PNM is it's a company that continues to function well and grow and we're excited about the opportunity to add that to the portfolio and then for the longer term with the restructuring of the partnership.
Offshore we got additional opportunities to continue to grow provides <unk> projects. So I think.
The future looks very bright I think theres going to be more clarity that the company can share here in the coming year on what 2023, and 2000 and beyond 2023 look like.
Okay, great, Thanks, and maybe just going.
The rate cases that youre planning to file.
Could you just give a little more color on.
What's driving that or are certain jurisdictions, requiring a do you need to kind.
Kind of catch up capital recovery.
Any potential rate increases, but we're obviously cognizant of that given what's going on with commodity costs and everything for Kathryn if you want to provide a little bit of color. Yeah, absolutely. So we're focused on making necessary investments to strengthen our systems across all of our jurisdictions.
As Dennis pointed out we need to address safety reliability resiliency.
We're committed to be providing strong customer service and we also Ravi making sure that we're supporting our state clean energy policy all of that requires investment into our system of course, we're always looking to balance those investments with the affordability of our customers and you're absolutely right in pointing out that there has been scrapped.
On a total bill as a result of an increase in commodity prices really proud of the team's work in getting funding into customers' pockets.
Help them with their energy Bill we have worked closely with the state of Maine.
In working with them to get those state.
<unk> dollars into low income customers pockets. We've also been working in New York and they just passed legislation for $250 million to be allocated to customers and we look forward to working with the state and with agencies across the state to be helping our customers.
Alleviate some of the pressure that they're seeing but of course, it always we need to look internally at what we're doing to make sure that we are operating as efficiently as possible and that we're prioritizing our investment.
That need for the system needs to continue with energy clean energy policies with data.