Q1 2023 DTE Energy Company Earnings Call
Speaker 2: Thank you for standing by and welcome to the DTE Energy first quarter 2023 earnings conference call.
Speaker 2: All lines have been placed on mute to prevent any background noise.
Speaker 2: After the speakers remarks, there will be a question and answer session.
Speaker 2: If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. To withdraw your question, press the star one again. And finally, I would like to advise all participants that this call is being recorded. Thank you.
Speaker 2: I'd now like to welcome Barbara Tucksill, Director of Investor Relations, to begin the conference. Barbara, over to you. Thank you and good morning everyone. Before we get started, I would like to remind you to read the Safe Harbor Statement on page 2 of the presentation, including the reference to forward-looking statements.
Speaker 2: Our presentation also includes references to operating earnings, which is a non-GAAP financial measure.
Speaker 2: Please refer to the reconciliation of GAAP earnings to operating earnings provided in the appendix.
Speaker 2: With us this morning are Jerry Narsia, Chairman, President and CEO , and Dave Rood, Senior Vice President and CFO .
Speaker 2: And now I'll turn it over to Jerry to start the call this morning.
Speaker 3: Thanks, Barb, and good morning, everyone, and thanks for joining us.
Speaker 3: This morning I will discuss the achievements we have made so far this year, provide an update on our plans to achieve our 2023 targets, and give an overview on the robust opportunities in our long-term plan.
Speaker 3: Dave will provide a financial update and wrap things up before we take your questions. Let me start on slide 4 to discuss the storms we experienced in the first quarter, starting with the worst ice storm in nearly 50 years, which was immediately followed by a major snowstorm.
Speaker 3: We understand the impact to customers during power outages, and our team worked around the clock to get the power back on safely.
Speaker 3: I want to express my appreciation to all of our DT employees for their tireless efforts, along with our labor and community partners, and the many others who supported our restoration efforts.
Speaker 3: It was all hands on deck at DTE for these two large storms. We had our front line working through dangerous ice and storm conditions, restoring power and conducting damage assessments.
Speaker 3: We also had our office staff in the field ensuring public safety from downed wires. Our gas team was going door to door checking on thousands of seniors and vulnerable customers to make sure they were okay.
Speaker 3: customers the latest information and escalate emergency matters.
Speaker 3: I am really proud and grateful for how our team showed up for our customers by keeping each other and our community safe.
Speaker 3: Our foundation also showed up in a big way by contributing $3 million to replenish food pantries and reaching out through United Way to provide low-income customers with food vouchers at local grocery stores.
Speaker 3: We remain committed to supporting and delivering for all of our stakeholders, including employees, customers, communities, and shareholders.
Speaker 3: I always say that employee engagement drives her success and is the secret sauce at DTE.
Speaker 3: And our team continues to operate at top decile engagement levels as measured by the Gallup organization.
Speaker 3: I'm excited to say we were recently recognized for this top engagement by earning the Gallup Great Workplace Award for the 11th consecutive year. In our effort to continue supporting our communities, we have been able to make this event possible.
Speaker 3: We partnered with one of the country's largest African American and women-owned energy efficiency companies to launch the Energy Efficiency Academy.
Speaker 3: Building a pipeline to talent that will help make our customers homes more energy efficient.
Speaker 3: And on the investor front.
Speaker 3: We are executing on our plan to achieve our 2023 guidance and our long-term financial growth.
Speaker 3: As you know, we are facing additional headwinds with the warm weather and the severe storms I mentioned.
Speaker 3: improvement efforts and one-time initiatives across our portfolio of businesses.
Speaker 3: growth that DT is known for with long-term operating EPS growth of six to eight percent.
Speaker 3: Let's turn to slide 5 and discuss the extreme weather events that continue to increase in frequency. As you are aware, Michigan's weather has dramatically changed in recent years.
Speaker 3: with storms that were once considered historic, seemingly becoming the new normal.
Speaker 3: Earlier this year, we experienced the most challenging two-week storm period we have ever faced as a company.
Speaker 3: The first storm that rolled through was the largest ice storm in our area in 50 years.
Speaker 3: As I mentioned, the ice storm was a very significant event.
Speaker 3: And having 80 to 90 percent, or the vast majority of our system, hold up extremely well through the storm is really a tribute to the investments we have made in the grid so far.
Speaker 3: We've invested five and a half billion dollars over the last five years to rebuild poles, wires, transformers, and substations.
Speaker 3: We have also invested over $800 million in tree trimming over the last five years, and we see great results from these investments.
Speaker 3: It is important that we continue to implement our learnings from these storms and we are implementing a plan that will be bolder in our approach to reducing the impact of these more intense weather events. We need to provide safe, reliable, affordable energy. Our customers expect this from us.
Speaker 3: It is important that we continue to implement our learnings from these storms, and we are implementing a plan that will be bolder in our approach to reducing the impact of these more intense weather events. We need to provide safe, reliable, affordable energy. Our customers expect this from us, and we have the same expectation.
Speaker 3: and this can only be achieved through infrastructure investments. We agree with all of our stakeholders that we must work together to do more and we must do it faster. Having a resilient grid is critical to providing safe and reliable electricity, as well as enabling transportation electrification and achieving statewide decarbonization, as well as promoting economic development.
Speaker 3: We have been ramping up our strategic investments to prepare the system for the challenges and opportunities ahead. We know that the investments are having a positive impact, and we are looking at ways to accelerate our efforts while maintaining customer affordability. In communities where DTE completed some of our most focused work on the grid's more challenged infrastructure, customers experienced up to a 70% improvement in reliability. DTE
Speaker 3: Significant long-term investment is needed to prepare our infrastructure for extreme weather and for increased demand for electrification and economic development. Our focus is continue to make strategic investments in our grid. Let's turn to slide six to discuss some of these opportunities. We have invested heavily in our electric grid over the years focusing on hardening infrastructure, replacing aging equipment.
Speaker 3: and completely rebuilding parts of the grid that originated back in the early 1900s. You can see from the data that in areas where we make these investments, we see reliability improvements. But to see the type of dramatic improvement we all want across our entire system, we must do more. We will invest $9 billion in the grid over the next five years to further harden the system through a focused strategy. First, we'll continue to invest in enhanced tree trimming.
Speaker 3: We know that the majority of customer outages are due to trees contacting wires. We also know that areas where trees are trimmed perform significantly better than those not trimmed.
Speaker 3: Second, we will continue preventative maintenance and hardening on the existing infrastructure and continue updating the electric grid. Specifically, polls, wires, and other equipment that makes the system more reliable and more resilient. Third, we will accelerate the complete rebuild of the older sections of our infrastructure.
Speaker 3: In some instances, it will make sense to pursue the undergrounding of our distribution system. In our most recent rate case, we requested two undergrounding pilots. Since the early 1970s, new construction has been developed with underground wires, with a third of our system now underground. There is a significant opportunity to continue this important work on our electrical system and drive down the cost of undergrounding.
Speaker 3: Lastly, we will accelerate our work to achieve the full automation of the electric grid, which will fundamentally reduce the duration of outages.
Our distribution plan filed with the MPSC in 2021, envisioned this happening on the same timeline as the grid rebuild, but the automation work must be accelerated to improve the performance of the grid for our customers in a near term.
With our recent investments in the Advanced Distribution Management System and our new system Operations Center being complete.
We can now bring smart grid technologies into the field which will enable us to more quickly and efficiently isolate outages on a circuit so the impact of an outage can be minimized
Our goal is to fully automate the grid within five to six years. Increasing investment in our system is something we have done consistently over the years.
We know how important these investments are to provide clean and reliable power to our customers.
And we will continue to evaluate opportunities to accelerate investments.
while maintaining affordability. Now let's turn to slide 7. We are making great progress at each of our business units this year. At DTE Electric, the IRP and rate case proceedings continue to progress.
We began settlement discussions on the IRP, which are very constructive, and we continue with the audit and discovery process in the race case.
We recently announced the Meridian Windpark is now operational. This is Michigan's largest windpark spanning three townships.
The 225 megawatt wind park has 77 wind turbines and generates enough clean energy to power more than 70,000 homes.
DT Electric continues progress on the highly successful volunteer renewables program with the recent edition of a 20-year contract with Toyota.
We are seeing some promising ongoing economic development in the state.
which will continue to drive growth in our service territory.
Henry Ford Health System is planning a $2.5 billion investment in Detroit for a hospital expansion, research facility, and neighborhood redevelopment in Detroit's new center area. The University of Michigan and the Illich organization announced a commitment for a $1.5 billion investment.
or an innovation campus that will bring research and innovation firms together. These developments will take place across downtown Detroit, including a development adjacent to our headquarters.
We also expect to see a meaningful pickup in the potential domestic manufacturing within critical supply chain areas.
including solar manufacturing and battery storage in order to comply with and benefit from domestic content requirements under the IRA.
Such energy intensive manufacturing businesses should translate into higher load growth in our service territory.
A recent example of this is our next energy ED battery maker that is located in our service territory.
And GM is investing $4 billion to convert its Oreum Township assembly plant to produce full-size electric pickup trucks. These developments will directly support our ability to deploy more capital while mitigating customer rate impacts by bringing a potential increase of 50 megawatts of new demand on our system.
More broadly.
This is also a positive for our vantage business which has expertise in providing customized energy solutions for commercial and industrial customers.
we are seeing increased activity and potential in this business line. Moving to DTE gas, we completed over 70 miles of main renewal with a target of completing over 200 miles by the end of the year to continue progress in accelerating the modernization of the gas transmission system.
Another major accomplishment for our gas company is the completion of the final phase of a major transmission renewal project in Northern Michigan. This project included the installation of new pipe and facilities modification work to provide supply redundancy for a growing market.
DTE Vantage, with a new RNG project and a Custom Energy Solutions project in service, and we continue to progress on our growth plan, driven by a strong development pipeline in both RNG conversions and large custom energy solutions projects.
With that, I'll turn it over to Dave to give you a financial update. Dave, over to you.
With that, I'll turn it over to Dave to give you a financial update. Dave, over to you. Thanks, Jerry. Good morning, everyone.
Let me start on slide 8 to review our first quarter of financial results. Operating earnings for the quarter were $274 million.
This translates into $1.33 per share. You can find a detailed breakdown of EPS by segment, including our reconciliation to gap reported earnings in the appendix.
I'll start the review at the top of the page with our utilities. DT Electric earnings were $101 million for the quarter. This is $100 million lower than the first quarter of 2022. The main driver of the earnings variance is a storm restoration expense that we experience from the significant events that Jerry described. We're also impacted by warmer weather.
and we experienced lower sales relative to 2022 with the continuation of people returning to work.
The sales were consistent with our forecast. We also had higher rate-based costs in the quarter and accelerated deferred tax amortization in 2022.
This is all partially offset by the implementation of the one-time ONM cost reductions that we discussed in our year-end call.
Moving on to DT Gas, operating earnings were $171 million.
$25 million lower than the first quarter of 2022. The warm weather also had a significant impact on earnings at the gas company, resulting in a variance of over $40 million quarter over quarter due to weather.
$25 million lower than first quarter of 2022. The warm weather also had a significant impact on earnings at the gas company, resulting in a variance of over $40 million quarter of a quarter due to weather. The earnings decrease is also driven by higher rate-based costs.
and was partially offset by low-row and M expenses. Let's move to DT Vantage on the third row.
Operating earnings were $27 million in the first quarter of 2023. This is a $13 million increase from the first quarter last year, primarily due to higher earnings from our renewables plant.
On the next row you can see energy trading finished the quarter with a 26 million dollar loss.
The first quarter was all this consistent with the estimate we provided on the year end call. As I mentioned then, this is primarily due to the contracts in our power physical business that included revenue based on fixed prices over the term of the transaction, and then these transactions are hedge upon execution.
The recognition of the fixed price revenue received for energy in these contracts does not vary month to month, while the recognized cost of energy is based on the energy curve, which is higher in January and February . This timing variance will unwind through the remainder of the year. We continue to feel confident about the performance in this segment this year.
Finally, Corporate Another was favorable $9 million quarter over quarter, primarily due to the timing of taxes offset by higher interest expense. Overall, DT earned $1.33 per share in the first quarter.
Let's turn to slide nine to discuss our 2023 guidance. As you can see from the slide, we added a red arrow to show that DT Electric is experiencing headwinds this year. We added a red arrow to show that DT Electric is experiencing headwinds this year.
and green arrows to show that we are seeing incremental opportunity in the other business units.
Given our strong portfolio businesses, we have plans in place to achieve our total operating EPS guidance midpoint of $6.25 per share.
which provides 7% growth from the 2022 original guidance midpoint. I'll discuss the drivers for each business unit starting with ET Electric.
The weather and storms from the first quarter are a headwind to our outlook at DT Electric.
We did have contingency for one standard deviation of weather and we do budget for a certain level of storm activity. Earnings are also supported by the one-time O&M reductions I described during our year-end call. As I mentioned, we budget for storm restoration costs and weather variance for the year.
The catastrophic storms we've experienced combined with the warmer than normal weather have consumed the budget levels at the Electric Company for storm restoration and unfavorable weather.
The remainder of the year we're assuming historical averages for weather and storms.
Offsetting the headwind to DT electric, the stronger performance of DT gas, vantage, and energy trading.
DG Gas was impacted by the warm weather as well, but we anticipate stronger earnings at this segment for the year, given focused one-time initiatives, weather contingency, and we're also seeing higher customer sales.
For DT Advantage, we mentioned on the year-end call, we'll likely see slightly stronger earnings in the back half of the year as new, already secured projects come online.
Additionally, the projected favorability of our project is supporting stronger performance for this business unit.
The energy trading, the timing variance experienced in the first quarter, will unwind through the remainder of the year as we see favorability in our contracted, highly hedged power portfolio that provides additional upside to this business.
Overall, we have plans in place to achieve our 2023 guidance as we find opportunities across our portfolio to overcome the weather and storm impacts that we experienced in the first quarter, and we remain well positioned to achieve our long-term growth.
Let me wrap up on slide 10, and then we'll open the line for questions.
In summary, through the remainder of the year, DT will continue to focus on our team, customers, communities, investors.
Although we experience warmer than normal weather and severe storms in the first quarter, we are executing on our plan to achieve full year guidance without jeopardizing safety and reliability.
Our robust capital plan supports our strong long-term operating EPS growth as we execute on the critical investment that we need to make for our customers to deliver cleaner generation and increase reliability while focusing on customer affordability.
Our near and long-term plan supports our 6 to 8 percent operating EPS growth rate through 2027 and provides a dividend growing in line with operating EPS.
With that, thank you for joining us today, and we can open the line for questions. Thank you, Dave, and thank you to all our speakers for the presentation. And at this time, I would like to remind everyone, in order to ask a question, press star, then number one on your telephone keypad.
And your first question comes from the line of Durgesh Chopra from Evercore ISI. Your line is open. Hey team, good morning, and thank you for taking my question. Good morning. Hey, good morning, Jerry. Hey Dave, the weather EPS impact is very clearly broken out on the slides.
Can you give us a sense of how much of a headwind storm expenses were this year in the first quarter? Sure. Yeah. Like we said, we did see headwinds in our electric business in the first quarter from both weather and storm. And the storm is in there at $20 million.
We also, this storm was kind of a heavy one where it hit a lot of our wires, so it was a little heavier on them. So, after taxes around $70 million. But again, we see great opportunity in our other businesses through the year to kind of overcome those headwinds. And again, all the cost reduction work that we've been doing.
We've had these headwinds in the beginning of the year. We see great opportunities still to work through this and with normal weather and storms through the end of the year, we'll be able to reach our guidance.
Can you comment on building contingency and protecting your plan before the year begins?
Can you comment on how much contingency you may have used up and sort of how much room you may have to flex as a year kind of progresses?
Yeah, the first quarter, the weather and storm we just talked about were pretty impactful. We came into the year with some challenges. So through the end of the year, we need normal weather and storm along with some management actions to offset some of that. But we'll need normal weather and storm to be able to hit our guidance. Perfect.
That's very helpful. And maybe just one last one. Can you sort of compare and contrast the weather normalized residential sales trends that you're showing on slide 13? How does that compare and contrast to your rate case filing? I mean, that's a pretty steep 4.5% decline over the last quarter on the residential sales front. None of this was an issue in the last rate case. Can you talk about increasedivity at the overall rate or even critical bars?
Yeah, our sales that we're forecasting or that has come in there. They're in line with what we had in our budget and it really close to what we had in the current rate case as well.
We did see people return to work a little quicker in the first quarter than we had expected, but we think that will bounce off through the end of the year. So it's very consistent with what we saw, what is filed in this rate case, and a little below what we had in our previous rate case even. I appreciate it, guys. Thanks so much again. Your next question comes from the line.
contingencies across segments or are there still contingencies in place should something go adverse to plants?ue
Well, at our electric business, we've worked through the contingency for the we have for the weather and storm combined.
But within our other other businesses we are still seeing favorability that can continue to make up for that as we go through the year.
The other thing we're seeing Jeremy as well as you know as we initiated our continuous improvement efforts and cost reduction efforts we are seeing some favorability there as well which will also be helpful.
And just to be clear for everybody on the line as we embarked on these cast reduction efforts, which most of them are one time efforts to
move through this year. We are investing at record levels in our distribution grid. This year we'll invest about a billion and a half in our grid.
And also we have not touched our tree trimming budgets, which both of those two combined.
are the most impactful things that we will do to make our grid more resilient, more reliable. Got it. That's helpful. So, just to be clear there, outside of electric, in the other segments, there are still contingencies that are not in plan yet that could be used should something move adverse to plan at this point. So, just to be clear, outside of electric, in the other segments, there are still contingencies
Yes, so yeah, that's what we signaled is that there's favorability within those businesses that can offset other things.
Got it. That's very helpful there. And then just kind of pivoting away, I guess, to the R&G business with Advantage. Just wondering if you could talk a bit about how you see the opportunities set there, kind of you see higher competition. Just wondering how you think about returns and opportunities at this point..
You know, primarily our current
Investment opportunities in RNG are driven by assets that are already under our control where we're converting existing landfills to produce RNG. So that's what we're seeing opportunities and those are still really nice returns you know IRRs that are in the...
sort of the north of 10% and into the teens in some instances, delivered after tax. So those will feel real good to us. We're also seeing a resurgence.
and our energy solutions area where we're a lot of the sort of repatriation of industrial activity in the United States is giving us opportunity to look at incremental investments of some of our large industrial partners. So we're also excited about that line of business.
That's very helpful. I'll leave it there. Thank you. Your next question comes from the line of David Akaro from Morgan Stanley . Your line is open.
Good morning. Thanks. Much for taking my question. Morning. Good evening. I wanted to see if there's any appetite from your end or just within the state to pursue decoupling, going forward at either for a rate case or just overall its medical strategy or regulatory structure that would be appealing.
You know, traditionally in our area, even in the Midwest, that's not been a practice that's…
been widely adopted or endorsed. So I we don't see that as a high probability outcome. We have not asked for it because it's not something that there seems to be appetite for at this point in time.
got it understood. And I was curious to your view on as you pursue one time, savings initiatives this year for one time, you obviously get them reversing going forward. And I think about 2024, is there a certain kind of level of headwind or natural offset into...
have significant impact on reliability and certainly not safety. And we will look through our continuous improvement initiatives to see how much of that can stick. Obviously that's something that we're always looking for to make our operations more efficient through our continuous improvement initiatives. And as you know, anytime you embark on one of these initiatives you do find opportunity.
So we'll try and make some of those continuous improvement initiatives. But many of them will be if that all will be reversed. Yeah, I got it understood. And then I was wondering how are you thinking?
kind of strategically about how to manage the more extreme weather that you've been facing Michigan. I'm wondering if you've obviously laid out a number of CapEx pursuits and targeting. Is this something that you could bring as kind of a separate initiative to the commission, whether it's some kind of undergrounding plan, or just weather resiliency type of a plan, or. Would you expect it to go through the more traditional rate case process over time?
have now become more frequent. It's going to be happening every three to five years.
So that's one reality. The second reality is that we've got significant demand growth opportunity that we're facing with the electrification of the transportation fleet. We're also seeing what I would call high levels of economic development in our state, especially as the auto industry starts to retool and rebuild to build electric vehicles.
So, when we think about all of that and we think about our five-year plan and 10- and 15-year plans going forward, several things really come out. One is our five-year plan right now is projecting approximately $9 billion of investment going into the grid. And there's really three fundamental areas. One is continued grid hardening. So …
It is the oldest part of our grid and the need for rebuild is driven by several things. One is age.
and the need to modernize, but secondly, also the ability to accommodate incremental demand through electrification of the transportation sector as well as the economic development activity that we're seeing. So that's number two. Number three – TheRoyanda 1992 Report
We were pursuing full automation over this period of rebuild, 15 to 20 years. But with the reality of the new storm activity that we're seeing on a more frequent basis, we want to accelerate that to five to six years, which is the full automation of our grid.
What that will do is it will fundamentally move the duration of outages. And that's where we need to make the most improvement in our grid in the near term. And of course, the level of investment that we're making in Treetrim for five years through a seven year very aggressive Treetrim and program were over the last five years.
We've invested $800 million in tree trim, and we'll continue at that pace for two more years, and then we'll return to a more normal pace of aggressive tree trimming once we've sort of removed the backlog, if you will. So those are the fundamental things that you'll see in our distribution grid plan. And obviously, as we get support and...
Yes, okay, great. Thanks so much for all the color. Before we move on to our next question, a quick reminder, if you would like to ask a question, please press star one on your telephone keypad. And your next question comes from the line of Michael Sullivan from Wolf Research. Your line is open.
Hey guys, good morning. Morning Michael. Hey Jerry, so maybe just picking up on that last one, is there any way some of the things you're thinking about on the liability spend can be factored to the currently pending electric case or?
Do you kind of have to wait until this distribution grid plan gets filed and then fold it into future cases? Certainly the grid hardening is already in our plan in this current rate case. The tree trimming is in our current rate case that's in front of the Commission. The beginning of a 4.8 kV rebuild is in our rate case. And eventually...
is part of the infrastructure renewal mechanism, or the tracker that we're proposing, that we feel there's strong support for, is to start tracking capital investments for this rebuild. And the full automation, the acceleration of that is not in our current rate case, but we're going to start anyway. We think this is so fundamental that we're happy to start this investment and pull forward this investment. And that it's a good thing that we're going to be able to do that.
the other portions of our grid.
And we should attempt to put as much of that underground as possible is economically feasible. And that's something we're going to start experimenting with. We have several pilots that are in this current rate case that we're hopeful that the commission will approve. And that'll start to get our feet wet. And I've actually met with the mayor of Detroit, Mike Duggan.
Kim and I have talked about how we start that in Detroit and really start to experiment with that as we replace water main and we replace gas pipe and we try to attempt to create some synergies here with infrastructure renewal in the city of Detroit.
about how we start that in Detroit and really start to experiment with that as we replace water main and we replace gas pipe and we try to attempt to create some synergies here with infrastructure renewal in the city of Detroit. Okay, that's really helpful.
Maybe just like with all this incremental spend, how we should just be thinking about the CapEx budget and customer rate impact? Are there other things that get shifted out or do you see incremental headroom to absorb some of this additional spend on the grid? Well, we've got $9 billion in our five-year plan. And this year, we'll invest a billion and a half in the grid. And we feel that to accelerate, the piece that will get accelerated here fundamentally is automation. We're going to try to find that.
opportunity inside the $9 billion by becoming more efficient with their capital deployment. But we'll update. We may also have to increase it modestly over the next five years, but we'll update that in likely in November at E. I.
Okay, great. And then last thing, I just wanted to circle back to the quarter results and the guide. So I guess just to confirm, if we do get more storms or mild weather at the electric business over the summer.
how much more can be absorbed there or should we think about that as it starts to become too much to offset?
Well, we have storm budget left, obviously, as we try to move forward in our plan here for the summer. We have assumed normal weather. If we get cooler than normal weather, it will put pressure on the plan and we'll have to look for other opportunities. Dave, do you want to add any color to that?
I think that's right. We are looking if we have normal storm and normal weather, we're in a good place to hit our guidance.
But again, we'd have to find some more offsets if things are outside of the normal. Okay, thanks very much. Your next question comes from Andrew Weisel from Scotiabank. Your line is open.
Thank you. Good morning, everyone. Good morning, Andrew. Good morning, Andrew. First question on the reliability spending and automation in particular. Should we expect structural day-to-day O&M savings from these investments? I think the primary goal is to reduce outages, but would these come with mitigants to customer bill pressure?
Yes, that's a great question. As you think about automation, just to describe it quickly, you have an interruption caused by a tree falling on a wire and taking wires out between two poles, for example. While automation gives you the opportunity to do is to isolate that outage.
and restore customers on both sides of that outage. So instead of having a thousand customers waiting 24, 48 hours for restoration, you can reduce that impact to perhaps a hundred or 150 customers waiting until that damage is repaired. So that one makes the restoration faster, so it starts to kill duration, if you will. Now, that is just where we...
need to make the most improvement to be best in class, if you will, in the industry. And then secondly, Andrew, in terms of efficiencies, it points you to the location of the outage so that you can properly go there more quickly. Like right now we have to patrol the circuit.