Q2 2023 Fortis Inc Earnings Call
Good morning, everyone. Thank you for standing by my.
My name is Michelle and I will be your conference operator today.
Welcome to for this Q2 2023 earnings conference call and webcast.
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At this time I would like to turn the conference over to Stephanie I'm Emo. Please go ahead Stephanie.
Thanks, Michelle and good morning, everyone and welcome to <unk> second quarter 2000, twenty-three results conference call I'm joined by David Hutchins, President and CEO Jocelyn Parry Executive V. P. N CFO other members of the senior management team as well as C. E. O is from certain subsidiaries before we begin today's call I want to remind you that the discussion will include.
Forward looking information, which is subject to the cautionary statement contained in a supporting slideshow X.
Actual results can differ materially from the forecast projections included in the forward looking information presented today, all non-GAAP financial measures reference dinner prepared remarks are reconciled to the related U S. GAAP financial measures and our second quarter 20, twenty-three MBNA <unk>.
Also unless otherwise specified all financial information reference is in Canadian dollars with that I will turn the call over to David.
Thank you and good morning, everyone.
Continues to build on its strong momentum from the first quarter operationally, our utilities delivered safe and reliable service in the second quarter, even with the extreme weather events in Western Canada.
Notably, we replaced almost 1000 poles and structures in Alberta damaged by wildfires.
Fortunately customer impacts were minimal given successful mitigation efforts and a strong response and restoration by the team.
Ah regulated rate base growth has supported E. P. S through the first half of 2023 as we have invested capital approximately $2 billion or investments continue to focus on modernising the grid.
Enhancing system reliability and delivery and cleaner energy.
During the quarter, we continued to advance our sustainability priorities and regulatory proceedings, which we will speak to in more detail shortly and lastly, the sale of the Aiken Creek is on track to close in the second half of 2023 subject to approval from the British Columbia Utilities Commission.
Today, we released our 20th twenty-three sustainability update report, which includes our key E. S. G performance indicators for 2022 <unk>.
The report highlights or 29 per cent reduction in scope, one greenhouse gas emissions. Since 2019, this mark significant progress towards Fortas's greenhouse gas reduction targets of 50 per cent by 2030 75 per cent by 2035 and net zero by 2050.
For the first time. The report includes limited assurance by a third party uncertain key performance indicators, including scope wanted to greenhouse gas emissions data. The report also highlights fortas's advancement and diversity equity inclusion and inclusion. The corporation has achieved this board of directors diversity targets with 58 per cent of the <unk>.
Comprised of women and two of the 12 members identify any identifying as visible minorities.
The report also highlights of further alignment of R. E. S. G priorities with our approach to executive compensation for 2023, we have increased the weightings for D. S. G leadership and safety performance and our short term incentive plan and added a new D E I measure to our long term plan.
With $2 billion invested in our systems through June or 4.3 billion dollar annual capital plan remains on track or 22.3 billion five year capital plan, consisting of virtually all regulated investments in a diverse mix of highly executable low risk projects also remains on track.
<unk>, we expect rate base will increase by $12 billion to over 46 billion in 2027 supporting average annual rate base growth of 6.2%.
Outside of the capital plan, our utilities are pursuing regulated growth opportunities central Hudson as a minority investor in New York Transco recently, the New York ISO selected a proposal to construct transmission infrastructure to deliver at least 3000 megawatts of energy from long island off shore wind facilities.
To the rest of the state by 2030 transpose portion of the project is estimated to be 2.2 billion U S dollars with central Hudson portion of this investment estimated at 10%.
With a strong track record of increase in dividends for the past 49 consecutive years, coupled with our low risk growth strategy, we remain confident in our 4% to 6% annual dividend growth guidance through 2027.
Now, we will turn the call over to Jocelyn for an update on our second quarter financial results.
Thank you David and good morning, everyone Slide nine provides a summary of our second quarter and year to date financial results for the second quarter reported earnings for $294 million.61 per common share.
Reported earnings include tiny differences related to mark to market accounting of natural gas derivative at eight and Creek.
<unk> for 302 million or 62 cents per common share five cents higher than the second quarter of 2022.
Great bass growth was the key driver for the quarter.
Timing of operating costs that central Hudson, and Fortis, Alberta, as well as higher margins on gas. So that agent Creek also contributed to the increase.
Your earnings reported in Arizona were mainly driven by milder weather and the timing of wholesale sales.
At corporate elevated financed costs and higher weighted average shares outstanding issued under a dividend reinvestment plan, yielding over 35 per cent shareholder participation, we're partially offset by favorable impact of a higher average you asked to Canadian dollar foreign exchange rate of 1.34 in the <unk>.
Order compared to 1.28 in the second quarter of 2022.
On a year to date basis reported earnings for 731 million or $1.51 per common share adjusted earnings for $741 million or $1.53 per common share 19 cents higher than the first half of 2022.
You hear today E. P. S was impacted by many of the same drivers as the quarter, except on a year to date basis higher earnings at you and ask for driven by favorable margins on longterm wholesale sales and transmission revenues.
The waterfall charged on slide 10 highlights the E. P. S drivers for the second quarter by segment.
Western Canadian utilities, and other electric segments. Each contributed to sent EPS increase driven mainly by rate base growth.
For our western Canadian utilities timing of operating costs at Fort is Alberta also favorably impacted the quarterly results, while our other electric segments that segment benefited from higher sales in the Caribbean.
As I mentioned, our energy infrastructure segment contributed a two cent E. P. S increase for the quarter, mainly driven by higher margins on gas so that they can creek.
At I T C. A P S increased by one cent for the quarter driven by rate base groat tempered by higher finance costs.
A P. S was lower by one sent for a U S electric and gas utilities with central Hudson, increasing one cent and you and S down to central Hudson results with like bright based growth and the timing of operating costs.
In Arizona, the quarterly results were mainly driven by milder weather and lower wholesale sales whether for the quarter impacted E. P. S. Five four cents. This was somewhat offset by customer growth lower depreciation with the retirement of the San-juan facility last year and games on investments.
Support retirement benefits.
As I previously discussed the remaining items on the waterfall chart were driven by corporate foreign exchange and weighted average shares which together netted two and one cent decrease.
Here to date a P. S was impacted by many of the same factors discussed with a quarter, except that Arizona contributed to earnings growth for the six month period.
<unk> call favourable market conditions in the first quarter resulted in higher wholesale sales and <unk> transmission revenues and as expected wholesale sales moderated in the second quarter.
All in all a very strong first half of 2023.
Our utilities were active in the capital markets with nearly 2 billion of debt issue through June primarily to refinance maturing debt and fund our capital program, most notably ITC issued 800 million U S dollars and nonregulated that in June at a weighted average rate of approximately 5%.
To refinance their maturities.
Through the end of next year, we have holding company debt maturities at Fortis of approximately 500 million U S dollars and for our preference shares we have dividend rate resets of 230 million in 2023, and 850 million in 2024.
We continue to maintain strong investment grade credit ratings last month S. N P confirmed or a minus issue or credit rating and stable outlook.
A recent debt issuance is coupled with over 4 billion available on our credit facilities places us in a strong liquidity position.
Turning now to an update on a regulatory proceedings since we last updated the market in Arizona T. E. PS rate case continues to progress in July the administrative law judge issued a recommended opinion and order proposing a non fuel revenue increase of 102 million you.
S dollars with new rates expect it to be effective in September .
B a L. J as recommended rate base of 3.6 billion U S dollars and equity ratio of approximately 54% were consistent with T E PS revised request.
D. A L. J also recommended and allowed <unk> of 9.4% compared to Tep's current hourly of 9.15%.
In terms of <unk> design T. P had proposed a regulatory mechanism to include recovery of certain investments associated with this clean energy transition, although not recommended by the a L. J T. E. P is hopeful the commission will consider such a mechanism.
Consideration of D. A L. J's recommended opinion in order is tentatively scheduled for next week's a C sees open meeting.
At Central Hudson constructive interim agreement was reached last week with the New York Public Service Commission and related to its show cause order.
As part of the agreement Central Hudson will implement an independent third party verification of recent system improvements relating to its billing system.
Central Hudson will also accelerate the implementation of its monthly meter reading plan.
While the system is now operating as intended central Hudson continues to work with key stakeholders and customers to address any remaining concerns.
Earlier this week Central Hudson also filed a general made application with the New York Public Service Commission for their normal regulatory cycle as the current three year plan concludes on June 30th 2024.
I'm turning to Western Canada, B C filed his final reply arguments earlier this year on its generic cost of capital proceeding any decision is now expected in the third quarter.
At four this Alberta.
Records are closed in the proceedings related to the generic cost of capital and the third P. B R term effective in 2024, a decision is expected from the Alberta Utilities Commission later this year and both proceedings with that I'll now turn the call back to David Thank.
Thank you Jocelyn, we're pleased with the progress we are making in 2023 to deliver sustainable growth for the remainder of the year. We're focused on executing our annual capital plan closing the sale of a can creek and securing constructed regulatory outcomes.
We are confident we will deliver long term value to our shareholders through the execution of a regulated grill strategy and a 4% to 6% annual dividend growth guidance through 2027.
For our customers, we are committed to providing safe and reliable electricity and natural gas as we deliver a cleaner energy future without compromising on affordability.
I look forward to updating you all on these matters and our new five year plan at.
Add Investor day in September that concludes my remarks, I will now turn the call back over to Stephanie.
Thank you David This concludes the presentation at this time, we'd like to open the call to address questions from the investment community.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session.
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One moment. Please for your first question.
Your first question will come from Morris Choi at RBC capital markets. Please go ahead.
Thank you and good morning, I want to start with the T. P. Right case, what are your views of the L. G recommendation and what <unk>, that's still have substantial gaps between your expectations and other participants and maybe bigger picture as well.
You approach a decision in Q3, what is your take of the Arizona <unk> process your relationship with the regulator recognizing that a coupla years ago, a decision, but ishi on another utility arguably cause some distress.
Oh, great good morning, and thanks, <unk> for the questions and we have Susan Gray Who's a CEO view on us with US today actually we have a lot of our team here in in Novi because we just got done with some board meetings. So I'll I'll, let Susan address that then if if we miss any of the multiple questions and they're just shoot.
Back to US go ahead, Susan Alright, great. Good morning, Marie Thanks for the question so.
Terms of the L. J's recommended opinion in order I think we're fairly close you know we've got.
The normal things that were not included like L T I and and and various things like that but I think the biggest gap here is the <unk> and a fair value increment and so that was the exception that we filed in our area testimony last week was really pressing back on that <unk> that we requested and.
9.75, and the ALJ has recommended in 9.4.
And and her recommendation for the fear of all your information is 0.2 and ours is 0.66, so pushing back on that a little bit.
She also did not recommend the expedited or accelerated depreciation it springerville, nor did she support the system reliability benefit so I'm expecting to have those issues. You know have heard in the open meeting next week, we'll see where this turnout uhm, but.
Largely or.
Or you know, we're mostly a line on on all the other recommendations maintain the other big thing is the cost allocation that she's recommending to shift more of the cost of residential customers versus commercial. So we did recommended that take a more gradual approach than what she's recommending.
In terms of relationship with a commission you know I think the the.
Decision that you're referencing.
Was it different makeup as commissioners and so two of those commissioners have been have.
Have been replaced since then and I think we have a good relationship with our commissioners now and I think they they have a.
A commitment to improving the regulatory environment in Arizona, and we've seen some good decisions come out of the commission. So I think I think they're headed in a better direction overall.
Did I answer all of your questions or did I did I, Miss anything really and and thanks for that answer maybe.
Maybe just to finish off assist you look for it to connect.
The next update in September and also recognizing that you've put out your sustainability update report thoughts on areas, where you feel that the next ramp up investments might come from.
<unk> do that renewables as well last transmission beam.
Priority under the next plan.
Yeah, I'm <unk> I'm already so we we always talk about those additional investment opportunities, we have to expand and extend our our capital plan and you know obviously, we'd been working hard and the different categories <unk> to at at I T C and the money so long range transmission plan as well as the remaining part of <unk>.
<unk> additional clean energy investments I mean, there's a lot of stuff and you know adaptation resilience your investments et cetera, a lot of different categories, but I can't steal the Thunder for the September conversation as we pull together that capital plan and will rule that out then, but we you know that.
This is a good time for for our industry in our sector and particularly for our key large utilities for the <unk> the opportunity to really see the clean energy transition uhm accelerate with the you know obviously the big catalyst like the inflation reduction electric cetera. So what we'll give you a full update on all those all those good.
<unk> come September just a little commentary on to add to Susan's just on the on the <unk> the regulatory construct.
Because we are seeing a lot of positive momentum and I I just want to point out that you know the U N. S team has done a fantastic job in in executing this rate case and the commission is as <unk> as well done a very good job in getting this this getting this on the agenda.
In the in a very timely matter. So that is that's that's another really positive sign when you can when you can prosecute a rate case and this was a full rate case it wasn't the settlement and the time frame like this it's it's kudos to all parties involved.
Makes sense since you mentioned <unk> to like any update on the transmission roofers be that in Iowa or look through some proceedings in other states.
No no no real updates now so they're going through the process in Iowa, and nothing new on the front and in the in the other states. Obviously, it's something will be watching going forward and combating and and you know out there pushing for the benefits that our customers need.
Deserved and we think the way that we get fast affordable reliable clean energy connected to the grid is through Rover as an existing transmission provider. So we'll we'll continue to to tell that to anyone who listens.
Alright, Thank you very much for that update.
Thanks <unk>.
Your next question will come from Rob Hope at Scotiabank. Please go ahead.
Morning, everyone can.
Ah nice investment that was not kind of in the books. So far might have opportunities continue to percolate to the top as well. So when you take a look at your transmission kind of investments where are you seeing the opportunities rise to the surface quickest.
Whether it be I D C.
Some additional transco or even some stuff in Arizona.
Yeah. It's it's all three of those Rob obviously I T sees the biggest transmission played that we have and but we we we don't forget that we have transmission in New York in Arizona as well. So we are you know looking for you you know what we like we like regulated great base and will you continue to look for regulated.
Base investment opportunities across all of those portfolios. Obviously, we talk a lot about I T C and you know getting the rest of the tranche of one portfolio built looking for what we can get and trash too and going through those processes and then the New York Transco was one that we've been involved with for awhile, but you never know when when some.
Of those big projects will hit because you have to bid in into that process in New York for those and then in in Arizona, It's a bit different we look forward to build like are they are totally the line that we have in our existing forecast. We we look to build those transmission lines is needed to support that clean energy transition there is.
Well, so I'm always looking for those opportunities to increase those investments and transmission in all three of those footprints for sure.
I appreciate that and then the second question is a little bit short term in nature at Central Hudson The show cause order and acceleration. So on some plans there uhm could that'd be a drag on income for the next we'll call it a year and whether or not they're gonna be <unk>, whether or not they are accurately reflected in the new <unk> application.
Rob This is Jonathan no with respect to the agreement, we're not expecting any material impact on the financials for this year it for it to be a drag so I'm not expecting any their show cause order is proceeding is not complete of course, and we don't have the full picture.
Sure of it but what we see those fries, there's nothing material and earnings.
Thank you.
Your next question will come from Linda Galus at T. D Securities. Please go ahead.
Thank you may.
If we could just tell us a little bit more on this rover in Iowa.
What are the next steps and <unk> of timing of when this might be resolved. Maybe you can just update us on any sort of evolved arguments that I T C might have on that front.
And how confident are you that this will not be potential precedent for other jurisdictions.
Thanks, Linda I'm Gonna turn that right over to Arlinda, Linda Apsey Who's C E O of I T. C. As you well know great. Yeah. Good morning. Thank you wonder for the question in terms of the current status and in terms of the process right now the Supreme Court essentially reminded it's decision.
And back to the Iowa District Court.
And so the the judge has essentially established scheduling a hearing I think the next step is.
It's early August I think the state of Iowa has to file it's written response and so that sort of a new term next steps.
As is always the case with the courts is there is no mandate a timeline for a decision and so you know Unfortunately I can't give you any specific indication as to kind of what the timeline as you.
I think as I've stated before on row first in terms of sort of our our arguments and our position. If you recall you have the key issue that was the Supreme Court rendered their decision on <unk>. It was the sort of the process in which the Iowa legislature passed out.
Rover law.
It did not meet the statutory are they claim that it did not meet the statutory requirements in terms of it has to be a single issue piece of legislation with the appropriate title of a piece of legislation.
And so that was what the Supreme Court had found.
Wise unconstitutional.
And therefore re mandate it back to the district court for the <unk> essentially now that's L. As power who wants the applicant in the case, claiming that they now had standing to challenge the legislation so.
Our view is obviously, we are going to continue to vigorously defend our position both as it relates to the process and certainly the state of Iowa. The Attorney General will will obviously take the lead on defending the legislature's authority and obviously.
To the to the extent there are additional arguments and claims are unconstitutionality of Ah Rover around the context of competition. You know we will be vigorously defending our view and our our role in physician along with the other parties in the case.
In terms of you know kind of you know just as this precedential you know I would just identifying remind you that you have there are 15 other states that have state Rovers in place.
The Rover has been challenged for example in Minnesota. It was challenged the US the circuit court or the U S District Court came to a ruling a rendering that in fact state Rover were indeed legal.
However, you know there is a case in Texas.
That essentially the court essentially deemed that the rule for was not legal and that case has been sort of I guess I guess it is now in the hands of the Ah U S Federal Court.
With the department of Justice weighing in to render a decision. So Linda I would say it was all of that no doubt. There is certainly a lot of activity around you know Rovers ultimately, we fall under federal jurisdiction transmission, because it's Interstate commerce falls under federal.
Jurisdiction, so ultimately to the extent that these issues continue to be litigated. It ultimately will fall under the jurisdiction of federal carts and you know if it continues to be pursued I would imagine this will take years to work its way through the process ultimately given multiple parties worked will challenge.
<unk> and use their appeal rights uhm to whatever extent necessary.
I would just add one thing and that's not all Rovers are the same so each state has some different definitions there in the Texas one's a bit a bit different so the the challenge that may be seen in the Texas. One may not be you know obviously applicable to ones that are designed differently than the other states.
That's that's helpful contacts like it's just hot level.
Now just moving on as a follow up in terms of central Hudson offshore wind transmission Transco potential project you know how how do you think about any sort of incremental construction and operating risks associated with offshore transmission.
How might that translate into either financing or return expectations and is this a potential new avenue for growth with the potential for additional similar investments over time.
Yeah, a linda <unk>, it's it's transmission for off shore wind facilities, but our portion is the onshore portion so it's nothing different than the transmission risk.
File that we see in any type of project that we do and of course being that part owner of New York, Transco, where you expect them to be bidding and on other projects on a going forward basis, and seeing some potential pick up from those as well.
Thank you.
Yep.
Your next question will come from Mark Jarvie, Let's see I P. C capital markets. Please go ahead.
Yeah, Thanks to one of your own.
No transfer can you remind us again, what is the <unk> for that.
<unk>.
Turned that right over to Chris component <unk> from Central Hudson sure. Good morning, <unk>, 53% empty <unk> 9.65.
Got it.
And then just with the for order 2023, just just your thoughts in terms of what that means is that impact at all in terms of how Michael goes for too long range planning on decision, making and in that process.
Go ahead, Linda great. Thanks, I <unk> I think you said 2023, the generator interconnection ruling exactly what you were <unk> yesterday, okay. Yeah. So clearly I mean, obviously our perspective is I think that is it was Ah well I expected anticipated decision in order I think is consistent.
With how we felt first would rule on it.
As you likely know it essentially allows you know generation developers sorta first ready sort of first out they're Gonna study you know January to projects in clusters, and then obviously it imposes timelines for transmission owners to study.
The interconnection request. So I think all of that told I think as we step back from it and we'll say we're still digesting the order who was 1400 pages and so our teams are are busy obviously digesting the order, but I would say <unk> I sort of a broad perspective, I think we viewed as very atkins destructive and positive.
In terms of it will no doubt allow more generators to continue to move through the queue more quickly and bring those generators. You know obviously online quicker faster sooner. So certainly I think from a broad perspective that will likely you know drive more <unk>.
Generator interconnection request.
Because more generators will have the ability to connect so we view it as a constructive and positive and certainly I think it was in line with our expectations.
<unk>, just a little additional color on.
What this does big picture wise transmission from a transmission perspective, as well again another positive piece of the puzzle at the <unk>.
Does break the logjam from an interconnection perspective, so that we can you know hopefully get these as Linda mentioned get more projects connected more quickly but in the end what that's doing is pushing obviously the need for the transmission development downstream in order for us to deliver all that the interconnections and <unk>.
[noise] system upgrades and the things that are needed them to support the renewables in other generators that you'd like get connected there's gonna push towards more transmission development, which is obviously, what's going on in the body. So long range transmission plan, but you know that's that's followed on the heels of the siding and permitting reform that was part of the.
Fiscal responsibility act as well so all these pieces are starting to to fall or not none of it's perfect by any means yet you know and there's still always work to be done on cost allocation and things like that and you know the next step hopefully inciting and permitting reform that we that we can get in the U S related to you know some.
<unk> some of the bigger issues around the basically the level of legal reviews et cetera that are that are needed for some of those permits inciting but all the pieces are starting to fall in place and that's again another another positive from the transmission from.
Yeah, certainly encouraging uhm.
Just in terms of the trust you to write it myself just does this change it all timelines when you think about clarity there.
Mmm no no. That's still that's still you know the assumption is <unk> your 2024.
Okay, and then just coming back to T. P. Right case with the open meeting next week.
Should we assume that you'll have a decision at the end of that or is there any <unk>.
The decision just pushed or they don't review.
You're sitting right case decision next week.
Well, it's it's on the agenda [laughter] is scheduled it's it's hard to say you know whether or not you know you can there's never 100 per cent guarantee that the agenda goes through as as design, but we're obviously very hopeful and we'll be doing everything we can from our team's perspective getting it through the process there.
On next during next week open meeting so <unk> <unk> <unk>.
<unk>, we can't we can't give you we can't give you that level of certainty, but what are we sure are hopeful and and definitely a positive I'm getting that done it.
Sounds good okay excellent.
Thanks Martin.
Your next question will come from Bam Bam at Gmail. Please go ahead.
Alright, Thanks, good morning, Ma'am.
Question on your your Slash 24, Q2 sales trends and.
I'm looking at.
A sales numbers and it's it's interesting this is.
Canadian side of things with some pretty good grow.
On consumption and then.
Some other data points in the U S that with some smaller water conditions can you can.
Give me a call back on.
And it is quite a divergence difference does that.
Do you think it's more of a regional situation I Q2 or is there some sort of.
Customer consumption behavior changes that are you, saying.
Yeah, Let me, let me take a crack at that is rustling through while I'm, not really Russell and I'm I'm scanning through pages or on the <unk>.
IPad here to get to that page I would say that in general most of what we're seeing variability wise and and the U S was weather related I think that was really consistent across 12 across the entire U S or even though these are desperate jurisdictions in Arizona New York.
But that mild weather was pretty prevalent so there's there's no underlying read through too commercial industrial economic activities on those for sure and then on the on Fortisalberta. That's that's that actually probably is due to some more underline it's not really weather related but a little bit more under law.
Lying economic activity and growth that we're seeing in the commercial and industrial sectors and similarly, you know a b C is probably in that in that same and that Saint bucket. So I I would expect you know and this is just.
Just going out looking out into the future, particularly that the U S utilities I I've been one who who thinks that the the level of onshoring reshoring additional manufacturing that's going to be needed for the clean energy transition then that is really.
Pushed by the inflation reduction act and the way that the domestic content rules are in there I I really think that we're we're standing on a cusp of of good economic development strong economic development and some of our key areas, particularly like the Midwest and in my Soul in Michigan in particular here.
And Arizona. So we're looking forward to seeing some of that increased economic activity as we go forward.
Okay.
That's the contact center.
And my second question is.
When you look at.
Some of the North American utility activity with.
Moves towards.
Play names I guess, that's that's kind of what you've been doing the last few years shutting Juanita and then the storage business become <unk>. We saw pipeline company last week also look at.
Restructuring.
Can you may just come in high level, just just thoughts on really your observations there and.
Do you think that for tortoise is as well positioned now so I'm just.
Overall corporate structure.
Yeah, that's for sure, but I I I would say that when we were.
Even even before we did any of those transactions or at most a couple percent that was not right that was not regulated utility investments and now you know basically posed taken creek will be essentially you know rounding 100 per cent regulated. So there's that that's that that was some things that we were working on overtime and it and it was it was.
It was more opportunistic finding value, where we could at at the times that we could they can creaking specifically as as I mentioned on the last call. It's a it's a great opportunity because we found someone who can who can squeeze more value out of that as something we can and that's that ends up being being good for everyone, but yeah, I mean as as we sit here today and.
And as we hopefully wrap up Bacon Creek by the end of this year. That's that's about as about is about as pure play as you can possibly get.
Alright, so there's there's all clients on her and another thing is that like.
<unk>.
Happening that board conversations.
<unk> say that again <unk>.
You broke up a little bit under yeah, nursing that way if we seem as.
The.
Companies.
Getting smaller to get <unk>.
Like leather carving out.
Assets and Ah Hargrove company and you have a loan for a company that anything.
<unk> review and are looking at.
I mean as as part of any you know utilities fiduciary responsibility, we're always looking at our portfolio, but there's you know there there's you know.
You look for opportunities and opportunistic, but you know nothing nothing here on the horizon.
Okay. Okay. Thank you.
Your next question will come from Andrew Caskey at Credit Suisse. Please go ahead.
Thanks, Good morning in the quarter, you had milder weather in Arizona, and I guess for the last month or so it's been anything but mild in Arizona, maybe if you just give us some context on.
System's sale system reliability on any issues that are sort of perked up in the last little while given the heat wave.
Yeah, we can't give you any any numbers related to that other than I can give you.
A bit of an additive it's been really hot so that that that we can say with with certainty lot of a lot of heat in Arizona, particularly in Phoenix, but also down in our service territory around Tucson. So the the context that that I give you is is operationally and.
And so far we have been managing successfully without any operational issues to maintain the the generation that we need to serve that load and one of the things that's a bit different this time around and then it was in 2020, where probably every bit as hard as we were in 2020 and loads.
Probably at those kind of similar levels, but there isn't a coincident heat out in California. So is it from a regional perspective, there's a little bit more resources available and also there's been a lot of you know battery additions I'm in California, as well so it's a little bit more stable of a system that were that were riding through this this heat wave on.
Okay I appreciate that and then maybe just more broadly across the entire portfolio bills.
To cover a fair amount of geography.
Are you seeing any differences and inflationary pressures across the portfolio are there certain pockets that maybe have greater wage wage inflation in office of your cost of servicing virtually everywhere you operate but are there pockets of different inflationary pressures coming across the whole loss a portfolio.
No not really I mean, it's it's it's it's fairly consistent I mean, there there's higher cost of living areas like in in southern lower mainland in British Colombia that can lead to a little bit more wage inflation there.
But I I I I can't really call out any as I'm thinking around the horn and my head on the different utilities I I <unk>.
Can't really think of any of those that are standing out to me. So if they don't they're not standing out to me, but I don't need to stand out to you.
Okay I appreciate that thank you.
Mmm.
Ladies and gentlemen, once again, if you would like to ask a question. Please press star one now.
Your next question will come from Michael Sullivan at Wolf Research. Please go ahead.
Yeah wrong a morning.
And Michael.
It is just wanted to ask on on the <unk>.
Investor day or are there any.
New disclosures are you're kind of kicking around as potentially rolling out beyond the traditional capital plan dividend growth refresh any.
Incineration given to I'm trying to give a longer term earnings guidance.
So right now we're still putting together all the things that we're gonna cover on that Investor day. So.
<unk> well, we really can't cover anything new before then.
But we are looking forward to you know seeing seeing our analysts and investors in Saint Johns and and having a good conversation about how we see the company going forward, but really no no additional details of give her on that at this point.
Okay, and then in Arizona or are you still planning to file an updated I R. P.
This month and then if we assume that you don't get the the.
System benefit rider and a rate case, what is the process look like for pursuing something like that.
Beyond the <unk>.
Yeah. So we have pushed back the filing of the integrated resource plan in Arizona to November we needed. Some additional time, because we're running so many scenarios down there that we do need that additional time to bring the stakeholder process along with it because that's where a lot of these scenarios are coming from us.
Stakeholders asking to run a bunch of different scenarios and models. So we we we are aware that filing that until until November . So what was the second half of your question.
Oh, just as it relates to the O O Dot S. R beef yeah. So if you don't get with renewables, what's the plan.
Yeah, if if if we don't get that now and we have a couple more bites at the Apple we'll see how the open meeting goes next week and if we you still don't have any clarity on what the process might be in getting that going forward. You know hopefully we can get some sort of generic docket go in so that we can evaluate what.
Track It would look like what would be considered an inappropriate for from both our perspective and and the rest of the stakeholders go through a process and to find something which we've done many times on renewable portfolio standards of energy efficiency standards et cetera down there. So I'll go through a general process and then look to file something to him.
<unk> the next Ray K. So a couple more bites at the Apple most of our renewable energy investments or later in the five your plan. So we've got we've got time. So we're hopeful that we can still get something like that can be done over the next few years.
Alright, Thanks, a lot.
As there are no further questions at this time I would like to turn the call back <unk>.
Thank you Ms shall we have nothing further at this time. Thank you everyone for participating in our second quarter 20 twenty-three resolve conference call. Please contact Investor Relations should you need anything further thank you for your time and have a great day.
Ladies and gentlemen, this doesn't need conclude your conference call for this morning. Thank you again for participating and at this time. Please disconnect your lines.
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