Algonquin Power & Utilities Corp. Q1 2023 Earnings Call
Yes, we lapped a silty jacana fields, because super duper pretty old to be honest with you I had thought about getting because there's still meaningful human the peso guilty.
[music].
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've liked it turned 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 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 Johnston, Chief operating officer to accompany today's earnings call.
We have a supplemental webcast presentation available on our website Algonquin power and utilities Dot com.
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 and the strategic review of the renewable energy group at the end of the call I will read a notice regarding both forward looking information and non-GAAP measures. Please also refer to our most recent MD&A filed.
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 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.
Around our announcement this morning.
Our strategic review of the renewable energy group.
Yeah.
All of our renewable energy group and our regulated services group have grown into strong businesses.
With scale 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.
To 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 separating our renewable energy group.
Our regulated services group will advance that objective.
As part of the process.
We will review the best structure to position our company for continued growth.
And value creation for our shareholders.
Yeah.
To oversee the reviews are.
Board has created a strategic review committee.
Apprised 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 let.
Let me touch quickly on guidance.
We are reaffirming that our 2023 adjusted net earnings per share outlook of 55 to 61.
Unchanged.
In addition.
Our expectation of a $1 billion in organic capital expenditures for 2023 remains unchanged.
And with that <unk>.
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 with AEP.
Our mutual termination of our agreement to acquire Kentucky Power company.
AEP, Kentucky transmission company.
This was 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 to terminate the transaction.
I wish to personally extend my gratitude to the teams.
That work 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 Union 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.
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.
And Cal people electric.
With aggregate annual revenue increases of $29 6 million.
Which includes <unk>.
Approximately $9 $7 million due to increases in rate base.
Yeah.
A one time net earnings benefit 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 Gallagher electric expected in the second quarter of 2023.
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 in.
In our utility systems.
And targeted constructive return on the rate base across our various utility systems.
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 added Empire electric Arkansas utility.
Speaking of an increase in revenues of $7 $3 million.
Based on an IRR of 10, 5%.
And an equity ratio of 56% to be phased in over three years.
These rate cases highlight a broader pattern for us.
It is that we place a high emphasis on attempting to earn as close to our authorized ROE as possible.
Turning now to growth for our renewable energy group.
The first quarter 'twenty to 'twenty three.
So 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 Sandy Ridge too.
As mentioned previously.
Deerfield 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 and contributes the most of the financial results in the first and fourth quarters.
New to the pipeline this quarter.
Is 144 megawatt clear view 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 approximately 450 megawatts in service.
Throughout 2023.
As for an update on the new market solar projects.
42 megawatts of the remaining 76 megawatts of firm delivery.
The remaining 34 megawatts has 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.
We expect our 2023 renewables operating earnings.
Excluding gains on sales to be relatively flat year over year.
I'll now turn things over to Darren.
We will speak to our first quarter 2023 financial results.
Darren.
Thank you Arun and good morning, everyone.
Our first quarter 2000 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 at 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 in 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.
<unk> to $117 9 million in the same quarter last year, a decrease of 10%.
The decrease was as seen in prior quarters, primarily due to lower <unk> income as a result of the end of tax attributes eligibility on projects commissioned in 2012.
Excluding the HBV roll off 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 a $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.
<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.
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 <unk> 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.
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 key 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 question there will be a brief pause while the participants register.
Thank 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.
Hi.
My first question is relates to the strategic review.
So while youre running the strategic review.
Are you still.
Progressing with the I guess targeted $1 billion of asset sales can you just talk about how.
The two processes overlap or don't overlap and obviously the scope of.
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 of 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 the $1 billion of asset sale.
We stand by our <unk>.
Commitment as we announced at the January 12 update.
As you recall, our first priority.
As always been too.
Strengthen our balance sheet and the actions, we announced on January 12, where all geared towards that so.
So we continue to stand by our billion.
Billion dollars 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 strict.
Strategic review in August .
The Q2 call.
I am not going to speculate on the timing on that Nelson.
Nelson, but like I said I mean, both processes are.
Our continuing at the same time.
Okay got it.
And then my second question just relates to it.
It's more about the number of rate cases, you guys have had.
Have you seen any I guess.
First question is in terms of higher interest rates and higher cost of capital.
Has that caused.
Has that driven.
I guess rate case request.
A much higher rate has that been a big driver in.
And additional rate requests.
From your perspective and are you seeing any pushback from the regulator and consumer groups.
We note that we continue to have very constructive dialogues.
And discussions with our regulators.
Of course, I mean things like interest rates and inflation and others are part of the overall <unk>.
<unk>.
Bob.
But.
It is business as usual for us in terms of the number of rate cases, we are looking to file in and as expected.
As part of our business plan.
Okay. Thanks, I'll leave it there.
Thank you.
The next question is from Rupert <unk> from National Bank Financial. Please go ahead. Your line is now open.
Hey, good morning, Thanks for taking the question.
You highlight that the market may not be valuing your renewable assets appropriately.
We have seen public market valuations on some of your peers come down a bit recently.
Now 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. Do you think is in private transactions and our private market valuations that youre seeing still healthy and how are they trending relative to the public market.
Sure sure.
<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.
Set of interest.
In that.
Asset size and frankly from all different types.
Types of financial.
Clears and strategic players and also from all.
Geographies.
No.
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 Wow.
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 now the strategic review likely will impact the outlook for atlantica yield to what 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.
The Atlantica board.
He is running the strategic.
Our strategy review for Atlantica.
And as we announced before we remain supportive of the strategic review process.
Our strategy review process is totally different.
And there is really no linkage between those two.
The strategy review process.
I imagine you're somewhat involved in their process as well does that inform your process 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 the 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.
The next question is from that Mark Jarvi from CIBC capital markets. Please go ahead. Your line is now open.
Hi, just wondering if you can comment on the timing of it wondering why it wasn't initiated earlier strategically given.
Some of the things you've been trying to solve for 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 2019.
Sure Mark.
Our forest.
Focus and priority.
It was really around our balance sheet.
That will 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.
All geared towards forming a pump our balance sheet.
You know at the same time, we are in the middle of.
Continuing to execute on the <unk> power transaction, which.
Would have been our largest M&A transactions 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.
Provides values for our strong set of assets.
And.
As you will.
No we continue to have a regular dialogue with our <unk>.
That is on board and this strategic review came out as the one that where we believe we can unlock perhaps the most value.
So just to follow ups here, saying the strategic reviews more of unlocking value not sing.
Singularly focused on solving the funding issues and then maybe just tomato part is there anything else.
Now post protecting <unk> being terminated that you're considering in terms of optimizing and trying to surface value for shareholders.
No nothing new besides of executing on our January drove update on executing on our status strategy review.
Mark maybe I'll just add just to your question is to make sure I heard 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.
Darrin if you did split apart for renewables and divested all or most of it and it became predominant regulators is there a path forward. We 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 remain a gigabit more plenty of flexibility and balance sheet flexibility.
Yes, Mark Mark.
Certainly don't want to speculate on outcomes today as to where 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.
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 and 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.
Yes, as you observed.
We have reduced our capital intensity, which was all really with a view to strengthen our <unk>.
Balance sheet.
But at the same time as you pointed out we do have the ability.
To invest more on our regulated business.
Further growth at the same time, we always look at things like.
Installation and customer Bill impact and we saw that this year was a good year for us to do.
Two.
Moderate the capital intensity, but there is the ability to invest more on the regular decided the business, yes, and shiny probably just add to that I think youre thinking about it right as we look beyond this year into next year and after that.
Do you think there is more opportunity to invest in our rate base.
Okay. Thanks for that.
And then.
Broader 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 you are successful in asset divestitures can you comment on whether share buybacks or potentially part of the plan longer term.
I think from where we are today, it's really and with the announced actions we have it's really around paying down paying.
Paying down debt and investing in the business.
Again thats for all the actions that we've announced today.
Great.
Okay.
Okay. That's all I have for now thanks, guys.
Thanks, Sean.
Thank you.
The next 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.
<unk> given us the right basis again in the authorized ROE, 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 but do you have.
I believe we have already given that information that Andrew at that hour.
Weighted average.
Rohit.
I realize <unk> is right in the range of 9%.
Okay, I might have I might have missed.
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 seat while ago you talked more about it.
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 improve the funding situation.
Absolutely Andrea the first priority was has continued to be to strengthen the balance sheet.
And especially in the light of the macro environment, we have to take a very decisive steps, which you announced in January .
And yes, as we've announced before.
Yeah.
Both of our platforms are very strong.
The regulated business and the renewable business.
Both are benefiting hugely from.
The energy transition in and are positioned to continue to benefit usually over the years.
And it really is not a lack of opportunities.
For us so first of all strengthen the balance sheet.
A second and a continued focus on.
<unk> 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 if you 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 rigorous side of the business.
Sure.
You know about the 600 megawatts customer savings plans that we have in Missouri.
So that continues to be part of our.
Our 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 open mind.
Re judging what the end.
Result might be so I would 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.
Ignore evaluation.
For a second.
Which segment has the best outlook.
In terms of earnings EBITDA growth do you.
Think about it in the next five years.
That's a tough one I mean.
Given the.
Societal move towards Decarbonization and energy transition when we look at.
Both our regulated business and our renewables business.
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 very very closely.
And also given the fact that allows an electric on the regulated side of the business and.
And Walter that's where we believe that much of that growth.
In line with the energy transition is going to be.
So we see.
Pretty much unlimited opportunity, then again constrained by cut.
Customer bill impact on their on the renewables side.
You know the landscape with continued.
Closure of.
All assets the need to really green the green grid, a massively in both the U S and also in Canada.
And very strong.
Government incentives like the.
Right.
It's difficult to say, which side of the business is more set of opportunities.
Okay.
A couple thoughts on.
We will review process one.
I'm just curious.
Hey, how influential.
Hi.
To drive this review.
So curious.
What are you actually giving up here.
<unk>.
You did mentioned synergies.
Sure.
And then.
Lastly, when you think about value creation is it 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 absolutely owned this strategy review process Alright.
It's 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>.
<unk>, our peers, both integrated and pure play.
<unk>.
Our discussions with shareholders.
Really informed by a whole variety of.
Items and also the timing is right.
Given the fact that we are not focused on closing.
Thank you power.
But again, let me reiterate management and our board very.
Very much on.
This strategy review process.
Price earnings you're looking at right around.
We're looking at various.
Values and factors out there.
B and some of the parts B C. You've got you've got a lot of as you know a lot of complexity and high value of the company.
Okay.
Okay. That's great. Thank you.
Thanks Ben.
Thank you. The next question is from Darius <unk> 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 Stu.
Strategies can you maybe talk a little bit about what's driving that relatively quick timeframe.
The visibility you may have into the process, having done asset recycling before or is there anything else specifically that's driving.
That timing 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 else.
That's driving why we believe that it can be done in three months and not take longer.
Is that okay, great. Thanks.
It does answer thank you.
Maybe just following along that theme.
You guys 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.
It happened in Q4 of this year you'd be in a position to give a more comprehensive multiyear look as far as earnings growth capital at the utility.
So as usual type of long term updates.
We will absolutely take that into consideration values and will probably.
Our 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, guys.
Thank you. The next question is from Matt <unk> from <unk> capital markets. Please go ahead. Your line is now open.
Hi, good morning.
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.
Is there a preference for either 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 90 before we.
Add the full result of the strategy review.
So we will look at all different.
He used to maximize shareholder value and again, we are growing in that in this was very open.
<unk>.
And looking at all possible.
Pathways.
And I assume one of those pathways, but include a spinoff.
The renewables business as well so that they would be standalone public entities how does.
Sort of similar initiatives that have been undertaken by your peers in North America and inform your decision to maybe do as well.
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.
Ken.
Everything is on the table.
The.
Two primary outcomes, we're looking for our.
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 on that first one.
You mentioned before our priority of paying down debt and investing for growth.
The $1 billion of asset sales you had previously targeted.
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'll talk about that you have been with you yes just.
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.
And where that.
Where that would lead us.
Okay. Okay. So just maybe one last quick question on the North American water can you just remind us of.
Current regulator talk regulatory construct I think I had 46% equity and roughly 9% Roe.
Funding for <unk> is that correct.
Yes, I think that Johnny ammonia nine one is the current allowed Roe.
Yes.
I think he built the equity statement, so I'm going to that number I think.
Just like the.
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 our renewable power group side as well as the utility side.
If the company was to be split up how 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.
Rob that's clearly going to view part of the analysis.
Going forward right.
We have maintained in the past that there is synergies there maybe dis synergies as well.
Groups being together.
Those are clearly.
Ideas 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 Atlantic.
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 in the valuation 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, Thats, a better question to the atlantica.
Bob.
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.
Of the 42% shareholder that we are.
Supportive of that strategy review process, and we continue to be supportive.
The future of data really shouldn't be coming from atlantica.
Thank you.
Thanks, Robert Thank you.
Once again, please press star one on your devices keypad, if you have any question.
We have a question from David.
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 of 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 strategic review process. So I'll I'll answer your question around <unk>.
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 constructing a 161 kv line in the state of Missouri.
We have growth opportunities in.
Arizona constructing a new ways to work through.
Our system.
In our galaxy good jurisdiction.
We are putting in renewable energy to increase.
The amount of clean energy on that grid. So there continues to be both.
Core requirements.
Four again, <unk> safety security reliability, but also beyond that to account for growth.
And in multiple ways, where we could manage.
Converted clean opex into Capex, and thereby help manage.
<unk> 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 wondering if there's any comment you can make around that.
Development projects in your renewable business could you just talk about.
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 renewable side, citing an interconnection or.
Really really for.
To moving the process forward.
As you know interconnection has been more challenging in PJM and that has actually been.
Stop.
Hold on.
A new bra.
Interconnection.
Agreements.
But we continue to make advancements and we have accounted for the increase timing in our plans and our expectations.
In the renewable projects, Jeff 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 interconnection timing is going to be a key factor.
I would point out that our portfolio of development projects that are greenfield pipeline.
We've got 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 the <unk>. There are some projects that will have to deal with it that way, but we feel good about what we put forward for the next five years.
Excellent. Thank you very much.
Thank you David.
Thank you there are no further question registered at this time.
I'd now like to turn the meeting back to them.
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.
<unk>.
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 our strategic review of the renewable energy group. This 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.
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I'll say hosni please.
<unk>.
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