Q1 2023 Xcel Energy Inc. Earnings Call
What was the duration of the call you're likely to be in a listen only mode.
Question and answer session will follow the prepared remarks and questions will only be taken from institutional investors.
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And the other half voltage Paul Johnson, Vice President Treasurer, and Investor Relations to begin today's conference.
Please go ahead Sir.
Thank you good morning, and welcome to <unk> Energy's 2023 first quarter earnings call joining.
Joining me today are Bob Frenzel, Chairman, President and Chief Executive Officer, and Brian Van Abel Executive Vice President and Chief Financial Officer. In addition, we have other members of the management team in the room to answer your questions if needed this morning.
We will review, our 23 first quarter results and highlights and share our recent business developments.
Slides that accompany today's call are available on our website.
As a reminder, some of the comments made during today's call may contain forward looking information significant factors that could cause results to differ from those anticipated are described in our earnings release and our SEC filings.
Today, we will discuss certain metrics that are non-GAAP measures information on the comparable GAAP measures and reconciliations are included in our earnings release with that I'll turn it over to Bob.
Thanks, Paul and good morning, everyone.
Let's start with our first quarter results, we had another solid financial quarter. According earnings of <unk> 76 per share for 2023 compared to <unk> 70 per share in 2022.
The increase in earnings largely reflects new revenue to recover our investments in clean energy and grid systems for the benefit of our customers.
Our business plan is on track for the year and as a result, we are reaffirming our 2023 earnings guidance.
$3 30.
$3 40 per share.
This quarter, we continued to make progress on our industry, leading clean energy transition plans.
We've received and reviewed a significant number of proposals and our pending solicitations for nearly 6000 megawatts of new electric generation across multiple jurisdictions.
We anticipate commission decisions on these various proceedings in the second half of 'twenty, three and remain confident in our ability to deliver a beneficial mix of both company owned and third party resources across those plants.
We also continued to pursue the benefits and opportunities provided by the infrastructure investment and jobs Act and the inflation reduction act to accelerate the clean energy transition.
We recently submitted multiple projects to the department of energy for funding consideration, including the multiparty heartland and western Interstate hydrogen hub and grid resilience investments in Colorado.
In addition, we recently applied for and venture capital grants for a long duration energy storage proposals in Colorado, and Minnesota and believe we are well positioned to receive some or all of our requests.
Our country and our company need new technologies like long duration storage like hydrogen in clean fuels to commercialize in order to realize the clean energy future.
And at XL energy, we are actively working to do our part for the regions and the customers that we serve.
And while the promise of a clean energy future is bright we are keenly aware of the financial challenges that some of our customers experienced this winter with a significant rise in gas prices that we saw in 2022, driven by macroeconomic and geopolitical issues.
<unk> energy is proud of our long track record of keeping customer bills amongst the lowest in the country and to transition to a cleaner energy future with bill increases below the rate of inflation.
We believe that affordability reliability and sustainability can be realized concurrently.
Through thoughtful energy policy and excellent operations.
We've taken a number of steps in recent years of save customers' money and reduced exposure to commodity volatility.
In our electric business ex LNG is nearly 4500 megawatts of owned wind farms continue to be a leader in capacity factor performance and generated $1 $1 billion of fuel related customer benefits in 2022 and more than $3 billion since 2017.
Future investments in renewable generation and clean fuels will continue to reduce our reliance on fossil fuels and add further benefits to our customers.
Since 2014, we've kept our operating and maintenance expenses, nearly flat and well below inflation through our continuous improvement programs, which is a benefit that accrues to our customers built.
Our numerous energy efficiency and demand management programs have saved enough energy to avoid building approximately 25 average sized power plant.
And in 2022, we disbursed a record $216 million in state and federal payment assistance funds to customers across our states and we expect to exceed that record in 2023.
Also in partnership with Colorado Staff, Colorado Energy Office Energy outreach, Colorado, and the utility consumer advocate, we proposed to the commission to increase funding to support income qualified customers burdened by high energy costs.
We expect to provide those increased benefits to our customers throughout 2023 and beyond.
And with recent declines in natural gas prices, we proactively lowered our gas recovery mechanism in Colorado, four times, reducing customers' gas cost by 58%.
Our customers and our other states youre seeing comparable benefits.
In Colorado, we have been working with stakeholders on proposed legislation regarding customer affordability right stability in the regulatory process.
And finally in addition to our energy efficiency programs. We are re looking at potential long term solutions to reduce price volatility that could include physical and financial hedging additional natural gas storage long term natural gas supply contracts multi year rate plans natural gas cost deferrals energy decoupling in the use of.
<unk> energy to generate clean fuels for blending in the natural gas LDC.
We are confident that have implemented these actions can help reduce natural gas volatility in the future for our customers.
As I wrap up I am pleased to share some of the company's recent recognitions.
For the 10th year in a row, we've been honored as one of the world's most admired companies by Fortune magazine.
We ranked first in social responsibility and quality of management, placing second overall amongst the most admired electric and gas companies in the country.
In addition for the fourth year in a row ex LNG has been named one of the world's most ethical companies by Ethisphere, a global leader in defining and advancing the standards of ethical business practices.
None of this would be possible without the commitment of our employees contractors and our partners.
And while we're proud of our track record and our accolades, we will never rest on our mission to provide our customers.
With safe clean reliable energy services at a competitive price.
With that I'll turn it over to Brian .
Thanks, Bob and good morning, everyone.
We had another solid quarter reporting earnings of 76 per share for the first quarter of 2023, compared with <unk> 70 per share in 2022.
Most significant earnings drivers for the quarter included the following.
Higher electric and natural gas revenues increased earnings by <unk> 24 per share, reflecting new revenue to recover investments in our electric and natural natural gas systems in clean energy infrastructure.
A lower effective tax rate increased earnings by <unk> <unk> per share.
Keep in mind production tax credits lower the ETR, However, ptc's, our Florida back to customers through lower electric margin and are largely earnings neutral.
In addition to other items combined to increase earnings by one seven per share.
Offsetting these positive drivers were increased depreciation expense, which reduced earnings by <unk> <unk> per share, reflecting our capital investment program.
O&M expense, which decreased earnings by <unk> <unk> per share from higher interest expense and other taxes, which decreased earnings by <unk> <unk> per share.
Turning into sales weather adjusted electric sales increased by six.
6% for the first three months of 2023 weeks.
We continue to expect annual electric sales growth of approximately 1% in 2023, driven by C&I sales, while we expect residential sales to be down slightly for the year.
O&M expenses increased $48 million for the first quarter. The increase was primarily due to timing differences associated with regulatory recovery mechanisms.
Generation outages and emergent work.
Inflationary pressures and investments in electric vehicle programs and other customer products.
We continue to expect O&M to decrease approximately 2% in 2023 compared with last year.
We've also made progress on a number of regulatory proceedings. The commission recently approved our settlement in the Minnesota natural gas rate case, which reflects a rate increase of $21 million.
ROE of 957% an equity ratio of 52, 5%.
Coupling mechanism and property tax tracker.
And the Minnesota Electric case, we received a constructive ALJ recommendation, including a $9 eight 7% ROE and a 52, 5% equity ratio. We anticipate a commission decision in June and final rates implemented in the fall.
During the quarter, we filed a Texas electric rate case, seeking a rate increase of $158 million based on an ROE of 10, six 5% an equity ratio of 54, 6%.
Historic test year, and the early retirement of the coal plant.
We anticipate a commission decision and implementation of final rates in the first quarter of 2024.
Our electric rate case in Colorado as early in the process Intervenor recommendations are due in May and we will see if there is a potential to reach a settlement with parties a commission decision and implementation of final rates are expected in the fall.
Okay.
And our new Mexico Electric rate case Intervenors filed initial testimony.
The staff recommended a forward test year with a rate increase of $37 million based on an ROE of 935% and an equity ratio of 54, 7%.
Other intervenors recommended equity ratios in the range of 45% to 54, 7% and ROE between $8 seven to nine 6%.
We anticipate a decision later in the year.
Finally later this month will file a rate case in Wisconsin, seeking an electric rate increase of approximately $40 million and a natural gas rate increase of approximately $9 million based on a 10, 5% ROE a 52, 5% equity ratio and a 2020 for future test year.
We expect the commission to decide on the case before year end with new rates in effect in January .
Details on these cases are included in our earnings release.
We are reaffirming our 2023 earnings guidance range of $3 30 to $3 40 per share, which is consistent with our long term EPS growth objective of 5% to 7%.
We've updated our key assumptions to reflect the latest information which are detailed in our earnings release.
With that I'll wrap up with a quick summary.
Our customers continue to have some of the lowest bills in the country. We remain committed to keeping long term bill growth below the rate of inflation, while leading the clean energy transition and reducing customer exposure to volatility in fossil fuel prices.
We continue to achieve constructive regulatory outcomes across our operating companies with progress across multiple rate cases.
We have received a significant number of generation bids in response to Rfps with additional rfps forthcoming.
We are reaffirming our 2023 earnings guidance and we remain confident we continue to deliver long term earnings and dividend growth was in the upper half of our 5% to 7% objective range. So we lead the clean energy transition.
This concludes our prepared remarks, operator, we will now take questions.
Thank you so much sir.
Ladies and gentlemen, if you would like to ask on the audio question. Please press star one on your tough with key pad.
Today's first question is coming from Julien Dumoulin Smith of Bank of America. Please go ahead. Your line is open.
Hey, good morning. Thank you guys appreciate.
Appreciate it.
Look I wanted to talk about the proposed legislation and just efforts in Colorado to address the affordability, obviously a lot of different comments out there can you set a little bit of <unk>.
Your thoughts out there as to what the key tools and mechanisms and avenues that exist out there and then ultimately how to address some of the.
Sure.
Recovery issues and some of the perception issues.
Yeah, Hey, good morning, Julien good to hear your voice on a Thursday morning.
Sure.
So we've been I. Appreciate your question look as I think about legislation in Colorado that got introduced last week pretty late in the session.
Been very keenly aware as I said in my prepared remarks around the impacts to our customers from the volatility in natural gas prices that occurred largely last year and the declines that we've seen this year and we've taken a lot of steps both on the communication side and on the price mitigation side.
To assist their and obviously more to do the.
The legislation itself as proposed was introduced in the Senate.
And.
With the idea that we look at both price and price volatility that we saw over the past year really with the benefit of our customers in mind requires the company and the PUC and again this is still in.
It was approved by the Senate I believe yesterday, and it's going to go to the house, maybe today or tomorrow, but requires the company and the PUC to look at all the mechanisms that can be helpful.
For our customers on pricing and price volatility.
As I think about it I think it provides.
Tools on both the front end and the backend of the gas procurement cycle. So think on the front end hedging and hedging tools thinking rethinking about long term storage physical and financial hedging and things like that on the front end of the cycle.
The legislation also takes a look at the back end of the cycle in the event that there are price.
Volatility that exceeds our.
<unk> forecast then we look at mechanisms for deferrals. So that it may not be felt immediately in the pocket books from our customers and I think those mechanisms much to be determined in the regulatory process, but the legislation.
Contemplates those mechanisms being very beneficial to mitigate the volatility that we saw over the past year I think the third piece of the legislation looks it's something we've been already working with practically with the commission on which is a <unk>.
Incentive mechanism that provides an incentive to the company to meet or beat gas price forecast and manage the volatility for our customers again lots of lots of details that have to get worked through the regulatory process, but on balance the intention is to really protect customers from the volatile.
<unk>, we saw over the last year with regulatory mechanisms.
Yes.
I hear you on that front and then ultimately as you think about this I mean, just on the electric business. I mean does this change anything in terms of procurement, obviously that could feed into some of those conversations and the related on the gas side any initial thoughts as to what this could mean from a financial perspective, and maybe too early.
Yeah look I think on the on the <unk>.
Gas procurement side it apply to procurement for both the electric and the gas business.
More broadly speaking it also looks at it.
I'd asked us to do a cost causation study around gas LDC customers and how we make future long term investments into the gas system.
Allows for some distributed energy resources and the ability to add those to our systems, maybe in a more expeditious manner. So theres some factors like that of the electric gas probably a little too early to say what the long term implications on our capital forecasting are in the state, but I don't think it will be necessarily material.
In totality.
And Julian I would just add we are scheduled to file a clean heat plan in Colorado in August which is really.
Weight that to call. It a resource planning process on the electric side, So really working through with our commission and stakeholders is how do we do decarbonize. The LDC, we have legislation with targets in 2030.
And then a net zero target longer term. So we're looking forward to working with all our stakeholders about how we decarbonize, our LDC and think Thats, a real opportunity as we put plans in place with longer term.
Excellent guys I'll leave it there I appreciate it good luck. Thank you.
Well, thank you very much sir.
Our next question that will be coming from.
<unk> Chopra from Evercore ISI. Please go ahead.
Hey team.
Thanks for the update.
I just wanted to.
I was going to ask you a question on Colorado, which you just answered, but just maybe can we get an update on the.
The tax credits.
Transferability you had what one 8 billion in the plan.
That is going to come from the tax credit trends demonstrate ability through 2027, maybe just update us on your efforts. There and then can you remind us I think you've disclosed this in the past what are you assuming in terms of funds.
From that activity this year. Thank you.
Doug Thanks for the question something we're very focused on not only transferability guidance for guidance for the other aspects of the IRI, but specific specifically transferability.
On the guidance, we expect guidance to be issued in Q2 for transferability and for US we're looking for fairly straightforward guidance right we're call it.
Clean no pun intended a clean seller of these tax credits from wind farms that are already been in service and so we're looking for documentation in the certification requirements in terms of sale registration requirements are pretty basic stuff. So that's really what we're looking for out of the guidance from the IRS.
The other aspect is we've talked to about 20, counterparties already and there is a significant amount of interest and the purchases of our tax credit is not only this year, but for a longer term. So we're pretty confident in terms of our ability to execute on this at a good price for our customers and so I think about this so we gave guidance in Q2, I would expect us to start X.
<unk> in Q3, and this year, we took a pretty conservative approach, we only expected to sell about $200 million of tax credits and our financing plan. That's more of a half of what we could sell this year. So and then we would assume we sell the remainder of it in the year after but thats kind of our view on transferability and think is a great mechanism is.
As we think about the longer term cost of renewable projects and how we can be the most tax efficient with those tax credits.
Got it and then just.
How will you announce.
As you sell these tax credits is that just going to be in.
Or back half of the earnings calls or are there going to be.
Depending on how sizable these are.
Are there sort of 8-K type announcements any.
I think we've just included in our quarterly earnings calls, obviously, there may be depending on the counterparty. They want to may want to make some announcements about thinking about how they're thinking about their supporting the clean energy transition to other counterparties may not may not want to yourself, but the expectation would be in our quarterly earnings calls.
Thank you Brian much appreciate it.
Thank you Sir.
We'll now take questions from David Arcaro from Morgan Stanley . Please go ahead.
Yes.
Hi, Thanks, so much for taking my question good morning.
I was wondering if you could comment a little bit on what you're seeing in the rfps that you've got outstanding right now how XL is competing.
And if you are seeing cost increase or decrease just in terms of inflationary pressures or if on.
If some of these project proposals are coming in at more attractive prices.
Hey, David Thanks for the question, so still working through the RFP processes and I can comment on Colorado, because we made a what we call a 30 day filing in Colorado that talked about the median prices that we've seen incredible amount of interest in the projects.
And in the bid process on the wind side. The median price was about $22 from an LCR perspective.
And if you think about that that's if we didn't have Iranians any tax credit so it'd probably be closer closer to $50. So a really great opportunity from a customer savings perspective, with the IRA and what we're seeing now thats slightly above the RFP that we did five years ago as you can see some inflationary pressures on the capex.
On the solar side, the medium price is about $33.
I'm, giving you a median price we have not disclosed the project portfolio that will happen in August when we when we make our filing and with a recommended portfolio to the commission, but overall you think our project portfolio, we will come in well below those median prices that we've stated so overall I think we know.
We've set ourselves up well with the number of bids we put in from a self build perspective, we've done that the scheme for a long time from the wind side and now we've proven with <unk> solar and the price where we've delivered share across all of that we can be very competitive.
Overall, we're excited about getting these rfps.
<unk> talked about Colorado, because thats the one that we've at least shared some information, Minnesota expect a filing from US here in may on the Minnesota, RFP and then on the Sps RFP expect a filing in Q3, so we'll give everyone's kind of full transparency and visibility into the opportunities later in this year, but.
I would say overall, we're pretty excited.
And excited to execute on some of these wind and solar and storage projects for the benefit of our customers.
Okay got it great. Thanks.
And then could you also.
Any more color just related to the water leak.
At the Monticello plant what was the cost of the repair I'm curious if you see any broader or more significant issues that popped up.
Just in and inspecting it and then.
What's the status of the plant now and when it would be coming back online.
Yeah, Hey, David It's Bob Thanks for the question.
As we think about the water leak it at Monticello.
The repair costs were not significant.
<unk>.
As we said in our releases we have contained the leak repair the pipe are in the process of removing the water from.
The Aqua for below the plants, there was no no risk to people our planet and the process. We're about halfway close to halfway through that water removal expect to finish its probably end of this year early next.
So not a material increase in the cost side, it's really about pumping water out of the plants the plants and planned shutdown for refueling, we do refueling at Monticello every two years.
And I expect they probably have two more weeks before they finish loading fuel and restarting the plant, but it is ready to go.
Okay, great. Thanks, so much.
Thank you very much sir.
We'll now take questions from Jeremy <unk> of Jpmorgan. Please go ahead.
Hi, Good morning, Hey.
Hey, Jeremy.
I just wanted to pivot to Minnesota.
Didn't know if you could share any other thoughts with regards to remaining priorities out of munis or electric.
ALJ recommendation there are there any particular points to address in the final stages of this rate case from your perspective.
Sure look I appreciate the question process really continues since we last got together.
We filed our the ALJ filed their recommendations at the end of March.
We certainly didn't get all that we asked for in the ALJ filing but as.
Litigation goes that's not atypical for the process will file some exceptions.
Some things that the ALJ recommended we take up in a future proceeding or has the commission take up I wouldn't say, it's terribly material on the exception side.
We haven't had a general rate case since 2016 and prosecuted in the state on the electric side and so we think that the recommendation from the ALJ was pretty thoughtful for all sides of the arguments and expect the commission to look at the Alj's recommendation as well as some of them.
The mitigation mechanisms that we put in place as a company to mitigate the impacts to customers for having been out for a long time.
I will take it up in probably early June and we expect the decision by the end of the second quarter.
Okay.
Got it thank you for that.
And then just kind of pivoting towards MISO just sorry.
Tranche two is concern.
What are you hearing there are there any updated thoughts from your side, what kind of what our current timing expectations for initial thoughts on capex potential there.
Yeah.
Thanks for the question Jeremy.
I think we're thinking about it right now and obviously this is a little bit of a moving target with MISO, what we're thinking in an announcement in the first part of next year, but like I said that has the potential to shift as we've seen.
And we're expecting kind of the next tranche of tranche two to be as as they get leases tranche, one and potentially bigger and as we think about it we would expect a similar share as we received in tranche. One so that's where our thoughts are today, but obviously working with MISO and the stakeholders as they move through the process.
Got it that's helpful last one for me just.
Didn't know if you might be able to elaborate a little bit more on the hydrogen hubs now that the application.
And just any incremental thoughts you could share with us would be great.
Yeah, Hey, it's Bob Thanks for the question.
Look I think as we think about the future.
And the future of hydrogen I think the country really needs.
As we think about the carbonization across the economy, why we need a clean molecule for some of those harder to decarbonize sectors and hydrogen appears to be the most versatile of the clean energy molecules that we've been looking at.
Certainly the department of energy support that through the hydrogen hub programs and in the <unk>.
So we're excited about the application process, we expect decisions by end of year.
There then we would go into.
Future proposals around the.
Around the proceedings.
So we have two one on the Rocky Mountain region, one in the upper Midwest region, both our consortiums with our multiple states and both involve the goal of creating what I think about it as an ecosystem of both producers and users of our clean molecule like hydrogen and weather.
That can then be converted into fertilizer for AG process heats burning for processes and from our perspective.
Blending into the distribution system and co firing in our existing natural gas plants. So we're excited around the versatility that the molecule provides we appreciate will Congress and <unk> are doing and we look forward to progressing our applications at the Doa This year, yeah, and I'll, just add a little bit of more color on the process No I think overall there.
About 80 concept papers that were submitted and the Dewey encourage 33 concept papers in all three of ours. We're encouraged ultimately as Bob said, we've moved forward with two because two were in the Rockies Rocky Mountain region, but we feel good about our multi application hydrogen hubs and multistate hubs. So looking forward the dose.
And this process play out and as Bob said.
Awards at the end of the year and then it's a stage gate process going forward after that.
Great that's helpful I'll leave it there thanks.
Thank you Sir.
Well now take question from Sophie Karp with calling from Keybanc. Please go ahead ma'am.
Hi, Good morning, Thank you for taking my question.
A quick follow up on the RFP process could you remind us if you also get in into those and what do you expect your win rates to be if any.
Hi.
Yes. Thanks for the follow up question, we do so the way we see this playing out as we have some absolutely submitted our own self self build projects in all three of the Rfps in Minnesota, Colorado, and Sps and those range from solar to wind and storage.
And combinations of each of those and depends on the RFP, Minnesota was only a solar RFP, but we've spent probably the last 18 to 24 months working on our self build projects.
As we know we have a mass of renewable build outs over the next decade in our territories. So not only do we see potentially our own self build projects being selected and we have a good partnership with Vestas in Colorado with the Colorado facility.
So we have some geographical advantages with with having wind turbines.
Wind blades being manufactured there and we have a lot of opportunities around were using the interconnection of our retiring coal plants. So we feel really good know publicly we talked about targeting 50% ownership. Obviously, we think will be very cost competitive.
Would love to demonstrate to our commissions that we could do more than 50% ownership. Because we think we have really good projects that will show a lot of benefit to our customers.
And I think this is just because I think of all of this let me give you a little view of longer term I really think this is a start of steel for field to point out.
As we think about it and.
I don't think there are many utilities can do this clean energy transition at the price point that we can because of the solar and wind resources in their backyard and we think thats a true competitive advantage over the longer term as being able to deliver 80% to 85% clean energy in 2030 at or below inflation. So we're excited to continue to work on these rfps and following these RF.
We'll do a multiple more rfps in our jurisdictions. So I'm looking forward to given you would never and on this call and our stakeholders. All further updates as we work through the process.
Terrific. Thank you for the color and then as a follow up maybe on the O&M.
That the O&M has been a drag of about <unk> <unk>, maybe in the first quarter just wondering if that was.
Impacted maybe by Monticello outage and repairs to a larger degree and how do you see the shape of the.
You know the O&M spend the rest of the year.
Yeah. Thanks for the question no Monticello no amount of sellers may be a couple million dollars from our repair cost perspective.
So pretty immaterial relative to the quarter as we think about it.
Last year, if you look at our pattern of O&M last year. It was significantly higher in the latter part of the year part of that is due to some regulatory regulatory deferrals that were in place of Q1 last year, then unwound as we got rates into effect in Texas and then we also had good weather last year. So we invested in our system.
Then as a follow up maybe on the O&M.
Later in the year, so as we think about it we're still good with our year end guidance and we'll continue to work on that now that being said, we are facing inflationary pressures and something that we're very focused on internally is keeping those O&M expenses.
I see that the O&M has been a drag of about <unk> six cents, maybe in the first quarter just wondering if that was.
In fact, it may be by Monticello outage and repairs to a larger degree and how do you see the shape of the you know the O.
Down as I think it is important from a customer bill perspective long term, but overall, we feel good with where we are and expect to deliver on our year end numbers as we've done for 18 years.
O&M us what's the rest of the year.
Yes. Thanks for the question no Monticello no Monticello, maybe a couple of million dollars from our repair cost perspective.
Thank you that's all for me.
So pretty immaterial relative to the quarter.
Thank you very much.
Next we'll go to Mr. Gregg <unk> of UBS. Please go ahead Sir.
As we think about it.
Last year, if you look at our pattern of O&M last year. It was significantly higher in the latter part of the year part of that is due to some regulatory the regulatory deferrals that were in place of Q1 last year, then unwound as we got rates into effect in Texas and then we also had good weather last year. So we invested in our system later in the year. So.
Yes, thanks for taking my question.
Hey, good morning, just a clarification.
Around the transferability as it is it sort of the legal basis that youre looking for.
The getting the clarification enables you to move forward or is there something that.
So as we think about it we're still good with our year end guidance and we'll continue to work on that now that being said, we are facing inflationary pressures and something that we're very focused on internally is keeping those O&M expenses.
So your.
Youre looking for in terms of the content.
Not at all in terms of the content I would call. It we're looking for more administrative guidance now there may be other parties that are involved in tax equity partnerships or ITC, but were looking at transferring ptc's as I said, we're a very clean from a transferability of perspective. So it's more like hey, what are the registration requirements and then just.
Down as I think is important from a customer bill perspective long term, but overall, we feel good with where we are and expect to deliver another year of numbers as we've done for 18 years.
Thank you that's all for me.
Our counterparties wanted to see the guidance do so they know what they need to do so.
Thank you very much Matt.
Next we'll go to Mr. Gregg oral of UBS. Please go ahead Sir.
Nothing of concern beyond just getting administrative requirements out.
Yeah. Thanks for taking my question.
And Thats why were waiting and we'll be ready to pull the trigger.
Hey, good morning, just a clarification.
When we give that guidance.
Around the transferability is it is it sort of the legal basis that youre looking for.
Thanks.
Thank you Sir.
The next question is coming from Ryan Levine, calling from Citigroup. Please go ahead.
You know, they're getting the clarification enables you to move forward or is there something that.
Good morning.
So you're you know.
New Mexico can you give some color as to what youre seeing in that regulatory process and compare it to how the processes where with the prior commission and is there any potential.
You're looking for in terms of the content.
No not at all in terms of the content I would call. It we're looking for more administrative guidance now there may be other parties that are involved in tax equity partnerships are or ITC, but were looking at transferring PTC use as I said, we're a very clean from a transferability of perspective. So it's more of like Okay. What are the registration requirements and then just.
Potential for settlement or change to the Q4 guidance given the ramp up of the new the new.
New Commission.
Hey, Ryan Thanks for the question as we think about it in new Mexico.
Our counterparties wanted to the guidance too so they so they know what they need to do so.
Nothing of concern beyond just getting that was administrative requirements out.
A wide range of intervenor testimony I think some of that from large industrials is called par for the course.
And that's why we're waiting and we'll be ready to pull the trigger when we give that guidance.
Look at the staff testimony and we think that's a good starting point the staff testimony I think what are the key aspects as we follow the forward test year.
Thanks.
And I think there is support from a forward test year construct perspective, which is which is different from historical standards. So absolutely.
Good morning.
New Mexico can you give some color as to what youre seeing in that regulatory process and compare it to how the processes where with the prior commission and is there any.
Just got the testimony in last Friday have digested it and then we'll see if there is an opportunity to work with the parties and reach a balanced and constructive outcome from a settlement perspective, if you look at the schedule we have a.
Hearings are June 20th and so that would be kind of from now until June 20th and Theres actually a stipulation period and they're made to in terms of looking at settlement opportunities, but we've been we've reached settlement in our last couple of rate cases in new Mexico and certainly.
The New Commission.
Hey, Ryan. Thanks, So thanks for the question as we think about it in new Mexico or a wide range of intervenor testimony I think some of that from large industrials is called par for the course.
We look forward to working with the parties on it to get a balanced outcome for <unk>.
Look at the staff testimony, we think that's a good starting point the staff testimony I think what are the key aspects as we follow the forward test year and I think there is support from a forward test year construct perspective, which is which is different from historical standards. So absolutely just got the testimony in last Friday.
Our customers the.
The second part of your question was around guidance. This goes into effect late in the year, so relatively small impact on 2023 guidance.
Okay.
Okay. So this is the fourth quarter 'twenty three decision do you think that there is any risk to that timeline.
Digested It and then we'll see if there is an opportunity to work with the parties and reach a balanced and constructive outcome from a settlement perspective, if you look at the schedule that we have a.
Regulatory.
From a timeline perspective, no I do not in terms of getting pushed out I mean, Ryan the schedule has already moved out a month. So we think it's fine the way it is.
Hearings are June 20th and so that would be kind of from now until June 20th and there's actually a stipulation period in there in may two in terms of looking at settlement opportunities, but we've been we've reached settlement in our last couple of rate cases in new Mexico and certainly.
Okay, and then on new Mexico, what are you seeing for weather normal normalized load.
After that.
Jay.
Okay.
So I think overall in Sps if you looked at our sales is very strong sales on particularly on the C&I side.
Look forward to working with the parties on it to get a balanced outcome for.
Or customers.
The second part of your question was around guidance. This goes into effect late in the year, so relatively small impact on 2023 guidance.
We had 7% plus C&I sales quarter year over year for the quarter.
Okay.
Resi sales were up.
Okay.
First quarter 'twenty three decision do you think that theres any risk to that timeline.
About 3% now that was higher than expectations on the residential side commercial side was pretty much in line with what we expected so really strong growth and more of that growth is weighted towards new Mexico than Texas with what we're seeing in the <unk>.
From a regulatory.
From a timeline perspective, no I do not in terms of getting pushed out I mean, Ryan to the schedule has already moved out a month. So we think it's fine the way it is.
<unk> patch region in the Delaware Basin now rigs are up about 10 year over year from the rig count in the two continents, we serve Eddy and Lea and then we're also seeing a lot of electric electrification requests as the large oil and gas customers have their own carbon reduction targets hit and we're obviously working with the state of New Mexico is how they can improve their own.
Okay, and then on new Mexico, what are you seeing for weather normal normalized load.
After that then.
Richard.
Okay.
So I think overall in Sps if you looked at our sales is very strong sales on particularly on the C&I side.
For our carbon footprint, so really good growth there and we're doing everything we can and working with our customers to make sure that we can support them with the distribution transit transmission investments that we need to make.
We had 7% plus C&I sales quarter year over year for the quarter.
Great. Thanks for taking my question.
Resi sales were up about.
Thanks, so much for soybean.
About 3% now that was higher than expectations on the residential side commercial side was pretty much in line with what with what we expected so really strong growth and more of that growth is weighted towards new Mexico than Texas with what we're seeing in the oil patch region in the Delaware Basin now rigs are up about.
Our next question is coming from Paul Patterson, calling from Glen Rock Associates. Please go ahead Sir.
Can you hear me.
Yes, Paul good morning.
So just back to the Colorado, Bill I apologize if it wasn't.
Just didn't get this but.
I mean, the bill seems to be moving pretty quickly.
<unk> 10 year over year from the rig count in the two continents, we serve Eddy and Lea and then we're also seeing a lot of electric lecture frication requests as the large oil and gas customers have their own carbon reduction targets hidden in there obviously working with the state of New Mexico is how they can improve their overall carbon footprint. So really good growth there and we're doing.
Are you guys.
<unk> that were done on Tuesday.
<unk>.
Are you guys, okay with it at this point or do you look for additional changes in it.
If you guys actually addressed this earlier.
Hey, Paul It's Bob I did comment earlier, but nobody no concerns there.
Everything we can working with our customers to make sure that we can support them with the distribution of transit transmission investments that we need to make.
The bill as it passed the Senate.
And the amendments that were provided.
Great. Thanks for taking my question.
Make the Bill workable I think from our perspective, we continue to watch it as it moves through the house process.
Thanks, so much for soybean.
Our next question will come from Paul Patterson, calling from Glen Rock Associates. Please go ahead Sir.
But as it stands right now I think it's something that we can work with we think it still leaves a lot at the commission for decision making.
Good morning can you hear me.
Yeah, Paul good morning.
Hey, so just back to the Colorado Bill I apologize if it wasn't if I just didn't get this but are you guys. I mean, the bill season, you're moving pretty quickly.
Would very much work with the CPUC in the staff to implement some of that legislation through the regulatory process.
Okay.
Are you guys I mean, you.
Great and then.
You may Miss that were done on Tuesday.
Given.
So of your management's experience in California.
Okay with it at this point or do you look for additional change isn't it.
<unk>.
And there you know sort of more novel idea of the condition of the company is proposal two.
I apologize if you guys.
Actually addressed this earlier.
Hey, Paul It's Bob I did comment earlier, but nobody no concerns there.
To bill at least part of the bill associated with income.
The bill as it passed the Senate.
I was just wondering if that's something that.
And the amendments that were provided.
You guys have thought about.
Make the Bill workable I think from our perspective, we continue to watch it as it moves through the house process.
Any of your jurisdictions.
But particularly Colorado given given the.
But as it stands right now I think it's something that we can work with we think it you know.
Experienced in California and.
And just if you have.
If they are still leaves a lot at the commission for decision, making and we would very much work with the CPUC in the staff to implement some of that legislation through the regulatory process.
Any feedback or any thoughts you might have about that.
Yes, Thanks, Paul I think you're talking about stratification of residential customers.
From an income perspective, I think at this point.
And then given.
<unk>.
What we do in that regard as we direct a lot of assistance through regulatory state and Federal agency programs.
Of your management's experience in California.
And.
There you know sort of more novel idea of all the commission will put the company's proposal to too bill.
To mitigate the income qualified customers and that process. I think has worked pretty well I don't see us proposing any any changes to customer stratification at this point.
Part of the Bill associated with income I'm, just wondering if that's something that.
You guys have a thought about.
Okay.
That's it thanks so much.
Any of your jurisdictions, but particularly Colorado given given.
Thank you. Thank you Mr Patterson.
As we have no further questions at this time to call back over to Mr. Brian Van Abel for any additional or closing remarks. Thank you.
Rates in California and.
And just if you have sort of any feedback or any thoughts you might have about that.
Thanks, everyone for participating participating in our earnings call. This morning, please contact our Investor relations team with any follow up questions.
Yeah. Thanks, Paul I think you're talking about stratification of residential customers.
Okay.
From an income perspective, you know I think at this point.
Okay.
Thank you very much ladies and gentlemen that will conclude today's accomplished tech fleece tenants. You may now disconnect have a good day.
What we do in that regard as we direct a lot of assistance through regulatory state and Federal agency programs.
To mitigate the income qualified customers and that process. I think has worked pretty well I don't see us proposing any any changes to customer stratification at this point.
Okay.
That's it thanks so much.
Thank you. Thank you Mr Patterson.
As we have no further questions at this time lets turn call back over to Mr. Brian Van Abel for any additional or closing remarks. Thank you.
Thanks, everyone for participating participating in our earnings call. This morning, please contact our Investor relations team with any follow up questions.
Okay.
Okay.
Thank you very much ladies and gentlemen that will conclude today's conference Tech fleece tenants. You may now disconnect have a good day goodbye.