Q2 2022 Portland General Electric Co Earnings Call
Okay.
Good morning, everyone and welcome to Portland General Electric Company's second quarter 2022 earnings results Conference call. Today is Thursday July 28, 2022. This call is being recorded and as such all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer period. If you would like to ask a question. During this time simply press star one one on your telephone keypad. If you do not intend to ask a question. Please avoid the if you do tend to please avoid the use of speaker phones for opening remarks, I would like to turn the conference call over to.
Portland General Electrics senior director of Finance Investor Relations and risk management.
<unk> hired Mitchell. Please go ahead Sir.
Thank you Jonathan Good morning, everyone and happy you can join us today.
Or are we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion, which we will be referencing throughout the call. The slides are available on our website and investors that Portland General Dot com.
Referring to slide two some of our remarks. This morning will constitute forward looking statements. We caution you that such statements involve inherent risks and uncertainties and actual results may differ materially from our expectations for a description of some of the factors that could cause actual results to differ materially. Please refer to our earnings press release and our most recent periodic.
Our reports on forms 10-K, and 10-Q, which are available on our website.
Leading our discussion today are Maria Pope President and CEO , and Jim Ajello Senior Vice President of Finance, CFO Treasurer and CCL. Following their prepared remarks, we will open the line for your questions and now it's my pleasure to turn the call over to Maria.
Dr. Don and good morning, everyone and thank you for joining us today.
Gaining with slide four.
I'll start by discussing our strong quarter and provide some operational and regulatory highlights.
We reported GAAP net income of 64 million or <unk> 72 per share compared with net income of 32 million or <unk> 36 per share in the second quarter of last year.
Due to these strong results, we're revising our GAAP earnings guidance to $2 60 to $2 75 per share.
Additionally, after further evaluating the first quarter write off of the 2020 wildfire and Covid deferrals.
And after receiving further clarification from the Oregon Public utility Commission.
We are also initiating non-GAAP adjusted earnings guidance of $2 74 to $2 89 per share.
This addition reflects our ongoing work to provide the most meaningful comparison of our earnings and assessment of ongoing financial performance.
Our results this quarter reflect several key drivers.
We're seeing continued growth in energy deliveries, particularly on the industrial side with semiconductor high Tech and digital customers.
Several new and existing semiconductor manufacturers are expanding their operations in our region.
This builds upon decades of investment in the state and extend it longer secular trend and in migration and business growth.
Many of our investments at Portland General are critical to the infrastructure that supports the technology sector.
As we discussed in the first quarter call.
Operating expenses are also higher due to wildfire mitigation as well as grid resilience and enhancements to customer and other digital technologies.
On the power and fuel expense front, we've had a great hydro year.
<unk> benefited from the very favorable power market conditions.
As many as you know our region experienced the wettest second quarter in the last 81 years as well as record breaking spring snowfall.
Moving to slide five.
As we look to the future we're focused on three key areas.
Advancing investment that drives growth in alignment with the state's energy policies.
Enhancing performance and operating efficiency.
And operating our system with a focus on risk management.
We are pleased with the operational and financial progress, we're making in these areas.
And we're well positioned as we execute through year end and beyond.
Let me start with growth.
We're living in a transformational moment in the energy industry.
Portland General electric is leading the way by advancing the state's policy goals and investing strategically to build a clean energy future.
We continue to see operate excuse me, we continue to see opportunity.
Related to resource acquisition as we seek to reduce greenhouse gas emissions to meet 2030 emissions targets.
And on July 15th OTC verbally acknowledged our RFP shortlist.
Given inflationary pressures our processes underway for parties to refresh their bids.
While we hope this is short.
We will need to be patient as we work with independent evaluated to ensure the best price and lowest risk for our customers, while maintaining the attractive diversity of wind solar battery and pumped storage resources.
We may we remain optimistic that we will announce executed agreements by the end of this year.
The projects are expected to be in service by the end of 2024 to capture expiring federal production tax credits for the benefit of customers.
While the process is ongoing.
Any new generation capacity ownership opportunities, we will have an impact on our equity needs in 2023 and beyond.
Which Jim will discuss shortly.
The RFP process represents an important step in accelerating the clean energy transformation and is a key aspect in our ability to decarbonize, our power supply, while continuing to provide reliable affordable energy to everyone. We serve.
While the ink is not yet dry theyre also looking ahead and expect to issue. Our next integrated resource plan and file our inaugural clean energy plan in early 2023.
Turning to performance.
During a period of significant inflation in growth.
We are all the more disciplined in managing our costs.
Like most companies, we're dealing with the impacts of a strong labor market and high inflation.
We are intently focused on driving operational productivity and performance, while holding overall cost trends stable.
As an example on the T&D side crew productivity is up about a third since 2018, thanks to better use of technology investments in the grid and improvements in overall workflow.
Today, we are getting a lot more work done at the same cost.
Much of our digital improvements have been focused on customers.
We've improved web based solutions payment options communications, and better reliability, better visibility and distributed automation.
On the generation side, our thermal plant operating performance has remained high over the last five years today, our <unk> plant utilization.
More than tripled to support renewable adoption, all the while saving money and maintaining availability.
While we're operating more efficiently. We're also improving safety safety statistics, including vehicle incidents have shown an 80% improvement over the last five years.
Yeah.
Now turning to risk management.
As the work we're doing to manage costs supports our ability to invest in robust and improved risk management.
First as a vertically integrated utility we're well positioned for example, while commodity prices in particular natural gas prices have show significant volatility throughout 2022, a regulatory Macau mechanisms.
<unk> strategies strong balance sheet and credit ratings, all help to mitigate potential impacts to customers.
Shareholders.
In late April the <unk> approved our.
2022, wildfire mitigation plan, which was timely in light of the Oregon Department of <unk> recent declaration that all of Oregon is now in wildfire season.
While wildfire season typically extends from May through October wildfire related planning is year round.
Our mitigation initiatives this year are well underway and showing results.
This work is paired with long term investments in wildfire cameras automated re closers weather stations, all to increase situational awareness of provide visibility and high risk fire zones.
Our risk mitigation of course goes beyond wildfires, our climate is becoming more extreme and every season.
The investments, we're making today are making our system more resilient and reliable.
Our integrated Operation Center is a great example, as it allows us to monitor control our entire system in real time. It Centralizes a range of vital functions that is critical to resource and system integration.
US manage and improve reliability with daily grid management and it serves as a central hub to offer efforts to increase resilience and security.
As you all have seen in the press we are in the middle of an extreme heatwave in the Pacific Northwest.
This facility our integrated Operation Center is improving our ability to respond to these circumstances, which put a great deal of stress on the grid.
Finally I.
I'd like to touch on our focus on areas in the coming quarter.
Market conditions for power costs are favorable.
As they were in the second quarter and our outlook for the third quarter is solid.
We're monitoring the profitability of constraints and regional power markets that could produce significant higher energy costs, such as we saw last year.
We're laser focused on closely managing O&M in light of our run rate in the first half of the year.
And our current inflationary environment.
And finally yesterday, we filed for the amortization of major deferral expense balances related to the 2022 labor day wildfire the <unk>.
February 2021, ice storm and the 2021 power cost adjustment mechanism or <unk>.
All of these represent a total of $132 million of outstanding major deferrals.
Additionally, we plan to file for amortization of the $34 million COVID-19 deferral in late 2022 or early 2023.
As we close the books on a solid quarter, it's worth noting that the key to our success is focusing on what matters most.
Safe reliable affordable clean energy with customers at the center of all we do.
Enabling their wellbeing and the advancement of the communities we serve.
All the while creating opportunities to invest delivering value for all stakeholders and shareholders alike.
With that thank you and let me turn it over to Jim. Thank you Maria and good morning, everyone.
Moving to slide six our second quarter results reflect the strength of our service territories.
Dynamic and favorable power market as well as broader economic conditions, our regional economy continues a trend of strong growth.
Migration industrial development, all driving rising to that.
You saw the unemployment rate in our service territory declined to three 2% June of 2022 compared to 5% in June of 2021.
We also continue to witness strong growth fundamentals in our service territory highlighted by high growth in the industrial sector.
Overall, Q2, 2022 loads increased by 1% weather adjusted compared to Q2 2021 residential load decreased three 2% year over year weather adjusted as we began to witness a moderation from usage patterns during the peak of the pandemic residential customer count.
Growth remained steady at four 3%.
Compared to Q2 2021 commercial load decreased one 7% year over year weather adjusted due in large part to decreased need for irrigation in 2022 after record rainfall during the spring.
Tech and digital services sectors continued on their existing growth trajectory as we saw were nine 8% higher industrial loads weather adjusted year over year on a weather adjusted basis total load increased 4% year over year weather adjusted retail deliveries were up.
Two 7% year over year first half 2022.
Beyond the continued strength of our region, we observe significantly more favorable power market conditions in Q2 of 2022 relative to the prior year. These conditions, coupled with deliberate actions by our power operations team.
<unk> purchase power and fuel costs on behalf of customers led to improved financial results compared to last year.
As we look at the broad economy, we are closely watching the impacts of inflation in the near term we are managing inflation pressures on O&M by focusing on an inefficient spend throughout our business and I believe that on a pressures are manageable within our current guidance.
I would note that from 2017 to 2022, our base O&M increased at a compounded annual growth rate of approximately 1% is one as an non deferrable vegetation management and wildfire mitigation expert expenses. The CAGR is closer to 2% based on the midpoint of 2022.
<unk> guidance, yet I think we could do better as we look to the remainder of 2022 and beyond we are focused on creating more efficient operations and effectively managing commodity risks and minimize the impact of cost pressures.
On customers.
I will now cover our financial performance quarter over quarter, we experienced a five <unk> increase in total revenues attributed to the previously mentioned increase in deliveries led by industrial customers, while load was up 4% quarter over quarter with significant increases in industrial load, partially offset by <unk>.
Creases in residential and commercial loads, resulting in some offsetting effects due to the composition of customer prices. This created a 7% decrease in total revenues.
As noted earlier Q2, 2021 hour cost conditions were challenging 31 cents over quarter over quarter earnings change relates to headwinds in 2021 that did not recur.
<unk>.
Is attributed to a more favorable power market in the current quarter driven by strong hydro conditions in the region as well as conditions and company strategies that allowed us to resell power and gas into the market at optimal times in prices. This includes the strategic dispatch of our generation fleet, which gives us.
The opportunity to respond to market conditions, reducing power when it is cheaper relative to market rates and selling excess power when market prices are advantageous. This was also mitigate risks and volatility and manage costs the benefit of our customers.
It was a 7% decrease in EPS from higher operating expenses Q2, 'twenty. Two forward have drivers include <unk> <unk> of additional wildfire mitigation, reflecting incremental work performed in 2020 to implement our recently approved wildfire mitigation plan.
Customer service spend related to transportation electrification enablement and enhancements to the digital customer experience.
Of additional outside service and labor cost for grid reliability, and resiliency and finally <unk> decrease from higher administrative.
<unk>, primarily driven by insurance cost increases.
It was a <unk> <unk> decrease due to lower market drive.
Returns on the non qualified benefit trust compared to Q2 2021, finally, we achieved a 1% decrease from other miscellaneous items.
Turning to slide seven which shows our capital forecast through 2026.
We have again increased our capital expenditure forecast for 2022 by an additional $70 million up by $105 million compared to the original forecast of $650 million. This reflects additional opportunities for <unk>.
<unk> and grid resiliency and vessel as.
As a reminder, our current investment plan calls for over $3 3 billion of capital investment over the next five years, primarily related to system resiliency and transportation electrification, but this number does not include any expenditures related to the possible.
RFP ownership options.
Turning to slide eight we continue to maintain a solid balance sheet, including strong liquidity and investment grade credit ratings, accompanied by a stable credit outlook total available liquidity at June 30 is $870 million and we.
We maintained a strong liquidity position.
We plan to fund investments from cash from operations and an issuance of $220 million.
Of that.
Later in 2022.
<unk> is expected to be issued under our green financing framework.
To seek out opportunities to tie our long term debt.
Our sustainability strategy capital investments on.
Now on to slide nine as we look forward to our capital needs in 2023 and beyond we are assessing the equity needs primarily related to the potential RFP investments as well as creating balance sheet flexibility previously we've discussed the long term equity needs to rebalance our capital structure for regulatory purposes.
And to maintain strong credit ratings, we believe a strong balance sheet creates important benefits to both shareholders and customers, including financing costs, while facilitated growth options, most notably for successive rounds of RFP investment opportunities needed to achieve the 2030.
CCAR goals.
While our ultimate equity needs will be linked to RFP investment opportunities our capital structure, we will likely need to align the historical regulatory ranges over time.
We're excited about our growth prospects for the new generation of capacity assets, which are in addition to the $3 billion based capex to be between 22 and 2006.
As mentioned by Maria we are revising our GAAP basis earnings guidance from $2 50.
To $2 65 to a new number $2 60 to $2 75 per diluted share.
We also received additional information or after our first quarter call that allowed us to further evaluate our earnings guidance, particularly related to the deferral reductions recorded in Q1 2022 as a result of the general rate case order.
Importantly, we received clarifications from the op UC that reiterated the commission has an established practice of evaluating deferrals on a case by case basis, and we will continue to employ this thanks.
Perfect specific approach on each case going forward in light of this clarification as we look ahead to the second half of 2022 we are also initiating non-GAAP basis adjusted earnings guidance of $2 74.
$2 89.
Which excludes the impact of the lease deferrals associated with your appendage 2020.
The second quarter results reflect continued load growth strong power cost performance.
This past.
Year, we remain focused on strong execution for the balance of 2022, we anticipate continued economic growth in our region driving weather adjusted retail load growth of two to two 5%.
Led by continued high Tech and digital growth and continued in migration.
Further employ our power cost framework, which yielded.
Successful risk management strategies in the second quarter and helped dampen the impact on customer prices and the runoff of commodity prices.
Year.
Operating cost challenges remain but we are continuing to take proactive measures to manage O&M for the remainder of 'twenty two including continue.
Continued focus on operational efficiency and high return O&M activities.
Technology, and digital solutions to manage customer needs, while optimizing performance and managing costs.
I am confident we are on the right track as we continue to drive efficiencies.
End of the year, which coupled with continued load growth.
It will allow us to achieve our long term earnings guidance growth is 4% to 6%. We will evaluate this growth rate as we get certainty around the RFP process hi.
Im optimistic our outlook for the second half 'twenty, two and beyond is strong our near term growth investment opportunities and the ability to raise capital for growth is also strong ongoing commitment to providing clean reliable and affordable energy long term focus to decarbonize the grid and electrified the economy is unwavering.
And we have established a framework for PGE to accomplish our long term financial goals and deliver value to our customers investors and communities and now operator, we're ready for questions.
Certainly ladies and gentlemen, if you have a question at this time. Please press star one one on your telephone.
One moment for our first question.
And our first question comes from the line of Julian to aluminum.
Smith from Bank of America. Your question. Please.
Hey, good morning, everyone. This is actually Ryan on for Julien.
Good morning, initiate the update good morning, I appreciate the update here. So maybe just on that last point, Jim and Ken again, revisiting the longer term growth rate is final resolution of the RFP process. The only gating item at this point and any other considerations that are kind of more dynamic in nature and factoring and how are you.
About things.
Yes, Thanks, Brian .
I think that is the gating item for us will determine where we are.
The RFP awards in the fourth quarter, we'll focus in on a more precise.
Vision of our financing plan and obviously, we are modeling scenarios now, but we are already operating as you will know and see the new guidance.
In the five plus five range right now so we're comfortably inside the current guidance and I think the RFP that will give us an opportunity on balance to grow the growth rate even more so yes in a word.
Excellent any.
And the macro backdrop, that's impacting the process and how youre thinking about ability to participate here.
Maria mentioned that.
Bidding is being refreshed.
It's probably no surprise to anyone given what's happening in the macro environment with the cost of money.
Supply chain issues inflation and the like and so we think that's a natural part of the process, we think it could be dispatched.
Pretty quickly and we still are confident that we can get resolution by the end of the fourth quarter was awards in place, but the macroeconomic environment to no one's surprise.
Is affecting these bids as you might expect.
Yes, understood and then maybe just lastly, any way to quantify how youre thinking about the impact of getting rid of decoupling here and how that could factor into your longer term trajectory.
Yes. Good question clearly, we have a stub year that we're presently in new rates and the decoupling mechanism.
Elimination, although theres a tracker there.
Youll see that for the balance of the year.
Reflect a year, where it's not fully effect, let's put it that way so starting next year.
Lack of decoupling.
Fully effective just to remind everyone. We bargained for that result, because we think on balance.
One of the growth of your utilities. So if I can use that word is tremendous growth year, so I think that.
You might be able to realize on that.
<unk> capital to invest in the business I don't have a quantification for you right now.
Look for that in the App.
And your guidance published in February of 'twenty two.
Three pardon me.
Okay.
Excellent I'll leave it there thanks, so much for the time.
Hello.
Thank you one moment for our next question.
Okay.
And our next question comes from the line of <unk> Kim from Goldman Sachs. Your question. Please.
Hey, Tim.
Good morning Mario.
First question.
I guess.
We think about 'twenty, two underneath the guidance and performance for the year and into 'twenty three as well so I guess, the adjusted guidance, excluding the regulatory items and with the strong performance on the power side kind of gets you back to where the original guidance was for the year with the I guess the power benefits.
Offsetting maybe some of the O&M inflationary aspects.
And if I heard it correctly your third quarter is set up pretty well it seems just from a power side as well how are you.
Thing to think about positioning for 'twenty three whether it's a pull forward of even more costs and how much of that lever do you have.
And on a 23 versus 22 basis.
Initial indications of whether youre more like better positioned or or roughly the same as when you started out the year.
So answering your analysis of where we are is spot on and it's a good question. So we are doubling down on our focus on cost I mean, it's really important that we continue to invest in the business, but also to lower costs at the same time, it's important for customers and it's important for our results overall.
With regards to power costs.
Really focusing on technology that will give us better visibility across the market better tools to be able to manage in a more volatile environment.
As well as making sure that we have the kind of hedges and mechanisms in place that can really protect the company and customers from spikes that could come as a result of <unk> power supply.
Vince or extreme cold that we're seeing so we're really living in a much more volatile environment and therefore, the power operations practices, we have the hedging that we do and overall management and visibility is really important.
There is no question that we as well as.
Everyone in corporate America is facing increased inflation.
Labor issues and challenges that we haven't seen in a long time, and our economy and we're recognizing them hitting them head on.
Just to add one thing.
We anticipate transitioning to the adjusted only presentation.
Into 'twenty three right so.
Please keep our framework in mind as we go forward there.
Yeah, no that makes sense.
Just talk about the potential for additional investments through the RFP in the equity financing needs that may take place.
So if you think about just the.
The legislative potential build.
In the Hopper right now as of last night.
Components of it any initial look on the net impact to those financing considerations if.
Whatever versions out there where to take place.
Sure. So I think on the energy side Theres still a lot to work through.
As you know we have been strong advocates for our clean energy a policy at the federal level everything from.
At Teck neutral to the ability for utilities to utilize investment tax credits on an equal playing field.
We also are really encouraged with what's happened with regards to the chip back into.
And see what you may not realize is that about 15% of semiconductor manufacturing actually takes place and Portland General service territory. Our Intel is very large operations in much of their R&D.
Is done here.
In particular that they're investing in their advanced lithography and we have several other companies.
Who service the semiconductor industry, who are or who are semiconductor manufacturers themselves, who are increasing their investments and you can see our quarter on quarter growth in that area and we would expect it to only continue and to be quite robust not just for the next couple of years, but really for the decade to come.
I think it is through the <unk>.
Specht of legislation that circled mentioned schumer arrangement from last night.
Sure Bill.
Cortes potentially significant benefits with PTC and ITC extensions and <unk>.
And so I think this plays into our strategy very very well as does <unk>.
<unk>, which we've been examined a core number of months now so.
Yes, we have a lot of capital to deploy yes that will bring a lot of financing on it.
We also think that these legislative.
Tailwind so if they become enacted could be very significant for us.
Got it.
A question I guess.
Based on whats out there relative to.
I guess the potential amount of equity needs that you had.
I had modeled in with this potentially reduce that or would there be not much of a change.
Well I am assuming now that we're sort of on our own.
We see the tangible benefits coming out of Washington, right. So it will be sizing our needs based on the RFP Awards and in addition to the balance sheet strength.
Mentioned relative to the ratios.
We'll hope to achieve over time, and it's a very very strong belief that we should be keeping.
Stout investment grade ratings with stable outlooks, because we have the next seven years in front of US the next two or three only.
Of RFP opportunities. So we wanted to lids, but period to achieve the 80% Decarbonize <unk> through investments in a very strong financial footing.
Got it thanks, John Thanks Mario.
Thank you Edward.
Thank you and as a reminder, ladies and gentlemen, if you have a question. Please press star 111 moment for our next question.
And our next question comes from the line of Sophie Karp.
Keybanc your question please.
Hi, Good morning, Thank you for taking my question Sophie.
So I just wanted to ask you about the potential for I guess.
Got it.
Transferability or direct debt.
That I understand it.
I'm wearing the bill Alright, I appreciate it 700 pages and you probably put it into it.
Historically, I think you were a little bit of a disadvantage versus some of the nonregulated entities when bidding.
And you have a project because of tax treatment and does that change things for you potentially where it levels the playing field.
Sure. So first of all thank you for the question.
You are right, we do have production tax credit carryforwards direct pay would be beneficial.
It's our view that actually I level.
Level, playing field to be able to utilize the same.
Investment tax credits for solar battery storage and other mechanisms that don't put regulated utilities at a disadvantage is the most important aspects of the legislation outgoing forward.
We remain very encouraged and I would add that we're very fortunate that our senior Senator from Oregon, Senator Wyden has been front and center and the negotiations as chair of the Senate Finance Committee and we've been in contact with them as latest last night.
So it is this is something we're spending a lot of time on and are deeply involved in it will make a difference to our business.
Thank you that's all I had appreciate the answer.
Thanks.
Thank you one moment for our next question.
And our next question comes from the line of Anthony <unk> from Mizuho. Your question. Please.
Hey, good morning, Jim Good morning Maria.
Good morning.
Jim I, just want to make sure I heard correctly I believe you said going forward the guidance.
The guidance that you will be providing is on a non-GAAP basis is that correct.
I've mentioned that you should anticipate that we'll carry on with that basis into 2023. So again, what youre, saying is is that we'll have what we will exclude items that might be extraordinary or unusual and not reflective of the <unk>.
Overall run rate of our business that's right in order to provide more transparency really to demonstrate what the.
Actual earnings power of the.
The underlying businesses.
Great. Thank you.
Just referencing slide six on this question if I if I look at the biggest variation is mainly related to pecan.
Sure.
At least for me it's.
I struggle to challenge me to forecast it any thought to maybe excluding the.
Pecan, whether it's a plus or minus from the non-GAAP measure just to highlight the strength and earnings at the utility because sometimes may be up or down it may get distorted by the PK and then on the non-GAAP .
Any thoughts or excluding it.
Yes.
Really appreciate the question because as I look at the volatility year over year.
I understand exactly why you asked that question.
Got it.
It did not occur to us. This first time out if you will using adjusted earnings to do that but maybe we can examine how to make that more transparent just.
It gives me the opportunity to say that there are dramatic differences year over year in terms of.
Whether we had a nice cool spring we have wonderful hydro last year was the absolute opposite.
We had an enormous he domain.
Some degrees.
When you flush through these activities and the mechanism.
It really demonstrates the volatility of that so we look at the mechanism all the time and we will take into account your question about how to present that.
Certainly the quarter over quarter differences suggests the same question to us.
Great and just lastly, a quick follow up.
On the loan growth guidance that you have for this year, maybe going forward.
Are you guys, assuming pre pandemic levels I know there was a change in the customer mix here on the margin.
Our guidance based on the pre pandemic level or you guys have.
Alternative.
So overall, our guidance represents really quite extraordinary growth in the high tech and digital areas in particular I noted.
The semiconductor companies expanding in our area.
What you'll also see us.
Commercial has been a little bit slower to come back than we would've expected and we do see slower growth probably in the residential side, but overall our mix is certainly shifting and that provides opportunity not only on to spread our fixed costs over higher levels of growth.
But particularly the semiconductor business requires pretty substantial investment.
Great. Thanks, so much for taking my questions and congrats on a good quarter.
Thank you.
Thank you one moment for our next question.
Our next question comes from the line of <unk> Gandhi from Wolfe Research. Your question. Please.
Yes, Hi, Steve Fleishman here can you hear me, Okay, Brian Jim Yep sure Okay.
Sorry to sneak in there.
So I have a couple of questions first just.
Jimmy you mentioned kind of getting the equity ratio back to what's in your jurisdictional rates could you just.
Give me give us sense of where the equity ratio is now.
And how much equity you might need to get it to kind of.
It's at a level that's in your jurisdictional rates.
Yes. The first question, Steve is pretty easy its we.
To make by the end of 2022 pro forma here will be a skosh over 46% unregulated basis of 50 in terms of getting it back.
It depends on how we do this and how much time.
We have to do this typically.
<unk>.
The equity is close to 100 million bucks, but that depends on so many other things it depends on how we grow the company otherwise to the Rfps and the like so I wouldn't necessarily just calculate that out at four points.
Okay.
Thats helpful. Thank you and then on the RFP itself, you mentioned the inflation aspect in and just.
Which you know.
I guess to a degree you win them means it means more rate base.
Growth opportunity.
And.
But just is there any way to get a sense of.
How meaningful the.
The increase.
Related to that might be in terms of like inflationary changes.
From what you would have thought before.
All the.
The increase.
<unk> to that might be in terms of like inflationary changes.
From what you would have thought before.
Right now Steve those those prices are being refreshed.
Directionally the bid package I could say is higher than the prior than the last time, we went to the market.
Back a few years ago. So they were over a higher base of what we saw a few years back and now I suspect they'll be refreshed upwards, a little bit as well I don't have an exact number for you know we're still in the process.
Thats a refreshed Steve as you can see from the materials. We do have a number of bids we have PPA options. We have company owned option and we have hybrid options.
It's a robust and very competitive environment and and.
And when you go back out to refresh bids things could change.
Okay.
Okay. So it's hard to figure out kind of where the.
Okay. That's helpful and then.
Just in terms of.
I guess more broadly between the.
Equity needed to kind of get the balance sheet back to the 50% plus this growth.
If you do win the RFP just how are you thinking about.
I mean have you thought of some options other than straight equity I guess to facilitate that how are you thinking about.
Getting all of that funding.
Yes.
Steve We've really focused on this a lot lately and get a lot of inbound questions about it because we.
We could see a very large opportunity here right and.
I want to make sure we do this in the most non dilutive way as we possibly can I will tell you that.
Equity forwards of bank a lot of sense.
The projects are going to be delivered on a build own transfer basis won't be making progress payments on them. If we're awarded them next year in 'twenty three most of them will be deliberate.
<unk> and 'twenty four and so the big funding requirement is in.
24 <unk>.
<unk> forward.
I suspect.
And Thats the market program makes sense as we sell into the needs that we have so.
That's my that's my sense right now of technique the amounts to be determined as I said, a moment ago will will trigger that off so the actual RFP awards and we'll want to make sure that we can.
Principally positioned ourselves here with growth and over time.
Managing that equity ratio Theres no immediacy.
Immediate pressure to do.
That balance sheet.
Work I'd, rather do it in concert.
Efficiently issue.
When we have both the growth of.
And the balance sheet stuff together.
Okay that makes a lot of sense. Thank you.
Appreciate the time.
Youre welcome Thanks, Steve.
Thank you once again, if you have a question. Please press star one one.
This does conclude the question and answer session of today's program I'd like to hand, the program back to Maria Pope for any further remarks.
Great. Thank you very much for joining us today before we finish up I'd like to thank Dave Robertson, Our vice President of public policy, who has announced his retirement and is leaving US at the end of the month. After 18 years of extraordinary leadership that our company has been responsible for much.
Our clean energy future in the legislation that we benefit from today.
We welcome Nick Plosser joins US most recently from the Biden administration in the White House and prior to that was a key member of the Governor's office here in Oregon, Welcome Nick and we look forward to working with you in the public policy communications area today.
Today, we appreciate your interest in our company and hope to connect with you in the future some of the Investor conferences and please follow up with very much bye bye.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program.
Disconnect good day.
The conference will begin shortly.
Raise your hand during Q&A you can dial one one.
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