Q4 2021 OGE Energy Corp Earnings Call
Good day, and thank you for standing by and welcome to the Q4 2021 O G Energy Corp earnings Conference call.
At this time all participants are in a listen only mode. After.
After the speaker presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
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I would now like to hand, the conference over to your Speaker today, Jason Bailey Director of Investor Relations. Please go ahead.
Thank you Dennis and good morning, everyone and welcome to <unk> Energy Corp's fourth quarter 2021 earnings call with.
With me today, I have Sean <unk>, our chairman, President and CEO and Brian Butler, our CFO in terms of the call today, We will first hear from Sean followed by an explanation from Brian a financial result.
And finally as always we will answer your questions.
I'd like to remind you that this conference is being webcast and you may follow along on our website at <unk> Dot com and.
In addition, the conference call and accompanying slides will be archived following the call on that same website.
Before we begin the presentation I'd like to direct your attention to the Safe Harbor statement regarding forward looking statements.
This is an SEC requirement for financial statements and simply states that we cannot guarantee forward looking financial results, but this is our best estimate to date.
I'll now turn the call over to Sean for his opening remarks, Sean Thank you Jason.
Before we begin I do want to acknowledge the sad and disturbing news out of Ukraine. This morning and share our thoughts for a peaceful resolution.
With that in mind. Thank you for joining us today, it's certainly great to be with you.
Before I get into the specifics of 2021, I do want to mention a few items at the outset.
Some of you may recall that over the last five years I've shared with you how we were changing our operational paradigms.
With an intentional focus on reliability resiliency and affordability.
Really drive load and customer growth and we push to change how we engage our customers concentrate economic development efforts to grow our communities.
Operator business with excellence and creating a sustainable business model we have today.
And this effort was very intentional.
This focus led to the tremendous load growth, we are experiencing today and we're not done.
I am incredibly proud of every single employee for their exceptional performance.
How they've adapted to create a brighter future for <unk> energy.
We're well positioned for future growth.
Our confidence in our team confidence in our business and our confidence in our company.
With that let's take a look at 2021 results.
This morning, we reported earnings of $1 80 per share for the utility and the holding company loss of <unk> <unk> per share and also included as a $1 92 per share from natural gas midstream, including a gain associated with the enable merger transaction.
In total consolidated earnings totaled $3 68 for the year and Brian will provide more detail shortly.
Turning to operations every employee in this company took the opportunities in front of them to deliver outstanding results and they did so across all metrics. We are celebrating two key operational performance indicators this year.
2021 was our second best safety year on record, making each of the last six years the safest in company history.
And for the second time in four years, we delivered a number one ranking in the southeast electric exchange, where SCE for safety.
Additionally, escalate recognized <unk> as a business customer champion for 2022, and thanks for all of our efforts on delivering a great customer experience.
Again as I mentioned at the outset. This is confirmation of our intentional focus we continue to make investments in the grid to benefit our customers and communities in both Arkansas and Oklahoma.
The impact of our grid investments as real last May wind storm swept through Fort Smith, and our data shows 20000 fewer customers experienced a sustained outage and the power restoration process was reduced by 50%. Thanks to those grid modernization efforts in that state.
The Oklahoma grid enhancement program kicked off in 2020, and we expect to see similar results in the future.
In 2021, we invested approximately $232 million in the grid, including work on 104 distribution circuits 64 distribution Substations for technology platforms, three communication systems, and these investments improved service to more than 175000 customers or nearly 20% of our customer base.
Yeah.
For 2022, we plan to continue these investments improving reliability and resiliency for an additional 145000 customers.
Combined the two program investments ensure a better customer experience by reducing and eliminating outages.
We continue to expand our solar offerings underway, we have another five megawatt solar farm supporting our customer subscription programs.
And we will provide you an update on our utility scale solar RFP that we have underway later this year.
Our regulatory calendar continues to be steady.
In December we obtained the securitization order and Oklahoma to cover nearly all the fuel and purchase power costs associated with winter Storm Europe .
We are awaiting the Oklahoma Supreme Court to certify those bonds in Arkansas, we reached a settlement in our fourth Formula rate evaluation report, which we filed in October we expect an order soon with rates going into effect in April at the same time, we also filed for a five year extension of the Formula rate plan.
We filed a rate review in Oklahoma at the end of the year first and foremost this rate reviews about recovering the capital investment we've made for our customers in 2019, 2020 and 21 additional.
Elements of the review include the continuation of the Oklahoma grid enhancement program and established recovery mechanism.
Also in the reviews, an option for the Oklahoma Corporation Commission to consider a performance based rate plan like those used by the natural gas utilities in Oklahoma.
The review also includes updating the depreciation schedule to reflect the useful life of assets in service and these new rates would likely become effective in July .
The customer impact of the review is an increase of approximately 9% to the current rates of residential customer we are sensitive to the financial impact on our customers and are committed to continue our long track record of affordable rates and program offerings to help customers manage both their monthly bill and energy usage.
Turning to the economic development activities. We ended 2021 on target with two 4% load growth and customer growth of one 4% outpaced our customer growth projections.
Strong growth like this means the combination of our highly affordable rates and ability to service commercial expansion in our markets drives drives results for <unk> and the communities. We serve we expect continued low growth in the three 5% to 5% range for 2022.
This tremendous growth reflects our economic and business development efforts designed to support existing business expansion with new growth in health care defense contracting and other industries in our service area.
We ended 2021 with 201 megawatts of new connections lending right on target with the estimate I shared with you last quarter.
Oklahoma and Arkansas as key economic indicators are strong with unemployment rates lower than the national average, reflecting a competitive business environment. Additionally, Oklahoma City was recently listed as the <unk> best place for startups in the U S. Thanks to an affordable cost of living and business friendly environment.
So as we look to the future we intend to grow our utility O Jeanie earnings by 5% to 7% over our forecast period.
Underpinned by the reliability and resiliency investments as a result of our growing service area.
Additionally, we expect to grow the dividend targeting a dividend payout ratio of 65% to 70% based on utility earnings.
Over the next several years, we expect our earnings per share growth to exceed the dividend growth rate to help achieve this target.
Regarding our energy transfer units or plans are consistent to exit the majority of the position by the end of the calendar year and we will update you quarterly on the progress we've made.
Before I hand, the call over to Brian I want to recap a few important points first the economies in our service area are strong driving economic development that leads to growth and capital investment it fuels our business second is our regulatory agenda.
We're delivering on our customer commitments and look forward to constructive regulatory outcomes in rate reviews, and finalizing securitization in both jurisdictions.
Third our balance sheet is among the strongest in the industry and we're on a path to becoming a pure play utility. Our plans include grid and generation infrastructure that add value for customers and support our growing service area and.
And finally at the end of the day.
It's about our people.
Our employees told us through a survey last fall that they feel a higher sense of purpose and working for <unk> and our customer experience is the result of our employees dedication to what we believe is our noble purpose to energize life. So with that thank you and I'll now turn the call over to Bryan Bryan.
Alright, Thank you, Sean and good morning, everyone.
Let's start on slide eight and discuss 2021 fourth quarter results were as expected and the details can be found in the appendix of the slides.
For the full year 2021, the utility achieved net income of $360 million or $1 80 per share compared to $339 million or $1 70 per share in 2020.
The $1 80 of earnings per share at <unk> is right at our original guidance midpoint of $1 81, representing an increase of five 8% and earnings per share at the utility.
After winter storm Uri, we committed to get back within our original guidance range and we met that commitment with strong execution across our operations, including cost mitigation efforts.
As Sean mentioned, we could not be more proud of the employees of <unk> and their dedication to excellent customer service in 2021, while while meeting our financial objectives for our shareholders.
On a year over year basis. The increase in net income was primarily driven by strong weather normal load growth of two 4% increased revenues from the recovery of our capital investments and customer programs as well as strong cost mitigation efforts.
These favorable results were partially offset by the impacts of the winter storm Yuri including the fourth quarter regulatory settlement, we reached in Oklahoma and higher depreciation on a growing asset base.
With respect to our natural gas midstream operations, we reported net income of $385 million or $1 92 per share compared to a net loss of $515 million or $2 58 per share in 2020.
The impact of the closing of the enable merger with energy transfer in December 2021 was a net gain to the company of $265 million after tax.
As a reminder, 2000 twenty's results were impacted by a loss due to enable investment impairment charge of $590 million after tax.
Holding company and other operations resulted in a loss of $8 million or <unk> <unk> per share in 2021 compared to a gain of $2 million one per share in 2020, primarily due to higher short term debt levels and lower income tax benefit.
We expect holding company and other operations to have a minor impact to consolidated results in 2022 of a 1% to <unk> loss.
Putting it altogether on a consolidated basis, we had an excellent 2021 with net income of $737 million or $3 68 per share.
Turning to our 2021 vote results on slide nine fourth quarter load came in as expected and for the full year load was two 4% above 2020 levels.
The residential class maintained its 2020, whether normal volumes of approximately 4% above 2019 levels sustained by outstanding customer growth.
We also began to see real strength in the commercial and industrial classes overall, our 2000 22021 vote surpassed the pre pandemic levels to 2019 by one half a percent and we are bullish on the future of our local economies.
As we look to 2022 as shown on slide 10.
We expect total load growth between three 5% to 5% above our 2021 levels.
Our commercial segment is forecasted to experience double digit increases.
A large portion of that growth will come from data mining companies attracted to our service Terry territory by our low customer rates.
We also expect to see strength of several other commercial segments.
Further we expect volumes in our residential class to be supported by customer by customer migration into Oklahoma and Arkansas.
Lastly, we are also forecasting solid growth in the public authority and oilfield sectors as volumes return to pre pandemic levels.
Turning to slide 11, you can see how these load trends play into our strong EPS growth equation for 2022, we expect utility earnings per share in the range of $1 87 to $1 97 per share.
The midpoint of $1 90 to represent 6% growth from the midpoint of our 2021 guidance of $1 81.
Nearly 7% growth off of actuals.
In addition to outstanding load projections, we expect new customer rates to come into effect in Arkansas and Oklahoma during the year.
Other drivers in our 2022 financial plan included an expectation of normal weather and higher depreciation in line with our capital investment plan.
With respect to O&M or non rider O&M in 2022 is forecasted to be approximately $25 million below 2019 levels. Our company's cost discipline has been an important factor in maintaining some of the lowest customer rates in the nation.
Let's turn to slide 12, where we are introducing our five year capital plan through 2026.
This targeted capital investment plan will address the robust investment needs in Oklahoma, and Arkansas to maintain and improve reliability and resiliency, while adding capacity for devote and customer growth expected in the coming years.
Over 75% of our plan as customer focused distribution and transmission investments.
This new five year capital plan of $4 75 billion excludes potential additional investments associated with our 2021 ERP.
We will update you on investment needs related to our integrated resource plan as we received the results of our Rfps.
From an earnings perspective, as Sean and I have looked at the five year financial forecast, we see a business with strong fundamentals a compelling customer focused capital investment plan and our service territory with outstanding load growth prospects.
These factors give us confidence that <unk> can annually grow earnings per share and a 5% to 7% range over our forecast period based off the midpoint of our 2021 guidance of $1 81.
Turning to our financing plan on slide 13, our balance sheet strength remains a key advantage and supports our long term growth plan and dividend without the need to issue equity in our five year planning horizon, our cash flows will benefit from the sale of the energy transfer units as we exit the majority of our ownership interest by the end of 2022.
With respect to the fuel cost we incurred during winter storm here in December we received a financing order from the Oklahoma Corporation Commission and a 30 day appeal period ended in January .
We await certification from the Oklahoma Supreme Court and anticipate the securitization transaction closing in the second or third quarter of 2022, which will solidify our credit metrics to more normal levels. We.
We project <unk> to debt of 18% to 20% for 2022 through 2024.
Earlier this month Moody's revised their ratings outlook on both the holding company and the utility to stable from negative reflecting their expectation at <unk> will recover the cost incurred during winter storm Yuri in Oklahoma due to issuance of securitization bonds.
Separately, we expect to issue long term debt at <unk> of approximately $300 million in the second half of 2022 to support our capital investment plan.
Before I turn the call back over to Sean Let me summarize where we stand.
Our employees have built a strong foundation for this company and they delivered outstanding results in 2021.
Looking forward, we have put together an operational and financial plan for 2022 through 2026 that will continue to deliver great value to our customers and drive economic development in our communities, we expect to deliver strong earnings per share growth of 6% in 2022.
And lastly, our 5% to 7% long term earnings per share growth rate, coupled with a stable and growing dividend offers our investors an attractive total return proposition.
That concludes our prepared remarks, and we will now open the line for your questions.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.
And your first question is from the line of Shar <unk> with Guggenheim Partners. Please go ahead.
Hi, Good morning, Sean and team, it's actually Constantine here for Shar, Congrats on great quarter.
Hey, good morning constant team good morning.
It looks like a healthy capex low forward and.
We're now hitting that $915 million run rate of Capex per year.
You talked a little bit about the drivers for the step up.
Seem to be more generation more transmission spending and not including upsides from the IOP at this juncture. So just any color you can provide on the step up in Maine and record the regulatory mechanisms for recovery there.
Yes, well I think in two parts there the driver there is really around the growth we're seeing in our service territory and.
As I mentioned in my comments, we've been intentional we built this the right way trying to attract businesses and customers to our service territory and we're seeing the results of that.
So those investments are really targeted to that growing service territory.
Exactly right there is nothing in there for.
The results coming out of our integrated resource planning process as.
As we get feedback from those will certainly layer those in as far as the recovery of that we have a case on underway right now.
And we proposed a.
Two alternatives one with this grid enhancement mechanism in Oklahoma to kind of recover that.
Alternatively, we've also proposed a performance based ratemaking program both of those would.
Serve as the recovery mechanism for a lot of these investments and then as you know in Arkansas, we have a formula rate and we're in the process.
Seeking a five year extension for Arkansas.
Yes, that's very helpful and the second question is on the longer term assumptions.
And in Europe presenting today.
And what level of low growth and bill inflation do you embed over the five years and maybe a little bit more broadly of what takes you to the top of the 5% to 7% growth that you are projecting any assumptions on rate case outcome or the performance base rates as you mentioned.
Yes, well I think I'll turn this over to Brian here to get into the details, but I think very succinctly.
Whats going to drive this as load growth and.
That's what's going to be the driver of this and so on.
The more load we have you should expect.
Hi earnings coming out of our company, but Brian you want to fill in the details sure absolutely and I think.
Incremental load growth as is the factor that could take you to the top end of that 5% to 7% loan growth.
Earnings per share growth expectation Constantino, just so you know as we modeled out our five year plan, we model out different scenarios of outlet growth could could play out capital investment plans various outcomes on a regulatory front and we have great confidence in being able to deliver that 5% to 7% over the five year period.
Under various scenarios.
For load growth.
Absolutely showing some very strong load growth in 2022, but as we build our core financial plan in 2023 and beyond we've assumed that we revert back to a.
More historical 1% load growth level in 2023 and beyond so certainly there is some upside there, but we're really proud of the capital investment plan that we've targeted for our customers over the next five years.
Great balance of.
Doing the infrastructure investments that community needs, while also always keeping in mind affordability. So we believe over the five year period as capital investment plan with the load growth were seen will allow us to stay at the top tier of affordability in the nation and keep.
Right right increases very modest.
So I think that that's a great message and maybe just one client that you didn't touch on is the performance based rates there is any.
Timing embedded and plan for an outcome there or is it too soon yes.
Yes, our financial plan does not assume the PBR in Oklahoma occurs.
We obviously believe the grid recovery mechanism is working very well in Oklahoma.
So we filed for an extension of that.
But it's the the PBR is really another option for the commission to consider.
Yes.
Excellent. Thank you and congrats on.
Closing out a good year.
Thanks, Constantine take care.
Your next question is from the line of Julien Dumoulin Smith with Bank of America. Please go ahead.
Hey, this is actually Cody Clark on for Julian Thanks for taking my questions.
Hey, good morning.
So just piggybacking off of Constantine question than I am.
Im wondering how youre thinking about investments driven specifically from the 2021, RFP and how that plays with the 5% to 7% growth rate. If we can kind of hone in on the on the solar investments there I mean, depending on the ownership percentage.
150 megawatts of solar annually that you previously outlined could be fairly significant. So I'm wondering you talked a lot about load growth, but how does investments there.
Kind of drive the range.
Yes, certainly that's not included in the.
Investment forecast over the five years that Brian laid out there.
We're going to go through this RFP process.
Recognizing that.
There are inflationary pressures out there we do have some flexibility about the timing of when we do some of this.
But we'll layer those investment dollars in when we come to conclusion.
Evaluate all of those bids that we received back but.
And one one point there Cody it is my expectation that we're going to own all of these assets these would not be.
Contractual arrangements.
I think that's an important distinction there.
Okay understood that's very helpful and then.
Curious if that's a significant ownership.
For it to come to fruition, you just stated expectation to own all of the assets I'm just wondering.
Thats not embedded in plan now would you need to issue equity as you later these investments in or are you thinking about using incremental leverage to kind of satisfy the funding needs.
Yes, I think we will.
We'll cross that bridge when we get there and we will certainly lay all that out for you I don't think it.
It's good to speculate right now about.
What that would look like but.
Again, we've got a lot of flexibility around our plan and I'm really proud of what we've done here because we built it the right way.
Over the years focused on affordability to drive this load growth.
This this wasn't by chance. This this was intentional and so we're going to be cognizant of continuing to do everything we can to have load growth too.
Okay and just the <unk>.
Just a follow up to that leverage question. Just wondering if you could share any updated thoughts on how the rating agencies are thinking about the downgrade threshold.
You're exiting energy transfer.
Okay, Brian you want to take that one yes, absolutely Hey, Cody it's Brian .
With respect to Moody's they recently issued.
The report on the company, the holding company and the utility and it's as I mentioned in my remarks.
They have put us back on stable outlook.
In that report they've they've taken our downgrade threshold from 20% down to 18%.
And many of our peers are more at that 17% or 16% Downgrowth ratio downgrade threshold. One thing I will say is that we.
Part of the reason they over to downgrade threshold is because we're exiting the midstream business. So we are lowing lowering the risk profile of the company.
And as we exit and fully exit the midstream business and as we continue to execute well on our operational plans I think youll see Moody's revisit that downgrade threshold, but all in all we feel we feel like we're in great shape with all the agencies over the next several years and as you know an 18% <unk>.
That is one of the strongest in the industry.
It gives us a lot of flexibility on deploying our investment plan as needed for our customers.
Okay got it I'll pass it up there thanks again for the time.
Have a good day.
Your next question is from the line that into Kim with Goldman Sachs. Please go ahead.
Hey, guys. Thank you for taking my question.
My first one is maybe piggybacking off of the.
The balance sheet question and as you get rid of the midstream when you just look across your peer set.
Regulated utility I guess in your.
Your type of balance sheet, what is that.
Threshold by Moody's typically and if that were to be the case and a good case scenario, where you have that threshold, even lower to where your peers are what type of additional leverage capacity do you think that creates for you guys.
Hi, Brian sure Hey into.
Again, when we've looked at our peers peer sets.
The <unk> rating at Moody's and <unk>.
Triple B, plus with S&P S&P downgrade threshold is actually a good bit lower than Moody's. So that from one gives you a lot more flexibility as.
As I mentioned before we've looked at many of our peers in our sector and they appear to have more of a 16% or 17% downgrade threshold at Moody's.
That certainly as you described would indicate you are able to deploy more capital with leverage.
Without impacting our credit rating.
So does that does that answer your question looking forward.
Yes, no it does and I guess the other question I think currently you guys are currently at the Triple B plus B 21 is that not something you want to maintain or.
I think a stable utilities some of the other peers out there are okay to be in the mid Triple B range is that something that you're okay with.
Holding it's Walter do you want to maintain your current ratings.
We intend to maintain our current ratings.
Okay.
That makes a lot of sense on the low growth side I mean, obviously it can be.
Especially the commercial load that you are putting out there for 2022, we've talked about the low growth trends over the past couple of few quarters from you guys. On this number is definitely very impressive.
I know that the forecast beyond 'twenty, two it's relatively conservative so.
Seem to indicate that there could be definitely upside from there if that holds any color on what youre seeing on 2020 to expectations and which industries are what momentum do you think exists to at least.
<unk> 22 at this level, maybe not the same level, but being above your conservative assumptions.
Ill.
I'll, let Brian get into the detail but into.
I would tell you this is a great.
Great conversation when we're talking about momentum were talking about growth.
It's really exciting so Brian you want to kind of get into the details there yes absolutely.
Yeah.
I'm in my fifth quarter here at the company and in a.
A lot of discussion, Sean and Jason I've had I've talked about the real strong momentum the company had developed right before the pandemic hit so we're starting to see load growth exceed 1% before the pandemic hit and had great momentum and then of course speed bump in 2020 with Covid and the pandemic and now we're turning a corner here.
And Youre in Oklahoma, and Arkansas are very business friendly States. Then you have us as a utility that has some of the most affordable rates in the countries. So you are seeing great interest in.
Existing and new companies come in and expanding operations.
2022, I would describe it.
One of the bigger drivers there is a lot of different industries that are helping to grow I.
I did mention data mining companies in my opening remarks.
We've taken a pretty conservative approach with that expected load is too.
We expect it to come in at <unk> <unk>.
They've indicated certain start dates for their operations and we have taken a conservative approach by assuming a six month ramp up period for those operations. So a slower ramp up than what those customers are actually expecting.
And that should start in earnest in the second quarter.
And I think your question to US could you also see some of that upside.
Going into 2023, and I think that's absolutely a possibility.
Got it and then just follow up to that that the capital the 950 per year over the next few years.
Starting to 'twenty three period that capital is assuming relatively conservative low growth assumptions.
Yes.
I wouldn't point to this specific load I've been speaking to is driving our capital investment needs. Its the overall ocean ryzen and Oklahoma.
Great customer demand residential industrial oilfield public authority its the entire the entire economy here that we've been planning for for years, and so youre seeing not only new.
Capital projects around capacity upgrades in our transmission system 69 kv lines in our Substations on a distribution side you are seeing us make investments needed to make the entire grid more resilient.
To protect it against extreme weather events and things of that nature. So these investments are needed. They are critical for a safe and reliable operation of our grid over the next five years irrespective of what you might see in 2023 load.
Yes.
Okay, that's definitely the color and just one more if I could.
'twenty two guidance and also just an annual fee to some growth rate as we think about the utility I assume thats utility.
Net of Holdco and others as well and if that is the case any from a modeling perspective any expectations on the range of either drag or benefit on the holdco side that we should be thinking about.
Yes, so our our 5% to 7% we mentioned that is our utility expectation of earnings per share growth on the holdco.
We had a <unk> <unk> drag here in 2022, and my comments I mentioned, we expect that to go down to about a penny or two here in 2022 and really what's driving that into is that our holding company debt levels to go back close should really shrink here in 'twenty, two and 2023 as we sell our energy transfer units.
Get the proceeds from those sales as well as the harvest the distributions. If you will from that investment. So we expect holdco to have a minimal impact on the company from an earnings perspective. The next couple of years and then over time as you deploy your your annual $950 million of capital Youre going to see holdco debt levels start to.
Move up and you will have a bit of.
Interest expense drag in the out years, but we've modeled utility by itself and then of course utility plus the Holdco and believe we can deliver in that 5% to 7% range.
On a consolidated basis once you exit the midstream business okay.
Okay. So that's all embedded okay. Thank you so much.
Great. Thank you.
Your next question is from the line of Travis Miller with Morningstar. Please go ahead.
Good morning, everyone and thank you.
Good morning, Travis good morning.
All my questions are on the Capex. So just to follow up on what you were talking about just then.
That 1% number that you are planning for kind of beyond 2023 or so.
If that were to go to a two or 3% what areas of Capex would you expect the most affected distribution generation transmission, where would you think we would see the most pieces moving around so to speak.
<unk>.
Youll continue to see investments in the transmission and distribution side of the business I mean that we've said for many many years.
Really the wires is where we're focused.
As Brian remarked, it's really that customer focus where there is benefit and those will be the investment dollars, we make to connect those new customers.
Okay understood.
And then a couple of your peers around the southeast and Midwest, We talked about industrial demand driving a lot of renewable growth ESG and greening of.
Their energy use it are you seeing that and if so what are the dynamics of <unk>.
Trying to get users essentially to pay for that upgrade versus socializing across the system.
Yes, we're certainly having that conversation.
Some of them some of our customers.
Think the.
The bar there is a little higher.
In our service territory, because our rates are so attractive.
And so.
No.
Those industrial customers are looking for the economics, there too and so they've got a really good thing where they are now and so we're working with them.
Our solar subscription program, where customers are able to subscribe to some of that has been very successful we've got another one on one.
The way this year.
But those discussions are ongoing but.
Just like we're focused on the economics.
And the affordability as we call it for our customers those those industrial customers are looking at the same thing there too.
The only thing I might add is that.
Being an SPP, we have access to a tremendous amount of wind generation and when you look at <unk> in the country Spp's, probably done a better job than any as far as bringing renewable resources and so they're getting a pretty green electron flow as it is today.
Sure Okay.
I appreciate the thoughts.
Thank you.
Once again, ladies and gentlemen, if you would like to ask a question simply press Star then the number one on your telephone keypad.
Our next question is from the line of Brandon Lee with Mizuho. Please go ahead.
Hey, good morning, Sean and Bryan.
That's on the quarter.
Most of my questions have been asked.
Just a quick question.
<unk>.
If you guys had good weather.
You guys perform well during the year are you guys looking toggle O&M to stay within your 5% to 7% range.
Any pull forward capex.
Yes.
We're forecasting 10 months ahead here Brandon but.
I think thats something that.
Our planning and operations are dynamic Brian talked about the efforts we undertook in two.
2021 to <unk>.
In the guidance range and I think thats the expectation that you.
Youre adaptable and adjust things based on how how the year progresses, I mean things will surface.
And we will adjust and adapt and we have every expectation to meet our numbers and again.
Wanted to be really clear.
We built this company and built this plan the right way and we're focused on the long term to that we're not we're not.
Narrowly focused just on the current year, either we're making sure that we're going to deliver this for many many years.
Great and then.
Just on your.
Energy transfer sell down.
I think you guys mentioned that the majority of the energy transfer your shares will be exited by the end of the year is that.
Change in strategy are you expecting to hold a small minority piece into 'twenty three.
There is no change in our strategy. We were just trying to communicate we are going to exit this position.
Okay, Great. That's all I had thanks, alright, thanks, Brian .
Thank you Brian .
Okay.
Okay.
And I am showing no further questions at this time I would like to turn the conference back to Sean <unk> for closing remarks.
Thank you Dennis as.
As we close today's call I do want to leave you with a final thought.
We will continue our sustainable business model of growing revenues by attracting new customers and managing expenses by utilizing technology and becoming more efficient as we focus on reliability and resiliency.
This virtuous cycle helps us maintain some of the most affordable rates in the nation, which in turn attracts more customers as we're seeing.
I am grateful for our team for every employee who has brought us to this point realizing the growth projections, we set out five years ago.
And as we celebrate <unk> 120th birthday. This week, we aren't letting up and I look forward to sharing continued results with you in the future. So.
So I am excited about where we're headed and what the future has in store for the company. Thank you for your interest in <unk> Energy Corp, and for being on the call today take care of yourselves.
This concludes today's conference call. Thank you for joining you may now disconnect.
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Yeah.
[music].
[music].
[music].