Q2 2022 American Electric Power Company Inc Earnings Call
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<unk> second quarter 2022 earnings conference call.
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Now to the conference call over to your host Vice President of Investor Relations Darcy Reese go ahead.
Thank you Alan Good morning, everyone and welcome to the second quarter 2022 earnings call for American Electric power. We appreciate your taking the time to join US today, our earnings release presentation slides and related financial information are available on our website at AEP Dot com.
Today, we will be making forward looking statements. During the call. There are many factors that may cause future results to differ materially from these statements. Please refer to our SEC filings for a discussion of these factors. Joining me. This morning for opening remarks are Nick Akins, Our chairman President and Chief Executive Officer, and Julie slowed our Chief Financial Officer, We will take your questions following their remarks.
I'll now turn the call over to Nick.
Thanks, Darcy welcome everyone to American Electric Power's second quarter 2022 earnings call.
<unk> continues to make progress on the strategic initiatives, we announced earlier this year with strong execution against our plan, resulting in another solid quarter.
Later in the call Julie who will walk you through our second quarter performance drivers, including the strong load increases we're experiencing in our territory as well as provide additional details surrounding our financial position, but I'll start with the key financial highlights for the quarter.
We will then move to an update on our Kentucky operations sale process and timeline I will also spend time discussing the progress we're making in our transition to a clean energy future as we simplify and Derisk our business profile by divesting unregulated renewable assets, while maintaining focus on our responsible generation fleet transformation and regulator.
Renewables execution.
I will close by providing some additional insights into our ongoing regulatory activities, including our transmission business.
We're very pleased with our positive momentum this quarter delivering operating earnings of $1 20 per share or $618 million. We are moving full speed ahead towards the increased operating earnings guidance range and long term earnings growth rate, we provided during our fourth quarter 2021 earnings call and we are reaffirming reaffirming both financial.
<unk> targets this quarter as a reminder, we are guiding to an operating earnings guidance range of 47 to <unk> seven per share for 2022, with a 497 midpoint and our long term earnings growth rate of 6% to 7%.
We are also continuing to ensure we are best positioned for value creation as we navigate the macro trends impacting our industry and the broader economy. We are working with states to drive expansion of our service territory, while considering global economic uncertainty inflationary pressures and of course customer bills. We're also diversifying our mix of <unk>.
Flowers to minimize supply chain disruptions for our customers and business, while also lessening the impact on our capital investment plan.
We know that timing of the closing of the sale of Kentucky power and AEP, Kentucky Transco to Liberty is top of mind, and we have been working with liberty to obtain the approvals necessary for closing this summer our regulatory timelines of the sale can be found on slide seven of today's presentation. We are pleased to report the Kentucky Commission to approve the key milestone in the <unk>.
<unk> action with an order approving the sale transfer in early May.
As we have discussed previously a prerequisite in our contract with Liberty for closing the sale is approving the approval of new Mitchell operating agreements by both the Kentucky Public Service Commission and the West Virginia Public Service Commission.
While we received related or related.
The related Mitchell orders from the Kentucky Commission on May 3rd in the West Virginia Commission on July 1st the two states approve the operating agreement with different formats, and some divergent post 2028 plant provisions. However through the two proceedings. Both commissions have indicated an ability to use the existing agreement as a basis to opera.
The plant going forward and accomplish their differing expectations for investment in operations for that reason on July 11th we made a compliance filing in West, Virginia and filed an update with Kentucky, providing an alternative way to move forward with Mitchell operations in the near term, we inform both commissions that we will operate under the existing agreement.
And manage the new operational focus of the two commissions through the operating committee and the absence of any new agreements the existing Mitchell operating agreement is still in effect and we believe no additional regulatory approvals should be required since regulatory approval of a new Mitchell operating agreements as a prerequisite in our contract with Liberty for the closing.
In the absence of such proposal, we're working with Liberty on the commercial solution for missile related operations and both parties remain optimistic about reaching a resolution in closing the transaction.
At this time, the only regulatory matter currently pending is the two or three application at FERC related to the sale transfer which broke is currently considering we were in the final stages of the Kentucky operations sale process and expect to close this summer.
Moving to our unregulated renewable portfolio in May we closed on the sale of five unregulated development sites located in south and the southwest power pool area, marking the successful divestiture of the majority of our wind and solar development assets. As we mentioned last quarter. We have also signed an agreement to sell our solar development.
In Ohio with that transition to close expected also in the third quarter. In addition, we are in discussions with an interested party for the sale of our flat Ridge two wind farm ownership, consisting of 235 megawatts simplifying the resulting portfolio for our upcoming auction. These milestones demonstrate our commitment to.
<unk> execution.
As we announced during our fourth quarter earnings call in February we are selling our unregulated contracted renewables portfolio in order to simplify and Derisk the company and facilitate investment in our regulated businesses. We are in the final stages of preparation of the marketing materials for the auction and expect an official launch of the process. No later than early September .
After the removal of flat ridge to the portfolio consists of 1300 65 megawatts of contracted renewable assets consisting of 1200 megawatts of wind and 165 megawatts of solar geographically diversified throughout the U S.
There has been robust inbound interest in the portfolio and we expect the process to proceed quickly.
As a reminder, utilization of contracted renewables sale proceeds is not yet reflected in our multi year financing plan, we remain focused on maximizing transition.
Transaction proceeds and directing additional capital to our regulated businesses, where we have meaningful pipeline of investment opportunities to better serve our customers as we push toward a clean energy future and enhance transmission infrastructure as always we are open minded and we'll evaluate all value additive potential activities as we focus on our regulated.
Businesses, where we see meaningful long term opportunities for growth.
AEP continues to make significant progress in our transition to clean energy resources through a regulated renewables execution.
Details regarding the specific actions we are taking it can be found on slides eight and nine in today's presentation. We are also firmly grounded in our principles of resiliency reliability and affordability, while recognizing the increasing value of our diverse resource portfolio against the backdrop of energy related volatility.
<unk> is taking steps to secure renewable resources, making regulatory filings in may in Arkansas, Louisiana, and Texas to own three renewable turnkey projects totaling 999 megawatts. This $2 2 billion of investment is currently reflected in our five year 38 billion capital plan.
<unk> expects to issue another RFP in the near term consistent with its RFP for energy and capacity needs at <unk> 409 megawatts of owned wind solar and wind resources were approved by West, Virginia, and Virginia, marking an $841 million capital investment that is also included in our current capital plan.
Request for proposal or in process and Atco on M. N P. S O with expected in service dates in the year end 2024, and 2025 time frame. We also expect to make regulatory filings to acquire additional renewable resources prior to year end 2022.
Finally, the U S. Supreme Court ruling at the end of June related to the federal EPA regulation of greenhouse gas emissions will not require any changes to aep's current generation and compliance planning our generation fleet transformation plans are well on track.
We remain fully committed to our target of an 80% carbon reduction emissions emission reduction rate by 2030, and net zero by 2050, and we are proud of the work well underway at AEP to help us achieve this goal reaching these targets is foundational to our long term strategy and we believe we are on the right path toward prioritizing regulated.
Some of the opportunities and transitioning our generation fleet.
Turning now to a brief update on our regulatory activity our regulated ROE as of as of the end of June 2022 is nine 2%. We continue to work through regulatory cases, and maintain our focus on reducing our authorized versus actual.
ROE spreads.
Additional regulatory activity in the quarter include a commission order received in May on Sweat coast, Arkansas rate case, including a 9.5% row, marking a net revenue increase of 28 million and a capital structure of 55% debt to 45% equity. We're also expecting a decision on sweat coast, Louisiana rate case in the third.
<unk> oral arguments related to App COSE Twenty-twenty, Virginia base case were held in March 2022 at the Virginia Supreme Court with an anticipated final decision later this year.
PRC recently initiated several rulemaking proceedings related to transmission planning cost allocation generation interconnection to the transmission grid and extreme weather preparedness, we support the commissioning these actions and are in full support a full agreement that that reform is needed to build the infrastructure necessary to transition our.
<unk> fleet in the most efficient and cost effective way possible, while also helping achieve our carbon reduction goals.
These proposed rules along with Aep's objectives of developing a more robust reliable and flexible grid of the future that ultimately reduces cost to customers and strengthens economic development in our communities.
Before I turn it over to Julie I want to take take a moment to thank our team for the incredible work that they were doing as we execute against our strategic objectives and deliver for our stakeholders, what's going on at today at AEP as a perfect blend of the execution of our Bachman Turner overdrive as taking care of business with the edge of princes, Let's go.
Raising in the good sense of course, we have an incredible market position, a bold vision and the foundation in place to achieve our goals and deliver on our vision of further modernizing our energy grid in order to supply reliable clean or low cost resources for all of the communities we serve.
As we think about the future in the next chapter of AEP, We're excited to share more about our plans at AAP is upcoming analyst day on October 4th in New York City, We will provide additional details soon and look forward to seeing you there Julie over to you.
Thanks, Nick Thanks, Darcy, it's good to be with everyone. This morning, good morning, and thanks for dialing in I'm going to walk us through our second quarter and year to date results share. Some updates on our service territory load and finished with commentary on our credit metrics and liquidity as well as some thoughts on our guidance financial targets and then recap our current portfolio management activities under.
So let's go to slide 10, which shows the comparison of GAAP to operating earnings.
Earnings for the second quarter were $1.02 per share compared to $1 16 per share in 2021.
GAAP earnings through June were $2 43 per share compared to $2.31 per share in 2021 does a detailed reconciliation of GAAP to operating earnings on pages 18, and 19 of the presentation today, but I'd like to call out three of the reconciling reconciling items that do not affect operating earnings about relate to.
Our asset optimization activities underway specifically you'll.
You'll see that we made an adjustment to arrive at our operating earnings for the quarter and year to date periods, consisting of Kentucky sale costs and the write off of one of the unregulated Universal scale wind projects. That's included in the portfolio. We're in the process of preparing for sale at Kentucky sale charge reflects an anticipated reduction in the sales price as we can.
Work with Liberty to accommodate adjustments for costs that have been identified through the regulatory approvals that we've received turning to the renewable investment right off the flat Ridge to project. Specifically has continued to see deteriorating performance due to the equipment issues and transmission congestion to avoid an otherwise necessary repowering investment to address the performance issues.
And complicate our portfolio sales process, we elected to write off the equity investment in <unk>.
We are in discussions with an interested party for the sale of ownership interests in flat ranch to.
Consequently, this will remove the flat rich to project from the portfolio, we're preparing for auction, which should help improve the valuation opportunity as investors engaged in the sales process, which is scheduled to launch no later than early September .
Lastly, I'll mention that we monetize some mineral rights, which gave rise to a benefit to GAAP, but not operating earnings which helps to offset the charges I just mentioned so while I would typically not spend time walking through the GAAP to operating earnings reconciliation I thought it was appropriate at this time given the milestones we're clearing on the asset optimization front and while these charges and gains.
I think that we need to recognize they are entirely driven by our effort to derisk simplifying bring cash in the door to support our continued investment in our regulated business. So with that let's go to slide number 11 and walk through our quarterly operating earnings performance.
Operating earnings for the second quarter totaled $1 20 per share or $618 million compared to $1 18 per share or 590 $190 million in 2021 operating earnings for vertically integrated utilities were 59 per share up 14 cents favorable drivers included rate changes across.
People jurisdictions positive weather, primarily in our western jurisdictions increased transmission revenue and normalized retail load and income taxes. These items were somewhat offset by increased depreciation and O&M and lower off system sales just as a reminder, on the O&M and depreciation front as I mentioned on our first quarter call and included in our 2002.
'twenty two guidance details because of a change in accounting related to the Rockport unit to lease that I N. M. We're seeing approximately five cents a favorable O&M offset by five cents of unfavorable depreciation in each quarter of 2022, but no consequential earnings impact until I have a little more to share on load performance going to get that to that in a minute here.
Just hang with me the transmission and distribution utilities segment earned <unk> 32 per share up a penny compared to last year favorable drivers. In this segment included rate changes load positive weather in Texas, and Ohio and increased transmission revenue offsetting these favorable items were unfavorable O&M and depreciation.
Transmission Holdco segment contributed 27 cents per share down seven cents compared to last year favorable investment growth of three cents was more than offset by an unfavorable true up of seven cents as I mentioned last quarter. This is consistent with our guidance. Our 2022 guidance had this segment down by eight cents a year over year as a result of the 12 cents of investment growth.
Being more than offset by the annual true up that occurred this quarter and some favorable uncompressed hands on the tax and financing side.
The segment continues to be an important part of our 6% to 7% EPS growth as you well know.
Generation and marketing produced 18 cents per share up nine cents from last year, a positive variance is primarily due to the sale of renewable development sites as well as increased generation margins and land sales finally, corporate and other was down 15 cents per share driven by lower investment gains increased income taxes and unfavorable interest the lower investment gains are.
Largely related to charge point gains that we had in the second quarter of 2021 that a reverse this year.
Income taxes are related to the reduction of a consolidating tax adjustment at the parent, let's turn to slide 12, and our year to date operating earnings performance.
Year to date operating earnings totaled $2 42 per share or $1.234 billion compared to $2 33 per share or $1 billion $160 million in 2021 opt.
Operating earnings for the vertically integrated utilities were $1.18 per share up 18 sense similar to the quarter favorable drivers included rate changes across multiple jurisdictions positive weather, mainly in our western jurisdictions increased transmission revenue and normalized retail load and income taxes. These items were somewhat offset by.
Kris depreciation and lower off system sales once again the change in accounting around the Rockport unit two lease results in 11 cents of favorable O&M offset by <unk> 11 cents a favorable unfavorable depreciation.
The transmission and distribution utilities segment earned <unk> 62 per share up eight cents compared to last year favorable drivers. In this segment included rate changes in Texas, and Ohio, and increased normalized retail load and transmission revenue.
Offsetting these favorable items were unfavorable O&M and depreciation.
AEP transmission Holdco segment contributed 62 cents per share down six cents compared to last year favorable investment growth of five cents was more than offset by unfavorable true up of seven cents and increased property taxes.
Generation and marketing segment produced 21 cents per share up five cents from last year. The positive variance is primarily due to the renewed the sale of renewable development sites and increased wholesale margins offset by lower retail margins finally, corporate and other was down 16 cents per share driven by lower investment gains unfavorable interest and increased O&M the lower investment gain.
And again are largely related to charge point gains that we had in 2021 that a reverse this year.
Turning to slide 13, I'm going to provide an update on our normalized load performance for the quarter and a general sense. The AEP service territory has mean significant momentum despite the well publicized headwinds impacting the macro economy, starting in the upper left corner normalized residential sales increased by one 2% in the second quarter and were up 1%.
Year to date compared to 2021. This growth was comprised of growth in both customer counts and weather normalized usage for both comparisons.
The results were mixed by operating company the strongest residential growth was in the AEP, Texas service territory, which is which consistently has the strongest customer growth across the AEP system due to favorable demographics moving to the right one.
Normalized commercial sales were up four 1% compared to last year for both the quarter and year to date comparison. This consistent growth in 2022 is spread throughout the service territory. The growth in the commercial sales segment was spread across every operating company in nine of our 10 commercial sectors. The only top commercial sector that is down versus.
Last year's hospitals, which makes sense given that hospitalizations have dropped since early in the pandemic on the flip side the fastest growing commercial sector is data centers were loaded up 32% compared to last year.
Finally, focusing on the lower left corner you can see that industrial sales posted another strong quarter up 5% for the quarter and up five 3% year to date compared to last year industrial sales were up at every operating company and most of our largest sectors, we experienced double digit growth in a number of key industries, this quarter, including chemicals manufacturing and oil.
Gas extraction, we also saw robust growth in primary metals manufacturing paper manufacturing petroleum products and coal mining.
To summarize we've experienced broad based growth throughout the service territory on top of a recovery or every operating company has increased its sales in 2022 compared to last year. Both is also consistent across every major retail class and most of the top commercial and industrial sectors served by AEP. We know the headlines are full of messages about.
Pending recession, but our sales statistics through the first half of the year show our service territory is still firmly in the expansion phase of the business cycle, we're mindful of the difficult monetary policy decisions being contemplated by the federal reserve to address inflationary pressures in the economy and recognize some of these decisions could impact our customers' growth opportunities going forward.
But so far we're seeing little evidence that is dampening economic activity within our footprint through the first two quarters of this year.
Going to slide 14, I want to provide additional context to the load we experienced weak and we've experienced so far in 2022 and how it compares to our pre pandemic sales levels, starting with the chart on the left the bar show, how the second quarter sales compared to the pre pandemic baseline in the second quarter of 2019, you'll notice that the total retail.
Our $3, 6% above pre pandemic levels. Furthermore, every classes showing higher sales than before the pandemic began this means that every classes fully recovered and is in the expansion phase of the business cycle. The chart on the right shows the same comparisons for the year to date period, you'll notice that while the numbers are slightly different the message is the <unk>.
Aim through June Aep's normalized sales are 2% above the pre pandemic levels and just like the quarter every classes exceeded to pre pandemic levels on a year to date basis last year's strong growth numbers were expected considering it was a recovery year from the pandemic shutdowns. This year's growth is perhaps even more impressive considering the growth as compared to a <unk>.
Strong recovery year, we'll continue to monitor the economy and its impact on our load over the summer months and will provide the results of our updated load forecast this fall.
So let's move on to slide 15 to discuss the company's capitalization and liquidity position on a GAAP basis, our debt to capital ratio decreased 1% from the prior quarter to 61, 4%, taking a look at the upper right quadrant on this page you'll see that our F. F voted that metric stands at 13, 4% on a moody's basis and <unk>.
13, 3% on a GAAP basis, which is a decrease of 3% and 4% respectively from the prior quarter. The slight decrease can be attributed to an increase in deferred fuel balances as well as a slight increase in balance sheet debt as we stated on our last earnings call, we anticipate trending toward our targeted <unk> to debt.
A 14% to 15% as the year progresses.
You can see our liquidity summary on the lower right of the slide our five year $4 billion bank revolver, and our two year $1 billion revolving credit facility to support our liquidity position, which remained strong at four 7% $4 $7 billion.
On the qualified pension front, while our funding status decreased point decreased <unk>, 8% during the quarter. It remains comfortably strong at 105, 6% negative returns on risk seeking in fixed income assets. During the quarter were the primary drivers of the funded status decrease however, rising interest rates cause plan liabilities to decrease which.
I did a favorable offset to the negative asset returns. So lets go to slide 16 for a quick recap of today's message in the second quarter has provided a solid foundation for the rest of 2022, and we are reaffirming our operating earnings guidance range of $4.87 to $5.07. We continue to be committed to our long term growth rate of 6%.
7%, we continue to work through the Kentucky power sale to Liberty and are on track for a closing late in the summer and we'll be launching the auction process for our unregulated contracted renewables business. No later than early September so before I hand, this over to the operator I'd like to mention one thing we had previously announced that we would be having an investor conference. This year.
And we've set a date for that as Nick mentioned, we'll be hosting our Investor Conference in New York City on October 4th. So we really do appreciate your time and attention today with that I'm going to ask the operator to open the call. So we can hear what's on your mind and take any questions that you have.
Thank you ladies and gentlemen, if you do have questions. Please press. One then zero on your Touchtone phone, you'll hear an indication you've been placed into queue and you may remove yourself from the queue by repeating the one zero co man.
If you're on a speaker phone, we ask you to please pickup your handset and make sure. Your phone is on mute it before pressing any buttons.
Again for questions breast, one then zero.
Well first go to the line of Jeremy Tonet with Jpmorgan go ahead.
Good morning, Jeremy.
Just just wanted to start off with load growth trends, if I could just want to confirm here full year load growth estimates have not been updated for year to date actuals or is there any reason to expect a falloff in the back half of the year.
That is correct, we have not updated anything yet we are cautiously optimistic we will give you an updated view as we get closer to our analyst day or at our analyst day on October four so standby for that as far as what you can expect for the second half if I look at for example, the residential.
Lode.
Talk of recession and in how inflation is outpacing wage growth could potentially have residential customers shipped in and their behavior, a little bit we'll see so we're again, we're cautiously optimistic there, but we do expect that it could be a little bit tempered on this particular customer segment by inflation energy cost mortgage.
Rates the lack of no new stimulus those things that everybody knows about so so no surprise there, but just the general trend. So when it can't continue to keep a close eye on.
On that particular segment on the commercial segment.
I mentioned earlier that we had great performance and nine of the top sectors of our 10 top sectors with hospitals being the only one that was down again, we're keeping an eye on things like inflation labor shortages, our supply chain and borrowing costs, but again at this point, we don't have a reason to shift away.
And things continue to click along there and similar on the industrial side, we see a lot of large customer expansions that are expected to come online throughout the rest of the year, which should support the momentum, but again, we're cautiously optimistic optimistic because we know that the federal reserve has a big job in front of it.
And has the tap the brakes are so we'll see how that ultimately impacts all of these but so far we're in a really good place.
Really good place so hang tight and we'll be able to give you a little more granular view in terms of our expectations are when we come to you. This fall.
We told you I guess is probably a quarter or two ago about.
Reinforcing our service territory, particularly as it relates to energy.
And as it relates to onshoring and our certainly our territory has been very strong in terms of both of those categories and manufacturing as well and and that's clearly become a benefit for us So and really when you think about what's going on in the world today associated with security aspects.
That's really going to drive more toward the ability if we're onshoring do occur and and certainly for energy security.
It bodes well for our territory.
Got it.
Great to hear there and just wanted to pick up with I guess will share more details at the analyst day on on these points with load growth, but also wanted to see what else we might expect to hear at the analyst day I suspect both of sales processes, we'll get some more color there, but is there anything else we should be looking for at the analyst day.
There's.
Actually you have the sales process.
Process, obviously, everybody will know about Kentucky, but also the unregulated contracted renewables there'll be new data points on that as well and then of course Ah Ah Ah.
22 earnings guidance update our 'twenty to 'twenty three guidance range will be introduced and also will probably roll for the five year capital and financing plans through 2027.
And then there could be other things too so.
We'll we'll hold that till October 4th.
Got it and we'll wait for that and just the last one if I could any thoughts on the renewable sale, whether it makes more sense to do as an entire package package or in pieces I realize it's very early stages here, but just wondering if you had any thoughts to share on that.
Yeah, you know the team is looking at that and certainly I think.
The base case would be to sell all at one time, but.
If there are opportunities exist to stage that out with the capital needs that would be great. So we're still going through that process and we will go through as we talked earlier would.
We'll be going out to the market here in.
In the September timeframe. So we'll know a lot more at that point in time, so more to come in October .
Got it great. Thank you for that.
We'll go next to the line of Julien Dumoulin Smith go ahead.
Morning Julien.
Hey, good morning team. Thanks for the opportunity I appreciate it so maybe just a follow up in brief on this operating arrangement in the two states here I mean, just what do you need to see from Liberty to be able to move forward here at this point in time I just wanted to make sure I understand exactly is this just about them acquiescing to sort of the updated position from the two states or do you.
Really need resolve say a specific transfer value et cetera here.
Yeah Julien.
Certainly Liberty has been great partners through this entire process.
And we certainly wanted to be fair to them because they were obviously, you're looking for certain things out of out of the transaction. We were looking for certain things and I think it's going to be just a matter of going through the process of defining risk.
Going forward so.
It's not obviously, it's not is because cut and dry in saying, it's going to be the existing agreements and you know a tough luck, we'll move on it it's really an issue where you know there is a there is an opportunity for us to get together with them and define that future because we're gonna be partners.
In that and Mitchell going forward, so we might as well get comfortable with that relationship.
100%.
No I noticed in the in the comment the various comments you made in the prepared remarks, a uninflated <unk> can you elaborate a little bit more into as to how that ties into both near and longer term again I get that you guys are providing an update in a couple of months here, but just elaborate a little bit of the pressure points that you are seeing of late just if you can define that and how that is cascading through maybe speak a little bit.
The cadence of labor arrangements for instance, et cetera.
I missed the first part yeah, yeah, yeah, So Julien I'll I'll, let Nick talk a little bit about supply and in labor, but you know what we're we're also watching as you know in addition to our own cost and in working with our individual parties around making sure we have material supplies equipment and focus they actually do the work we're also paying attention.
What's going on with our customers because as we talked earlier today, our load is a big piece of our driver for earnings a year to date in this quarter so far.
And we hope to see that continue but as we know as the fed needs to take some action and tap on the brakes that could have some dampening effects as it relates to actually all three of our individual customer segments now as I mentioned earlier industrial segment looks you know reasonably healthy based on the customer expansions.
We see in the pipeline et cetera, but I don't think everyone can entirely escape the consequences. So even from a commercial standpoint, if you look at the real estate segment in particular interest rates have a direct impact on that piece of that that sector in that business and then of course on the residential side that choose into the wallet because if you know you're sitting.
It's sitting in a situation where your wage isn't growing as quickly as your costs are you may tend to want to tap the brakes, there not to mention mortgage costs go up as well so keeping an eye on it from a customer perspective, managing through it as it relates to our particular P&L, but I don't know Nick if you wanted to say anything about supply chain or labor.
So and Julien sorry, I missed the first part of your question Julie building them for me supply chain has certainly been an area of focus for the company and they've done a great job just watching the organization has done a great job of getting out ahead of that understanding the delays that are occurring relative to delivery of.
Transformers and those kinds of things.
And then also.
The size of inventories and other things come into question.
But in our case you know, we're a large electric utility with a with a lot of requirements the largest transmission system in the country distributions. Obviously widespread. So so we have some we have abilities to to really focus on the supply chain aspects in a positive way by expanding suppliers in and certainly exerting the lever.
We have associated with.
The large buying that we do so so we're we're in good shape from that perspective.
Now that being said you know the entire industry and an AEP are watching storm activity and those types of things and what implications that could have on inventory.
<unk> levels and supply chain. So we're watching that very closely but we have time for the economy to to really pick up and catch up from up from us from that perspective.
Labor is.
As an issue for everyone and certainly we continue to focus on that particularly our frontline employees to ensure that we're meeting the customers' requirements going forward.
Very tuned in to our wage rates and those types of things that are changing dramatically and and certainly from a resource perspective. We also have those relationships with with not only attracting our own employees, but also contractors and so forth. It they were able to pull from for <unk>.
He has reason so so all in all we're hanging in there and the capital plan still remains secure in terms of the ability to move these projects board.
And and we believe that a.
He is in a great position to continue that process.
Okay Super quick clarification on SPP, there tweaks of the reserve margin is does that impact your procurement efforts at all I know you guys. You have a few things in flight just to clarify.
No. It doesn't you know where we're going through.
We're going through regular as you've as you brought as you've seen irregular integrated resource planning processes.
With all of the south of aspire approval states and and those processes will continue.
I guess the good thing is that the things that we're putting in obviously, we already talked about transmission and distribution in terms of supply chain activities, but in terms of resources.
We're already putting integrated resource plans in for renewables and the timing of those renewables are such that we have time for a supply chain to catch up relative to solar and wind.
Component. So so we're in good shape from that perspective.
Great. Thank you guys seem to have.
Yeah.
We'll go next to the line of sharper razor with Guggenheim Partners go ahead.
We're enjoying good morning, guys how are you doing.
How are you good Nick just on the contracted renewable sales were kind of thinking about the process for the sale. There is obviously some conflicting data points out there, but rates have ticked up materially.
Seems to be a few peers in the market selling as well, but on the other hand.
Just given supply chain issues steel on the ground is certainly more valuable I guess can you elaborate a bit more on the process. When do you plan on opening up the data rooms, and it's a tight time frame with the analyst day. So what data points can we get between September when you kicked that process off in the analyst day, which is owned.
A few weeks.
Process right. So I guess, what's giving you a sense.
Yeah. So so these are these are well known resources and they're already already there and that opened up a data room can be done pretty quickly and also review will be done quickly.
<unk>.
I would say that the interest has been very robust and it continues to be robust because and you said it.
They have steel in the ground, but also the ability to continue on with these projects in a very positive sense. We took out flat ridge too so that makes the portfolio, even better and and certainly from from that perspective, we expect the process to move very quickly and you know when we when we bought the resources.
Some of these resources from Sempra, we visited visitors bites and in the data room was opened in and we moved we moved very quickly and for these types of assets, even though there may be others that are selling the assets. There is a robust focus by the market on a on a certainly attracting these types of assets. So we.
We feel we feel very confident we can move forward quickly and have certainly more information. This year by the time, we get to the Analyst Day chart. This is Julia as as an anecdote.
When we initially made this announcement I can tell you that not only was I receiving calls Nicholas receiving calls taxable of his team is running the process with receiving calls so a lot of inbound calls coming in and as far as what you can anticipate I get it it's a shorter timeline assuming relaunch it.
At the very latest in early September we shouldn't be able to come back to you by October 4th with color on how that process is going and you're right. I mean, there are other folks in the market as well that's why I think we need to get out there as soon as we can and get business taken care of so that is absolutely. The objective and stay tuned we'll have more color and share with you.
Do you think you could actually announce a deal on the fourth with the redeployment of the proceeds.
No tight oh, yeah, that'd be too tight for that.
Obviously.
And then they will depend on what we get back to in terms of you know one time versus staged in all those types of things will have to be considered and and and.
Certainly we will have more information, but but but we won't have finalization of the deal.
That'll be probably by the end of the year.
Got it got it thanks, and just one last one on <unk>.
I mean, obviously your load growth in the backdrop in general has continued to show the ongoing strength do you highlight the fact that it's pre pandemic levels.
I guess, how are you sort of thinking about 'twenty two in general on where you are within sort of that EPS range, especially given that we're kind of into the key months of the of this summer with Q3.
I think there is obviously this is a very strong tailwind for you, especially as we're thinking about.
22, even though you guys are kind of hedging yourselves, a little bit on some of the uncertainties out there.
You know, it's always good to be be ahead, a little bit.
Each time, you go into the latter part of the year because.
Summer is always always always good.
And then you get into the fourth quarter with.
You don't know where storm activity is going to go in that kind of thing but.
But we feel really good about the position that we have right now and and and certainly if you look at the fundamentals of what's going on I mean, you take charge point out of it.
It is a very very positive quarter, and and and certainly one in which we continue to grow and see it see it I mean.
Or load guys pretty optimistic so and and if you knew our load Guy you know he's he's a it takes a long way for him to get there, but but but we are we feel really good about the position that we have and I think I think as we see more towards the end of the year. Then we will have more to say when it comes to.
By the time analyst day comes around.
Terrific. Thank you guys appreciate the color yup.
We'll go next to Steve Fleishman with Wolfe Research go ahead. Please.
Good morning, Steve.
Hey, good morning, Thanks, Nick.
So just just a question.
I think Julie mentioned the on the Kentucky sale. The write off you took 15 cents.
Is that should we read that as effectively reflecting.
Your expectation of what.
Kind of.
Price change needs to be renegotiated for the this Mitchell issue.
Yes.
Reflecting that or is that no that one it was really focused on.
When Liberty and an AEP got together to focus on the Kentucky transaction order itself and and they were requirements associated with that so and.
And we are and we certainly were focused on making sure that that we completed that Ah Ah Ah that that order in this requirements. So that's that's what that is.
Okay. So I guess, maybe then just on the difference between Kentucky, and West, Virginia, and how Mitchell's treated could you just give a little more.
Color on those differences in <unk>.
So we can get you kind of think about the value difference between the two.
Yeah. So.
I think it's pretty obvious.
Yes that Kentucky had its view of valuation.
In 2028, and West Virginia has its view of evaluation in 2028 and the two.
Or in very different positions and it's probably not something you're going to resolve today. So so really it becomes an issue of okay. How do we how do we get together and think about our continued operating partnership which could be done through the operating committee.
Of the existing operating agreements and and then and then Oh.
Certainly focus on a later date to to consider the risk issues associated with that so.
And I think that you know.
For us I think it's sort of a realization that that.
There there will be no doubt that that Kentucky power will.
We will continue to be a partner in Mitchell and then when the time comes before 'twenty 'twenty eight they'll have to be some reconciliation between what Kentucky wants and what the West Virginia Commission Wise and and then we just want to make sure. Those risk parameters are are taken care of on the front end.
Okay.
But I guess what matters in terms of closing is really the arrangement between you and.
And I guess Liberty in terms of yeah, that's right that's right.
Closing is that.
There'll be some kind of just ability to negotiate.
Some kind of.
Certainty on that.
Because you know we have we have now we have a an outside party involved with a.
A third party from Aep's perspective, with Michel going forward, so that sort of drives a different a different view and when everything was already owned by IEP companies. So so you have to go through that process and determined okay. What's the what's the right approach for for Liberty to have that ownership.
And for AEP to have ownership in and at arm's length.
Okay, but it sounds like Youre confident this will be resolved with the buyer.
Oh, Yeah property.
Yeah relatively soon.
Certainly or people who have been in constant contact on this issue, they're working very well together I talked to a rune as late as yesterday.
So it's really.
Both of US are very optimistic about the about this transaction.
Okay, that's good Eddie for himself.
[laughter].
I'm sure he will when it is his chance for it to do a call.
And then just on.
On the.
On transmission.
Anything that you kind of expect from FERC in the second half of the year to better.
Identify both kind of their interest in getting a lot more transmission build but at the same time still.
You know a little bit of kind of pressure on the ROE just what are you watching there.
Yeah, you know obviously.
Uh huh.
Reliability and resiliency.
<unk> is a central focus not only to two <unk>, but the Congress as well.
And I really believe they will continue the process of of all the all the areas of focus right now with.
With the <unk>, they've got several neighbors out actually and they just put initiated one around weatherization.
And making sure that we're as resilient as possible and certainly from a transmission planning, which was already done that <unk> along with.
The state process in terms of discussions relative to.
Cost allocation and those types of issues, so they're moving along.
When they when they issue that original nope were under transmission. They they made it clear that that it wasn't going to be sequential it's it's a it's a multitasking.
The opportunity for us to look at all of these provisions and then of course, the Qs associated with it with.
Our new resources and Archie owes those are all being focused on and I think I think Merck is doing a very credible job of marching through this and making sure that we are able to invest in transmission in a way.
That secures this country and in so many ways. So so I think that process will continue who are who knows what goes on with the ROE is the 50 basis point adder and that kind of thing that I mean that could take years to resolve but but nevertheless ah.
We will continue moving forward with our investments and.
And we will continue to look forward to.
The rules processes and procedures to be put in place where we're we as is.
<unk> stakeholders in this process are allowed to make the investments that we need to make in a timely basis. There's no question that.
As we look at all the resources that are needed the changes in the transmission system cyber type issues that I'm sure there'll be interested in as well in a regional activities associated with planning.
Ensuring that we're able to invest the way that we should on a timely basis with as little risk as possible and that's that's really important because.
There are so many changes occurring and for now Youre seeing you really are seeing applications relative to resiliency and reliability.
And I think everyone needs to sort of take a take a pause and ensure that we're looking at that with and with our eyes wide open and.
And that we're doing the right things.
At the right time.
That that process continues and I think broke is doing a great job.
Great.
Thank you very much yeah.
By the way most of those numbers are.
Pretty consistent with Aep's position. So so we feel really good about our role.
And.
Enabling the policy to move forward.
We'll go next to the line of their guests Chopra with Evercore go ahead.
Hey, good morning team.
Yep.
A quick clarification.
<unk> on the Kentucky sale process is my first question just just to be clear the your discussions with Liberty on the Michelle operating agreement and then sort of the FERC approval does or do sort of independent processes right. So you don't have to go back to FERC with asking for a revised approval or something like that once you sort of.
Settle with Liberty.
On as it relates to Michele.
Yeah.
Certainly we believe with the original agreements and the ability to operate under the operating committee under that agreement.
We can really focus on the status quo and ensuring that we're able to move forward.
With a partner that has a third party so that the provisions of the agreement already provide for the ability to make those kinds of adjustments. So it's our belief that we don't we do not need to go back.
Two bird for additional approvals.
Got it okay.
And then just maybe you know wanted to get your sort of thoughts on valuation.
For your renewable assets.
Maybe just how have the walled since the first quarter call, it's been a volatile day.
Interest rates have been up.
So just any color you can you can share with us there as you sort of started this process in September .
Well you know, obviously, we know that that.
The headwinds of inflation and those types of things are R. R.
Our areas of conflict with an increased valuation, but at the same time, you've got a lot of lot of.
Robust.
Our interest in these assets and.
The fact that they continue to produce energy in a.
A market that that.
Rods additional benefits for or whoever.
The ends up owning these assets so.
It's hard to tell what the what the valuation valuations are going to look like right now.
But I don't I.
I mean, certainly we're not concerned about.
You know all of the macro issues that are involved because these assets down pretty well and the cells and you have the positives and negatives, but but now that now and that's why we we obviously took the adjustment on the flat ridge too because we really wanted that out of the portfolio. So that you wouldn't be.
Arguing with bidders about what that valuation was and what the risk were of of that particular project the rest of them.
Or are excellent projects that that that should bode well in the marketplace. So I like I said I can't tell you any any thoughts on on what.
What we see valuation to be I think the market will tell us.
To provide just a little a little more color if you're trying to model.
Aside from giving your market price point, we didn't include in the presentation. Today on slide number 44 are the breakdown of all of the projects that are included in the portfolio, you'll see that we've essentially removed flat wrench to like we talked about today as it relates to asset <unk>.
Are you in that type of thing that's on our balance sheet. If you look at our balance sheet today, our asset value associated with the portfolio as it stands at about $2 $1 billion equity positions about $1 $4 billion. We do have some project debt and tax equity that total about $272 million. She can plug that into your model as well.
And then we do get the question around how much did this contribute to earnings so for 2022.
For the generation and marketing segment, which is 31 cents total for our guidance and that kind of that mid point about 13 to 17 cents relates specifically to this portfolio. So you can kind of begin to back into whatever valuation you want to assign to it and you know there is a very low tax basis associated with it but we do have some.
Capacity to absorb a tax gain because we've got some credits sitting on the on the on the bench that we can use to offset that so don't don't view that as a problematic or a seriously gating item for us just because it's not where it will be able to hurdle over that.
Excellent. Thank you both I appreciate the color.
Alright.
We'll go next to the line of Nick Campanella with Credit Suisse go ahead.
Alright.
Hey, good morning, Thanks for thanks for taking the questions I'm sure really quick follow up on the Kentucky sale reduction.
I noticed you have a 1400.
Proceeds in the funding slide still so just can you just reaffirm the progress with everything going on in the past quarter that cash proceeds when.
When you're closer to be unchanged.
We're good.
Good.
No worries there so no change in that modeling are those assumptions forget.
Okay, Great Great and then I guess just a.
Question on strategy.
During the analyst day.
You've had some and simplifying the business profile.
So the <unk> sales are on the horizon, obviously as.
As we kind of think about funding this long term capex plan.
You're interested in pursuing further related sales unregulated sales or are we kind of in the later innings of this.
Portfolio rotation strategy.
Yeah.
Hey, you know obviously, we have a lot of capital to fund.
And we have a great plan to do it.
I would probably look at the ownership levels of the new renewables projects and and that's going to provide additional opportunity for us resiliency and reliability.
Certainly distributed energy resources all of these types of things.
And our plans are really providing us the opportunity to fine tune our portfolio to match, what the growth expectations, we have around those areas. So so no we're not done.
We will continue to evaluate.
Evaluate our opportunities to add value from it from a shareholder perspective, but also.
And ensure that our customers are are seeing.
Seeing the.
The capital deployment that provides a better experience and that's something that we're very focused on so.
That's just going to.
You're only seeing.
The beginning of the of the part of our business.
That is going to endure going forward as we transition this company and in that.
That process will certainly can continue that's why I sort of said, it's a it's a.
But our continued execution around and I use taking care of business, but adding a dash of let's go crazy and that sort of that sort of says.
We're gonna be thinking on.
Oh on the edge about what can be done.
To make sure that we fund these real opportunities we have ahead of us.
Alright. Thank you very much we'll see you in October Thank you Yep.
And our next question will go to the line of Stephen Byrd with Morgan Stanley .
Orange, Steven Hi, It's Steven Carter on for Steven Thanks, So much a particular location.
Wondering hey, How're you doing I'm wondering if you could give your latest expectations around federal climate policy here.
Do you expect to renewable tax credits to be in an extenders bill potentially towards the end of the year and just generally anything you would expect in terms of federal climate legislation this year.
Yeah, I think I think it certainly is going to be it's going to be a challenge and I think I said that last quarter.
It is going to be a challenge and and the way it appears to be coming together is there.
There were some there was some discussions going on there may still be discussions going on but but right now they're so focused on.
The health care.
Pharmaceutical activities.
It may be bifurcated, and then and certainly the chips Act now we're obviously for the chips Act because entail is locating within our territory with.
The two fabs up to eight Fabs and that's a huge huge positive.
So you have things like that that are going on now not only not only that but obviously the midterms.
Or or providing some some overhang to to getting even a smaller package done.
Although there there has been discussions of working on that and trying to get something done by September 30.
But.
Even that is is gonna be a really a hard hard thing to do so.
So.
Again, I would say post election, you're probably dealing with either some form of a smaller package or extenders, which then you know that's a typical thing that happens when.
Towards the end of the year, Oh, when Itc's PTC start to roll off again.
You'll see extenders or or the R. S.
In terms of supply chain activities being able to extend it for some period of time. So you probably youll, probably see some band aid solutions until you see.
A solid solution going forward, so I just think that the.
The environment is certainly very volatile right now and it will take time to work itself out and maybe even post election.
Uh huh.
Again, you'll maybe have some sense of since a columnist to be able to focus in on some of these things that are important because our.
Power industry and by the way our 16000 megawatts does not include any extension of Itc's V D. CS.
But we are definitely for those extensions and expansions to.
Two nuclear and and as well too.
Storage those are clear opportunities for us to redefine.
The resource plans going forward.
Direct pay is also very important to us but.
We are that.
That would make it.
At least at this point, it's a tough sell maybe later on we can convince everybody that that truly is a benefit.
To our customers. So any anything we get from that respect there will ultimately be a benefit to our customers from an economic standpoint, and that would be good for not only are our movement to a clean energy economy, but the options that we have available to us.
Namely.
With storage nuclear hydro.
Hydrogen hubs those kinds of things.
I need to continue to be looked at to make sure we're resilient and reliable going forward. So.
That's where we stand right now I think.
Got it thanks, that's helpful color.
Just one small follow up I was just wondering if flat ridge if the issues that you've found there or is that just exclusive to that project. It didn't have any other or.
None of the other assets in the portfolio had similar issues is that driving on it flat ridge and that was the only one you plan to extract that's right. That's why we separated that one yeah. The others are good.
Understood Okay, great. Thanks, so much okay.
Okay.
We will go next to the line of Andrew Weisel with Scotia Bank go ahead. Please.
Good morning, Andrew.
Morning, everyone.
Just one from me about coal so between reliability concerns in the Supreme Court ruling that you mentioned do you see.
See any potential some coal plants online beyond their current schedule dates beyond Mitchell, which is a bit of a unique situation, but would you consider extending them and if so would they be.
Potential backup as pickers win or keep some as either intermediate or Baseload resources.
I think that's exactly why.
Certainly we said.
A rational and reasonable approach to move your board from a resource perspective, we have to be able to maintain.
Reliability resiliency.
And economics for the grid and.
And to our customers and certainly.
For our units we.
We continue to progress along the path.
We've already placed our in line and actually you have to do that to be able to to define our future and we're very very focused on the just transitional aspects of our communities as.
As we make any transition so you touched on a point that is particularly important for for resiliency and reliability reasons. The capacity provided by these units is extremely important and and whether whether the capacity factors move down as you bring in and layer in.
More renewable energy and clean energy that that's fine as long as you have the resource adequacy to be able to meet the demands and then eventually we have to find a path that insurers.
The communities continue to thrive from a tax standpoint fire protection Police protection schools school boards, all that kind of stuff.
We have to be able to look at that we can't just shut down. These communities and then then decides something else so in areas like Westwood.
West, Virginia with with the coal fired generation, we have to define what that path is it may be small modular reactors. If we can define what that risk is in and limit it from a shareholder perspective.
Certainly D O is very interested in that and it just so happens the jobs of the small module reactor is the same as a coal plant and paying the same taxes and those types of things that's a.
That's an opportunity to take a look at or there's hydrogen hubs or storage or other activities. So we got to be able to rationalize that but but coal has provided an important benefit.
In coal generation.
Particularly <unk> and <unk>.
These are summer months, and obviously during the winter months as well and we've got to be mindful of how that process continues. So that's why we have to say it has to be rational reasonable with a timeframe that makes sense.
Thanks, that's very helpful.
We'll go next to the line of Michael Lapidus with Goldman Sachs Go ahead.
Martin.
Nick I know you're excited about the analyst day and you even that you are probably equally as excited as having Brian Kelly down in Baton Rouge.
I guess.
I'm looking at the.
The earned ROE versus authorized exhibit.
A couple of questions about a few of the subs.
How are you thinking about what structural changes in ratemaking your tea.
<unk> is going to speak in the next couple of years in a few of the jurisdictions that are earning good bit below that meaning they can peso, where honestly you bought under earning for a number of years, but also thinking a little bit on Apple co a little bit on this webcast.
Yeah. So.
Obviously.
There's been substantial opportunities there in those regions of the country because actually when we put in renewables.
The renewables is helping from an ROE perspective, so and obviously.
Obviously from a as it reduces rates to customers from a fuel standpoint, and overall in the savings provided gives us an opportunity to deploy capital investment in those those areas, sometimes obviously, we'll spend capital.
To make sure that we're doing.
And those things.
To ensure resiliency reliability and all those activities, but but particularly.
Particularly from an ROE perspective, our ratemaking standpoint equity layers has certainly been a big a big push of ours.
And certainly from a concurrent recovery standpoint.
With Formula based rates, we have forward looking.
Rates in Indiana, Michigan, we like to see that in the other jurisdictions, particularly with with the massive amounts of capital that we're deploying and then typically.
Typically the renewables or or or tracked as part of the investment.
Until we get it in rate base, and that's worked out great for us.
I think I think.
And Youre also.
You're also seeing opportunities for us to really get out ahead with the commissions on all.
What we're trying to achieve.
In terms of not only benefits to our customers, but also the ability for our customers to use our product I mean, when I look at on the customer side with distributed energy resources with the analytics and all the all the equipment that can be put in place to enable customers to make a.
Make wise judgment will be highly beneficial not just for the for the operations of the grid, but also to mitigate their own fuel costs and bills.
During periods of time and.
You obviate the need for the securitization or other things that we have to do in huge storm related environments.
So I think theres a lot of a lot of good things going on.
And then the <unk>.
<unk>.
I think it's 85% of our our recovery as tracker base, so we'd like to improve on that as well I think there has to be a recognition that that cash coming into the utility is particularly important and we always talk about F F O to debt and the.
The utilities with all of the massive investments that are necessary.
Need to be able to see the cash coming in the door. So that we can continue to make those kinds of investments. So that's going to be a key message for our regulators going forward as well.
But we're doing good things and as long as we're doing good things and spending on the right things.
We believe we're a lot were aligned with our our commissions and our customers are on the right path forward and we feel very good about.
The path that we're on.
Got it and then.
Yes.
A little more help there too on P. S. O in particular, we've got securitization that will be completing here.
Next month, so in August for the storm Yuri costs, so that should help to alleviate some of this pressure as well and we'll be filing another base case, so stay tuned for that as well and this is new.
Nick mentioned, just some refinement around utilization of different.
Weight adjustment clauses et cetera, not only in and West Virginia, Virginia, But then also as we take a look at <unk>, we still have the outstanding Turk component. That's not included in rate. So we've got different ways to get after it and you'll see us talk more about that as we'll come at you here on October four so stay tuned.
That's great and one quick you can find all up just Cardinal alumni Jean M segment.
<unk> had a big benefit during the quarter, just given where power prices were versus your delivered cost of coal.
Can you remind us how youre thinking about the future for Cardinal going forward.
Yeah, So cardinal.
You're talking about the Cardinal.
Cardinal plant yeah. So yeah. So we plan on completing a transaction with Buckeye relate.
Related to that particular plants. So they would they would take ownership of the plant and we would take a PPA back for a certain period. So and then that means we will not have any generation to speak of a left in it.
Ohio on the unregulated side so.
Uh huh.
Long way from you know from where we were in Ohio, but I think it's also theres a message for Ohio in terms of in terms of generation that needs to be place in this state. So that's.
That's probably another another issue I can get into but but I'll stop there, but I think I think.
Uh huh.
That's all that's all in the plans already yeah, Michael said that PPA with Cardinal goes I think through 2028.
Did you kind of point out in that as well.
Got it. Thank you guys. Thanks, Nick Thanks, Julie much appreciated you all.
Talk to you later.
We will go to the line of Sophie Karp with Keybanc go ahead.
Good morning Zoghby.
Hey, good morning, and thank you for squeezing me in.
A lot has been discussed already.
But if I may just ask.
I'll ask a couple of questions Chris on transmission.
You made a point of saying that transmission trustco remains as one of your key growth engine. So I don't want to Miss.
Misquote you guys, but it also at the same time, you were talking about not being done with divestitures.
And it's a non core business can you maybe help us frame. How you think about transmission is it are you, making these comments because you're getting questions about potential transmission sale and how you're thinking about that or should they not take too much.
No don't read too much into it cause dreamt transmission is a key component for our.
Not only for our investment in the company, but also in terms of what we see relative to.
The transition of the future transmission is a key component for resiliency reliability and optimization.
As we move to a clean energy environment. So no.
From from a transmission standpoint, we feel very good about our role relative to transmission and actually Aussie distribution continuing to grow in and certainly the renewables transformation itself. So no don't read don't read anything into that.
Alright, Thank you for clarifying that and then.
And my second question was a little bit of a housekeeping question I guess I'm looking at the regulated renewables opportunities exhibit that's slide 40, and it seems like for Opco. When the opportunity has been reduced a little bit in school or increase a little bit.
So any sort of timeframe.
I'm just kind of wondering if that's true.
Projects that are in alignment or should we be how should we be thinking about that.
Yeah. So.
The April our integrated resource plan.
Certainly showed what.
What was needed from a from a NAPCO perspective, so and and.
I think there's probably a more more.
More to come on that but it's actually a pretty immaterial.
At this point.
Alright, thank you.
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Yeah.