Q3 2022 Avangrid Inc Earnings Call
My daughter was remanded to the trial court or the vested rights determination.
The trial Court recently denied frequency duration of each prior order denied our request for a preliminary injunction that would allow construction to resume as the legal proceedings continues.
We remain confident that the whole process, we find the differential designed to blow these projects construction is unconstitutional.
The C E C project will benefit, Maine, and all new England by reducing the reduced dependence on fossil fuels and provided much needed energy prices stability, keeping fossil fuel generators propylamine themselves on 80% or higher rates on the backs of made a new income families. One more.
Our region closer to a renewable energy future.
And renewables.
180 format Wildland Hill Solar project reached Cod's. This month, raising the total capacity we brought into operations over the last 12 months to 475 megawatts.
We are constructing approximately 600 megawatts of additional new capacity.
We also continue to focus on mitigating risk prudently addressing supply chain challenges.
In addition to the panel Sweet previously secured for <unk> 2223, we have now also secured or required panels for 2004.
In our offshore business construction and bigger when one is on track and is typically progressing.
We are proud to announce that the manufacturing of all major components for this landmark project is underway.
In addition were taken a strategic as steps to advance opportunities for long term growth B join our strategic plan for the 2025. This month, we executed a heads up agreement with separate infrastructure to support the potential joint development of larger scale clean green hydrogen Ah pneumonia projects in the U S with an initial.
Focus on the Gulf Coast, and the West Coast.
Given this positive trajectory and our operational achievements, we're confident in our ability to deliver results for the full year within our expectations. We are now reaffirming our outlook for net income and adjusted net income of 850 million to $920 million or.
222 point $38 per share.
These adjusted net income range would imply year over growth.
Versus 21, ranging between 9% and 11%.
We are focused on setting reasonable and achievable goals are most importantly on following through continuing to build a trend where we consistently meet the mark.
Taking a closer look at our nine months results on a slight six we're demonstrating a very solid earnings tragic story on further reinforcing of our trend of continued growth over the last two years.
Since 2020 hour nine months net income and adjusted net income have each increase by over 70%.
The net income and adjusted net income we were reporting today for the last nine nine months have already surpassed the levels, we were able to deliver for the full fiscal year 2020.
These results have driven approximately 40% growth in 2020 in our earnings per share and adjusted earnings per share.
Even with the impact of last year's equity issuance, our nine month adjusted EPS has grown since 2020 at a strong compound on our growth rate of approximately 18%.
Moving onto our businesses on the network side, we are focused on execution and investments we have filed rate cases in our jurisdiction. This year each seeking multiyear plan with new rates effective in 2000 2003.
As mentioned at our Investor date, these rates Kc's combined with our Formula reads will provide regulatory agreements or approximately 90% of our rate base.
Our request aim to balance the investments needed needed to improve the system and deliver on estate climate policy with customer affordability.
We have requested approval of approximately $10 billion in capital investments over the next few years, focusing on clean energy transformation reliability and resiliency on improving the quality of service to our customers, which will also create jobs where local communities.
The investments needed to Modernise the system and meet the state policy goals are substantial and.
The proposals we have put forward represent a balanced path to address those needs.
As we work with regulators on these proceedings, we have taken a conservative approach to our long term outlook maintaining capital spending on average as historical.
But ultimately insufficient levels to meet the future needs of the system into the future.
As filed the resulting bill impact will be around 13% in New York with rates for our company. It remaining among the lowest in the state in between four and 5% for CMP July and Berkshire gas and increase that is lower than the current level of inflation.
At CMP, our rates with remain among the lowest score investor owned utilities in new England.
Turning now to the process in New York, We have filed a response to a staff testimony, which support at an average rate increase across all four business of 20% versus 25% sites.
Evidentiary hearings are scheduled to begin early next month. However, we have filed for a stay of those proceedings in order to enter into voluntary settlement negotiations shortly with all parties.
In Maine technical conferences on initial testimony are scheduled for November and in Connecticut, <unk> testimony suspected to be filed in December .
In Massachusetts, our pre fighting settlement with the Attorney General is currently being considered by regulators on an ordinary suspected shortly if approved our new rates would take effect in January .
Turning now to our offshore business owners like number eight.
As you know being Darwin, one as the first utility scale offshore wind farm in the U S and a key project.
Both our company and for the country, which will generate clean affordable energy for over 400000 homes and businesses, while reducing carbon emissions by over 1.6 million tons per year.
The project is progressing well and remains on track with a construction plan.
As we have discussed previously the supply chain for being Darwin one is fully contracted.
A non labor costs are either fixed or capped which protects the projects from carbon micro pressures.
We have now issued all notices to proceed on the manufacturing for all major components is now underway.
In particular, we are happy to report that the offshore export cable installation with restart will start this week.
And still erection for the onshore superstation is 95% complete and installation of the equipment is ongoing.
We are very encouraged by the excellent progress made here and we get ever closer as we get closer to delivering this milestone project in 2000 2004.
Embark seating in common with wind our focuses on improving the prior to economics and renegotiating, our ppas because of the difficult environment. As you know we beat destroy us in 2019 and 2021, respectively. Since then the market our experienced meaningful unanticipated changes due to inflation too.
Hi, James chain strengths and.
Higher capital and borrowing costs make it necessary for us to pressure changes to the BBA terms, which we believe are modest and achievable.
Two fallacy to facilitate this process, we have filed a motion with regulators in Massachusetts to suspend regulatory review of our Commonwealth, We Bpa's for one month.
As new England's largest offshore wind supplier of Engreaten committed to developing these new American industry, and bringing with it the wide range of benefits, while we're communities.
Based on a report by Pwc, we estimate that our investment in our three new income projects would generate tens of thousands of jobs. During the construction phase most of which will be in Massachusetts, and Connecticut, where we will be also generating over 1500 longterm sustain jobs during the operational I.
Of the <unk>.
As we deliberate these benefits our offshore activities will benefit when we patrol as development experience and proven track record of execution.
Moving to slide nine in onshore over the last 12 months, we have achieved commercial operation of approximately 475 megawatts, including 281 megawatts of wind on 194 megawatts of solar.
We have roughly an additional 600 megawatts under construction, including 106 megawatts of the onshore wind on 480 megawatts of new solar.
In line with how we're focused on mitigating risk and ensuring we can deliver on our existing commitments. We have worked with our suppliers to secure the required tunnels for also <unk>, we plan TLD in 23 and 2004.
In addition, we continue to work with our customers to renegotiate certain terms and conditions of our pba's to address inflation pressures accommodate escape impact and maximize value.
The inflation reduction act will be a driving force for America clean energy industry not just in the next one or two years, but over the next decade.
We expect the rate will create a strong long term tailwinds four additionally investments in wind solar and other renewables and subject to treasury items. We are moving forward on plans to capture the opportunities the IRL brings.
We are evaluating the best Street within our fleet to execute Repower project as we have done in the past and we will maximize the value proposal of new growth.
On our project my period basis by maximizing the contribution of tax credits in different firms as well they are monetization schemes.
And we deliver near term future periods. We will also continue to benefit from the experience on a scale of lipitor growth, especially when it comes to purchasing power on new technologies like doing hydrogen.
Turning now to slide number 10, our top of strategic priority is execution.
As you can see from the least our team is taken action throughout the year, we have delivered a number of successes across organization and in both of our businesses.
Above all at our one grade level, we are working to deliver on our 2022 earnings outlook and even though we're strong <unk> story to this person they months, we're on track to do so.
To date, we have delivered 2.1 billion in investment and 11% year over year increase as compared to 21.
Last month, we presented our new strategic plan, which will provide a deeper focus on a steady regulate the growth unhealthy, but achievable results. While also identifying a robust robust set of opportunities to deliver incremental value over and above our assumptions.
We're also remained committed to creating sustainable value through our focused on ESG.
As part of the nearly $100 million of debt with bills on this year.
About $75 million, where neo green bonds.
Fortunately our commitment to climate action, we are now targeting to reach carbon neutrality in a scope on an a scope two emissions by 2030 Moodiness ahead of most other major usdt's.
Nation, we are advancing innovative new technologies, such a green hydrogen that will support longterm recovering station.
Our efforts continue to be recognized by third parties, including atmosphere, which named Autenrieth one of the world's most ethical companies for the fourth year in a row.
The networks our team have worked hard to put forward multiple proposals for our right K filings in each of our states balancing investment needs with customer affordability.
We've taken significant steps forward in Maine, with our improved commerce customer service performance of TMP, leading to the removal of the 100 base basis points early adjustment and we received a favorable ruling on any CEC from the Maine Supreme Forbes.
We have also achieved a number of positives regulatory outcomes, including and order a new Europe , providing the state funds to help pay down the unpaid balances of our most vulnerable customers impacted financially by the Kobe pandemic.
We also received approval for additional historical amortization remained to recover are full of 2021 the firm referred to stone balance in our utilities have been recognized by.
For the standing performance, helping Lucy on a recover a sincere regain items.
In recent weeks, our gross traveled north to help restore power to Nova Scotia. After a few regain Fiona.
Lastly, or networks, we are accelerating our digital transformation and enhancing the customer experience.
We have increased our E bill enrollments by 22% year over year, reaching a 40% adoption rate them when our customers and have increased download of our mobile app by 76% year over year.
In renewables, we completed the restructuring of our offshore wind joy.
Joint venture partnership, which allow us to take full ownership of our largest new income premiums and.
And we reached <unk>, roughly 400 megawatts of new onshore capacity.
We are taking action to mitigate macro pressure on the business by securing partner supply per hour periods through 2024.
And through the renegotiation of the Pba's.
We continued to making steady progress in the construction of our <unk> our winter one project and this week, we would have starved base dilation of the offshore export the cable.
Furthermore, the passage of the Iras represents the largest federal investment in clean energy and climate in the USA story.
Providing long term certainty on a range of incentives unlocking transfer stability as an alternative to tax equity and overall, creating a strong growth signal for the industry.
As we await additional guidance from the federal government Ah renewable steam is focused on reviewing the impacts of the full package and surely can swiftly respond and capture old benefits that align with our businesses.
Finally, we commonly tax equity for approximately 600 megawatts of onshore projects and as mentioned, we continued to optimize our portfolio on development pipeline to maximize expected returns on reduced rates, including.
Seth Arseholes potentially.
With these achievements.
And a solid operational in earnest tragic story Hon. I'm confident that we are on firm footing to deliver future growth.
To discuss the growth further on a slightly <unk> I'd like to bring you back to the investment we expect to make some of 2025, you've seen a broader view that reflects our full contribution to use growth continue development.
On the left Iowa plan investments withheld <unk> PNM resources merger.
The chart on the right shows our total investments with PNM resources, including the fall enterprise value of the transaction and estimated capex from 23 to 25.
In both cases, we have concluded included 100 per cent of the Capex for being here with one where we have the opportunity to consolidate the proteus after <unk> pending a final business decision.
After including the full capex for being there with one even without being in resources regulated networks accounts for roughly 60% of investment or $6 $3 billion.
If we exclude the noncontrolling interesting bingo with one with a PNM resources regulated networks will account for over 70%.
PNM resources to add another 10.9 billion on post of our equity investment projected Capex and dead, increasing network share of our total investments to 80% or 88%. If we exclude the noncontrolling interest in <unk> one.
Altogether, including PNM resources, our investment total total to over 21, BB unregulated networks and contracted renewable assets.
Across our existing utility footprint, we are holding capex spivey at a level consistent with the prior three year period, allowing us to growth at an even pace balance and investments to improve reliability and resiliency with customer affordability.
As a reminder, our predictions do not fully consider the proposed investment investment in our rate cases include any investments to meet the state policyholders.
As mentioned previously we are focused on taking a disciplined approach that prioritizes the strategic unprofitable growth of both our networks on renewables benches and positions us to deliver a healthy financial results, even through our personally challenging economic environment.
Turning now to slide 22 hotels over the last several months, we have engaged with many of you know how far you feedback I'd like to spend a few minutes here, providing some additional color on explaining our team on our strategic plan are addressing those topics.
As I continued to say our number of of our number one objective is execution.
Over the last two years, we have established a solid entire story of sustainable and reliable earnings growth and we are on track to deliver our 2000 2002 items.
Our investment plans of 2025 centers around our regulated network businesses and we promote secure on a stable growth over the coming years.
Including the full enterprise value of PNM resources on 100 per cent of Bender with one capex, we're investing $21.5 billion to expand our footprint in both networks on renewables or approximately 11 billion without pnm's enterprise value on organic capex.
Another of my top priorities this engagement and building constructive <unk> relationship with regulators another key stakeholders and we've made important progress over the years.
We have been focused on making sustained improvement in customer service and me and as a result, we are successfully removed.
100 basis points early adjustment on CMP.
And as you know we filed multiyear right plans in each of our states keeping the bill impact well below the current rate of inflation in Connecticut, Maine and Massachusetts.
We've designed our proposals to include mechanisms to release risk exposure such a forward looking this year's revenue decoupling on trackers.
A challenging macro environment and rising commodity cost puts pressure on our customers.
By driving an increased focus on operational excellence securing government assistance funds for posting ballots right plan on developing low income rates, our utilities are working hard to help support.
Our customers.
Our work has a real positive impact when we asked for a rate increase each to invest in our space for additional capital projects that create economic benefits such as local jobs and additional tax base, whereas the much larger increases requested by sources cogenerators RP or margin.
We're also executed on our key periods with being Darwin, one progressing on time and on budget.
We delivered both the multibillion dollar financing for the 30th and finalize it turned seats for the tax equity.
We are encouraged by the main low scores recent ruling on any CEC.
While the lower court decided not to grand up really bitter injection. We believe we have our strongest standing and remain confident that full legal process. We find that the references attracted blocking on <unk> on.
Unconstitutional.
We are 100 per cent committed to profitable growth with a disciplined approach focused on value creation.
Thanks to while we're early investments in offshore wind, we have built on our spring pipeline at a lower cost than competitors entering this space today.
We have 2.4 jail, what's owed uncontracted capacity, including the first commercial larger scale projects under construction.
This is part of a larger diversified 2000, <unk> pipeline, combining onshore wind solar and offshore wind, which provide us incremental growth and valid creation opportunities to Russia rotation or partnerships.
Lastly, a spear subscribed to create cleaner generation profiles and set a stronger climate commitments, we already there and look very attractive from that perspective.
Clean renewable resources account for over 90% of our portfolio, which is had lost at least twice as much as the other leading with level of operational referring to us in the U S and I'd like those properties, we have Nicole in our generation mix.
We were the first utility to set up a carbon neutral gold and will continue to raise the bar now targeting neutrality is for one and it's hoped to emissions by 2030.
If we continue to concentrate on each of these areas and drive a red or a relentless focus on execution I know, we can't deliver success now.
Now I will hand, it over to Patricia to provide more detail on our financial results.
[noise]. Thank you pay out good morning, everyone.
Turning to our earnings performance.
And the third quarter of 2022, we generated net income of $105 million and are adjusted net income for the $122 million.
While the quarter on accord comparison benefit.
And mainly plans and positive results and thermal an asset management and renewable there was an overall decline primarily due to the absence of Anthony T. N E. C. C transmission project in 2021.
Appreciation uncomfortable in business class.
Principally reflect the implementation of the right plan to New York.
Can renewable production pricing was flat quarter over quarter, that's capable of pricing offsetting lower volume.
And congestion.
Quarterly results were also impacted by lower taxes, and renewables that are offset by higher taxes and network.
During the first nine months of 2022, our net income was $734 million.
<unk> net income for $749 million increases of 35 per cent and 23% respectively on the same period in 2021.
The first nine months of 2022 compared to the first nine months of 2021 benefited from it.
Mainland primarily for the New York Company, which increased adjusted net income by $58 million that.
That number includes the positive impact on the removal of 100 basis points early assessment in Central Maine Taylor active earlier this year, resulting from our customer service network.
And regulatory outcomes, including any like we are just the letter earlier this year at a net positive impact year over yet.
Results for the nine months comparison also benefited from $181 million Ain't in the restructuring of the App shelving partnership agreement that gave us control of 100 per cent of the pets.
On the left wing projects.
From a $38 million increasing results in renewables pricing and production and some lower taxes.
Those increases were moderated by the absence in 2022 of $83 million I'd like to trough performance and of 2021, Texas weather event and $17 million.
C D C. In 2021, primarily by the anything missing project as well as tight by depreciation and as noted higher business costs, which Netflix and networks are related to the right.
And in renewables are related to cloud.
Moving to the next line.
We are refining reaffirming at 2022 outlook for net income and adjusted net income of $850 million to $920 million in EPS, and adjusted EPS of $2 and $22.38 per share.
Our focus remains on achieving these targets at the executed.
Discipline and arrhythmia net focus continuously driving operational excellent.
Our expectations reflects our performance to date, including the implementation of our network.
When restructuring.
Capitalized labor.
And lower taxes, which have been motivated by negative regulatory adjustments and collect.
Labour extent any impact.
And renewables of congestion and sandy.
We also shall expectations of opportunity.
For the remainder of the year. This is our outlook expectation, which include wind production and pricing thermal an asset management with all taxes regulatory gentlemen, including negative.
Revenue adjustment that could be related to achievement of annual reliability and service Netflix as well as labour business costs and uncollectible.
Moving to the next slide.
In this challenging and changing economic environment, we are focused on our balance sheet access to liquidity and credit rating.
Access to capital at a calculator is important.
Last year, we secured at 2.3 billion dollar construction in term loan facility from a large group of banks that is funding the construction of our opinions when one project, which we attach that competitive rates a year ago.
And we recently, it's executed attention for $1.4 billion, a pack has to be for that project.
One is the first large scale offshore wind farm any less delimiter important achievement, which will allow us to monetize the tax benefits from this landmark project.
Year to date, we also calls and text equity funding fix 606 megawatts of solar energy.
Project.
As a reminder, several of aren't regulated subsidiary twice $575 million of that in the second quarter walking and competitive rates for the funding in December .
Some of these bonds that are central Maine power company with three lines.
And as you know you should $4 billion equity in May of 2021 for the PNM resources.
Which happened you think to fund to the capital investments and Netflix in renewables, and which would help defray our external debt means ethnic while these businesses.
Strong liquidity is a key priority at.
At the end of the third quarter, we have $560 million of cash, which allows ongoing cash from operations data city utility level test equity financing at renewable actual billion commercial paper program backed by three $575 billion credit facility.
Our $500 million intercompany line of credit with EBIT, Lola and the $575 million of desktop typically will receive in December we will use to fund investments and dividend.
<unk> has also provided us with a 4.3 billion dollar commitment letter that back steps are PNM reset this merger clothing.
These sources provide us is eight 7 billion of liquidity covering 21 months.
We also have the unique benefit of being a member of even available which has a strong liquidity of approximately $25 million.
Covering 27 months.
Finally, I dividend policy remains the same.
Getting a payout of 65% to 75% that we will grow into as our earnings increase over time subject to board approval.
Recently declared the regular quarterly dividend of 44 cents a share payable January 3rd 2023.
In summary, our year to date results remain on track and we're focused on execution.
As he outlined in our recent Investor day, we have the discipline focused on our investment mismanagement financing plan liquidity management and maintaining our credit rating.
Thank you for joining us today for our financial update I'll now have the call back over to our operated for questions followed by closing remarks pickup.
Thank you.
Can I ask a question please <unk>.
We have the first question.
From the phone lines from.
<unk>.
You said J P Morgan Chase.
Hi, Good morning. Thank you take time today, when starting on offshore you've been very clear on the challenging backdrop for offshore now versus what striking the party and Commonwealth contracts.
Speaking about the restructuring beginning earlier this year versus the current CGA challenges on those two projects do you need to be successful in the renegotiations to realize this value. You'll also curious what the range of options for moving forward and a tiny expectations for that process nurses to 2027 2028th Street.
<unk>.
I think.
Take the lead on this one at the first of all from a gain point of view I think we're very comfortable and order value. As you can see you have just the ECS of dose <unk> is huge so from that point of view I think there is a value in those assets with a you go ahead with the project now later or to just cancel them on just on it yet the leases and are worth a lot.
So from government of you I think.
The value that we have agreed for our game that you mentioned in agreement with CIP is clearly a very good value for us well below of you know most of it comparable transactions you know just what <unk>. Okay. Second I think it's important that everything we're doing right now is what we do in many plants, we renegotiate we've been working right now.
Onshore wind on solar periods that we have we're developing this year in renegotiating timelines and regularly renegotiate imputed of delivering on avoided tens and tens of millions of potential penalties. We're doing the same thing here. There is a change automatic change in the world right now in many aspects of we have commented and therefore, we believe these periods are the cheapest.
Alternative for energy in New England.
By any.
Without any doubt it doesn't matter what you compare these with and therefore, we're not suggesting we want to make more money, which was suggesting we need to find these groceries back to their return will respecting.
Basically no to lose money and it's a question of putting that on the table, which we are doing an IP. We are comfortable that this is something to work with many parties and we are working right knowing through negotiations many meetings already.
A process that is going to take you know programing nine months.
And also from my point of view, we are working as we do.
Situations, so very comfortable.
In the process ahead of us either to renegotiate or to start again, but I think we're comfortable right now with the process on the arguments were using.
Mhm.
Got it and I appreciate you, calling and keeps you just to be clear ishiba value, which are superior to scream derived from bouquets.
Other than the contracts, meaning if you have to go in to the process of getting for new contracts on on a new RFP there will be a change on the gameplay is like the place.
You can you can pick up one or the other one.
You conclude you know successful renegotiation devalues huge you use so you know the group.
Salt and obesity in East Anglia.
Unusual or they have sold a stake also in this taking <unk>. So if you have you know appropriate renegotiation I think the value would be amazing okay stay with the leases undue participating in an auction you know how much it was facing Carmine us in New York and other places. So you will see that a social hundreds of millions of value there will evolve in any case.
The values that we have come see therefore, the CIP agreement.
Got it that's very helpful.
Just wanted to ask stomach sempra agreements.
Can you speak a little bit more about.
What you evaluated in or what the next steps to detail.
I think I'll wait on the Sempra agreement again, we knew each other for a long time from.
From that point of view there are some things in life either for financial disciplined and complementary in terms of your New Hall Bye Bye Bye bowls.
We are much better going together to such a massive development as yourself ahead of us in the U S and hydrogen and therefore, they have a you know a very good <unk> infrastructure et cetera, I think we know what we are probably.
Probably one of the leaders in renewables I think we know that we are in the geographies where the ammonia.
Hydrogen is needed so from that point of view and let's get together on a nice vinicius may be simple I think we're going to conclude these analyses on a specific periods, but for the time being poor computers, you'll reasons, we will mention where and what exactly were doing but do you think is probably two three months, we should conclude the notebooks analyses on <unk>, we think you'd be successful.
Got it that's very helpful. If I could just slip one morning here you've spoken a lot about the activity on the right side.
<unk> on your developing regulatory relationships with the states how do you choose from a higher level in terms of the discussions on the offshore contract side and rib cage backdrop.
You'll relationships in the stadium.
It's related trade off the community, what you're asking for on the offshore side versus what you had to choose <unk> regulated relationships for the three that is completely separate prostitution.
I mean, the teams involved and sometimes you have legal restrictions on regulatory restrictions that they need to be different but I think the important thing is it shows the commitment and all other than greed telephone Neo-dada group, you know to the region I think where they also help the states.
To put on the table the energy that otherwise they will not have you'll see you know the the news recently about the lack of oil umaga potential issues over the lack of gas. There are many many issues loved those are not to become less and less over time the ability to increase I think we are working to bring energy renewable energy and the cheapest possible you confide so from doubled over.
I think we're not an overload negotiating like 222 or both parties. This is a hormone objective and where are we know one of the few people putting ideas on how to work together too.
Good future for the citizens of those states. So I think we are working together in the same direction.
Great maybe thanks, new plan today.
Thank you.
Mmm Mmm.
Mmk Kim Goldman Sachs.
<unk>.
Thank you first question just following up on the.
Offshore wind PPA repricing process I.
I guess, if we think about whether you do successfully are able to negotiate through the states or.
If they offer a new competitive bidding process that you may re enter into are you still looking too and either option are you still looking to choose or stick to the option that gets you to the low teens levered returns or are you willing to.
The monetary low return, if you're able to be used.
Current price.
<unk>.
To go back to to the same return that we were expecting the project when we put it on the table. So I think what has changed is.
The world is different the supply chain issues the quality of the prices they delay in construction, but there are many things have been in the world.
Unexpected even.
Even in the last 20 years. This this has not happened at all so I think the Ada is to go back to the same numbers in economics, we have before.
Okay, and then just from a legal perspective is.
Alright is there legal precedent for a competitively struck contract to throw a regulatory system be be repriced just trying.
Trying to see if there's something that we can look to in history.
There are cases I understand that there has been renegotiation and contracts and then second I understand also we're we're trying to do here is to renegotiated within the framework of our contract. Okay. So we're not trying to go out around or both the contract that we have that we believe has closest maintaining the transmission 90.
Main Thanksgiving deal for periods, we believe within you know what easing the contracts there is room for the request where Duane.
Okay, just just one more on any T C.
With the remand to the lower courts, and but not being able to I guess.
Construction until at least April 2023 trial concludes.
Still keeping the timeline of 2024 or does this latest development push it back a little bit.
Yeah, Hey into this is Catherine.
So what we said at the Investor Day with we currently had at that time and in service date of 24 AD, but what we are really focused on is the contract that we have with the adcs, which requires us to have COPD by April of 2025. So we are currently assessing the construction timeline.
And when we think that will be able to start construction after that expedited trial proceeding in front of the trial court.
And just looking to work with our contract or so that we can start construction soon thereafter and get going back on the project again.
Got it thank you.
The next question comes from the line of <unk>.
<unk> Smith Bank of America Merrill Lynch.
<unk>.
Hey, good morning, Federer thanks for the time.
If I if I can just to go back on the last set of questions and I just want to continue that a little bit more on the offshore considerations.
If the Massachusetts Commission does not grant to hire PTA will you move forward with the project.
Wanted to see if we can ask us in a more of a black and white kind of way.
The answer is we need to those revisions in order to continue with the project.
We just need them.
Yeah, you need them to move forward right I'm hearing you right.
Yes.
About.
With a lot of your actual adjusted applying to make more money. No. This is a very serious matter with full transparency, including everything happening on the table. That's what I think we're having good meetings so far.
In general so that's what the answer is simple, yes, we need that.
Yep. Thank you for thank you for the clarity there I appreciate it and it separately.
Does the change in the equity value here changed your view about the relative merits of selling assets versus raising common equity year of the car.
I'm an equity timing.
Might be somewhat delayed here given the the close of the PNM pushed in the next year, etc. But can you talk about the desire to pursue more asset sales relative to the equity issuance outline of the analysts say just considering you know higher rates, obviously impact on the stock price, but also impacting the asset sale.
Market as well.
Opinion.
Usually the conclusion why do you need to re tape with these because you'll need equity I think for that is the message with us in the in the industry presentation was clear.
Maintain what we have told the market before but we're going to focus on us that rotation on CNN.
CNN doesn't happen, we don't need to do and it got bigger increase actually we will be over in a labored over.
Excessive.
Leverage capacity and if PNM happens, we are still considering us we said at least 2 billion of us a rotation. So if that happens then baloney, we will we will need either all or part of that capital increased. So the answer is yes of course, you know we always keep in mind the price, but I don't think the price of the share price is what drives divestitures the divestiture is something where.
Analyzing and we'll try to get that done as we have done in the glue for 20 years nonstop and we have always delivered so it's not really because of the price that we will not do more or less divestitures will do as many as of HD soon as needed because they make sense I think that will be the driver for doing it.
Right, but let me put it this way if if I can take your temperature or the asset sale market. I mean, how is that market evolving here, obviously, we see the equity price where it is do you still feel robots buyer backdrop, and especially it's sort of relative right as I think about it.
If if asset valuations are sustained relative the stock price you would think that that'd be on the margin a little bit more of an interesting Avenue, but as you say timeline is important to watch here as well right.
I think as asset valuations. We can go back you know to the you know.
2005, 2006, I think there is a moment that you review history on I thought that was going to be all time High Street multiples of sales and then there was another deal and then there was another one I think the amount of money you know that is right now on the table because of funds because of other companies they need renewables they need <unk>.
Related assets.
Is unlimited.
Unbelievable compare you know two payments within 10 15 years ago, you'll see recent transactions involving a German company on a US company, you'll see another U S company with hotel I mean, you can go one by one I think you always filled <unk> when things are going to change I don't think there is even.
One one feeling that I have that the appetite of the people are usually deal with that they're interested in either buying things or doing things with US. You know has has been radio is the contract I think the appetitive there on very good relationships and I think there is an interest.
Got it alright excellent well, thank you very much.
Okay.
Thank you now have the next question from my <unk>.
<unk>.
Hangover on good morning.
Wanted to start with just a quarter and the year to date results.
I'm doing the math right it looks like.
The implied Q for earnings are gonna be down about 910 cents year over year at the mid point of your guide or are there any headwinds that we should be aware of us. We just think about the next quarter.
Or is it just conservatism and just re affirming the God.
Patricia Okay yeah.
We are happening in our guidance, which is why we reiterated it today.
Quarterly estimates so legit payment.
Got that and your date.
Information with our annual guidance number I think Lee highlighted some risks and opportunities that.
Okay.
Year to date into the corner, so just to reiterate in a quota fourth quarter will.
We will definitely have some incremental benefit from rate cases, if they look and a year over year basis, but we do have risks and opportunities in those relate to.
Production and pricing.
Thermal asset management variability in adults.
Even as I get to the end of the year when you tax to obviously look at however, we're performing against some of our reliability and customer service metric. So.
There can be.
Regulatory adjustment.
To that.
And then we were kind of watching.
Any any regulatory development.
And our trends in uncollectible things like that I can't we have it all the other things we've highlighted on the call that things hadn't been impacting us or an.
Orange Iron years.
As well.
Okay, but it sounds like there is no.
Specific items from last year's quarter that we should be backing out or mindful of.
I think for me I think that there is failing.
Continuation of what's going on so many little things, but not a big big items.
Okay, and then as we think about next year, just wanted to understand a little bit better.
Business. So I think you pointed out some of the bigger moving pieces year over year like offshore wind gain I think kata.
Kittyhawk sale in there as well and then obviously PNM for half the year, but as we think about.
Excluding that.
What are the drivers as the base business growing at all or not.
So.
Some of the things that we're looking at is renewable.
Or just under 600 megawatts in construction, we have new asset Stetler, let's see <unk>.
As in Apple unhelpful that'll have a positive impact here over here, we have a couple of other projects as well that'll be CRD. So those wall.
Have an impact on here over here.
And then we were looking at the timing of a rate case.
Cases, and you might not have a decision until later in the year, but that might be similar to what we had in the New York, We take payment in the past, where we had a decision at the end of the year.
A trio up that happened later on in the year, Paul those are some of the things that.
Consider.
Okay. Thanks, and then last one just on the the New York rate case.
Can you just summarize the seals CPA upside what.
What you filed and what.
Staff is recommending.
Okay, Yeah I'll take this one.
The New York right case get complicated because of the legislation with the Tpa Bob.
So our right K spiling.
Contained based Capex that we see is needed for the resiliency of the grid as well as proposals under both phase one B L. Tpa in phase two FCS Tpa and if your call phase one are those reliability projects that we have accelerated within our service territory in phase two projects or projects that are needed to.
Bring renewable production downstate until those phase two projects are anticipated to be at spread across all of the state as opposed to just within the nice second <unk> service territory.
So in total are filing amounts to about $186 billion worth of investments.
And $2 nine at that with Tpa when we look at the staff testimony they had a higher waiting.
Expenditures in Tls Tpa, then it's based Capex.
But as Patriot said overall as they as their testimony came in.
They're at rate increased was approximately 20% versus or 26% on the base T&D rates.
So we're looking forward to entering into negotiations.
Staff and with other intervenors to really talk about what the base Capex and what are the clean energy.
Firemen at.
For New York investments in order for them to meet their aggressive timeline.
For the clean clean energy transition.
Okay. Thanks, sorry, just to be really clear the $2.9 billion, you filed that understand theirs moving pieces, but what is the apples to apples staff number on that.
It's it is Ah, it's hard to quit exactly the pieces because they excluded all of that faith Q pushed that off to mess with us investment are investments that will it be making and putting into rate base post 2026.
So they're really focused on that portion as at a little bit over.
$5 billion on that face to face one investments rather.
And so they would accelerate a large part about $900 million of those space one investments into the right.
Great Kids here are right case proposal was focused more on the base capex.
Need to the system. So if you compare again, if you look at what they asked for versus are with their testimony supported versus what we requested.
Not that far off it's just the mix of how you get to that.
Total impact in Capex investment's needed for the system.
And remembering the base case for the projections hinder in Osp's plan, a month ago, we assume nothing and sales GBA, okay. So with the input that into the mobile <unk>.
Thank you.
We now have the next question from David Okay from Morgan Stanley . Please go ahead, when you're ready.
Hi, Thanks for taking my question.
Given update on what you're seeing for the inflationary backdrop, just any inflationary pressure on O&M, whether it's labor materials components other things.
And the business right now.
Okay well.
Well I guess I guess I would just say.
In terms of inflation.
We certainly are impact on labor and they suddenly impact on cloth, but I think our in our network business we have.
Which is really.
Only about 8% of our.
Net income in our earnings we're pretty well protected.
Time because of the economy prices are Castro on when we're looking at gas and commodity academy lateral without purchase them all at once and we saw them in the winter.
We're also entering tube maintains filings while we have included updated inflation estimates and we actually have requests for inflation trackers.
Yeah, Paul over looking at our strategy, where we minimize the gap between lately, but we are updating an accounting for equal costs going forward and then just to remind you at this time.
Transmission rates are reconciled annually, we look at on the App store businesses.
Pedro had mentioned, we actually have secured almost all accounts for 2024, and we have been negotiating successfully some contracting adjust elman placement while inside supply chain challenges.
And finally, if we look at our arched pops a renewable project.
V as when one week secured all the Capex and we're actually actively in.
Target with instructions that we do not have.
That explosion for that project and.
Can tell already talking about future projects beyond our plan and <unk>.
Got it no that's really helpful color I appreciate it and then back on just the asset recycling <unk>.
Potential here for $2 billion for proceeds going for it I was just wondering if you could give you ladies thinking around what he wants.
<unk> could get priority, which might have the most interested in the.
In the market must appeal in the market and would you also be considering minority interest sales in regulated utilities.
Mmm.
I think the appetite for our assets I think any of the assets and you know I think and Ah you know that.
A lot of people are keen on renewable acid a lot of people are keen on minority stakes in in businesses and not not be regulated only but also in in renewable companies. So for example interview I think we just we're just reviewing the portfolio of making sure we put on the table the right approach and I think we will go into action very soon.
One of the USA with one rule out anything peroni that first focus for us as the renewable business, where we have a lot of assets and I think there is a lot of appetite for those assets them slowly that should be the first area of focus for us in terms of opportunities in Delaware location.
Okay got it thanks, so much.
Thank you.
Now I have a question on the line from Angie Stone S T.
<unk>. Please go ahead, you're lying to killington.
Thank you. So so my first question is about now what we've seen in.
In Nova Scotia, the the proposal to cats customer utility rates nonfuel rates.
And and and how you actually see this risk and.
Even in the northeast in general.
Given how high electric customer bills are about to go go and then secondly.
The the poor decision about the implementation of that bill discounts for low income customers and how.
You're gonna recover that those those discounts and cash in your future cases.
Thank you.
Thanks Angie.
So you know first with respect to your first question.
I kind of see it as they are.
Risk with respect to rising costs and will follow over onto utility rate and that's why we're focused so much on affordability for our customers and when we filed our rate cases really focused on balancing the needs of the system with.
The affordability of that but.
Systems really do require investment and I think our regulators and stakeholders understand that reliability as a priority, especially as we move into changing climate and also the aggressive goals that are states.
Have with respect to clean energy. So it's all a balance when we talk about that and look for various rate mitigator to help smooth out that transition for our customers.
With respect to low income.
At a couple of things that are first in are Connecticut, right case, we actually for the first time.
Had offered up a special rate for lower income customers.
Directly in response to some of the feedback that we have had from some of our stakeholders and so we'll be discussing add that type of a proposal in Connecticut and see what the appetite is for for that proposal then with respect you are.
This being kind of rates and our customers will really proud of the work that we were able to do in New York in order to get some arrearages paid off or some of those low income customers and those were access from funds that the New York State Legislature had set aside two particularly target the impacts of Covid on lower income Cussed.
We're continuing to look for options like that on a federal and state level to see if we can work with our states as well as with for instance, the joint utility group in New York to see if there is additional funds that we can access to help those particularly vulnerable customers.
Okay. Thank you that's all I have to <unk>.
Thank you.
Type of questions I'd like to hand it back.
I think <unk> pizza.
<unk> Max.
Okay. So too close to this call I would like to bring you back to one simple question why <unk> why us at the heart of our plan is a commitment to execution as well as for Pacific spoke the CSE focused on regulate the growth and value creation.
And also our company is.
Our heartbeats I will regulate the utility business, which is contemplated by additional renewables opportunities.
These unique imbalance means positions us to accelerate transformation in the energy sector from multiple angles across all sectors businesses are facing a challenging economic environment in the near term. We're responding we're realistic targets and a steady disciplined disciplined approach knowing that the witness in the longer term is at our back.
The energy transition he's here to state there is no turning back and diversified utility companies like ours are close to benefit.
As we look over the next few years, we expect to grow where earnings and adjusted earnings per share at the healthy can both on a growth rate of six 7%.
We don't unknowns quarterly guidance, we just go to <unk> and I think we're comfortable to provide a clear guidance on funeral twenty-three versus 2425 to make it always you know very clear what we're expecting year by year on a combined basis for the period.
Our core regulated network business continues to real Ricky vertical growth representing us, we'll discuss approximately 80% of our blend investments with a turning to maintain a support the balance sheets and leveraged value created opportunities like asset location and partnerships to further improve our position while maintaining our grade ratings finished only queasy.
We are closely aligned with accelerating the state and federal policy targets ahead of many of our peers and as a result, we're positioning.
Our sales to deliver investments in offshore wind onshore renewables and transmission that we create jobs and stimulate economic development and support our our.
Our our own long term growth as well. Furthermore, we have substantial upside opportunities to generate value over and above what is assuming our plan, including approximately $2 billion in other words, a civilization option incremental investments were right case proposals an unprecedented policy support from the Iras.
<unk> execution execution on execution as our team works to deliver we will benefit very step of the way from destructive strong backing of the vagina.
A strong global expertise and proven track record of success. Thank you again for joining us today on our third quarter call. If you have any other questions pre follow up with over on the our team and have a great day. Thank you very much.
Thank you for joining that does complete today's cool.
Have a lovely day you may not disconnect your lines.
Okay.
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