Q4 2021 CMS Energy Corp Earnings Call
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Speaker 2: Good morning everyone and welcome to the CMS MD2041 hearing results.
Hello, everyone and welcome.
Good morning.
On the year end results.
Speaker 3: The early news release issued earlier today and the presentation used in this webcast are available on CMS Energy's website in the investor relations section. This call is being recorded. After the presentation, we will conduct a question and answer session.
Sure.
It's a girl are today.
This webcast are available on <unk> website.
Website.
Relations section.
This call is being recorded.
After the presentation, we will conduct a question and answer session.
Instructions will be provided at that time.
Speaker 3: If at any time during the conference call you need to reach an operator, please press star followed by zero.
Robert <unk> Conference call you need to reach small braver. Please press star followed by zero.
Speaker 3: Just a reminder, there will be a rebroadcast of this conference call beginning today at 12pm Eastern Time and running through February 20th.
So sure of water there will be a rebroadcast of this conference call.
Well, Rob Im wondering through February .
Speaker 3: This presentation is also being webcast and is available on CMS Energy's website in the U.S. relations section.
This part of the answer is also being webcast.
That was available on several milestones as well im.
Sure Relations section.
Speaker 3: At this time, I'd like to turn the call over to Mr. Shri Madhubati, President and Vice President of Finance and Investment Relations. Please go ahead, sir.
At this time I would like to turn the call over to reduce your Remodels what are your treasurer, and Vice President of Finance and Investor Relations. Please go ahead Sir.
Speaker 4: Thank you Rocco. Good morning everyone and thank you for joining us today. With me are Garak Rochow, President and Chief Executive Officer and Reggie Hayes, Executive Vice President and Chief
Thank you Rocco.
Everyone and thank you for joining us today with me are <unk>, President and Chief Executive Officer, Richard Heyse, Executive Vice President and Chief Financial Officer. This presentation contains forward looking statements, which are subject to risks and uncertainties. Please.
Speaker 4: This presentation contains forward-looking statements which are subject to risks and concerns.
Speaker 4: Please refer to our FCC filings for more information regarding the risks and other factors that could cause our actual results to differ materially. This presentation also includes non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted on our website. Now I'll turn the call over to Gary.
Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actual results to differ materially.
Presentation also includes non-GAAP measures reconciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted it on our website now I'll turn the call over to Derek.
Speaker 5: Thank you, Sri, and thank you everyone for joining us today. I'm pleased to report that the team continued to deliver strong performance in 2021, demonstrating consistent results across the triple bottom line for our coworkers, customers, communities, and you, our investors.
Thank you Sherry and thank you everyone for joining us today I'm pleased to report that the team continued to deliver strong performance in 2021, demonstrating consistent results across the triple bottom line for our coworkers customers communities and U R.
Investors.
Speaker 5: Allow me to take a few minutes to share the big wins this team accomplished in 2021.
Allow me to take a few minutes to share the big wins. This team accomplished in 2021.
It is a point of pride that CMS was named the number one utility in the U S.
Forbes for women and for workplace diversity.
Starts with our coworkers.
We know the companies that value and practice diversity equity and inclusion deliver stronger performance or.
Speaker 5: our commitment to people, our co-workers and customers within high gear all year.
Our commitment to people, our coworkers and customers was in high gear all year.
Speaker 5: For our co-workers, we delivered the 11th straight year of first quartile employee engagement.
For our coworkers, we delivered the 11th straight year of first quartile employee engagement.
Speaker 5: For our customers, we delivered first quartile customer experience and launched several programs which support our most vulnerable and prepare all for a cleaner future with EVs and renewable energy generation.
For our customers, we delivered first quartile customer experience and launched several programs, which support our most vulnerable and prepare all for a cleaner future with evs and renewable energy generation.
Speaker 5: This year's highlights include the expansion of our Voluntary Green Pricing Program, which allows for an incremental 1,000 megawatts of old renewables and our Power My Fleet EV program to meet the demand of Michigan businesses, governments and schools as they electrify their fleet.
This year's highlights include the expansion of our voluntary Green pricing program, which will allow us for an incremental 1000 megawatts of owned renewables and our power My fleet EV program to meet the demand of Michigan businesses governments and schools as they electrify their fleet.
Speaker 5: And just this week, we announced, along with General Motors, the plan to power three existing auto plants with 100% clean energy through our Voluntary Green Pricing Program.
And just this week, we announced along with General Motors the plan to power three existing auto plants with 100% clean energy through our voluntary green pricing program.
Speaker 5: And I know, yes, yes I know, all of you want to hear about our IRP.
And I know yes.
Yes, yes, I know all of you want to hear about our IOP.
Speaker 5: Our clean energy plan, also known as our IRP, places us in a solid leadership position on the transformation to clean energy. It has us out of coal by 2025, which achieves a
Our clean energy plan also known as our ERP places us in a solid leadership position on the transformation to clean energy.
It has its out of coal by 2025.
Which achieved 60% carbon emissions reduction.
Speaker 5: I am pleased with the progress we are seeing in the regulatory process.
I am pleased with the progress we are seeing in the regulatory process.
Speaker 5: I look forward to landing the IRP in 2022.
I look forward to landing the AARP in 2022.
Speaker 5: I also want to share the progress we have made with our guests.
I also wanted to share the progress we have made with our gas system.
Speaker 5: Our commitment to be net zero methane by 2030 is industry leading. We are making our gas system safer and cleaner by replacing old mains and services with modern materials. This year we reduced fugitive methane emissions by more than 445 metric tons and executed on our best year ever for main replacement.
Our commitment to be net zero methane by 2030.
Is industry leading.
We are making our gas system safer and cleaner by replacing old mains and services with modern materials.
This year, we reduced usually the methane emissions by more than 445 metric tons.
Our best year ever.
Our main replacement.
Speaker 5: This stand to reduce methane extends beyond our system with exciting new programs, which will make a positive impact on the planet.
This stand.
To reduce methane extends beyond our system with exciting new programs, which will make a positive impact on the planet.
Speaker 5: We recently announced a plan to build and own our first renewable natural gas facility with a Michigan dairy farm, which is included in our pending gas rate case. This facility would be a regulated asset, and the emissions reduction will remove the equivalent of 4,000 gasoline-fueled vehicles from the road annually. Clearly, we're on our way to the second phase of the
We recently announced a plan to build and own our first renewable natural gas facility with the Michigan Dairy farm, which is included in our pending gas rate case.
This facility would be a regulated asset.
And the emissions reduction.
Remove the equivalent of 4000 gasoline fueled vehicles from the road annually.
Clearly, we're on our way to a safe and.
And clean gas system.
Speaker 5: Finally, I want to talk a little bit about Michigan, our home state, our...
Finally, I want to talk a little bit about Michigan, our home state.
Our service territory.
Speaker 5: In both our gas and electric business, we are seeing new service connections up over 2020 and 2019 above three pandemic levels.
And both our gas and electric business, we are seeing new service connections up over 2020, and 2019 book re pandemic levels.
Speaker 5: In fact, we have not seen this level of new electric service connection in the last 10 years.
In fact, we have not seen this level of new electric service connections in the last 10 years.
Speaker 5: We also attracted 105 megawatts of new industrial load to our service territory, which brings with it 4,000 new jobs and more than $1 billion of investment.
We also attracted 105 megawatts of new industrial load to our service territory, which brings with it 4000, new jobs and more than $1 billion of investment.
Speaker 4: And we are expecting even more new load growth in the state. The work we did at the end of the year on two important growth mechanisms further enhance Michigan's competitive position.
And.
We're expecting even more new load growth in the state. The work we did at the end of the year on two important growth mechanisms further enhanced Michigan competitive position.
Speaker 5: we filed an economic development raid in November , which was quickly approved by the Michigan Public Service Commission in December .
We filed an economic development rate in November which was quickly approved by the Michigan Public Service Commission in December .
Speaker 5: We also worked closely with the legislature, business groups, and the governor's office on a package of economic development incentive bills that passed with bipartisan support signed by our governor in December . With these improvements, I expect further announcements this year on several new projects.
We also worked closely with the legislature business groups and the Governor's office on a package economic development incentive bill that passed with bipartisan support signed.
Signed by our Governor in December with these improvement I expect further announcements this year.
Several new projects.
Speaker 5: For you, our investors, and I'm pleased to share we delivered our financial targets with another year of 7% adjusted EPS growth. We continued our long track record of managing costs and keeping prices affordable through the CE way.
For you our investors and I'm pleased to share we delivered our financial targets with another year of 7% adjusted EPS growth.
We continued our long track record of managing costs and keeping prices affordable.
Wei.
Speaker 5: 55 million dollars of cost savings were realized in 2021.
$55 million of cost savings were realized in 2021.
Speaker 5: when I step back and reflect on 2021. It is this strong execution and result that you and we expect. And it meets our commitment, the triple bottom line.
When I step back and reflect on 2021.
It is this strong execution and results.
And we expect.
It meets our commitment to the triple bottom line.
Speaker 5: positioning our business for sustainable long-term growth.
<unk>, our business for sustainable long term growth.
Speaker 5: Strong execution leads to strong results. In 2021 marks another year of premium growth. We delivered adjusted earnings per share of $2.65 in 2021 at the high end of our guidance range and up 7% from 2020. And in January , the board approved an annual dividend increase $1.84 per share.
Strong execution leads to strong results in 2021 marks another year of premium growth.
We delivered adjusted earnings per share of $2 65 in 2021 at the high end of our guidance range and up 11% from 2020.
And in January the board approved an annual dividend increase to $1 84.
Speaker 5: In addition to raising our annual dividend in 2022, I'm pleased to share that we are raising our 2022 adjusted whole year guidance to $2.85 to $2.89 from $2.85 to $2.87 per share.
Per share.
In addition to raising our annual dividend in 2022, I'm pleased to share that we are raising our 2022 adjusted full year guidance.
And 85.
To $2 89.
From $3 85 to $2 87.
Per share.
Speaker 5: I have confidence in our plan for 2022.
I have confidence in our plan for 2022.
Speaker 5: and our longstanding ability to manage the work and deliver industry leading growth.
And our longstanding ability to manage the work and deliver industry leading growth.
Speaker 5: Longer term, we remain committed to growing adjusted EPS for the high end of our 6-8% growth range.
Longer term, we remain committed to growing adjusted EPS for the high end of our six 8% growth range.
Speaker 5: Looking forward, we continue to see long-term dividend growth of 6% to 8% with a targeted payout ratio of about 60%.
Looking forward, we continue to see long term dividend growth of 6% to 8% with a targeted payout ratio of about 60% over time.
Speaker 5: And finally, I'm pleased to share that we have rolled forward our five-year utility customer investment plan, increasing our prior plan by over $1 billion to $14.3 billion through 2026.
And finally I'm pleased to share that we have rolled forward, our five year utility customer investment plan, increasing our prior plan by over $1 billion to $14 3 billion through.
Through 2026.
Speaker 5: On slide five, it's highlighted our new five year, 14.3 billion dollar customer invest.
On slide five we've highlighted our new five year $14 $3 billion customer investment plan. This translate to 7% annual rate base growth and supports the focused areas of our strategy.
Speaker 5: This translates to 7% annual rate-based growth and supports the two key focus areas of our strategy, making our electric and gas systems safer and more reliable and paving the way with clean energy future with net zero carbon and methane emissions.
Making our electric and gas systems safer and more reliable.
And paving the way with clean energy future with net zero carbon and methane emissions.
Speaker 5: You will know that about 40% of our investment mix is aimed at renewable generation, grid modernization, and mean and service replacement on our gas system to support the clean energy transformation.
You will note that about 40% of our investment mix is aimed at renewable generation.
Modernization and maintenance service replacement on our gas system that support clean energy transformation.
Speaker 5: Furthermore, we continue to increase our investments in what our customers count on us or every single day. Safe and reliable electric and natural gas.
Furthermore, we continue to increase our investments in what our customers count on us or every single day safe.
Safe and reliable electric and natural gas system.
Speaker 5: You will also see that we continue to plan conservatively. There is ample upside in projects not factored in this plan, such as our IRP and Voluntary Green Pricing Program.
You will also see that we continue to plan conservatively and have ample upside in projects not factored in this plan.
Such as our ERP.
And voluntary green pricing program.
Speaker 5: We remain focused on the regulatory process as we make investment on behalf of our customers.
We remained focus on the regulatory process as we make investments.
Behalf of our customers.
In December we received an order in our electric rate case.
Speaker 5: It offered several opportunities for us to improve our case process. We are hard at work as we prepare our next case.
It offered several opportunities for us to improve our case process. We are hard at work as we prepare our next take.
Speaker 5: This order did support our plan by maintaining our existing 9.9% ROE, increasing our regulatory equity ratio by 34 bases.
This order did support our plan by maintaining our existing nine 9% Roe.
Increasing our regulatory equity ratio by 34 basis points.
Speaker 5: and approving $54 million in revenue requirements.
In approving $54 million in revenue requirement.
Speaker 5: exclusive of $27 million of lower depreciation approved prior to the order.
<unk> of $27 million of lower depreciation approved prior to the order.
Speaker 5: We expect to file our next electric rate case early this year and anticipate an initial order on our IRP in April in a final order in our gas rate case expected by October . With that, I'm going to pause. at
We expect to file our next electric rate case early this year.
And anticipate an initial order on our IOP in April .
And a final order in our gas rate case is expected by October .
With that.
I will turn the call over to Reggie.
Thank you Derek and good morning, everyone.
Speaker 6: As Garak highlighted, we delivered strong financial performance in 2021 with adjusted net income of $767 million or $2.65 per share.
As Garrett highlighted we delivered strong financial performance in 2021.
With adjusted net income of $767 million or $2 65 per share.
Speaker 6: up 7% year over year off our 2020 results.
Up 7% year over year off our 2020 results.
Speaker 6: I'll note that our Adjusted EPS excludes select non-recurring items, most notably of financial performance of EnterBank, the gain on the stale, and related transaction.
I will note that our adjusted EPS excludes select nonrecurring items, most notably the financial performance of the interbank.
The gain on the sale and related transaction costs.
Speaker 6: all of which are disclosed in the reconciliation schedule in the appendix of this presentation and posted on our website.
All of which are disclosed in the reconciliation schedules in the appendix of this presentation and posted on our website.
Speaker 6: The key drivers of our full year financial performance in 2021 were rate relief, net of investment, coupled with strong volumetric sales in our electric business.
Key drivers of our full year financial performance in 2021, where rate relief net of investments coupled with strong volumetric sales in our electric business.
Speaker 6: These sources of positive variance will personally offset by increased operating and maintenance expenses and support of pre-customer initiatives related to safety, reliability, and decarbonization. And higher service restoration costs from formats.
These sources of positive variance were partially offset by increased operating and maintenance expenses and support key customer initiatives related to safety reliability and de carbonization.
And higher service restoration costs from storm activity.
Speaker 6: To this last point on storms, we saw a record level of storms across Michigan in 2021.
To this last point on storms, we saw record level of storms across Michigan in 2021.
Speaker 6: particularly in the final five months of the year, including December . And we still managed to deliver at the high end of our EPS guidance.
Particularly in the final five months of the year, including December and we still managed to deliver at the high end of our EPS guidance range.
Speaker 6: our ability to withstand such headwinds, quite literally in the case of 2021, and deliver
Our ability to withstand such headwinds quite literally in the case of 2021 and deliver.
Speaker 6: financial results you've come to expect highlights our track record of planning conservatively, managing the work, and relying on the perennial will of our dedicated co-workers.
Our financial results you've come to expect.
Highlights our track record of planning conservatively, managing the work and relying on the perennial will of our dedicated co workers.
Speaker 6: We deliver on the triple bottom line irrespective of the condition.
We deliver on the triple bottom line irrespective of the conditions.
Speaker 6: Moving beyond EPS, on slide 8, you'll note that we networked the vast majority of our key financial objectives for the year.
Moving beyond EPS on slide eight you'll note that we met or exceeded the vast majority of our key financial objectives for the year.
Speaker 6: is worth noting that even with the aforementioned headwinds, we still managed to deliver over $1.8 billion of operating cash flow, which exceeded our plan by over $80 million due to strong working capital management.
It is worth noting that even with the aforementioned headwinds, we still managed to deliver over $1 billion of operating cash flow.
Which exceeded our plan by over $80 million due to strong working capital management.
Speaker 6: The only financial target missed in 2021 was related to our customer investment plan, the utility, which was budgeted for roughly $2.5 billion. And we ended the year just shy of that at $2.3 billion.
The only financial target missed in 2021 was related to our customer investment plan at the utility, which was budgeted for roughly $2 $5 billion and we ended the year just shy of that at $2 3 billion.
Speaker 6: primarily due to the timing of select renewable projects, which were largely pushed into 2022 and 2023.
Primarily due to the timing of select renewable projects, which were largely pushed into 2022 and 2023.
Speaker 6: To close the books on 2021, we successfully completed our financing plan ahead of schedule as noted during our third quarter earnings call, issuing no equity during the year given the interbank failed while maintaining solid investment grade credit match.
To close the books on 2021, we successfully completed our financing plan ahead of schedule as noted during our third quarter earnings call issuing no equity during the year, given the interbank sale, while maintaining solid investment grade credit metrics.
Speaker 6: Moving to our 2022 guidance on slide nine, we are raising our 2022 adjusted earnings guidance to $2.85 to $2.89 per share from $2.85 to $2.87 per share with supplies premium annual growth off our 2021 results as they are highlighted.
Moving to our 2022 guidance on slide nine we are raising our 2022.
Adjusted earnings guidance to $2 85 to.
The $2 89 per share from $2 85 to.
$2 87 per share, which implies premium annual growth off our 2021 results as Derek highlighted.
Speaker 6: As you can see in the segment details, our EPS growth will primarily be driven by the utility as it has the past several years, and we also anticipate a return to normal operations at enterprises, whose financial performance in 2021 was largely impacted by an extended outage at gig late in the fourth quarter.
As you can see in the segment details our EPS growth will primarily be driven by the utility as it has in the past several years.
We also anticipate a return to normal operations enterprises.
<unk> performance in 2021 was largely impacted by an extended outage at dig late in the fourth quarter.
Speaker 6: To elaborate on the glide paths to achieve our 2022 adjusted EPS guidance range, as you'll note on the waterfall chart on slide 10, we'll plant for normal weather, which in this case amounts to a penny per share of positive year over year variant.
To elaborate on the glide path to achieve our 2022.
Adjusted EPS guidance range as you'll note on the waterfall chart on Slide 10, we will plan for normal weather, which in this case amounts to a penny per share of positive year over year variance. Additionally, we anticipate <unk> <unk> EPS pickup attributable to rate relief net of investment costs largely driven by.
Speaker 6: Additionally, we anticipate five cents of EPS pickup, a little to rate relief net of investment costs, largely driven by a recent electric rate order and the expectation of a constructive outcome in our pending gas case later this year. As a reminder, we also...
Our recent electric rate order and the expectation of a constructive outcome in our pending gas case later this year as a reminder, we also.
Speaker 6: continue to see the residual effects of tax benefits from our 2020 gas rate settled.
Continue to see the residual effects of tax benefits from our 2020 gas rate settlement.
Speaker 6: As we look at our cost structure in 2022, you'll note approximately 21 cents per share of positive variance, achievable to continue cost savings from productivity, driven by the CEA, and other cost reduction initiatives, as well as a return to more normalized levels of service restoration expense.
As we look at our cost structure in 2022 Youll note approximately <unk> 21 per share of positive variance attributable to continued cost savings from productivity driven by the UAE and other cost reduction initiatives as well as a return to more normalized levels of service restoration expense.
Speaker 6: As noted earlier, we're also seeing a resumption of normalized operating conditions in enterprises in the penultimate bar on the right-hand side of the chart, coupled with the usual conservative assumptions around whether normalized.
As noted earlier, we're also assuming a resumption of normalized operating conditions in enterprises and the penultimate bar on the right hand side of the chart, coupled with usual conservative assumptions assumptions around weather normalized sales.
Speaker 6: As always, we'll adapt to changing conditions and circumstances throughout the year, mitigate risk and increase the likelihood of meeting of operational and financial.
As always we will adapt to changing conditions and circumstances throughout the year mitigate risk and increase the likelihood of meeting our operational and financial objectives.
Speaker 6: Moving to slide 11, which denotes our near and long-term financial objectives, in addition to the adjusted earnings and dividend per share targets, as Eric noted earlier, from a balance sheet perspective, we continue to target solid investment grade credit ratings and will continue to manage our key credit metrics accordingly.
Moving to slide 11, which denotes our near and long term financial objectives. In addition to the adjusted earnings and dividend per share target. Eric noted earlier from a balance sheet perspective, we continue to target solid investment grade credit ratings and will continue to manage our key credit metrics accordingly.
Speaker 6: To that end, given the attractive valuation that's keyed in the interbank sale, and our successful closing of the transaction to fourth quarter, we do not anticipate issuing any equity through 2024, despite the increase in our five-year customer investment plan for $14.3 billion.
To that end given the attractive valuation of keyed in the interbank sale and our successful closing of the transaction in the fourth quarter, we do not anticipate issuing any equity through 2024, despite the increase in our five year customer investment plan for $14 3 billion.
Speaker 6: Beyond 24, we expect to issue up to $250 million of equity per year.
Beyond 'twenty four we expect to issue up to $250 million of equity per year.
In 2025 and 2026.
Speaker 6: As for 2022 Financings, our needs are limited to debt issuances, have the utility, and the settlement of existing equity forward contracts, the details of which you can find in the appendix of our presentation.
As for 2022 financings are needs are limited debt issuances at the utility and the settlement of existing equity forward contract. The details of which you can find in the appendix of our presentation.
Speaker 6: Our model is served and will continue to serve all stakeholders well. Our customers receive safe, reliable, and clean energy at affordable prices while our co-workers remain engaged, well trained, and empowered in our purpose-driven organization. Now, investors benefit from consistent industry-leading and anthropomorphic.
Our model has served and will continue to serve all stakeholders well our customers receive safe reliable and clean energy at affordable prices, while our co workers remain engaged well trained and empowered and our purpose driven organization and our investors benefit from consistent <unk>.
Related financial performance.
Speaker 6: We're often asked whether we can sustain our consistent industry-leading growth in the long term, given widespread concerns about inflation, supply chain, and natural gas prices, among other risks.
We're often asked whether we can sustain our consistent industry leading growth in the long term given widespread concerns about inflation supply chain and natural gas prices among other risks.
And our answer remains the same.
Speaker 6: Irrespective of the circumstances, we do it as far job to do the war in for you. Sustainable and agile cost management has been one of the key pillars of our successful bit past several years. Now, as you can see in the breakout of our cost structure on slide 12, there remain ample opportunities to reduce cost across the business.
Irrespective of the circumstances, we view it as our job to do the worrying for you sustainable and agile cost management has been one of the key pillars of our success over the past several years and as you can see the breakout of our cost structure on slide 12.
Ample opportunities to reduce cost across the business.
Speaker 6: Hasil note on the right hand side of the slide, we estimate over $200 million of episodic cost savings opportunities through coal facility retirement and the expiration of high price power purchase agreements for PPA. In fact, our PPA with the Palisade Movedure Facility will expire in April of this year, which will provide approximately $90 million of savings to our customers.
As you'll note on the right hand side of the slide we estimate over $200 million of episodic cost savings opportunities through coal facility retirements and the exploration of <unk>.
Power purchase agreements or PPA and.
In fact, our PPA with the Palisades nuclear facility will expire in April of this year, which will provide approximately $90 million of savings to our customers.
Speaker 6: These cost savings are above and beyond what we'll aim to achieve annually, largely through the CE way, our lien operating system, which as Garret noted earlier, was a key driver in our achievement of $55 million in cost savings in 2021 and $100 million worth in 2020.
These cost savings are above and beyond what will aim to achieve annually largely through the CE way, our lean operating system, which as Gary noted earlier was a key driver in our achievement of $55 million.
Cost savings in 2021 and $100 million worth in 2020.
Speaker 6: Given our track record of reducing costs, we're highly confident that we'll be able to execute our capital plan delivering substantial value for customers and investors.
Given our track record of reducing costs, we're highly confident that we'll be able to execute our capital plan delivering substantial value for customers and investors.
Speaker 6: To conclude my remarks, on slide 13 we have refreshed our sensitivity analysis on key variables for your modeling assumptions. As you'll note, with reasonable planning assumptions and our track record of risk mitigation, the probability of large variances from our plan are minimized. And with that, I'll hand it back to Geric for his final remarks before Q&A.
To conclude my remarks on slide 13, we have refreshed our sensitivity analysis on key variables for your modeling assumptions as you'll note with reasonable planning assumptions and our track record of risk mitigation. The probability of large variances from our plan are minimized.
And with that I'll hand, it back to Gary for his final remarks before Q&A.
Thank you Rajeev.
Speaker 5: Our simple investment pieces as was stood the test of time and continues to be our approach going forward. It is grounded in a balanced commitment to all our stakeholders and enables us to continue to deliver our financial objectives.
Our simple investment thesis as we stood the test of time and continues to be our approach going forward.
It is grounded in a balanced commitment to all our stakeholders and enables us to continue to deliver on our financial objectives.
Speaker 5: As we've highlighted today, we've achieved another year of strong performance in 2021, executing on our commitment to triple bottom line and our pleas with our strong results. I'm confident we're a great position to continue our momentum throughout 2022.
As we've highlighted today, we've achieved another year of strong performance in 2021.
Executing on our commitment the triple bottom line.
And are pleased with our strong results.
Im confident were a great position to continue our momentum throughout 2022.
Speaker 5: We look forward to updating you as we head into another exciting year. With that, Rocco, please open the line for Q&A.
And beyond <unk>.
Look forward to updating you as we head into another exciting year.
With that Rocco.
Please open the open the lines for Q&A.
Speaker 3: Thank you very much, Gary. The question and answer session will be conducted by Trotically.
Thank you very much Gary.
A question and answer session.
Ironically.
Speaker 3: If you would like to ask a question, what are you do so by pressing the star key followed by the digit one on your touchdown teleprompter?
Thank you for asking the question.
So by pressing the star key.
Followed by the digit one on your Touchtone telephone.
Speaker 3: If you're using a speaker function, please make sure you pick up your headset.
So if you're using a speaker function. Please make sure you pick up your handset.
Speaker 3: We'll proceed with the order you signal us, and we'll take as many questions as time to commit.
We will proceed with the ordering of the signals I wont take as many questions as time permits.
Speaker 3: If you do find the question that has been answered, you may remove yourself by approaching the star key followed by the digit two on your lunchtime telephone. We'll pause for a just a second.
If you do find that your question has been answered you may remove yourself are approaching historically, followed by the digit two other clubs tons all along.
We will pause for the industrial sector.
Speaker 3: Our first question today on some sharp result with doing a lot of partners. Please go ahead.
Our first question today comes from Shar <unk>.
They're going to want and partners. Please go ahead.
Speaker 7: Morning, good morning guys. Good morning. Good stuff this morning.
Good morning, Good morning, guys. Good morning, good stuff this morning.
Speaker 7: A couple of questions here if I may. First, Gary, you're guiding to the top end of, you know, six to eight percent, which was kind of a change in language post-transformation. And now you kind of break out in more details. The upside potential for non-IRP CAPEX.
Couple of questions here, if I may.
You are guiding to the top end of 6% to 8%, which was kind of a change in language post transformation and now you kind of break out in more details the upside potential for non IRB capex just to confirm.
Speaker 7: Just to confirm, is this upside included in the updated language around the growth rate? Maybe another way to ask is if you're already at the top end, you have $4 to $5 billion of incremental spending items within sort of outside of the IRP, how do we think about this growth rate in the context of the upside spending opportunities you're highlighting this morning?
Is this upside included in the updated language around the growth rate maybe another way to ask is if youre already at the top end, yes, $4 to $5 billion of incremental spending items within that sort of outside of the IR.
How do we think about this growth rate in the context of the upside spending opportunities you're highlighting this morning.
Speaker 5: Yeah, great question, Shar, and let me offer this real clarity and offer a little bit of context. And so, we're pleased with 2021 and delivering the high end of guidance. And as I shared previously, we've got a...
Yes, Great question Shar, let me offer this real clarity and offer a little bit.
And so we're pleased with 2021 and deliver on the high end of guidance.
As I've shared previously we've got a.
Speaker 5: We got a lot of momentum coming into 2022 and our raising guidance should have.
We've got a lot of momentum coming into 2022.
Our raise in guidance.
Speaker 5: offer much confidence to the investment community on our our strength here in 2022 and our confidence in the delivery in 2022. Well, remind you that our six to eight percent, again, toward the high end of the that range, that's off of 2022 base. So that's our projection going forward.
<unk> much confidence to the investment community on our our strength here in 2022, and our confidence in the delivery in 2022, I'll remind you that our 6% to 8%.
Again towards the high end of that.
That range.
That's off of 2022 base, so thats our projection going forward.
Speaker 5: You know we plan conservatively and so again you feel a lot of upside in that capital plan.
You know we plan conservatively and so again do you see a lot of upside in that capital plan.
Speaker 5: the IRP, the VGP type work. And so again, we'll weave those in as those materialize. We don't wanna presume excess in those. That's why we plan considerably. But again, we expect to be the high end off of that 2022 base. And so that's the nature of our growth pattern going forward. And I know Reggie wants to offer some additional comments there as well.
The ERP the BGP type work and so again, what we've built in as those materialize, we don't want to presume access in those why we plan conservatively, but again, we expect to be the high end of that 2022 base and so that's the nature of our growth pattern going forward.
Reggie wants to offer some additional comments there as well.
Speaker 6: Good morning, Sherry. Thanks for the question. The only thing I'll first comment just to be
Hey, good morning sure. Thanks for the question and the only thing I'll first comment is just to be.
Speaker 4: Our Desperate avoidance of doubt is that the guidance toward the high end of that sixth aid off the 2022 base
Our desk for the avoidance of doubt is that the guidance towards the high end of that six to eight off the 2022 base that just assumes the capital plan, we rolled out today, a $14 3 billion of that five year period, and the assumption of no equity through 2024, and so these other opportunities on the outside looking in the <unk>.
Speaker 6: That just assumes the capital plan we rolled out today, a $14.3 billion of that five-year period.
Speaker 6: and the assumption of no equity through 2024. And so these other opportunities on the outside looking in the GERIC noted the IRP. And so these other opportunities on the outside looking in the GERIC noted the IRP.
Notably the IOP, the voluntary green pricing program or BGP, those would give us even more confidence in delivering on that plan. So again delivery towards the high end of 2022 is just based on the $14 3 billion of capital and the assumption of no equity through 2024 those are the key drivers.
Speaker 6: the Voluntary Green Pricing Program or VGP, those would give us even more confidence in delivering on that plan. So again, delivery toward the high end of 2022 is just based on the $14.3 billion of capital.
Speaker 6: and the assumption of no activity through 2024. Those are the key drive.
Speaker 7: dot and just uh... just to follow up the rate based growth with twenty six is now seven percent it's a you know a little bit of a slight change from prior years language of quote-unquote greater than seven if subtle um... is there sort of a lot of large numbers taking effect here just as we're thinking about modeling
Got it and then just just a follow up to the rate base growth through 'twenty six is now 7%.
A little bit of a slight change from prior year's language of quote unquote greater than seven it's subtle is there sort of a law of large numbers taken effect here just as we're thinking about modeling.
Speaker 6: Yeah, you certainly do have that because we're compounding off of a higher base. But you know, it's a solid 7% charge, so I wouldn't read too much into it.
Yes, you certainly do have that because we're compounding off of a higher base.
It's a solid 7% sure so I wouldn't read too much into it.
Speaker 6: perfect and then just lastly for me um... you know in terms of the disclosures
Perfect and then just lastly for me.
In terms of the disclosures for 25 through 26 on the equity side.
Speaker 7: for 25 through 26 on the equity side. Obviously you were storing back the historical 250 per year. I'm sure Red you're thinking about this, but do you see any opportunities to maybe mitigate, find some optimization on the financing side, given that you're predominantly under percent regulated, maybe a way to flex the balance sheet and credit metrics, is there a way you can often.
Obviously, you're restoring back the historical $2 50 per year.
I am sure about Youre thinking about this but do you see sort of any opportunities to maybe mitigate.
Find some optimization on the financing side given that you are predominantly on the percent regulated maybe a way to flex the balance sheet and credit metrics is there a way you can offset this.
Speaker 6: Well, we'll see. I mean, the current base case for modeling purposes should be $250 million per year in 2025 and 2026.
We'll see I mean, the current base case for modeling purposes should be $250 million per year in 2025, and 2026, but what you'll see in the appendix charts, we are assuming about <unk>.
Speaker 6: But what you'll see in the appendix yards, we are assuming about over $10.5 billion of operating cash flow generation over the next five years.
$10 5 billion of operating cash flow generation over the next five years. So if we see upside to that will that certainly gives us more financial flexibility. We've also really done a nice job executing there.
Speaker 6: If we see upside to that, well that certainly gives us more financial flexibility. We've also really done a nice job executing very attractive, I'll say, equity-like securities that get an equity-like, the high-brids we've been doing from time to time. We did a perpetual preferred last year that got nice equity credit. So we'll see if there are opportunities there. But the current working assumption should be that $250 million per year in those outer years, 25 and 26.
Attractive I'll say equity like securities that get an equity like the hybrids. We have been doing from time to time, we had a perpetual preferred last year that got nice equity credit and so we will see if there are opportunities there, but the current working assumption should be that $250 million per year in those outer years 'twenty five 'twenty six.
Speaker 7: Okay perfect guys congrats on the execution this is really good thanks
Perfect guys. Congrats on the execution is really good.
Thank you.
And our next question today comes from Jeremy Tonet with Jpmorgan. Please go ahead.
Hi, good morning.
Good morning, how are you doing.
Good thanks.
It seems very clear from the slides, there's various capex upside.
We could see but just wondering if you could dive in a little bit more for the timing on when these items could make their way into plan and what we should be watching for there.
Speaker 5: I assume you're talking about the incremental items, just to clarify your question? Yes, the incremental capex operation.
I assume youre talking about the incremental items and just to just to clarify so the incremental capex opportunities.
Certainly so.
Speaker 5: As you know, we're in the midst of an integrated resource plan and we don't want to presume, although we're confident in that plan, we don't want to presume that the covert facility and the dig facility will move into the utility. There's certainly a lot of good indicators around that.
As you know we're in the midst of an integrated resource plan and we don't want to presume. Although we're confident in that plan, we don't want to presume that the Colbert facility into big facility will move into the utility there's certainly a lot of good indicators around that.
Speaker 5: But none of the last one I want to make sure that that's where it lands. We'll see a final order in the IRP by June of this year. And so again, assuming success there, we would anticipate the covert facility in 2023. And then the DIG facilities out in 2025 from an incremental opportunity.
But nonetheless, we want to make sure that that's where it lands will see a final order.
In the ERP by June of this year.
So again, assuming success there we would anticipate the cohort facility in 2023, and then dig facilities out in 2025 from an incremental opportunity.
Speaker 5: Our VGP, again, that subscription-based, based on customers, we saw some positive traction in that we announced this week with General Motors. But again, that construction would be, as those fill out in the eyes of those are subscribed, that construction period would be in 24 to 27. And so that's the nature of, you know, as that materializes, it would show up in that range.
BGP again, that's subscription based based on customers. We saw some positive traction in that that we announced this week with general motors, but again that construction would be as those fill out in and out of those are subscribed that construction period would be in 24 to 27 and so that's the nature of as that materializes. It would show up in that.
Range.
Got it that's helpful and if fees.
Speaker 6: come to fruition, would this impact, I guess, the funding plan on the equity side?
Come to fruition would this impact I guess the funding plan on the equity side.
Speaker 6: in Germany, this is Reggie. And we had said before, in the event the IRP gets approved, we don't believe we need to materially change your equity issuance needs. Now the VGP plus the IRP, if we have those high class problems, we would potentially have to recalibrate. But to be clear, that would only be...
And Jeremy This is Rajiv and we had said before in the event. The IR P gets approved we don't believe we need to materially change your equity issuance needs. Another BGP plus CRP, if we have those high class problems.
It would potentially have to recalibrate, but to be clear that would only be key.
Speaker 6: outside of 2024. And so, you know, you think about the time of the cap on investments, you know, covert would potentially be before 2024. And again, we feel good about not needing to issue equity even in that scenario before 24, where we may need to recalibrate as if we get the IRP and good momentum on the VGP. Those outer years 25 and beyond, we may have to take a second look there. But for now again, feel very good about the work consumption of this plan.
Outside of 2024, and so you think about the timing of the capital investments cohort would potentially be before 2024 and again, we feel good about not needing to issue equity even in that scenario before 24, where we may need to recalibrate as if we get the ERP and good momentum on the BGP those outer years 'twenty five and beyond.
I have to take a second look there but for now again feel very good about the work Consumptions in this plan.
Speaker 6: Got it, that's very helpful. Just a quick last one if I could, with regards to electric race case here, the outcome might have been a bit lighter than expected. And I just wondered if you could comment a bit more, I guess on the Go Forward expectations in Michigan, as far as the regulatory construct there, as well as the specific drivers in 2022 that you're using to employ, to kind of offset some of that stuff.
Got it that's very helpful and just a quick last one if I could.
With regards to the electric rate case here the outcome might have been a bit lighter than.
Unexpected.
And just wondering if you could comment a bit more I guess on the.
The go forward expectations.
Michigan as far as the regulatory construct there.
As well as the specific drivers in 2022 that you're using to employ to kind of offset some of the.
Some of that softness.
Speaker 5: Reginald said team this, let me be very clear. I feel good about the regulatory construct here in Michigan. And when I look at this rate case, there are two things to take away.
And I will tag team. This let me be very clear I feel good about the regulatory construct here in Michigan and when I look at this rate case, there are two things to take away from it.
Speaker 5: One, there's an investor read through on a strong and constructive ROI, 9.9. That has been constructive, especially when compared with other jurisdictions. There's good solid equity thickness. In fact, our regulatory equity ratio grew by 34 basis points.
One there is an investor read through on our strong and constructive ROE nine nine.
It's been constructive, especially when compared with other jurisdictions is good solid equity thickness in fact, our regulatory equity ratio grew by 34 basis points.
Speaker 5: That just again speaks to the nature of this commission in this regulatory construct. And again, all based in legislation, so don't forget that piece of it as well. The other piece of opportunity is clear in the order. And as a utility, we need to improve our business case.
That just again speaks to the nature of this commission in this regulatory construct and again all based on legislation. So don't forget that that piece of it as well the other piece of opportunity is clear and the order.
As the utility we need to improve our business cases, particularly in a forward looking test year.
Speaker 5: Particularly in a four looking test year, in the additional investments we wanna make on behalf of our customer, we need to do a better job of showing the benefits as well as the cost when compared to historical. That's on us. We own that, you can expect to see it in our next electric grade case.
The additional investments we want to make on behalf of our customer we need to do a better job of showing the benefits as well as the cost when compared to historical that's on US we own that you can expect to see in our next electric rate case.
Speaker 6: Well, let me hand it over to Reggie to walk through a little bit of it. Why we have such confidence in 2022. Yeah, Jeremy. So as you think about the offset with the order or from the order, you know, clearly it really highlights the benefits of having a forward test year. And so where we had disallowances in that forward test year, we obviously can revise our capital-known MSTEM programs. And so that's a clear offset.
Now, let me hand, it over to Randy to walk through a little bit of that.
Why we have such confidence in 2022, yes, Jeremy So as you think about.
The offset with the order or from the order clearly.
It really highlights the benefits of having a forward test year, and so where we had disallowances and that forward test year, we obviously can revise our capital and O&M spend programs and so that's a clear offset.
Speaker 6: from some of the disalances we saw and then a couple things related to 21 and then in this test you give us great confidence and so as you may recall we had plans to issue equity
From some of the disallowance as we saw and then a couple of things related to 'twenty, one and then in this tissue that give us great confidence and so as you may recall, we had plans to issue equity.
Speaker 6: in 2021 and obviously given the timing of the interbank sale, we didn't have to issue any equity that year and so we've got
In 2021, and obviously given the timing of the interbank sale, we didn't have to issue any equity that year and so we've got.
Speaker 6: That's some momentum from a share count perspective. That's helpful. I continue to feel quite good about whether normalized load. We saw a really nice recovery from commercial industrial sales of the course of 21. And we anticipate seeing some of that in 2022 as well, particularly given the leading indicators that we've seen with respect to new service requests which Gareth offered.
At some momentum from a share count perspective, that's helpful. I continue to feel quite good.
Weather normalized load, we saw a really nice recovery from commercial industrial sales over the course of 'twenty one.
And we anticipate seeing some of that in 2022, as well, particularly given the leading indicators that we've seen with respect to new service requests, which garik offered.
Speaker 6: and it's prepared remarks and we continue to see upside from our residential customers given this sort of teleworking phenomenon that we think should stick for to.
In his prepared remarks, and we continue to see upside from our residential customers given the sort of teller working.
Dominant that we think should stick for.
Speaker 6: to some extent. And then cost performance. Every year I continue to be surprised to the upside by what the organization can deliver. So last year our plan was about $45 million and we delivered $55 million there. And then in 2020, I can assure you, we didn't plan for $100 million. $100 million of savings and the organization went and got it. And so those are all the drivers that we think will offset some of the downs that we saw in electric grade order.
<unk>.
To some extent and then cost performance every year I continue to be surprised to the upside by what the organization can deliver so last year. Our plan was about $45 million and we delivered $55 million. There and then in 2020 I can assure you we didn't plan for $101 million $100 million of savings in the organization got it.
So those are all the drivers that we think will offset some of the downside we saw in the electric rate order.
Speaker 6: Got it. That's very helpful. Thank you. Thank you.
Got it that's very helpful. Thank you.
<unk>.
Speaker 3: And ladies and gentlemen, our questions, I'm from Intu. Here, look with Golden Thacks. Please go ahead.
And ladies and gentlemen, our next question comes from <unk> <unk> with Goldman Sachs. Please go ahead.
Speaker 7: Yeah, thank you. My first question, you guys dealt with a lot of storms, especially in 2021. And I think in the last decade, there were also just conversations about as you're spending, that's whatnot. Did the more strength of storms more recently identified any to be added to your GoFour plan?
Yeah. Thank you. My first question you guys dealt with a lot of storms, especially in 2021 and I think in the last rate case. They are also just conversations about potentially.
Potential spending thats whatnot and bid the more string of storms more recently identify any.
It could be added to your go forward.
Plans.
Sure.
Speaker 5: Thanks, thanks, into and good morning. I want to be real clear with everyone here. We're at a largest electric reliability capital spend that we've had in our company's history. And it's actually 40% over 2020. So we're at a good pace in terms of electric reliability. But clearly, as we demonstrated in this electric rate case, there is more to do across our vast system. And so we'll be making requests in this upcoming electric rate case with, of course, better business
Thanks, Nancy and good morning, I want to be real clear with everyone here.
We are the largest electric reliability capital spend that we've had in our company's history and its actually at 40% over over 2020. So we're at a good pace in terms of electric reliability.
But clearly as we demonstrated in this electric rate case, there is more to do across our vast system and so we will be making requests in this upcoming electric rate case with of course better business.
Yes, there is room for improvement.
Speaker 5: and we're well aligned with this.
And we are well aligned with this.
Matt.
Speaker 8: Got it. I have a question just going back to the domain.
Got it.
Final question, just going back to the demand.
Speaker 8: and comments you guys made. So, 2022, if I'm understanding correctly, you're thinking more of a modest issue of flat to modest growth, and your growth is that correct? And then too, just you talked about positive signals. Is there any particular segment or industries that you're seeing that out of?
And.
Comments, you guys made for 2022.
If I'm understanding.
I understand you correctly youre thinking more of a modest.
Flat to modest growth in year over year growth is that correct and then two just.
You talked about the positive signals.
Any particular segment.
Or industries that you are seeing that out of.
Speaker 6: And so this is Reggie. So yeah, I think you're working assumption for blended, whether normalized load on the electric side is about right. So call it just slightly up flat to about a half a point. But again, we continue to be encouraged with what we're seeing on the residential side. So last year, we had...
And so this is rajiv so yes, I think your working assumption for blended weather normalized load on the electric side is about right. So call. It just slightly up.
Flat to about a half a point.
But again, we continue to be encouraged with what we're seeing on the residential side. So last year, we had.
Speaker 6: We assumed they're pretty aggressive, returned to work, and we ultimately saw our residential down about.
We assumed a pretty aggressive returned to work and we ultimately saw a residential down about two 5% a little over that versus 2020. Our plan is much more bearish and so we saw surprised to the upside versus plan their commercial we've already seen commercial over the case of 2021 up about three 3%.
Speaker 6: 2.5% of the low over that, versus 2020. Our plan was much more bearish, and so we saw surprise the F-Fed versus his plan there.
Speaker 6: commercial we've already seen commercial over the case of 2021 up about 3.3% so effectively back at this point
So effectively back at this point.
Speaker 6: to prevent them. Levels when you take energy waste reduction into account and industrial I'd say admittedly still coming back and that's what we feel good about 2022 and versus 2021 about
To pre pandemic levels, when you take energy waste reduction into account and industrial I'd say admittedly still coming back and that's why we feel good about 2022% versus 2021 about.
Speaker 6: you know, somewhere between one to two percent commercial, basically flat is slightly up and then industrial we still expect to see pretty good growth there.
Somewhere between 1% to 2% commercial basically.
That is slightly up and then industrial we still expect to see pretty good growth there.
Speaker 6: around 5%. So that's what on a blended basis gets you to around a point, I'm sorry, excuse me, a flat, slightly up about half a point all in. And then the positive thing you'll see the new service request.
Around 5%, so thats what on a blended basis gets you to around a point I'm, sorry, excuse me flat to slightly up about half a point all in and then deposits signaled some new service requests.
Speaker 6: The point to a specific sector I think would be challenging because we're pretty diversified in our service territory but clearly we're seeing good news and auto. Now again, auto represents a couple percent of our gross margins. So not a great deal of exposure there, but across most sectors we expect to continue to see Michigan trend well. And if Garrett noted is prepared in Mark's, we're seeing some very attractive economic development and opportunities on the industrial side. We're not in a position right now to disclose those sectors, but we see a number of, I'll say, a combination of old and new economy sectors looking at Michigan as a place to land. And so we feel very good about the road ahead.
I'll point to a specific sector I think would be challenging because we're pretty diversified in our service territory, but clearly were seeing good news in auto now again auto represents a couple of percent of our gross margin. So not a great deal of exposure there, but across most sectors. We expect to continue to see Michigan trend well and as Derek noted in his prepared remarks were seeing some very attractive.
Tractive economic development opportunities on the industrial side, we're not in a position right now to disclose those sectors. We see a number of I'll say, a combination of old and new economy sectors looking at Michigan as a place to land and so we feel very good about the road ahead.
At economically in Michigan.
Thanks, that's good color. Thank you guys.
Speaker 3: Anyway, if you've done the right questions today, you're on some Michael Sullivan at Wolf Research. Please go ahead.
Ladies and gentlemen, our next question I'm going to answer Michael Sullivan Wolfe Research. Please go ahead.
Hey, Ron good morning.
Good morning, Michael.
Speaker 9: Hey, Garrett, just first wanted to ask on level of conviction and ability to potentially settle the IRP in the next couple of weeks or months here.
Hey, Gary just first wanted to ask on.
Level of.
Conviction and ability to potentially settle the DIR opinion in the next couple of weeks or months here.
Yes.
Speaker 5: I'm just going to break this down really, really clearly. I feel good about taking a full distance. I want to make sure that's very clear on the table. There's a 60%.
So.
I'm just going to break this down really really clearly I feel good about taking it will distance I want to make sure that's very clear on the table.
60%.
Speaker 5: Reduction in carbon by 2025, over 2005 baseline levels. And there's an opportunity for more resilient supply.
A reduction in carbon.
By 2025 over 2005 baseline levels.
And there is the opportunity for more resilient supply system those are the factors and so.
Speaker 5: And so there's good, there's a win, I've said this before, there's a win here for everyone. And so we feel very strong about taking the full length and get what we need for our customers, as well as for our investors.
Good Theres a win I've said this before theres, a winning here for everyone and so we feel very strong about taking the full length and get what we need for our customers as well as for our investors.
Speaker 5: But by online, whether it's an electric case, gas case, or an IRP, we're going to look at an opportunity to settle. And right now we're in a sweet spot where there's an opportunity to do that.
Sure.
But bottom line, whether it's an electric case gas case, or an IRB or look at an opportunity to settle in right now we're in a sweet spot where theres the opportunity to do that.
Speaker 5: And when there's a win in there for everyone, there's an opportunity to, to you are have a partial settlement or a full settlement. So we'll look at that and work with the party to see if something can materialize there. But just like there's an opportunity there, all those wins allow us to take a little distance as well. So I feel confident either way that we'll get what we need for our customers to plan it and for shareholders.
And when Theres a win in there for everyone. There is an opportunity to.
A partial settlement of our wholesale alone. So we will look at that and work with the parties to see if something can materialize there, but just like there is an opportunity there all those wins allow us to take the full distance as well so I feel confident either way that we'll get what we need for our customers the planet and for our shareholders.
Speaker 9: That helpful Michael. Yeah, super helpful. Thank you. And my other question was, Reggie, I think you mentioned one of the main drivers for the lower than planned CAPEX last year with some slippage on renewable projects. Can you just give a little more detail on that?
That helpful. Michael Super helpful. Thank you.
My other question was raised I think you mentioned one of the main drivers for the <unk>.
Lower than planned Capex last year was some slippage on renewables projects can you just give a little more detail on that.
Speaker 6: Yeah, Michael, good morning. Yes, so we had some renewable projects that we had to push out a little bit. You know, I think the issues around supply chain pretty well publicized across not just the country, but the planet. And so, you know, we saw some of that with respect to our projects. We still expect to get the project executed over time, but we did have to push them out a little bit. So that was really the primary driver. And I'd say, you know, across some projects or some ideally related to supply chain matters.
Yeah, Michael Good morning, Yes, So we had some renewable projects that we had to push out a little bit.
Think the issues around supply chain pretty well publicized.
Across not just the country, but the planet and so we saw some of that with respect to our projects, we still expect to get the projects executed over time, but we did have to push them out a little bit.
So that was really the primary driver and I would say across some projects. There were some immediately related to supply chain matters.
Speaker 5: I'm going to jump in on can I just jump in on this one as well, you know, I've been involved in large power plants and operations for
Good morning, I wanted to jump in can I just jump in on this one as well I've been involved in large power plants in the operations.
Speaker 5: 25 plus years. I don't think there's been a year in those 25 where I haven't seen
25, plus years I don't think theres been a year in those 25, where I haven't seen.
Speaker 5: projects move from year to year. Major projects in terms of outages, in terms of construction timelines, differed. So it's pretty typical in our industry to have a little give and take. And so this supply chain challenge that's in front of us will dissipate over time, have no doubt about that. But remember this, we're tiring coal.
Projects move from year to year major projects in terms of outages in terms of a construction timelines differed.
It's pretty typical in our industry to have a little give and take and so the supply chain challenge that's in front of us will.
Dissipate overtime I have no doubt about that but remember this we're retiring coal and so you have to fill that capacity somehow. So these projects arent going away. It's just a matter of when we plant them in one year and so again this is pretty typical for the work we do year after year, this give and take and so.
Speaker 5: And so you have to fill that capacity somehow. So these projects aren't going away. It's just a matter of when we plant them in a year. And so again, this is pretty typical for the work we do year after year, this give and take. And so I'm not worried, not concerned, in this two will pass.
Not worried not concern and this too will pass.
Great. Thanks, a lot.
Speaker 3: And our question today comes from Andrew Wauzow with Social Bank. Please go ahead.
And our next question I'm sorry.
It was.
First of all bank. Please go ahead.
Thank you good morning, everyone.
Speaker 10: My first question on the new CAPX plan, I see that excludes the billion dollars from the voluntary renewables program. My question is, you've been using that billion dollar number for a little while now. Shouldn't that be higher given the new customers you signed up? Trying to understand the spending might be in kind of the later years of the plan, but should that number be a bigger of?
My first question on the new Capex plan I see that excludes a $1 billion from the voluntary renewables program. My question. Then is you've been using that $1 billion number for a little while now shouldn't that be higher given the new customers you signed up I understand the spending might be and kind of the later years of the plan, but should that number be a bigger one.
Speaker 5: So the billion dollars equates to a thousand megawatts of renewables. And so the way this works is customer subscribe to that. And we have a certain number of subscriptions. We build out that. And so the thousand megawatts equates to the billion dollars. And so does that help? Andrew.
So.
The $1 billion equates to a 1000 megawatts of renewables and so the way. This works is customers have prescribed to that and we have a certain number of subscriptions, we build out that and so the 1000 megawatts.
The $1 billion and so does that help.
Thanks, Andrew.
And remind me how many megawatts are you up to signed up now.
Speaker 5: We've got one, this program started at 120 megawatts. That is fully subscribed and we're now in this, you know, second phase of subscribing the 1000 megawatts.
We've got it.
This program started at 120 megawatts that is fully subscribed and we're now in this second phase of describing the.
<unk> megawatts.
Speaker 10: Okay, got it. So you still got a little way to get to that billion. Okay, great. My next question is, if I compare the old cap explained to the new one, it seems, I don't understand there's a roll forward, but it seems like your electric spending is down by about half a billion and gas spending is up by about a billion. Is that a conscious shift in strategy or is that just the output of a bottom-up budget building project process?
Okay got it so you still got a little ways to get to that $1 billion. Okay. Great. My next question is.
If I compare the old Capex plan to the new one.
It seems I understand there's the roll forward, but it seems like Youre electric spending is down by about $1 billion in guest spending is up by about $1 billion.
Is that a conscious shift in strategy or is that just the output of a bottoms up budget building project process.
Speaker 5: It's really a bottom-up piece and just let me off for a little bit of the gas. Back in November of 2020, we got a large pipeline project to prove through an Act 9, which is the equivalent of a certificate of necessity. That is folded into this plan. And so as you might imagine, it reflects in 56 miles of large transmission pipe.
It's really a bottoms up piece and just let me offer a little bit on the gas.
Back in November of 2020, we got a large pipeline project approved through <unk>, which is the equivalent of a certificate of necessity that is folded into this plan and so as you might imagine that replacing 56 miles of large transmission pipe.
Speaker 5: The project's around $5, I think it's $550 million in that range. And so that's a big factor that, you know, as you build that bottom of the approach.
Projects around five I think it's $550 million in that range and so that's a big factor that.
As you build a bottoms up approach.
Speaker 5: It shows up in the gas and in this vintage of capital and capital five year plan.
It shows up in the gas and in this vintage of capital.
A five year plan.
Speaker 10: Okay, great. That's helpful. Then just one last one if I could squeeze it in. On the relative growth between the earnings and the dividend, you're targeting the high end of six to eight percent for earnings, and I know your targeted dividend payout ratio is 60 percent versus about 64 in 2022. You just announced a 5.7 percent dividend increase. Is that a piece that we should expect for the next couple of years so you get to that 50 percent ratio?
Okay, Great. That's helpful. And then just one last one if I could squeeze it in.
The relative growth between the earnings and the dividend.
You are targeting the high end of 6% to 8% for earnings and I know youre targeted dividend payout ratio of 60% versus about 64 in 2022.
Just announced a five 7% dividend increase is that a pace that we should expect for the next couple of years. So you get to that 60% ratio.
Speaker 6: Andrew, yeah, this is Reggie. So, yeah, I think conceptually you're right in that, you're gonna see a decoupling at least in the short term between the earnings growth and the dividend for share growth. And so that's what we're showing with this recent increase in the dividend. Cause we did mention on the heels, the interbank sale that will glide down and will glide path down to a low 60% pat ratio. Right now we're kind of mid 60s and we'll glide path down.
Andrea This is <unk>. So, yes, I think conceptually youre right in that Youre going to see a decoupling at least in the short term between the earnings growth in the dividend per share growth and so that's what we're showing with this recent increase in the dividend because we did mentioned on the heels of the interbank sale that we'll glide down we'll glide path down to a low 60 <unk>.
<unk> payout ratio right now, we're kind of mid Sixty's, and we'll glide path down overtime. So youll see a little decoupling between the earnings growth, which will be a little stronger than the dividend per share growth, but we still think both are healthy and combined offer very attractive total shareholder return proposition.
Speaker 6: over time. So you'll see a little decoupling between the earnings growth which will be a little strong and a dividend for share growth but we still think both are healthy and combined offer very attractive total shareholder return proposition.
Definitely thank you very much.
Speaker 3: And our question today comes from Julian Dandelion Smith with Bank of America. Please go ahead.
And our next question today comes from Julien Dumoulin Smith with Bank of America. Please go ahead.
Speaker 10: Hey, good morning, team. Hey, good time, Julian. Well done. So, perhaps just coming back to a couple things, the economic development tariffs just to come to that first here. How do you think about that impacting 22? Just you mentioned pretty strong industrial load. Obviously, economic development tariffs kind of impact, shift those impacts and loads that are earning, that's the thing. Can you talk a little bit about what that could do? Imagine it's not too material, but curious.
Hey, good morning, Hey, Julien.
Julian.
Well done so perhaps just.
Coming back to a couple of things the economic development tariffs just to come to that first year. How do you think about that impacting 'twenty two.
You mentioned pretty strong industrial load, obviously as economic development tariffs kind of impact shift those impacts and low sensitivity to earnings.
Can you talk a little bit about what that could do imagine its not too material but.
<unk>.
Speaker 5: Yeah, so let me offer a little more color on these economic, there's two pieces. We were very successful toward the end of the year and established an economic development rate. We filed that in November , and as I said, almost record approval here with the commission. And then...
Yes, So let me let me offer a little more.
Color.
And then these economic Theres two pieces were very successful towards the end of the year and establishing economic development rate, but we filed that in November and as I said almost record approval here with the <unk>.
Commission.
Speaker 5: public service commission and staff, which we see is a really good indicator here of Michigan, and the opportunity to encourage job growth in jobs here at Michigan. So it's an economic development rate, which is very competitive out there, and designed for energy intensive customers. The next piece, as we worked to achieve an economic set of bills that offered incentives to make Michigan competitive, that was offered.
Public Service Commission staff, which we see as a really good indicator here in Michigan and the opportunity to encourage job growth.
And jobs here in Michigan.
And economic development rate, which is very competitive out there and it's designed for energy intensive customers. The next piece as we worked to achieve economic set of bills that offered incentives to make Michigan competitive that was offered.
Speaker 5: through, again, bipartisan support through the legislature is signed by the governor. That was close to a billion, billion and a half of incentives here in the state. And so he and me, they're a big announcement, nearly $7 billion of investment in Michigan, 4,000 new jobs, that is a direct result of that work.
Through again bipartisan support through the legislature signed by the Governor of that was close to $1 billion and half of <unk>.
Incentives here in the state and so.
Jim made their big announcements nearly $7 billion of investment in Michigan.
4000, new jobs that is a direct result of that work and so we feel good by the initial the initial volley here, but as you said there is and I shared in my prepared remarks, there are more than.
Speaker 4: And so we feel good by the initial valley here. But as Reggie said, there's a nice here to my prepared remarks, there are more that are considering Michigan. And so we see a lot of upside from an industrial and jobs growth perspective, and ultimately the still over benefits. But Reggie, I don't know if you want to add any additional time text to that at all. Now I think you'll either that well, Gerrick.
Considering Michigan and so we see a lot of upside from an industrial and jobs growth perspective, and ultimately there's spillover benefits, but Reggie I don't know if you want to add any additional context to that at all.
Well garik.
Alright, So we'll see what happens this year.
Speaker 9: Perhaps if I could pivot on Campbell just super quick if I can. You know, Campbell retirement as you've alluded to several times already, a retirement in the 25 timeframe. You know, that's come up a lot in the RFP and represents the substantive portion of the onend saving. I think it's order of value to 60 minutes.
Perhaps if I could pivot.
Campbell just super quick if I can.
Kimball retirement as you've alluded to several times already of retirement in the 25 timeframe.
Come up a lot in the RFP and represents a substantive portion of the O&M savings.
I think its order of magnitude $60 million due offsets to this retirement and again as you think about it is if it is pushed back for instance in an RFP settlement or again, how you would think about that fitting into your plan to the extent to which that moves out if you will.
Speaker 7: You've asked that for this retirement, and again, as you think about it, if it's pushed back, for instance, in an IRP settlement, or again, how you would think about that, you know, sitting into your plan to which that moves out if you will.
So in.
Speaker 5: just to be really clear, $650 million of savings in total requires the retirement of Campbell 1-2 Ampere.
In my earlier comments, just to be really clear $650 million of savings.
In total requests.
Fires the retirement of Campbell, one two and three.
Speaker 5: And you know, I started my career at that plant. You can't do a partial there. It just doesn't work.
And I started my career at that plant you can't do a partial there it just doesn't work and so you need the whole thing one for the savings piece for our customers, which you can't do a partial retirement.
Speaker 5: And so you need the whole thing, one for the saving space for our customers, but you can't do a partial retirement. So that's critically important in this equation and this IRP. The second piece is when you retire a plant like that, you need the backfill in terms of capacity, in terms of energy. And the lowest cost option of that we've proved to modeling is to covert and through the dig facility.
Critically important in this in this equation and as the <unk>. The second piece is when you retire a plant like that you need to backfill in terms of capacity in terms of energy and the lowest cost option of that we've proved through modeling as a cohort and through the dig facilities and so again. This is why it all comes together.
Speaker 5: And so again, this is why it all comes together quite nicely. And so...
<unk> quite nicely and so.
Speaker 5: It's very clear what's necessary to see this type of savings for our customers to improve the supply side from a resiliency perspective, and then also to have a 60% reduction in carbon. So that's how we're approaching it. Again, a lot of benefits, a lot of wins for everyone, and we think we can achieve that. Not I think. We know we can achieve that here in 2022.
It's very clear what's necessary to see this type of savings for our customers to improve the supply side from a resiliency perspective, and then also to have a 60% reduction in carbon so thats how were approaching it.
Again.
A lot of benefits one of wins for everyone and we think we can achieve that.
We know we can achieve that.
In 2022.
Speaker 10: Right. And just even further to clarify that, your core base plan, does it, it doesn't reflect Campbell per se, the IRP, should we say quote of, outside as we talked about from the capital perspective, and making that affordable is, is predicated on Campbell, right? The segment that apart.
Right and just.
Even further to clarify that your core base plan does it doesn't reflect campbell per se. The ERP shall we say upside as we talked about from a capital perspective, and making that affordable is predicated on Campbell rates to segment that apart.
Speaker 5: Yes, we need all of Campbell to retire. And again, that's not built into our plans. Not our five year plan at all. Not the savings, not the capital. Upside, not in the plans. So just to be clear there.
Yes, we need Campbell's we need all of Campbell to retire and again thats not built into our plans.
Our five year plan at all not the savings not the capital upside if not in the plans and so just to be clear there.
Speaker 10: Excellent guys. Why would you the best of luck? Let's see what happens to Michigan in here. Cheers.
Excellent guys well I wish you the best of luck, let's see what happens in Michigan This year.
Thanks Julien.
Speaker 3: In a question today comes from Nick Campanola, I'm gonna try to squeeze. Please go ahead.
And our next question today comes from Nick Campanella with Credit Suisse. Please go ahead.
Hey, good morning, everyone.
Good morning.
Speaker 11: Hey, so most of my questions have been answered, but I just wanted to go back to the electric rate case quick, you know, absolutely knowledge, really healthy R.O.E. and equity ratio.
Hey, so most of my questions have been answered, but I just wanted to go back to the.
Electric rate case quick absolutely knowledge really healthy ROE and equity ratio.
Speaker 11: The commission did seem to push back on capital costs, specifically with that one solar project. I guess it'll be for this order. Can you confirm you're moving forward if that project's still? How should we think about subsequent approvals and your clean energy generation capital plan? Understanding it's obviously imperative for the company's decarbonization goals, but the commission does seem to be taking a slower approach to at least your initial set of projects here. Thanks.
The commission did seem to push back on capital costs.
Specifically with that one solar project I guess at least for this order.
Can you confirm your you are moving forward at that project still how should we think about subsequent approvals in your clean energy generation capital plan understanding. It's obviously imperative for the company's de carbonization goals, but the condition does seem to be taking a slower approach to at least your initial set of projects here. Thanks.
Speaker 5: I don't agree with that conclusion that they're taking a slower approach. The language is really clear in the X-parte order and in the electric grade case, they're support for green energy.
I don't agree I don't agree with that conclusion that theyre, taking a slower approach to language is really clear.
In the ex parte order and an electric rate case other support for Green energy and in fact that Washington.
Speaker 5: And in fact, that wash and aw project and it's clear that it's been supported.
<unk> project and its clear Thats been supported.
Speaker 4: and from a construction standpoint and a regulatory recovery standpoint. Now,
And from a construction standpoint, and in a regulatory recovery standpoint.
Speaker 5: Reginald walked through a bit of financial piece and how we'll progress with that project here over the course of 2022 and 2023.
Randy will walk through a little bit of financial piece on how we'll progress with that project here over the course of 2022 and 2023.
Speaker 6: Yeah, next again to Garrick's point, we feel very confident that it was really deferred decision by the commission because they did approve the contract and November before the electric rate order and the other reason it wasn't approved in the order is just given the timing of which it was introduced into the case. We do expect to get a constructive outcome and a subsequent filing. And so as a result of that, to Garrick's point, we'll continue to execute on the project and because of the...
Yes, so again to Gary's point, we feel very confident that it was really a deferred decision by the commission because they did approve the contract in November before electric rate order and the only reason it wasn't approved in the orders just given the timing in which was introduced into the case, we do expect to get a constructive outcome in our subsequent filing and so as a result of that to <unk> point, we will continue.
To execute on the project and because of the high probability of approval will recognize AFDC equity and debt accounting on this project and so there'll be no P&L drag if you will.
Speaker 6: high probability of approval will recognize AFUDC equity and data counting on this project. And so there'll be no P&L drag, if you will. And just a little bit of deferred cash flow or lag on the cash flow side. And so we fully expect to move forward on the project and again, expect to construct about common and subsequent case.
And just a little bit of deferred cash flow or lag on the cash flow side and so we fully expect to move forward on the project and the unexpected constructive outcome in the subsequent case is that helpful.
Speaker 11: Yep, that's very clear. Appreciate the part that I thank you.
Yes.
That's very clear I appreciate the time today. Thank you.
Speaker 3: The audit question today comes from Jonathan Arnold at Vertical Research. Please go ahead.
Our next question today comes from Jonathan Arnold.
Vertical research. Please go ahead.
Speaker 12: You're morning Jonathan. Just a quick question again on the five years land thanks for the clarity on was driving the step up on the gas side that was clear. I'm just curious though on the light for its distribution line I seem to take a pretty meaningful step down in 22 and you know we're sort of I think that explain most of the data.
Morning, guys.
Morning, Jonathan just a quick question again on the five year plan and thanks for the clarity on whats driving the step up in the gas side that was clear.
Just curious, though on the electric distribution.
It seemed to take a pretty meaningful step down in 'twenty two.
Yes.
I think that explains most of the delta.
Speaker 12: Can you swear that, Gary, with your comments about customer growth and new connections and the like, and maybe the rate case is probably the answer, but just curious.
Can you square that Garrett with your comments about customer growth.
New connections unlike.
Maybe sort of maybe the rate cases, probably the answer.
Speaker 5: Yes, specifically for new growth, both electric connections. And we have a deferral mechanism on there. And so we can...
Curious.
Yes, specifically for new growth both electric connections.
We have a deferral mechanism on there and so we can we can allocate the appropriate amount of capital capital for growth and then see recovery in a subsequent case and so that's been our practice we have had at least the last couple of rate cases that allow us to.
Speaker 5: We can allocate the appropriate amount of capital for growth and then see recovery in a subsequent case. And so that's been a practice we've had, at least the last couple of great cases that allow us to, it's in three areas, both in new business, at the relocations in demand capital. And so that's been very helpful in allowing us to expand our electric capital in year as result of changes in the environment like great business growth. And so that's an important piece.
Three areas, both in new business asset relocations and demand capital and so that's been very helpful in allowing us to expand our electric capital in year as a result of changes in the environment like great business growth and so that's an important piece.
Speaker 4: The other piece that I would just again point back to, our electric reliability spend is robust. It's the largest we've had here across our company, 40 percent over 2020.
Now the other piece that I would just again point back to our electric reliability spend is as robust. It's the largest we've had here across our company, 40% over 2020, but.
Speaker 5: But I would offer this. There's better and more important work we need to do in this next electric rate case. We have more capital that we want to invest on behalf of our customers and electric reliability to offer benefits and improve our performance there. And we'll work to engage that into the build that out in the next case.
But I don't offer this.
There is better and more important work we need to do in this next electric rate case, we have more capital that we want to invest on behalf of our customers and electric reliability to offer benefits and improve our performance there and we'll work to.
Engage that into the build out in the next case.
Speaker 7: And I know Reggie would also offer some comments as well. Jonathan, the only thing I'd add, you noted that there was a slight dip in the front end of the five-year plan in the distribution spend. So you can see the little walk trend. We tend to, and have historically been on about a billion dollar per year spend rate for all the reliability work that we know needs to get done in our service territory. The dip in 2022, that's attributable to just aligning the spend plan in 2022 with the rate order. We had about around 100 million or so, or thereabouts of disallowance in the rate order. And so obviously with the forward test year, we can toggle our plans accordingly. And so that's really what's driving some of that decline in 2022, which is a little off trend.
And I know that you would offer also offer some comments as well Jonathan the only thing I would add you noted that there was a slight dip in the front end of the five year plan and the distribution spend so you can see it a little walk trend, we tend to and have historically been on about a $1 billion per year spend rate for all the reliability work that we know needs to get done in our service territory. The dip in 2022.
Attributable to just aligning the spend plan in 2022 with the rate order, we had about round $100 million or so or thereabouts of disallowance in the right order and so obviously with a forward test year, we can toggle our plans accordingly, and so that's really what's driving some of that decline in 2022, which is a little off trend.
Speaker 12: Okay, great, that's perfect, thanks guys.
Okay, great. Thanks, guys.
Speaker 3: And our next question today, comes from Travis Miller at Morningstar. Please go ahead.
And our next question today comes from Travis Miller Morningstar. Please go ahead.
Good morning, Thank you.
Speaker 9: Back to the IRP, just thinking about timing post-IRP, would you get a decision soon enough or have concrete plans soon enough to weave anything from the IRP into the presumed-of-the-lactor great case?
Travis.
<unk>, just thinking about timing post IRT.
Would you get a decision soon enough for half.
Concrete plans sooner enough to leave anything from the ERP into this.
Presumed electric rate case filing.
Filing this year.
Speaker 5: Our electric, we're going to file our electric rate case here in April timeframe. And so that's our plan right now. And so we don't anticipate, you know, initial order could come out very early in April and then a final order in June . And so I don't anticipate that that'll be woven into this electric rate case.
Our electric we're going to file an electric rate case here in April timeframe, and so thats our plan right now and so we don't anticipate initial order could come out very earliest in April and then a final order in June and so I don't anticipate that that'll be woven.
Into this electric rate case.
Speaker 4: Okay, what is your thought on timing of maybe specific projects or capital at least generally from the IRP? A year out, six months out from the decision, what's your thought there?
Okay. What is your thought on the timing of specific projects or capital at least generally.
From the AARP a year out six months out from the decision.
Your thought there.
Speaker 5: Our intent here is to, so again, I don't want to presume approval. I think that would be, I don't want to get in front of the commission on that, but again, confidence in a final order by June . And let's play this out. Cover big into the utility. We'd look to update our plans, our five year plans and the kind of the normal cycle to reflect those, those changes.
Alright.
Our intent here is to.
So again I don't want to presume approval I think that would be I don't want get in front of the commission on that but again confidence in a final order by June and lets play this out cohort dig into the utility.
We'd look to update our plans our five year plans and that's kind of a normal cycle to reflect those those changes.
Speaker 9: Okay, perfect. And then real quick, on the inner prizes this side, any update to the strategy there?
Okay, Perfect and then real quick on the enterprise side any update to the strategy there.
Speaker 5: Enterprise continues to be an important part of our business, although it's really small part of our business, and just as a reminder for everyone on the call, it's about 4% of our earnings mix. So again, small and then as big in other facilities move into the utility that enterprises grow, grows even smaller. Right now it's focused on renewables. And in.
Enterprises continues to be an important part of our business, although a really small part of our business and just as a reminder for everyone on the call. It's about 4% of our earnings mix. So again small and then as dig and other.
Facilities move into the utility that enterprises group.
Even smaller.
Right now it's focused on renewables.
Speaker 5: customer relationships. And so let me offer a little bit more context around that. For example, a company like General Motors, or one of the companies that Enterprise works with, they have long-term commitment to sustainability across their global footprint. And so they provide
In.
Customer relationships and so let me offer a little bit more context around that.
For example, a company like General Motors or one of the companies in enterprise works with they have long term commitment to sustainability across their global footprint.
So they provide.
Speaker 5: Credit worthy party and we have a long contract period. We help them find renewable assets throughout the US So that's the role we play. We see utility-like returns or better In that space and again, we're not out in the auctions. We're not out
Creditworthy Party.
Have a long contract period, we help them find renewable assets throughout the throughout the U S. So that's the role we play in we see utility like returns or better.
In that space and again, we're not out in the auctions, we're not out.
Speaker 4: been squeezed from margin perspective. It's specifically designed at customer relationships and helping them meet their sustainability targets. And so it's narrow, it's thoughtful. And it's a small part of our business but important for our strategic customers. How did it? Great.
And squeezed from margin perspective, its specifically designed at customer relationships and helping them meet their sustainability targets and so its narrow as thoughtful.
<unk>.
Part of our business, but important for our strategic customers.
Got it great. Thanks, so much that's all I had.
Thank you.
Speaker 3: And our next question comes from Anthony Croteau with Minuto. Please go ahead.
And our next question comes from Anthony <unk> with Mizuho. Please go ahead.
Speaker 13: Hey, good morning. Hopefully, hopefully just two quick ones. And I don't know if I'm reading too deep into this, but I think of the 21 actual at 265, the range you gave for 2022 of 185 to 189.
Hey, good morning, hopefully hopefully just two quick ones and I don't know if im reading too deep into this but I think of the 21 actual of $2 65. The range you gave for 2022 of 185 million to 189.
The midpoint there is not.
Speaker 13: actually towards the high end of the six days, actually above the high end, and this is before any of the additional capital, that you're actually not even trending towards the high end, you're above the high end. Is this just smaller numbers and moving a decimal place here or there, or is there more to read through to this?
Actually towards the high end of the 6% is actually above the high end and this is before any of the additional capital that you are actually not even trending towards the high end you are above the high end or is this just.
Just smaller numbers and moving industrial pace here or there or is there more.
More to read through this.
Speaker 13: Well, here's the good news, Anthony. You said 185 to 189. It's 285. 285. Apologies. It's a long morning. Apologies. No. No problem.
Well here's the good news Anthony you said 185 to $192 85 to $2.
Apologies.
It's a long morning I apologies.
Speaker 5: You know, so again, we're happy with where we landed this year. We've got a lot of momentum coming into the year, and for some of the reasons that Reggie articulated earlier, but you may want to jump in again on this one.
No problem.
So again, we're happy with where we landed this year.
Got a lot of momentum coming into this into the year.
And for some of the reasons that Rajiv articulated earlier, you may want to jump in and again on this one but.
Speaker 5: Bottom line, we've offered guidance there, we feel we've expanded and raised that guidance and feel good about, really good and confident about landing there and as I shared earlier, likely in the midpoint range, a lot of year left, but in the midpoint of that of that range we offer today.
Bottom line, we've offered guidance there, we feel we've expanded and raise that guidance and feel good about really.
Really good and confident about landing there and as I shared earlier likely in the mid point range a lot of year left but in the mid point of that of that range we offer today.
Speaker 5: And so, again, and then after this and really into 2022, that.
And so again and then after this and really into 2022 that is the base year will grow at that 6% to 8% towards the high side, but.
Speaker 14: is the base year will grow at that 6% to 8% toward the high side. But anything else to offer on that, Reggie? No, I think you have the key point, Derek, which is the 6% to 8% guidance happening and that sort of confidence toward the high end, that is off of the 2022 base, and so I think 23 and beyond. 2022 is a fairly atypical year, again, given the sale of the bank, and that's why you see a little bit higher growth in the range of 285 to 289 off of the 2021 actuals at 265. It implies like 7.5% to 9%, but we don't foresee ourselves growing at that clip going forward. So it's just an atypical year as we reduce the dilution from the interbank sale and redeploy the capital.
Anything else that offer on that regimen now I think you hit the key points here, which is the 6% to 8% guidance, Anthony and that sort of confidence toward the high end that is off of the 2022 base and so I think 'twenty three and beyond 2022 is a fairly atypical year again, given the sale of the bank and Thats why you see a little bit higher growth in the range of $285.
<unk> hundred 89 off of the 22021 actuals of $2 65, it implies like seven 5% to 9%, but we don't foresee ourselves growing at that clip going forward. So it's just an atypical years.
Reduce the dilution from the interbank sale and redeploy the capital.
Speaker 13: Um, what has to happen for you guys to hit the sex?
What has to happen for you guys to hit the six.
Speaker 13: like what why even to sick that you guys are really fully loaded seven to eight i'm just curious what what's the scenario where you come in a sick why you why you remember why never move it i guess is my question
Why even to six that it seems that you guys are really fully loaded seven to eight I'm just curious.
What's the scenario, where you commented a six.
Why why why not remove it I guess is my question.
Speaker 14: Well, I mean, even though the range may seem wide on a percentage basis, it's about four or five cents on average, Anthony. And so we think that that's plenty conservative to give us a little room to land the plane. So we feel good about the guidance range, which, again, I think is one of the tightest in the sector.
Well I mean, even though the range may seem wide on a percentage basis, it's about 4% to $5 on average Anthony and so we think that Thats <unk>.
Plenty conservative.
Give us a little room to land the plane. So we feel good about the guidance range, which again I think is one of the tightest in the sector.
Speaker 13: Great, and just last for me, I think you said digs, the plant had an extended outage 2021. Just what was the issue and is that plant back in service?
Great and just lastly, I think you said giggs. The plant was extended outage 2021, just what was the issue and as that plant back in service.
Speaker 6: Yeah, the quick answer is back in service. There was a supply line of gas that was feeding into the plant that needed some additional construction work. And, you know, having been in the gas business for a long time, we know once that type of work is done, you know, it lasts about 70 years or so. So we feel good about the fact that that was non-recurring and we'll be back at normal operations going forward for the foreseeable future. But just to be clear, it wasn't our gas line. It was from a third party. But that's now fixed and we're off and running. Great. Thanks for taking my questions.
Yes. The quick answer is back in service there was a supply line of gas that was feeding into the plant that needed. Some additional construction work and having been in the gas business for a long time, we know once that type of work is done.
Last about 70 years or so so we feel good about the fact that that was the nonrecurring and will be back at normal operations going forward efficacy seeable future, but just to be clear it wasn't our gas line from a third party, but that's now fixed and we're often running.
Great. Thanks for taking my questions.
Speaker 3: And the next question today comes from Paul Patterson, Aguilin Rock, to the sea. Please go ahead. Hey, you have the gun.
Thank you.
And our next question today comes from Paul Patterson Glen Rock.
Please go ahead.
Speaker 9: and it's going well pa. Thanks. Just an hypothesis of this is that the normalized storm impact for
Hey, How's it going.
Well Paul Thanks.
Just on I apologize if I missed this but the normalize the storm impact for.
Speaker 9: um 2021 um that you guys uh i guess the delta that you guys are thinking i see that you're combining it with a customer initiatives um
2021.
Thank you guys.
I guess the Delta that you guys are thinking.
It with the customer.
Initiatives.
Speaker 9: How much was the storm? What do you think about terms is how should we think about storms this year? I mean 2021 versus in 2022?
How much was the what are you thinking about in terms of how should we think about storms. This year I mean in 2021 versus 2022.
Speaker 14: Yeah, Paul, thanks for the question. So you know, we've seen at least over the last four or five years, an increase in sort of the, I'll say the volume and the intensity of storms. And so.
Yes, Paul Thanks for the question. So we've seen at least over the last four or five years and increase instead of the I'll say, the volume and intensity of storms and so.
Speaker 14: You know service restoration has been somewhat volatile. Last year I'd say was atypical even relative to the last few years. And so I think if you look back from the pre pandemic levels to 2020 we were on a spend rate.
Service restoration has been somewhat volatile last year I'd say it was a typical even relative to the last few years and so I think if you look back from a pre pandemic levels to 2020, we were on a spend rate of somewhere around $70 million to $80 million.
Speaker 14: of somewhere around $70 to $80 million. And then 2021, we were a multiple on top of that. I think almost 2 to 3x that. Not 3x, but closer to 2x. And so we just don't foresee a level of service restoration at those levels.
And then 2021, we were a multiple on top of that.
I think almost two to three X that not three X, but closer to <unk> and so we just don't foresee a level of service restoration at those levels.
Speaker 6: in 2022, so we expect to be, you know, sort of, we're, I think we have rates about $65 million, so we may be a little north of that when all is said and done this year, but we certainly don't think we'll see, you know, numbers in excess of $100 million, $150 million, which is where we were last year. So that's how we're thinking about it, sort of more towards where we are in rates and maybe slightly above that. Is that helpful? Very helpful. And then just with respect to
In 2022, so we expect to be sort of where I think we havent rates about 65 million. So we may be a little north of that when all is said and done this year, but we certainly don't think we will see.
Numbers in excess of 100 $150 million, which is where we were last year. So that's how we're thinking about it sort of more towards where we are on rates and maybe slightly above that is that helpful. Doug. That's helpful. And then just with respect to Covid.
Speaker 9: I mean, it looks like, you know, you guys have done very well, uh, during it. Um, and, uh.
I mean, it looks like you guys have done very well during it.
Speaker 9: and you gave a lot of information on the usage and everything, but I'm just wondering...
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And you gave a lot of information on the usage and everything but I'm just wondering.
Speaker 9: Is COVID kind of a non-issue at this point, should we think about in terms of 2022 and going forward? I mean, obviously, you can't predict the pandemic, but I mean, I'm sort of saying, I mean, how do you think of COVID impacting stuff, I guess, in 2022?
Is it kind of where are we sort of scope of kind of a non issue at this point should we think about in terms of 2022 and going forward. I mean, obviously, you can't predict the pandemic, but I'm sort of saying I mean.
How do you think of Covid impacting stuff I guess in 2022.
Speaker 5: Well, I don't want to minimize COVID or the health effects to people and so I'll be sensitive to my response here.
Well I don't want to minimize COVID-19 or the health effects to people and so on.
Sensitive to my response here.
Speaker 5: But bottom line, what we've in Michigan here, we're seeing all the economic indicators are headed in the right direction and people have
But bottom line, what we in Michigan here, we're seeing all the economic indicators are heading in the right direction and then people have figured out a way to be able to work and live and even play in the midst of a pandemic and as a company we found ways to work safely.
Speaker 5: figure out a way to be able to work and live and even play in the midst of a pandemic. And as a company we found.
Speaker 5: ways to work safely with the appropriate precautions in place.
With the appropriate precautions in place and so again, we're not seeing what we saw at the beginning of the pandemic was economic shutdowns and other and other factors influencing load. It's really on the upswing in all economic indicators are again headed in the right direction and so I would put it in more of a perspective that we figured out.
Speaker 5: And so, again, we're not seeing what we saw at the beginning of the pandemic, which was economic shutdowns and other and other factors influencing load. It's really on the upswing and all economic indicators.
Speaker 5: are again headed in the right direction. And so I would put it in more of a perspective that we've figured out how to work within the context of COVID.
How to work within the context of Covid.
Okay, Great I really appreciate it thanks, so much.
Speaker 3: Anyway, this is an over-ditching include with a question and answer session. I'd like to turn the conference back over to Garibald, shall we open the closing of the work?
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Gary Wojtaszek for any closing remarks.
Thank you Rocco Rocco and I want to thank everyone for joining us today for our fourth quartile earnings call take care and stay safe.
Speaker 3: Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. They have a wonderful
Thank you Sir This concludes today's conference call. Thank you all for attending today's presentation.
Have a wonderful day. Thank you.