Q2 2022 American Electric Power Company Inc Earnings Call
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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.
Hey, 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 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 were making 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 are 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.
Targets this quarter as a reminder, we are guiding to an operating earnings guidance range of <unk> 87 to <unk> seven per share for 2022, with a 497 midpoint and our long term earnings growth rate of 6% to 7%.
We're 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 it.
The 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 metro 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>.
<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're 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 and 65 megawatts of contracted renewable assets consisting of 200 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.
The 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're 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 COSE 409 megawatts of owned wind solar and wind resources were approved by West, Virginia, and Virginia, walking and $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 is 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 emission 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 investment 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.
ROE spreads.
Additional regulatory activity in the quarter include a commission order received in May on Sweat COSE, 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 swept 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 transmission planning cost allocation generation interconnection to the transmission grid and extreme weather preparedness, we support the commission in these actions and are in full support a full agreement 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 AP 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 a moment to thank our team for the incredible work that they are 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 is taken care of business with the edge of princes, Let's go to <unk>.
And 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 cleaner low cost resources for all 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 AEP as 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.
As to 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 underway. So let's go to slide 10, which shows the comparison of GAAP to operating earnings GAAP 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 reconcile it 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 well.
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 is contingent 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 are in and are in discussions with an interested party for the sale of ownership interests in flat range too.
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 and gains 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.
There are things that we need to recognize they are entirely driven by our effort to derisk simplify and bring cash in the door to support our continued investment in the 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 multiple jurisdictions positive weather, primarily in our western jurisdictions increased transmission revenue and normalized retail load and income taxes.
These 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 2022 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 offs.
Set 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 low performance going to get that to that in a minute here. So 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.
As lode positive weather in Texas, and Ohio, and increased transmission revenue offsetting these favorable items were unfavorable O&M and depreciation.
The transmission Holdco segment contributed 27 cents per share down seven cents compared to last year favorable investment growth of <unk> 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.
Being more than offset by the annual true up that occurred this quarter and some favorable uncompetitive on the tax and financing side.
This segment continues to be an important part of our 6% to 7% EPS growth as you well know generates.
Generation and marketing produced 18 cents per share up nine 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 of $1.234 billion compared to $2 33 per share or $1.160 billion 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.
Volumes were somewhat offset by increased depreciation and lower off system sales once again the change in accounting around the rock Port unit two lease results in 11 cents of favorable O&M offset by 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.
The 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 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.
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 made 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 while 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.
Affix moving to the right weather 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 they own.
<unk> 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.
In oil and 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 a pending recession, but our sales statistics through the first half of the Air 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 move.
Moving to slide 14, I want to provide additional context to the load we've experienced we 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.
Sales of our three 6% above pre pandemic levels. Furthermore, every classes showing higher sales than before the pandemic began this means that every class is 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 messages.
Same through June Aep's normalized sales are 2% above the pre pandemic levels and just like the quarter every classes exceeded pre pandemic levels on a year to date basis.
Your 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 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.
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 <unk> to debt metric stands at 13, 4% on a moody's basis in <unk>.
14, 3% on a GAAP basis, which is a decrease of 3% and.
4%, respectively from the prior quarter.
Might 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 towards our targeted <unk> that range of 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 remains strong at four 7% $4 $7 billion.
On the qualified pension front, while our funding status decrease to 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 decreased 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% to.
7%, we continue to work through the Kentucky power sale to Liberty and are on track for a closing later this summer and will 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 had been placed into queue and you may remove yourself from the queue by repeating the one then zero co man.
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Well first go to the line of Jeremy Tonet with Jpmorgan go ahead.
Good morning, Jeremy.
Yeah.
Just just wanted to start off with load growth trends, if I could I 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 were cautiously optimistic we will give you an updated view as we get closer to our analyst day were 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.
Obviously, you talk of recession and how inflation.
Is outpacing wage growth could potentially have residential customers shipped in and their behavior, a little bit we will see.
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 no surprise, there, but just a general trend. So when it can't continue to keep a close eye.
On that particular segment on the commercial segment, you know 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 it was down again, we're keeping an eye on things like inflation labor shortages, our supply chain and borrowings.
Cost, 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.
The most 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 a really good place so hang tight and we'll be able to give you a little more granular view in terms of our expectations. When we come to you. This fall.
We told you I guess, there's 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 that's that's 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 where load growth, but also want 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 obviously.
I want to know about Kentucky, but also the unregulated contracted renewables there'll be new data points on that as well and then of course.
<unk> 22 earnings guidance update our 2023 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 will 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 resolved say.
Specific transfer value et cetera here.
Yeah Julien.
Certainly Liberty has been great partners through this entire process and and we certainly wanted to be fair to them because they were obviously 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 and saying you know there's going to be the existing agreements and and you know.
We'll move on it it's really an issue where 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.
In that and Mitchell going forward, so we might as well get comfortable with that relationship.
100% Yep.
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 sports yeah, yeah, yeah, So Julien I'll I'll, let Nick talk a little bit about the supply and in labor, but you know what what 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 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 your city.
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 fills in for me.
Watching.
There's 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 in an AEP are watching storm activity and those types of things and what implications that could have on inventory.
He 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 it from that perspective labor is an issue for everyone and certainly we continue to focus on that particularly our frontline employees to ensure.
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>.
She 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 forward.
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.
As you've seen irregular integrated resource planning processes with all of the southwest power pool 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.
When.
Components. So so we're in good shape from that perspective.
Great. Thank you guys seem to.
We'll go next to the line of sharper razor with Guggenheim Partners go ahead.
We're enjoying good morning, guys How're you doing fine.
Fine 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 right rates have ticked up materially there seems to be a few peers in the market selling as well, but on the other hand.
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 only a.
A few weeks.
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 opened up a data room can be done pretty quickly and also review will be done quickly.
I would say that the interest has been very robust and it continues to be robust because and you said that.
They have steel in the ground, but also the ability to continue all of these projects in a very positive sense. We took out flat ridge too so that makes the portfolio, even better 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 visit sites and in the data room was opened and 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 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 with 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 that will depend on what we get back to in terms of you know one time versus staged in all those types of things would have to be considered and and and certainly we will have more information, but but but we won't have finalization of a deal that'll be probably by the end of the year.
Got it got it thanks.
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.
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 summer with Q3 I would 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 [laughter]. 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 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 pointed out of it.
It is a very very positive quarter, and and certainly one in which we continue to grow and see it and see it I.
I mean.
Our load guys pretty optimistic so.
Newer 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 analysts that he 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.
So that's not 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 there were requirements associated with that so 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.
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 that Kentucky had his 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 partner.
<unk>, which could be done through the operating committee of.
Of the existing operating agreements and and then and then Oh well.
Certainly focus on a later date.
To consider the risk issues associated with that so and I think that.
So for US I think it's sort of a realization that that.
There there will be no doubt that that Kentucky power.
We will continue to be a partner in Mitchell and then when the time comes before 'twenty 'twenty eight there'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 threat, that's closing goes 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.
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 an 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 are working very well together I talked to a rune as late as yesterday.
So it's really.
Both of US are very optimistic about our about this transaction.
Okay. Good.
Zero.
Yeah.
I'm sure he will win.
His chance for it to do a call.
And then just on.
On the <unk>.
On transmission just.
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 and just what are you watching there.
Yeah, you know obviously.
Reliability and resiliency.
<unk> is a central focus not only to to Berg with the Congress as well.
And I really believe they will continue the process of.
All of the.
All the areas of focus right now.
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.
Cost allocation those types of issues, so theyre moving along and you know when they when they issue that original nope or under transmission. They they made it clear 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 the new resources and Archie owes those are all being focused on and I think I think Burke is doing a very credible job of marching through this and making sure that we are able to invest in transmission in a way.
Secures this country and in so many ways so.
So I think that process will continue.
Who knows what goes on with the ROE.
The 50 basis point adder, and that kind of thing that I mean that could take years to resolve but but nevertheless, we will continue moving forward with our investments.
And we'll continue to look forward to.
The rules processes and procedures to be put in place, where where we as well as significant 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 trial basis with it.
As little risk as possible and that's that's really important because.
There are so many changes occurring and for now you're seeing you really are seeing implications relative to resiliency and reliability.
And I think everyone needs to sort of take out take a pause and ensure that we're looking at that within our <unk>.
Eyes wide open and.
And that we're doing the right things.
At the right time.
Uh huh.
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 guest Chopra with Evercore go ahead.
Hey, good morning team.
Yep.
A quick clarification on the Kentucky sale process is my first question just just to be clear the your discussions with Liberty on the mutual 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.
Or something like that once you sort of settle with Liberty.
Liberty on you know as it relates to Mitchell.
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's 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 wanted.
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 tape.
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.
The headwinds of inflation and those types of things are R. R.
Our areas of of.
A conflict with an increased valuation, but at the same time, you've got a lot of lot of.
Robust.
Interest in these assets and.
The fact that they continue to produce energy and Ah.
In a market that provides additional benefits for but whoever winds up owning these assets. So it's hard to tell what the with the valuation valuations are going to look like right now, but I don't.
Certainly we're not concerned about.
You know all of the macro issues that are involved because these assets down pretty well and the sales 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.
Oregon with bidders about.
You know what that valuation was and what the risk world of that particular project the rest of them are.
Our 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 what.
What we see valuations to be I think the market will tell us.
Just to provide us a little more color if you're trying to model.
Side from given your market price point.
We didn't include in the presentation today on slide number 44.
The breakdown of all of the projects that are included in the portfolio, you'll see that we've essentially removed flat rich to like we talked about today as it relates to asset value and 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.
The equity positions about $1 $4 billion, we do have some project debt and tax equity that total about $2 $72 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 at that midpoint 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.
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.
Right.
We'll go next to the line of Nick Campanella with Credit Suisse go ahead.
Good morning, Nick.
Hey, good morning, Thanks for thanks for taking the questions.
Sure really quick follow up on the Kentucky sale reduction I, just I noticed you have a <unk>.
<unk> thousand 500.
Proceeds in the funding slide still so just can you just reaffirm that progress with everything going on in the past quarter that cash.
Cash proceeds.
When you're closer to be unchanged.
Good good.
Good.
No worries there so no change in that modeling are those assumptions I forgot.
Okay, Great Great and then I guess just a.
Question on strategy.
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.
Are you interested in pursuing further related sales unregulated sales or are we kind of in the later innings of this.
Portfolio rotation strategy.
Yeah.
Say 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.
<unk> 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 our opportunities to add value from it from a shareholder perspective, but also.
To ensure that our customers are seeing.
Seeing.
The capital deployment that provides a better experience and that's something that we're very focused on so.
Is this just going to.
You're only seeing.
Really the beginning of the of the part of our business.
That is going to endure going forward as we transition this company and and and 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 you know, adding a dash of let's go crazy and that sort of that sort of says.
We're gonna be thinking Hum.
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 .
Or and Steven Hi, It's Steven Carter on for Steven Thanks, So much for taking care of patients.
Wondering hey, how are you doing I'm wondering if you could give your latest expectations around federal climate policy here do.
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 in 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 you know, they're so focused on.
The health care.
Pharmaceutical activities.
It may be Bob Brocade, and then certainly the chips Act now we're 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 a 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 going to be 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, you start to roll off again.
You'll see extenders or or the IRS.
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.
A solid solution going forward, so I just think 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.
Our 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.
Those extensions and expansions too.
Two nuclear and and as well to our 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 would maybe.
At least at this point it does 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 were 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 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 yes, the others are good.
Understood Okay, great. Thanks, so much.
Okay.
We will go next to the line of Andrew Weisel with Scotia Bank go ahead. Please.
Morning, Andrew.
Morning, everyone.
Just one from me about coal so.
Between reliability concerns in the Supreme Court ruling that you mentioned.
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 back up as <unk> wind 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 to our customers and certainly.
For our units.
We continue to progress along the path that.
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 we make any transition so you touched on a point that is particularly important for for resiliency and reliability reasons the capacity provided by <unk>.
These units is extremely important and and weather rather the capacity factors move down as you bring in and layer in more renewable energy and clean energy.
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 ensures.
The communities continued to thrive from a tax standpoint fire protection police protection.
Schools and 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 they'll decide something else so in areas like Westwood.
West, Virginia with with our 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 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 and what the timeframe of.
That makes sense.
Thanks, that's very helpful.
We'll go next to the line of Michael Lapidus with Goldman Sachs Go ahead Mark.
Hey, Nick Nick I know, you're excited about the analyst day and your even your probably equally as excited as having Brian Kelly down in Baton Rouge.
[laughter] I guess.
I'm looking at.
The earned ROE versus authorized exhibit just have a couple of questions about a few of the subs.
How are you thinking about what structural changes in rate, making your team 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 <unk>.
So 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 are doing those things.
To ensure resiliency reliability and all those activities, but but.
Particularly from an ROE perspective, our ratemaking standpoint equity layers has certainly been a big a big push of ours and certainly from a a concurrent recovery standpoint.
With Formula based rates, we have forward looking.
Our 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 attract as far 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 on.
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, I look at on the customer side with distributed energy resources with the analytics and all of 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 the debt and the.
The utilities with all 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.
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.
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 you array 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 as Nick mentioned, just some refinement around utilization of different rate 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 term component. That's not included in rates. 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 on the <unk> segment.
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.
Are you talking about the Cardinal Cardinal plant Yeah. So yeah. So we plan on completing a transaction with Buckeye.
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 lift in Ohio on the unregulated side. So.
And that's a.
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 placed in this state. So.
That's probably another another issue I can get into but but I'll stop there, but I think I think.
That's all that's all in the plans already yeah, Michael So that PPA with Cardinal goes I think through 2028.
Give me a kind of point out in that as well.
Got it. Thank you guys. Thanks, Nick Thanks, Julie much appreciated you all.
And 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.
If I may just.
Ask a couple of questions Chris on transmission.
You made a point of saying that transmission Transco.
I guess the key growth engine, so I don't want to Miss.
Misquote, you guys, but and also at the same time, you were talking about not being done with the 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 because <unk> 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 to the future transmission is a key component for resiliency reliability and optimization.
As we move to a clean energy environment. So no.
From a transmission standpoint, we feel very good about our role relative to transmission and actually Aussie distribution, continuing to grow and and 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 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 <unk>.
When the opportunity has been reduced a little bit in solar increase a little bit.
Going into 'twenty sort of timeframe.
I'm just kind of wondering if that's just a SEC.
<unk> to their alignment or should we be how should we be thinking about this.
Yes, so in <unk> and.
The April integrated resource plan.
Certainly showed what.
What was needed from a from a NAPCO perspective, so and and.
I think theres probably more.
More to come on that but it's actually pretty immaterial.
At this point.
Alright, thank you.
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Yeah.