Q2 2023 Avangrid Inc Earnings Call
Alright, you all <unk> Ortega, Vice President of Finance Investor Relations and Treasury. Please go ahead.
Thank you <unk> and good morning to everyone. Thank you for joining us today to discuss <unk> second quarter of 2023 earnings results.
<unk> on the call today are pedrosa, our chief Executive Officer partition your skill, our Chief Financial Officer also joining us today for the question and answer part of the call will be Katherine <unk>, President and Chief Executive Officer of <unk> networks, Vanquish Antonio Miranda, President and Chief Executive Officer of renewables.
Other members of the executive team are also joining us today on may be called upon to assist with the Q&A part of the call.
Now have a copy of our press release or presentation for today's call. They are available on our website at <unk> Dot com.
During today's call, we will make various forward looking statements within the meaning of the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
On current expectations and assumptions, which are subject to risks and uncertainties actual results could differ materially from nowhere forward looking statements. If any of our key assumptions are incorrect or because of other factors discussed in Avon grades Ernest news release in the comments men do at this conference calls in the risk factors section of the company and presentation.
Or in our latest report filings with the SEC each of which can be found on our website.
We do not undertake any duty to update any forward looking statements.
Today's presentation also includes references to non-GAAP financial measures used to refer to the information contained in the slides accompanying today's presentation for definition on information on a reconsolidation of non-GAAP financial measures to the closest GAAP financial measures I will now turn the call over two bedroom.
Thank you and good morning to all thank you for joining us today on our second quarter results presentation.
Start date on a slight number five.
Have a great reportage second quarter earnings per share of 20% and adjusted earnings per share of 21.
As we anticipated last year 2003 would have timing effects such as the implementation of key right Casey suspected later in the year. This.
This year, we have accomplished various important milestone in our core business to punish strategic initiatives in.
In networks Central manpower received a profile for a two year rate case effective July 1st on.
The new England clean energy connect transmission any CEC in this quarter, we received favorable rulings from Maine species court supporting the advancement of these projects.
We also have two new positive developments first the Massachusetts crowd. Some Senate huffing closes legislation supporting cost recovery for change of law the referendum.
Costs in Apache appeal and second we have an agreement to extend the commercial operations date for the change in low delay if needed.
We continue our discussions regarding price adjustments for the change of low cost today, we have provided with the regulator remain with a required notice that we will continue some critical fast construction activities.
Commonwealth Wind, Massachusetts Electric distribution companies are filed with the department of public utilities for the termination of the PBA contracts, which will pave the way for our bank reached participation in future offshore fortifications.
In addition, we are progressing on our way of being Darwin, one offshore project, which is on track to deliver horsepower easier.
Finally, our ESG efforts continue to be recognized by third parties. We have earned elevens sustainability and Governor's award or recognition in the first half of the year.
We have also made significant strides in our legal right case, we filed the joint proposal agreement with the public Service Commission with Neil rates are expected to go into effect in October with our May hold probation back who may 1st.
We're also aiming to repower over half of our existing fleet beginning this year 23rd details to benefit from opportunities created by the Iras.
And we continue to address with regulators on the electric distribution companies about a path forward for our publicity offshore wind project.
Finally, we remain committed to the piano merger, we extended Americare agreement to December 31.
This extension will enable us to work through the legal process in the coming months.
Based on our year to date of treatments appropriate on key issues. We are reaffirming our full year 2023, EPS of $190 to $2 $91 and adjusted EPS of 22223 $5.
And a slight chase six in Maine, we have successfully completed the first multi year rate case settlement in 15 years.
We received approval from the main public utility commission or our CMT rate case, which is centered around all of our $380 million of investments to improve safety reliability and resiliency.
This will increase our rate base to $1.3 billion bite rate year too.
The plan also includes unauthorized <unk> of 935% and 50% equity with our ability to earn up to $10, 35% prior to sharing.
Negotiation provides make any systems that will reduce our <unk> culture, such as the ability to chart presentation cost to as Tom reserves from protection against hyper inflation.
Ultimately these rate case with balance customer.
Affordability with needed investments one is strengthening our create matrix.
In addition to our success rate case, we have also achieved another notable accomplishments in Maine.
On the regulatory front, we received approval for our compliance filings generating $80 million of additional cash for the second part of the year.
These filings enabled us to recover pass through items like generation expenses on a timely.
Macy's.
[noise] in customer service, we have met or exceeded our service quality indicators for over three years.
In operations, we have conducted over 9000, distributional 90 infections and.
Most of our 5000 aging pulse.
Finally, we also closed the 2020 CMP management August resulting in elections from the commission.
And the next slide regarding regarding our any C. C project. We are very pleased that the jury in the main business and consumer court on unemployment determined that any C. C can normally resume construction.
Nor appeals on the rolling.
In Maine.
The main department of environmental protection lifted it's fairly suspension cleared the way for Proia construction.
We are having ongoing discussions on cost adjustments and have reached an agreement with the counter parties to extend the CRT timeline under the contracts if necessary.
In addition, we will be working on critical path activities in the low wish those of the station.
August 3rd.
The transmission project cost an aspect of talk of doubters capital expenditure oppression of $1.5 billion with $638 million already capitalized.
Once complete any CEC.
Will benefit all of new England by with.
You've seen the regionals dependence on fossil fuels from providing more stable energy prices.
Recently, the Massachusetts House of Representatives and the Senate included favorable legislation in the budget Bill to provide the department of public utilities, the flexibility to approve a mandate transmission services agreements, which will support the recovery of cost increases.
And a slight number eight we are proud of their partnership we have built with Massachusetts, and we leave the ultra with industry in the United States.
We remain committed to constructing our offshore wind pipeline unhealthy new England meet their ambitious 2030 climate target for a better brighter clean energy future.
Wind.
The electric distribution companies have filed termination documents with the Massachusetts Department of public utilities.
Was approved we applied to repeat in future solicitations.
The termination agreement limits, our financial impact solely to the private security deposits.
Outcome is significantly better than our peers will update up to $350 million to terminate the respective offshore wind project contracts.
Construction is progressing well on being Darwin one day.
806 male up project is on track for set power in 2023 and commercial operation in 2024.
<unk> online destroy it would generate clean renewable affordable energy poured over 400000 homes.
Businesses across Massachusetts, while reducing carbon emissions by over 1.6 million tons per year.
We have achieved many construction milestone this summer on began with one including.
G citation of the onshore.
The station and burst of of Massachusetts.
Construction has also started on the operation on maintaining facilities in muscle pain.
Offshore we.
We have installed <unk>.
Six model files and transitional species and.
And shown on this slide is one of the six completed turbine foundations.
We have also completed the installation of the offshore substation and export cable, which connects the onshore and offshore facilities.
In the next slide in June we filed the joint proposal agreement for the new year right case with the public Service Commission, which has been signed by eight parties.
The <unk> will be completed on other sport. So that it is ready for the Commission to act.
Last week Deponent joint proposal was approved almost a smile.
Our proposal agreement request six $4 billion in capital expenditures over 2000, 2000 to 2000, 2000 seats, including $634 million for New York's climate leadership and community protection <unk> phase one.
The new rates are expected to go into effect in October of 2023, with our May hold probation back to may 1st 2023.
The agreement includes unauthorized early of 9.2% from 48% and 50 50, earning sharing above 50 basis points and contains a probation for fix that great reconciliation.
The rate case, <unk>, an additional $1.45 billion of authorized revenues.
The three year right settlement also include some regulatory asset language and collectibles, providing reach mitigation against customer <unk>.
There are also provisions pouring protest on recovery funding for vegetation management.
Additionally, we've taken significant steps in customer service performance in New York with a positive trend over the last several months.
Furthermore, we received approval to build transmission projects through CLS GPA phase, two and New York Transco, bringing the total transmission opportunities in the state the June 2025 to over $3 billion for these projects.
Finally, our teams have worked to improve system reliability by enhancing vegetation management targeting infrastructure replacements for aging assets are modernizing the greed.
As a result of this work we are seeing a 12% improvement in 96, and 16% improvement in our journey in system average interruption duration or city year over year as compared to 2022.
And a slight number 10.
The Inferential reduction act has created an attractive environment for clean energy projects by extending crust Greg tax credits.
Due to the IRL, we are pursuing opportunities between 2023, and 2030 tube to improve the earnings profile of our renewable business by recovering over half of our fleet with about four six <unk> identified as of today.
Repowering is a great opportunity for our renewable business first for technical reasons. The sweetest part of Repowering is winter buys are between 13 and 20 years old on over half of our existing fleet itching. These range.
Second the technology has improved significantly with new turbines, producing 30% more energy than the agent turbines.
Finally, the permitting process for recovering these simpler and faster while the profitability is expected to be the same as newbuilds.
Thus, we are beginning the repowering processes year by working to secure the supply chain and commencing development activities. We will begin by assessing our 80 marwat leaning Juniper wind project.
Repowering.
These assets enable us to receive additional pdc's on existing assets under incremental production for 10 years.
Extending our assets are useful life will help us avoid the diminished returns and performance of the agent fleet.
We will provide additional details on these plans in the upcoming funds in the coming months.
The slide number 11 in Connecticut, we filed the right case with a public utility regulatory authority in September 2022.
The rough draft decision was received on July 21, and we are preparing our response.
We expect a final decision by August or September with new rates in effect by September or October .
In addition, as part of our earlier agreement with the Connecticut Office of Consumer Council, which was approved by the public utility regulatory authority, we will be fighting right cases for Connecticut natural gas of solving Canadia gas. This November .
SV seven of Senate Bill to reform utility deregulation passed in the legislature and was signed by the Governor.
It was a political response to increased.
Increases that customer salt in their electric bills, our team worked hard with estate regulators and the outcome was much better than the original draft of the Bill.
Finally for Park city, when we continue working to address the economic viability of the power purchase agreement with regulators and the electric distribution companies with the goal of finding a popover.
Moving onto PNM, we continue working toward closing the merger with PNM resources.
We are committed to the merger and the benefits it will bring for the state of New Mexico.
This merger agreement has been extended to December 31, as we work through the legal process that is also an option to extend.
Eight for an additional three months if a great.
The merger has received approval from five federal agencies, and the public Utilities Commission of Texas.
The parties and the merger case will present arguments in front of the New Mexico Supreme Court in September .
And a slight 12 I am honored to Mark My one year anniversary of bankruptcy up over the past year I. Appreciate your support of the chairman of the board and all my team in in these tasks that we have ahead of us.
We have navigated through unprecedented macroeconomic and supply chain challenges as you have seen we have made significant progress in most of our priorities and also achieve some additional important accomplishments for example in Connecticut. After eight months of discovery. Our company has received an overall positive audited report and finalize that management.
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With no material negative findings will also make a substantial and stripes and customer Digitalisation, which will help us drive further improvements in our customer service matrix.
Efforts from our customer experience team have resulted in older 1.2 million customers enrolled any bill 10% increase year to year, plus over 1 million mobile application downloads at 54% increase.
In addition, we almost multiplied by four times the number of customers with outage alerts from 430000 to over 1.6 million customers.
We continued to prioritize customer service by automating net energy billing and they move in process and we launched a new electric vehicle portal on self service payment tool.
These tools and technology will have increased customer satisfaction reduced cost to customers unimproved cash flow.
In renewables, we reached $8 60 watts of Winos, our capacity signed 321 megawatts of new power purchase agreement and renegotiated <unk>.
We've achieved operation of success by reaching 90, 397.3% fleet wide availability in 2022 on are currently maintaining energy availability.
At 2097%.
Preparing for being there when one operation with integrated the project into the National control Center for remote operation.
We have also joined the California independent system operators Western energy imbalance market at the first generation only entity, enabling <unk> to optimize realtime trading in the energy balancing market and reduced for 10 minutes.
In addition, we have also signed a memorandum of understanding to explore opportunities to develop up to one G. A water green energy projects within the Navajo nation in New Mexico and Arizona.
Luckily for accomplishment across the rest of the company we have executed at transfer ability term sheet for 100 million tax credits for multiple projects that are not in tax equity.
In addition, we signed the tax equity term sheet or Bender with 140 funded the tax equity for landfill solar.
We also issued $575 million of loans and debt in networks and $800 million of a 10 year Green loan we keep it Dora.
Early this year H also operated in Greece outlook to stable, improving our ability to access the capital markets.
Thanks to these achievements and install it operational and Ernie strike during times I'm confident that we are on firm footing to deliver future growth.
Turning noticed like 13 in the first half of 23.
<unk> has earned awards and recognitions is finding various aspects of susceptibility and governance.
When our Q1 earned his call I discuss having reached inclusion in just 100, least Bloomberg gender equality index and into spheres wells most ethical companies for the fifth consecutive year will.
We received another eight prestigious awards and 23.
S&P Global 23 interest and ability yearbook named Alvin greed is one of the world's most sustainable company.
<unk> one of the only to use electric utilities to be recognized.
U S. Today recognized and greed is one of the nation's climate leaders.
The Edison Electric Institute recognize up in grades four exceptionally stoneridge duration performance. Following winters is Tom Eliot in December 2022, as well for mutual aid provided that Nova Scotia following Hulick Fiona.
This recognition serves as a testament to our continued commitment to customer reliability.
This is a six consecutive year that are ingredients included in the Footsie for good index serious.
We received top discourse in climate and governance, which includes assessments of risk management corporate governance and anti corruption.
As part of our sustainability commitments are central to our company strategy. So we are incredibly proud that our claim climate leadership is being recognized by third party.
Each of these awards and recognitions highlight of our commitment to building a clean energy future, while maintaining socially responsible business practices.
Now I will turn the call over to Patricia are CFO to provide more detail on our financial results.
Thank you page out good morning, everyone.
For the second quarter of 2023, or 22% compared to 48 in the second quarter of 2022 and are adjusted EPS with 46% compared to 21 and the second quarter of 2022.
Networks adults by 20 cents lower by 14% quarter over quarter compared to our second quarter of 2022.
He drivers included a positive for sensitivity due to the implementation of the third year of the existing rate plans for a New York Company.
Does not include the proposed new rates, an argument from <unk>, which we expect to go into effect in October with I may call back to nature.
While they were supported by joint utility of <unk> in New York and 22 in 2023 to reduce impact some uncollectible the positive impact in 2022 within the second Claire and in 2023, it within the first Clare, which explains the minus three cent impacted quarter related to the camera.
Continue to experience and collectibles, which had a negative impact quarter over quarter.
Additionally, we experienced higher cost to implement our investment plans and upgrade the businesses, including O&M depreciation and interest.
O&M includes new head count and cost of the business higher depreciation represents new asset placement service and higher finance cash reflects higher interest rates in short term debt down.
We anticipate improvement later in the year with the implementation of a rate cases.
That will update the cost of a good day.
Our renewable segment was 18 cents lower by a penny quarter over quarter.
Wind and solar operating performance, which includes the impact the pricing production and tax benefits explained minus 1%.
<unk> and with related to lower wind generation output and a decrease in redfin prices, especially mitigated by tax credits any new projects in service.
While we had strong wind components in the first quarter or wind reflects as low this clutter, our net capacity factor for our fleet with 28.6% to declare versus a long term average of 33.4% for the second quarter periods from 2011 to 2022.
Lower earning some external operations in asset management at <unk> reflected the plans maintenance of our plan.
<unk> concluded and neater lie.
<unk> 504 cents higher capitalized convenient.
Total cost reflects a decrease of 11 cent quarter over quarter, primarily due to tax timing of the balance to our annual expected tax rate and higher interest.
Moving to the next slide.
We are refining we are reaffirming our 2023 outlook ranges for EPS of $1.90 $2.10.
Just that EPS of $2 and $26.35.
Okay ongoing focus remains on achieving these targets as we execute our investment plans with discipline and a risk management okay.
We also provide our expectations for the remainder of 2023.
It includes the implementation of our New York K proposal with the May call back to neighbors previously mentioned in the remaining months in our fight main final date order.
And combined with the rain cause it 28 to 32 cents.
The rate cases capture the cost of the business and investment.
Safety reliability and resiliency.
While we recently received the proposed final decision in our Eli rate case, we're still evaluating that decision will be filing written exceptions, and providing wild arguments I believe our testimony briefs and the many inter additory that we filed fully support our rate filings. Therefore, the address does not reflect any adjustments related to the staff decision.
Additionally, we also anticipating the start of construction of our any CEC project with a range of six to seven cents per share reflecting AFDC earnings.
Operating performance of our networks and renewable businesses in the second half of the year and arrange a 72 cents to 78 cents.
And craft management initiatives at 4% to 6%.
History has to expected results prior to that Ah renewables transactions in the range of Ida $1.95 to $2 an acre.
Adding the renewables transactions as we have previously disclosed which include the partial sales or can you. Please area in partnership transactions at a range of 2428 cents and with that we reach at 2023 outlets of $2.20 to $2.35.
Note that the delay in the closing of the American with PNM has a minus to resent impact on the air considering the net impact of PNM operations in the interest rate on the cost of attending alright.
Funding to close the transaction.
As our guidance systems <unk> contribution from PNM of 2023, and $4.5 billion of debt at the parent level support and Roger transaction made yet.
The amount is included in the second half business operations by and attract.
Additionally, the opportunities and risks impacting excellent 23 results include renewable production and pricing other regulatory adjustments in final weight case outcomes thermal an asset management results taxes interest O&M collectibles and asset location.
Finally today, we are also re affirming a 67% compound annual growth rate and are adjusted EPS of 2025 offer based that is the midpoint of 2022 guidance.
And the next slide and you move on to update our financing liquidity dividends and credit rating.
In July we signed a 10 year Green term loan with EBIT Lola for $800 million at a rate of $5 45%.
This highlights the unique benefit over a relationship with Ebola, which provides us with flexible cast excessive cost effective access to capital.
Similarly, we increased our intercompany credit facility with EBITDA less than $500 million to $750 million.
Have anything outstanding under their facility, but the higher amount enhances our available liquidity.
We also recently re marketed a nice segue tax exempt bond for $100 million at an attractive rate of 4% true maturity of that behind in 2000 22034.
For renewables, we recently executed attempt to monetize are $100 million over $100 million of tax credits from existing assets not in tax equity benefiting from the transparent ability provisions enabled by the I R. A.
For the first half of the year, we have $7.4 billion in liquidity covering 16 months as a target to maintain at least 15 months of liquidity.
Includes $4 $3 billion from the commitment letter from Ebola that back stab San P. N M merchant.
Maintaining our solid credit ratings is a key objective.
At the <unk> grade level all of our ratings are unstable outlook.
Finally, our dividend policy remains unchanged targeting a payout of 65% to 75% and our board recently declared a quarterly dividend of 44 cents a share payable in October 2nd.
In summary, we continue to focus on executing our long term financial plan.
Timing impact for the recognition of the results of rate cases.
Mission construction and renewable asset monetization that we expect to materialize in the second half of the year and.
As you can see we've had successes in many important milestones that will support the achievement of our financial goals.
Thank you for joining us today for our financial update I'll know hand to call back to our operator, Dennis quick question, followed by closing remarks can pick up.
At this time I would like to remind everyone in order to ask a question simply press Star then the number one the audio telephone keypad will pause for a moment to compile vacuity roster.
And your first questions from the line of Richard Sunderland with J P. Morgan. Please go ahead.
Hi, Good morning can you hear me.
Yes.
Great. Thank you for the time today.
Muriel I'll pick it up where you left off on the waterfall for the second half of the year.
72 to 70 cents were for two weeks business operations.
Did around 70 cents last year for two H could you walk through some of the drivers year over year within that <expletive> you just quantifying the positives and the negatives presumably there are some.
Renewables megawatts entering service, but like with some other offsets as well so.
Quantify a few of those pieces.
Yes, certainly.
I think just overall the second half business operations is just a normal operations of the business. So we called out some specific items like right case implementations that are new this year any C. C. But this is this reflects just the normal collection of revenues in our networks business the normal production and.
<unk> and Ah renewables business in the overall cost of the business depreciation interest et cetera. So some of it some of the impacts may be year over year, they're looking if you're comparing to.
The last second half of 2022 would.
Would be some efforts that we have made to improve the capitalization of labor and maintenance.
I'm also a normal wind production, we have incremental new assets in service, we actually added 405 megawatts since the second half of last year for our lunch <unk> assets and we have 899 megawatts in construction.
And those new assets, we have incremental PCC.
<unk> are also inflation adjusted and then we also have a ton of thermal results now that are.
Alright thermal plant climate planets back in operation that Miss July so those are kind of the the.
Domain incremental benefits and then we have the normal costs of the business as I mentioned depreciation.
<unk> cost factor.
That kid in there.
Okay got it got a very helpful and sticking with the work here and you mentioned that the July draft decision is not factored in.
At a high level here, if you if the <unk>.
Draft decision holds or or substantially close to draft decision would you look to find other offsets within the plan to stick with the two 2000 and 235 range weather on the cost management side, the renewables transactions or elsewhere.
Let me, let me react to that I think is.
One year ago, when we have probably 10 things on the table.
Probably all of them <unk> to deal with I think we told you we need to work, okay and try to get.
Get these things done I think in the case of Connecticut. There is Central Association right now <unk>, Okay, we're going to be fighting pre fees in our hearings working on that and I think let's not forget in Connecticut.
A very small part of our business. So if you compare you know were invested in Connecticut $150 million, a year more or less.
Topics I think that compares with 2 billion right now in New York <unk> been more so it is a small part of the business as a whole, but it's important we care about you know 1 million as we can about 1 billion. Let us work on that you know give US you know one or two lumps studies, we know with a pending and then we'll come back to you of course, you know, we're always focused if something goes down to five.
Ways of getting better efficiencies on top of of US you know 24 hours a day the whole year, but on Connecticut, I think we prefer not to comment right now at work.
Not criticizing anybody making you know.
Public statements, we need to work, Okay and go to their work with the different parties you know make sure. We put our case strongly and then you know most of them will come back to you.
Very clear Pedro Thank you for your time today.
Thank you.
Your next questions from the line of Julian <unk> Smith from Bank of America. Please go ahead, [laughter] Hey, good morning, and thank you guys very much of the time you guys well.
Maybe it's just taking a different tack on things can we talk a little bit about the wind and maybe wind repowering opportunities, obviously with with prices coming off here you guys have perhaps a unique opportunity here to step in.
And pursue that versus many of your peers, how do you think about the timing size.
And sort of cadence of those investment opportunities here <unk> materializing posed to Iraq.
We intend to do a very detailed presentation in the months ahead of us, but we won't need not to delay 2% into a.
<unk> in a big picture of what we're going to be doing it in as we mentioned in the presentation Irna allows right now for an additional ptc's for 10 years.
Those of US that is very few of us that we have in our thoughts of marijuana already in operation more than 13, 15 17, almost 20 years. We are the perfect candidates to take care of these I think we've been working now for months on a very detailed aswell bye asset reviewing which once you know we could do and I'm very comfortable between now and the end of the decade, we are at least.
Going to go ahead with this amount of marijuana I think this is something important and as you know the way in which the profile of the earnings works for you S. Renewable assets, you'll get Btc's are telling US 80, depreciations. So the last part of the life of the actually direction you know.
Negative results by doing these repowering, we turn that around I think from a cash flow point of view is going to be very positive is going to be a business finance and also when you look at you know 20 32035 numbers. These business you know through the Ptc's allows you know for us on financing of that so I think this is a very positive piece of news I think the <unk> Latino we're going to.
Be doing that you like new investments in renewable non stop you know for the next eight years in a very simple minor.
Don't you if you want a compliment Jonathan Thank you pivotal in good morning, Julia Yes, you are totally right I assume that you point it out we have a fleet at the lowest like no others to profit from DRA guidance on the Repowering, because remember that we have 30% of Hollywood SFC merchant, So it's a great opportunity to.
Re engage with new Bdcs. Another 10 years for the whole production plus also we see structure, we know speakers, telling us that they would be agreeable to sign ppas for reveille. So all in all I assume that this good opportunities slower is totally.
Yeah, I I agree I'm curious to see what what and how it happens uhm if I can come back to another side of the equation here I mean, just given the delays and PNM does it have to be the <unk>. The next big update on your longterm outlook has to be after closer could we be seeing that sooner than later here as you think about 24 beyond Guy who just wanted to.
Clarify when do you think you'll come back with a more refreshed you does it need to be posted that deal.
Quick clarification on that.
Yes.
Now PNM we have.
The next step is there.
Iranian and the Supreme Court in September 12th So after that we will wait for a decision. So I think the answer bronies, you're right I think we have to wait until we have that because that's a very material part of the business going forward, but in that context, I think is very interesting.
We said before that we're going to be working on it to Europe to your plan that we announced last year. We made clear 23 was the most difficult year for several reasons first because we had a lot of things on the table and you've seen genuine in page five I'm very pleased with awards. The team has done we.
<unk> basically pulled out of the table things that hot either billions of risk hundreds of millions of impact. So very pleased on our menu brownstones not in the main rate case, I don't think a year ago anybody would think of having a 20 year actual cash right increasing two years I think you know we were expecting.
People were expecting at the negative helpful to cetera. So many things have happened when you look at PNM compare that with the 6 billion capital expenditure in New York You know that's almost PNM you think about the additional 3 billion now we are referring to you know to to.
4600 megawatts. So I think we're working on fixing the things that we need to fix in the short term, but as you can see we are laying out a strong foundation for only for the next 10 years ahead of US. So that's why I think we're working in the long term as well because those things need to happen right now.
Awesome and just a quick clarification on timing too it seems like the next opportunity here is around the climate vast been some proposals and New York can you talk a little bit about your expectations on timing, there, especially with the J T still pending and then again given the sort of as a protracted process for you here, what's the timing expectation for that J P approval too so just.
Really kind of getting at process here on the climate and the J P in parallel.
Yep.
On the on the on the right case in New York.
Police Caterino compliment Uhm I think for me is very simple we've been working very well with the parties with a public Commission I think you saw hall in a very short period of time, we reached a settlement with multiparty uproar support I'm very pleased with the work we've been doing with this stuff on the policy Commission with what with the <unk>.
With you know some of the key consumers Keith parties also involved and I think the case will be done in in August and after that you know, we just look forward to a rapid.
<unk> I would not like to guarantee is going to be the one most on another one but I think we've been working very well right now on making good progress in order for US we have a new York. So I'm very pleased on that suffering if you want to assure page or I'll just add some commentary on the CLS CPA, both phase one and phase queue. So if you look at those investments.
It's almost $3 billion worth of transmission investments that will be making between now and 2030. So 2030 is the date by which will have those.
Those projects complete per the legislation in New York and we're already starting to work on preliminary engineering and there's ever $684 million that are included in the GPA and we've worked hard with the settling parties to work on how much of the phase one.
Investments would be included in this rate case and as I said, we're already starting our preliminary engineering on those projects on the stage two projects. Those of course are not subject to rate case approval.
Those have already been approved through the phase two proceedings and will we've already provided our first update to the commission on the phase two projects.
And again, we're already starting our preliminary engineering on those projects and they are anticipated to be complete.
By 2030.
Excellent. Thank you guys I appreciate it and good luck.
Thank you.
Once again, if you would like to ask a question simply press Star then the number one on your telephone keypad.
Your next question is from the line of Michael Sullivan with Wolf Research. Please go ahead.
Hey, good morning.
Can you hear me.
Okay, Great I just wanted to go back to the.
With and without PNM scenario again, so I think I think you all talked about it being like a three cent swing factor this year netted against the dead, but can.
And you may be just explain how we think about that.
Next year, when when you talked about the the $1.9 billion of equity out there and.
And how that gets you to the same place I guess I'm just struggling with if.
If you do close the deal.
And you do the equity.
How that ends up being better.
Versus not during the deal and you are in the same place.
It seems this year and then you don't have to do the equity.
More on the capital increase from then you can insert more on the actual numbers there I think.
Remember, we put our plan for two years and the capital increase for next year, we will subject to two different things. The first one is whether PNM closest are not equal.
<unk>.
These different that it does no clothes and the second one of your whole social hour asset location I think we continue to work on the rotation showed that's why in the update that we gave in the upcoming months you know for next year, we hope to have a final decision of data sets location and then once we know of his PNM closest or not I think we will be able to boot.
Everything together.
That's I think the two things that will continue to drive that decision <unk>, Yeah, I think that covers it I think.
<unk> was that that that at 1.9 billion in 2024 was not related to PNM. It was really.
And the rest of the business day that the funding for PNM like the prior capital equity issuance and then the deaths of too close the transaction.
We just need to understand what the timing is held in terms of it putting that all together I mean, that's the additional equity, let's just to maintain our credit metrics over time and makes you laugh targeted levels and maintain our investment grade. So the timing may impact the timing of how we do this that and the equity with the pieces are just need.
For the same purposes.
Okay. Okay. Thanks.
On the on the asset rotation in the renewables I guess.
Why why now on that I mean, obviously things seem pretty.
Pre pressured and y'all sure business right now if we just look at what what Some'll peers are announcing and looking to do on the sail from.
Why why do it now if you don't have to and why why not wait.
Tell me Everything's Reba.
Rebound a little <unk>.
Try and capture more more.
More value.
They probably will go down Sir based on the 25 years I've been to a dollar group I think we have done more than 100 deals in that period, we will never sale. If the price. He has no right. We will never do that transaction. If we cannot explain he said look you know an attractive valuation for us we will never do anything like that okay. So feel comfortable that.
Unless we have you know.
Right proposition on the table.
We will now go ahead. So that's what we have done always you know transactions. We continue to do this at the group level in the same way.
I continued to think that the market in general may be the way you were commenting but I can tell you good assets and good platform and good proposals always find you know the right by you're at the right price and I. Even you may know, how soon and people competing but I think you'll have you know some people as we are the case when we wound up things very keen on <unk>.
And it is so I think the market that you have right now probably affects 90 per cent of transaction is going on but you still have you know the good deals that good platforms that is our once in the time available. So people are ready to pull at the right price on those meals as well.
Okay and on the specifically on the onshore peace is it still more so you're looking at individual assets or you're looking at.
You know a larger.
Portion of the portfolio and portfolio of itself or does it kind of all options on the table in terms of advil.
Yep all the options continue to be on the table. You know we have been receiving no first for a specific assets I think we have you know interest in a stake in the business and the partnership I think versus looking into what is the best option from a structural point of view from a valid point of view. So we don't rule out any option.
Okay, great. Thank you very much.
At this time there are no further questions I will now turn the call over to Pedro a zebra for closing remarks.
Okay. So thank you again for joining us for the second quarter earnings call. You'll get ahead. Our team is focused on execution growth and value creation in order to deliver our 2023 items on the years to come as such ongoing priorities include the resolution of our New York and Connecticut right case.
<unk> balancing cash flow earnings and customer affordability, and we will focus on achieving allowed.
And the different jurisdictions. Our priorities also include continuing to work towards the construction of <unk>.
And the completion of our PNM merger and renewables, we plan to execute on our Repowering plan, while continuing to bring new profitable projects.
With regards to our offshore projects, we will begin export empower from being there. When one later this year on top of that we are working with Connecticut stakeholders to find the path towards Park City wind and also we are concentrated on terminating the Commonwealth win contracts fancy learning opportunities in the RFP coming ahead of us.
Additionally, we will remain focus on our commitment to financial sustainability prioritizing the maintainer of solid credit ratings on the strong liquidity cash flow is key for us and we will continue developing and promoting talent on diversity, which will be drive employee engagement of course organization.
We believe that even greed has reception exceptional growth prospects our business makes with a core regulated networks means on expanding renewable energy investment represent an attractive opportunity at the forefront of the energy transition.
By <unk> additional long term growth opportunities like the Irag Neurocoele CPA, we're confident up angry will continue to drive value for our customers community communities and shareholders.
We look forward to sharing our progress with you over the coming months and appreciate your continued support. Thank you for joining us in today's call. If you have any other questions. Please follow up with our daughter on the team have a great day.
This does include 102nd quarter of 2023 earnings Conference call. Thank you for participating you may now disconnect.
Our team have a great day.
This does include 102nd quarter of 2023 years.