Algonquin Power & Utilities Corp. Q1 2023 Earnings Call
No one else seemed to be honest, we lapped a silty duckenfield they'd be touched soup. The pre owned at the end of Hulu I don't want to get it because that's the renewable isn't there some of the best loyalty.
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C homes that don't have as you see all participants. Please standby your conference is ready to begin.
Good morning, ladies and gentlemen, and welcome to the Algonquin power and Utilities Corp, first quarter 2023 earnings webcast and conference call.
Following the presentation, there will be a question and answer session.
I would now like to turn to meeting over to Mr. Brian Chin Vice President of Investor Relations. Please go ahead.
Thank you operator, good morning, everyone and thank you for joining us on our first quarter 2023 earnings conference call speaking on the call today will be <unk>, President and Chief Executive Officer, and Darren Myers, Chief Financial Officer also joining us. This morning for the question and answer part of the call will be Jeff Norman Chief Development Officer and Johnny.
Johnson Chief operating officer.
To accompany today's earnings call. We are we have a supplemental webcast presentation available on our website Algonquin power and utilities Dot com.
Our financial statements and management's discussion and analysis are also available on the website as well as on SEDAR and Edgar.
We would like to remind you that our discussion during the call will include certain forward looking information, including but not limited to expectations regarding earnings capital expenditures growth in the strategic review of the renewable energy group at the end of the call I'll read a notice regarding both forward looking information and non-GAAP metrics. Please also refer to our most recent MD&A.
On SEDAR and Edgar and available on our website for additional important information on these items.
On the call. This morning are rune will comment on our renewable strategic review and.
And provide an overview of our first quarter of our first quarter performance and Darren will follow with the financial results. We will then open the lines for the question and answer period. Please restrict your questions to two and then re queue. If you have any additional questions to allow others the opportunity to participate and with that I'll turn it over to Ruth.
Thank you Brian .
And good morning to everyone joining the call.
Before we get into the results for the quarter.
I'd like to provide some context.
And our announcement this morning of our strategic review of the renewable energy group.
Okay.
All of our renewable energy group and our regulated services group.
Have grown into strong businesses.
With skill and high quality assets.
And both are positioned to benefit from the energy transition.
Wow.
We believe our assets are undervalued.
We have therefore initiated a strategic review of our renewables business.
We explore alternatives to maximize shareholder value.
By doing so.
We aim to lower the company's cost of capital.
And better position the company for success.
The review will focus on whether step roofing, our renewable energy group.
From our regulated services group would advance that objective.
As part of the process, we will review the best structure to <unk>.
Position our company for continued growth.
And value creation for our shareholders.
Okay.
To oversee the review.
Our board has created a strategic review committee.
Comprised of three of our independent directors.
This committee will work with our internal team.
And external advisors, including JP Morgan.
To execute a thorough review and take an open minded approach to determining the best path forward to drive meaningful long term value for shareholders.
Our team has already initiated the process.
And we expect to announce our go forward plan by our second quarter earnings call.
Last <unk>.
Let me touch quickly on guidance.
We are reaffirming that.
Our 2023 adjusted net earnings per share outlook.
55 to 61.
He is unchanged.
In addition.
Our expectation of a $1 billion in organic capital expenditures for 2023 remains unchanged.
And with that.
Let me turn to our ongoing operations.
And recent developments.
I would first like to touch on the termination of the Kentucky power acquisition.
Last month.
We announced.
AEP.
Our mutual termination of our agreement to acquire Kentucky Power Company, and AEP, Kentucky transmission company.
This is not an easy decision.
However.
Our board of directors and management team decided that.
Given the challenging and continuously evolving macroeconomic environment.
And regulatory uncertainty over a final order.
It was in the best interest of the company.
Permanent the transaction.
I wish to personally extend my gratitude to the teams.
That worked tirelessly throughout the entire process.
Okay.
Now for a couple of updates from our operations.
Late in the first quarter of 2023.
The 112 megawatts Deerfield wind project located in your in the County, Michigan.
<unk> full commercial operations.
Supporting our growth lever of commercial and industrial partnerships.
All of the output from Deerfield to is being sold to a subsidiary of meta.
Pursuant to a <unk>.
Purchased power purchase agreement.
And on the regulated services side, we received final rate case orders at three of our California facilities.
Apple Valley water.
Park water.
<unk> electric.
With aggregate annual revenue increases of $29 6 million.
Which includes.
Proximately $9 $7 million due to increases in rate base.
A one time net earnings benefited from the retroactive impact of the orders of approximately $3 $7 million for Apple Valley water and park water.
Recorded in the first quarter of 2023.
With a further 11 $4 million for Gautam go electric.
In the second quarter of 2023.
Okay.
Okay.
I would like to touch on a couple of selected recent proceedings.
Our core growth strategy of the regulated services group is to responsibly invest.
And target a constructive return on the rate base across our various utility system.
Subsequent to the end of the first quarter of 2023.
The company filed an application at its New York water utility seeking.
Seeking an increase in revenues of $39 $7 million.
Based on an IRR of 10%.
And an equity ratio of 50%.
Additionally.
The company filed a new rate application that is empowered electric Arkansas utility.
Speaking of an increase in revenues of $7 $3 million.
Based on an IOU of 10, 5%.
And an equity ratio of 56% to be phased in over three years.
These risks cases highlight.
<unk> pattern for us.
Which is that we place a high emphasis on attempting to earn as close to our authorized early as possible.
Turning now to growth for our renewable energy group.
The first quarter 'twenty to 'twenty three solar.
The installation of the remaining panels at our Harris, Texas Solar project co owned with Chevron.
As well as further advancements on site preparation and turbine erection at <unk>.
Sandy Ridge too.
As mentioned previously.
Two wind project achieved full commercial operations.
In the first quarter of 2023.
Deerfield two came online at the tail end of Q1.
And as with most wind projects.
Contributes the most of the financial results in the first and fourth quarters.
New to the pipeline this quarter.
Is 144 megawatt clear new solar development project.
Looking at it in Champagne County, Ohio.
Which is scheduled to start construction at the end of May.
We currently have nearly 750 megawatts of wind and solar projects in various stages of construction.
And expect to bring on approximately 450 megawatts in service.
Throughout 2023.
Okay.
As for an update on the new market solar projects.
42 megawatts of the remaining 76 megawatts of firm delivery.
The remaining 34 megawatts have been shipped and are expected to be delivered by June of 2023.
So overall.
Our construction program continues on track.
As we have mentioned in previous quarters.
I expect our 2023 renewables operating earnings.
Excluding gains on sales to be relatively flat year over year.
We will speak to our first quarter 2023 financial results.
Darren.
Thank you Arun and good morning, everyone.
Our first quarter 'twenty to 2023 consolidated adjusted EBITDA was $341 million, which is up approximately 3% from the $335 million for the same period last year.
The company grew year over year, adjusted EBITDA by $10 $5 million, which was driven by growth in the regulated services group as a result of new rates in a number of the companies utilities.
This growth was partially offset by a decline in our renewable energy group operating profit as expected driven by lower HBV from projects commissioned in 2012.
Looking further at results on a segmented basis, the regulated services group delivered $255 $3 million.
Operating profit in the first quarter, which compares to $231 2 million in the same quarter last year, an increase of 10%.
The year over year increase was primarily primarily a result of new rates in a number of the companies utilities, most notably the Empire Electric and park water systems.
Switching now to the renewable energy group first quarter 2023 divisional operating profit was $106 5 million compared to $117 9 million in the same quarter last year, a decrease of 10%.
The decrease was seen in prior quarters, primarily due to lower <unk> income as a result of the end of tax attributed eligibility on projects commissioned in 2012.
Excluding the HBV rollout operating profit for the renewable energy group was effectively flat.
As we expected with financial contributions from new facilities slated to come online later this year.
Corporate interest expense were $81 $9 million compared to $57 9 million in the same quarter last year a.
$24 million increase, reflecting a higher interest rate environment and higher borrowings to support growth.
This quarter's increase over the prior year is primarily similar to the pattern observed in the late 2022 as it was in line with our expectations.
Looking further down the income statement first quarter adjusted net earnings were $119 9 million compared to $141 $2 million reported last year, a decrease of 15%.
Turning to adjusted net earnings per share the first quarter of 2023 came in at 17 cents compared to <unk> 21 in the prior year.
Our GAAP net earnings were $270 1 million compared to $91 million in the first quarter of 2022, an increase of $179 $1 million for the quarter.
Yeah.
Looking now at our capital plan for the year, we reiterate that we expect to spend $1 billion in capital in 2023 with approximately $700 million to be spent by the regulated services group and approximately $300 million by the renewable energy group.
This is consistent with our prior Capex plan disclosures, excluding the $2 $6 billion, we had initially expected for Kentucky.
We remain firmly committed to maintaining a triple b credit rating. We are pleased that within the past few months S&P Fitch Moodys and D. Brs all reaffirmed their existing ratings.
We were also recently removed from negative watch by S&P and in February the Brs updated Algonquin outlook to stable.
Turning to our earnings outlook, we have reaffirmed our 2023 adjusted net net earnings per share expected range of 55 to 61.
Which as a reminder, starting this year will be calculated excluding the impact of any gains or losses on asset sales.
Finally, we remain focused on optimizing our balance sheet and providing transparency on our financing needs.
As previously stated we do not expect any new equity financings through the end of 2024.
With that I will now turn the call over to the operator to open the lines for.
Questions operator.
Thank you.
We will now take the questions from the telephone lines.
If you have any question.
You are using a speaker phone please lift up the handset before making your selection.
If you have a question. Please press star one on your keyboard devices.
You can cancel the call at any time by pressing star two please press star one at this time, if you have any questions. There will be a brief pause while the participants register.
You for your patience.
The first question is from Nelson <unk> from RBC capital markets. Please go ahead. Your line is now open.
Great. Thanks, and good morning, everyone.
My first question just relates to the strategic review.
So while you're running the strategic review.
Are you still.
Progressing with the targeted $1 billion of asset sales can you just talk about how.
The two processes overlap or are don't overlap in and obviously the scope of that and provide a bit more color on the scope of the strategic review.
Sure Nelson good morning.
As we announced this morning, we.
We have initiated a strategic review process.
We have also.
The Board has also decided to form a strategic review committee, which is going to be overseeing the whole strategic review process and as we announced we plan to finalize the deliberations by the Q2 earnings call.
As to your other question around $1 billion of asset sale.
We stand by our commitment as we announced at the January 12 update.
As always been to.
Billion dollar asset divestiture program as well.
Okay. So is it safe to say.
You won't be making any big asset sales prior to the conclusion of the.
Strategic review in August .
Or are the Q2 call.
I'm not going to speculate on the timing on that Nelson.
Nelson, but like I said I mean, both processes.
Our continuing at the same time.
Okay got it.
And my second question just relates to them. It's just more about the number of our rate cases, you guys have.
Has that cause a.
Has that driven I guess rate case request.
Oh much higher like how has that been a big driver and.
And additional our rate requests.
From your perspective and are you seeing any pushback from the regulator and consumer groups.
Well, we know that we continue to have very constructive dialogues and.
In discussions with our regulators of course, I mean things like interest rates and inflation and others are part of the overall discussions.
But.
It is business as usual for us in terms of the number of rate cases, we are looking to file them and as expected.
As part of our business plan.
Okay. Thanks, I'll leave it there.
Thank you.
Next question is from Rupert <unk> from National Bank Financial. Please go ahead. Your line is now open hi.
Good morning, Thanks for taking the question Arun.
Arun you highlight that the market may not be valuing your renewable assets appropriately and we havent seen public market valuations on some of your peers come down a bit recently.
No no doubt you're you're in tune with the market.
With your asset divestiture plan. So I was wondering if you could comment on the state of the M&A market how much of that market. You think is in private transactions and our private market valuations that you're seeing.
Still healthy and and how are they trending relative to the public market.
Sure.
So <unk> as you know we did our first inaugural asset sell down.
That was completed in December .
And we continue to see a very robust.
Net of interest.
In that.
<unk> size and frankly from all different.
Types of financial.
Clears and strategic players and also from all geographies. So.
We continue to see very robust interest.
As you know.
We have an ongoing conversation with various.
Participants in the market.
And we believe that.
The public market and private market while.
Obviously cognizant of.
The interest rate environment. There does seem to be continue continued interest in long lived renewable energy assets.
Okay. Thanks, Thanks for the color no the strategic review likely will impact the outlook for atlantica yield to well will they be involved.
In your process 20 degree and how important is it that they complete their strategic review at the same time you complete yours.
Rupert those are two totally separate.
Processes.
Atlantica Board.
He was running the strategic.
The strategy review for Atlantica.
And as we announced before we have.
Remain supportive of that strategic review process.
Our strategy review process is totally different.
And there is really no linkage between those two.
I imagine you're somewhat involved in their process as well does that inform your process that to any degree.
Of course, given the fact that we were in the market until December on our own set of assets and the visibility we have through.
Through the Atlantic our strategy review buses, obviously that would be a data point.
What we're looking at as well.
Alright ill get back in the queue. Thank you.
Thank you.
Thank you.
Hi, just wondering if you can comment on the timing of this wondering why it wasn't initiated early in the strategic review you have given.
Some of the things you've been trying to solve the last couple of quarters and I guess is there anything else aside from strategic review that you might consider doing now, giving feedback and investor engagement that maybe didn't consider earlier this year back in 2022.
Sure.
Our forest.
Focus and priority was was really around our balance sheet.
That is absolutely the most important thing for us So in January we.
Announced a series of actions.
Including reducing our capital intensity.
Dividend reset.
Asset divestitures all of those actions were.
It's all geared towards forming a pump our balance sheet.
As you know at the same time, we are in the middle of.
Continuing to execute on the Kentucky power transaction, which.
Would have been our largest M&A transaction to date.
And really the focus was was on continue to use a reasonable best efforts to complete that transaction.
So once.
Both the seller and we decided that it was in the interest of both parties determined to the transaction.
That's when we started looking at what are the other opportunities out there.
For us to make sure we get that.
Right values for our strong set of assets.
And as you will.
No we continue to have a regular dialogue with them.
We didnt manage on board and this is strategic review came out as the one that where we believe we can unlock perhaps the most value.
So just a follow up so you're saying the strategic reviews unlocking value not singularly focused on solving the funding issues and then maybe just tomato part is there anything else.
Now post the Kentucky power deal being terminated that you're considering in terms of optimizing and trying to surface value for shareholders.
No nothing new besides of X.
Executing on our January 12 update on executing on our status strategy review.
And Mark maybe I'd just add just to your question is to make sure I heard it right. The strategic review has not been put in place because of a funding problem just to be clear the strategic reviews to figure out.
The best options, the most optimal way to structure the company in order to get the best valuation and the lowest cost of capital for the company.
Makes sense and then just to follow up on that on.
Darren if you did split apart for renewables and divested all or most of it and it became predominant regulator is there a path forward, where you can go back to the credit rating agencies and look to change their perception of business risks and try to lower your appetite for the debt metrics, which are maybe getting a bit more plenty of flexibility and balance sheet flexibility.
Yes, Mark Mark.
Certainly don't want to speculate on outcomes today as to where this this this may go where truly open minded to all the different options in front of us and obviously, we look at all the different levers that that each option presents and try to come up with the best answer for the for the company and for shareholders.
Okay. Thanks, Derek Thanks sure.
Thanks Mark.
Thank you.
The next question is from Sean Stewart from TD Securities. Please go ahead. Your line is now open.
Thanks, Good morning, a couple of questions.
It looks like Youre reiterating your your Capex plans this year, which calls for pretty conservative investment in rate based growth. This year one of the lowest levels we've seen in several years.
With more flexibility in your capital structure post, Kentucky power can you speak to your ability to potentially ramp up that that spending in in your rate base into 2024.
Sure Sean happy to take that question so yeah.
Yes, as you observed.
We have reduced our capital intensity, which was all really with a view to strengthen our balance sheet.
To invest more on our regulated business.
Further growth at the same time, we always look at things like <unk>.
Installation and customer Bill impact and we saw that this year.
Was a good year.
For us too.
To moderate the capital intensity, but there is the ability to.
Invest more on the regular decided the business, yes, yeah in China, you're probably just add to that I think youre thinking about it right as we look beyond this year into next year and after that.
We think there is more opportunity to invest in our rate base.
Okay. Thanks for that.
Then.
What are your priorities for capital allocation.
Even before potential proceeds from asset sales you've got.
Capital structure flexibility now.
Is it safe to assume that short term paying down revolver and credit facility drawings as priority and then if.
If you are successful in asset divestitures can you comment on whether share buybacks are.
Part of the plan longer term.
I'd say from where we are today, it's really and with the announced actions we have it's really around with paying down.
Paying down debt and investing in the business.
Again thats for all the actions that we've announced today to date.
Okay.
Okay. That's all I have for now thanks, guys.
Thanks, Sean.
Thank you.
Question is from Andrew <unk> from <unk> Suisse. Please go ahead. Your line is now open.
Thank you good morning, maybe just on the core utility business.
Given us the right basis again in the authorized ROE is which is much appreciated.
But could you give us maybe a context on where you are in aggregate maybe on the gap of realized versus the authorized that you have.
I believe we have already given that information out Andrew at that hour.
Weighted average.
Bob.
<unk>.
I realize <unk> is right in the range of 9%.
Okay, I might have I might have missed that.
All you just stuff this morning.
So so maybe just in the context of investing more in the utilities business Arun I think when you took over the you know a while ago you talked more about you know pivoting.
Pivoting in the utility investments.
Is the strategic review process may be a culmination of the plan that you set out a few years ago to really improve the balance sheet and maybe derisk. The overall company and improve the funding situation.
Absolutely Andrea the first priority was has continued to be to strengthen.
Strengthen the balance sheet.
Especially in the light of the macro environment, we have to take a very decisive steps, which you announced.
January .
And yes, as we've announced before.
Both of our platforms are very strong.
The regulated business and the renewable business.
Both are benefiting hugely from the.
The energy transition in and are positioned to continue to benefit usually over the years.
And it is really is not a lack of opportunities.
For us so first of all strengthen the balance sheet.
Second and a continued focus on value creation growth.
And continue to create value long term for our shareholders that absolutely remains our focus.
If I could just sneak in one more and it really comes down to you know what your exit the renewables group entirely would you just plan on having renewables and better within rate based activities.
Andrew We continue to we do have renewables embedded on a regulated side of the business.
You know about the 600 megawatt customer savings plan that we have in Missouri.
So that continues to be part of our <unk>.
Strategy on the regulated side.
On the renewable side and I don't want to prejudge what.
The end result is going to be we are.
Going into the strategic review process with a very very open mind.
Not judging what the end result might be so I will just leave it at that.
Okay. Thank you.
Thank you Andy.
Thank you.
The next question is from Ben Pham from BMO. Please go ahead. Your line is now open.
Alright, thanks, good morning.
When you think about renewables versus utilities.
Maybe ignore evaluation.
Ken.
Which segment has the best outlook.
In terms of earnings EBITDA growth.
And the next five years.
That's a tough one.
Given the.
Societal move towards Decarbonization and energy transition when we look at the <unk>.
Both our regulated business and our renewables business we.
We see frankly unlimited opportunities.
Obviously, the constrained on the regulated side of the business is vis vis customer bill impacts of which we look at it very very closely.
And also given the fact that we loudon electric on the regulated side of the business.
And what drove that is where we believe that much of that.
In line with the energy transition is going to be.
So we see.
Pretty much unlimited opportunities and again constrained by a customer bill impacts on their on the renewables side.
You know the landscape with continued.
The closure of coal.
All assets.
The need to really green the greed grid, a massively in both the U S and also in Canada.
And very strong.
Government incentives like the <unk>.
It's difficult to say, which side of the business is more set of opportunities.
Okay.
We will review process.
I'm just curious.
Hey, how are you.
Slide show.
Hi.
To drive this review them all.
What are you actually giving up here.
Caucus.
You did mentioned synergies.
More on that and then.
Lastly, when you think about value creation, it's a price earnings.
That's driving it in terms of the commentary on Bobby servicing.
Sure So look I mean.
Let me make it very very clear management and our board are absolutely on the strategy review process right.
Clearly informed by a whole number of <unk>.
Factors.
Clearly macroeconomic factors the interest rate environment, our cost of capital our values in the <unk>.
Our peers, both integrated and pure play.
Our discussions with shareholders.
Really informed by a whole variety of Oh.
Items and also the timing is right.
Given the fact that we are not focused on closing of Kentucky power.
But again, let me reiterate the management and our board are very much on.
We're looking at various.
Values and factors out there.
Pete.
Some of the parts piece, Okay. So you've got you've got a lot of as you know a lot of complex high value of the company.
Okay.
Okay. That's great. Thank you.
Thanks Ben.
Thank you. The next question is from Darius Larceny from Bank of America. Please go ahead. Your line is now open.
Hey, guys. Good morning. Thank you for taking my question maybe just.
Turning off on the timing of the strategic review you gave a target of your Q2 call as being able to provide an update to the market that seems like a relatively quick turnaround relative to some of the some of your other peers that have announced similar.
<unk> can you maybe talk a little bit about what's driving that really relatively quick timeframe is it.
The visibility you may have been to the process, having done asset recycling before or is there anything else specifically that's driving.
Thank you.
We actually believe that we are able to do a comprehensive review within that timeframe and that's why we feel comfortable giving you that timeframe for.
Determination of that.
Our strategic review process.
Really besides that there is nothing.
Ill, that's driving why we believe that it can be done in three months and not take longer.
Okay, great. Thanks.
It does answer thank you.
Yeah.
Maybe just following along that theme.
In the past have done comprehensive multiyear updates.
In December January .
In the past assuming that you have clarity on the outcome of the strategic review by that do you think that.
Perhaps in Q4 of this year you'd be in a position to give a more comprehensive.
Hence a multiyear look as far as earnings growth capital at the utility.
As usual type of long term updates.
We will absolutely take that into consideration values and will probably.
Formula that view as well.
As we get towards the Q2 earnings call and beyond.
Okay. Thank you very much I'll leave it here.
Thanks Darius.
Thank you. The next question is from Matt G. Beydoun from <unk> capital markets. Please go ahead. Your line is now open.
Hi, good morning.
Just going back to the strategic review.
I understand you're keeping sort of.
Staying open minded keeping flexibility, but just based on where you stand today.
That's for <unk>.
Although a full monetization or maybe a partial monetization like you did last year, bringing in partners.
No, we're not going to be doing anything right away in <unk> before we.
As the full result of the strategy review.
So we will look at all different ways to maximize shareholder value and again, we are growing in it and this was very open mind.
And looking at all possible.
Pathways.
Yeah.
And I assume one of those pathways, but include a spin off.
Sure.
We have obviously just started the strategy review process. So obviously, we'll be looking at market considerations and experience of our peers absolutely. So again.
Everything is on the table.
But the two primary outcomes, we're looking for are continue.
Continuing to strengthen our balance sheet and maximize the values of our assets, both regulated and renewables for our shareholders.
Outcomes will continue.
Okay, Okay got it.
Maybe I'm not for so long.
You mentioned before our priority of paying down debt and investing for growth.
The $1 billion of asset sales you had previously targeted is to fund the organic growth Capex, So let's say that.
Whatever the outcome is of the strategic review.
How much debt would you want to pay down.
Once you have more clarity on this with you.
So I was talking to you all of them with you Jeff.
Thats it Thats, obviously thats a tough question because theres, so many different permutations as to what the outcome could be so I don't want to speculate on.
Sure.
Where that where that would lead us.
For American water.
You've got the equity thickness umbrella that number I think.
Mitch just liked it.
Okay. Okay. Thank you.
Thank you thanks Maggie.
The next question is from Robert Hope from Scotiabank. Please go ahead. Your line is now open.
Good morning, everyone.
Just wanted to get maybe some high level thoughts historically of renewable power development has been a core part of the business both on the renewable power group side as well as the utility side.
The company was to be split up.
Are you thinking about potentially losing some of that renewable development capabilities and the utility group as well as some of the scale benefits as well.
Okay.
That's clearly going to be part of the analysis going forward right.
We have maintained in the past that there is synergies there maybe dis synergies as well.
Good to be together.
That those are clearly.
You know I do is that we're going to be focusing on as part of the strategic review.
Alright. Thank you and then I just wanted to revisit the atlantica com.
Comments, maybe you can add a little bit of clarity there because the outcome of the strategic review.
For Atlantica is seems to be a relatively large variable and devaluation of the renewable power business. So.
Do you think about.
That key variable and as it pertains to your strict strategic review understanding that a wise review may take longer than yours.
Again, that's a better question to the atlantica.
Bob.
A company that then and then to US <unk> have announced their strategic reviews, we haven't announced.
When exactly the plan to completed we have announced a.
42% shareholder that we are.
Supportive of that strategy review process, and we continue to be supportive.
A future updates really shouldn't be coming from atlantica.
Thank you.
Thanks, Robyn thank you.
Once again, please press star one on your devices keypad, if you have any question.
We have a question from David <unk>.
<unk>. Please go ahead from Raymond James Your line is now open.
Thanks, Good morning, everyone.
Maybe my first question, just assuming you do sort of refocused strategically on the regulated side of the business going forward could you talk about what your what your main priorities are what you see as the big opportunities there on the regulated side any particular region or modality that you think has a lot of potential.
Sure and again, let us not presuppose, what exactly is going to be the end result of the strategy review process. So I'll I'll answer your question around opportunities on a regular decided of the business.
If you just look at all of the organic growth requirements from things like.
Safety security reliability improvements.
We are construction.
We are constructing a 161 kv line in the state of Missouri.
We have growth opportunities in Arizona.
Arizona.
Starting a new waste water.
System.
Our <unk> jurisdiction.
We are putting in renewable energy to increase.
The amount of clean energy on that grid. So there continues to be both the core requirements.
For again, Steve safety security reliability, but also beyond that to account for growth.
And multiple ways, where we could.
Man is a.
Convert opex into Capex.
And thereby.
Managed customer builds as well.
So all in all we see a very robust set of opportunities on the regulated side of the business.
I appreciate that color. Thanks, Arun and maybe just one more for me just wonder if there's any comment you can make around that.
The development projects.
<unk> business could you just talk about if.
If there is any comment you can make on where they sit from a grid interconnection perspective has that been a challenge and moving those projects forward or do you think you're well positioned there.
Look as with any development project on the renewables side right.
Citing an interconnection.
It really really for two.
Moving the process forward.
As you know interconnection has been more challenging in PGM and there has actually been.
Stop Oh hold on.
<unk>.
Interconnection.
<unk>, but.
But we continue to make advancements and we have accounted for the increased timing in our plans and our expectations.
In the renewable projects.
And do you want to add anything no I think that last point I'd just reinforce that what is in our plan are considered and thought through the interconnections delays, there's definitely as we see excitement about the energy transition.
Connection timing is going to be a key factor I would point out that our portfolio of development projects that are greenfield pipeline.
Different vintages, and we've been investing in that pipeline for a number of years. So there are some projects that are in front of that wave and theres. Some projects that will have to deal with them that way, but we feel good about what we put forward for the next five years.
Yeah.
Excellent. Thank you very much.
Thank you David.
Okay.
Thank you there are no further question registered at this time.
I would now like to turn the meeting back to <unk>.
That's cool.
Thank you operator, and thank you everyone for taking the time to listen to our first quarter 2023 call today.
Please continue to stay on the line for our disclaimer Brian .
Thanks Rune our discussion during this call contains certain forward looking information, including but not limited limited to our expectations regarding earnings capital expenditures growth in the strategic review of the renewable energy group as forward looking information is based on certain assumptions, including those described in our most recent MD&A and annual information form filed on SEDAR and Edgar.
And are subject to risks and uncertainties that could cause actual results to differ materially from historical results or results anticipated by the forward looking information.
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Let's call say Hosni. Please also as you see.
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Okay.