Q3 2023 Eversource Energy Earnings Call
<unk> you can press star followed by one on your telephone keypad.
Like to remove your question you May press star followed by two.
I'll now hand, it over to your host.
Alright, so for Investor Relations. Please go ahead.
And thank you for joining us I'm, Bob Becker of resource energies director for Investor Relations. During this call we'll be referencing slides, we posted on our website and as you can see on slide one some of the statements made during this investor call may be forward. Looking these statements are based on management's current expectations and are subject to risks and uncertain.
<unk>, which may cause the actual results to differ materially from forecasts and projections, we undertake no obligation to update or revise any of these statements additional information about the various factors that may cause actual results to differ and our explanation of non-GAAP measures and how they reconciled to GAAP results is contained within.
Our news release the slides, we posted this morning and in our most recent 10-K and 10-Q.
Peaking today will be Joe Nolan, our chairman, President and Chief Executive Officer, and John Moreira, Our executive Vice President and CFO.
Also joining us today is Jay Buth, our vice President and controller now I will turn the call over to Joe.
Thank you Bob and thank you everyone for joining us on this call. This morning, I look forward to our conversation today and to seeing many of you at the EI Conference next week.
First let me start with the topic that I'm sure is top of mind to all of you, which is an update on the sale of our offshore wind investment.
We are very pleased to have closed the sale of our 50% stake.
And the uncommitted lease area dwarfs that in September along with our South Fork wind tax equity investment.
We are delighted to have these transactions behind us.
As for the sale of our interest.
And the three projects, which are under development, we have substantially completed our contract negotiations with a buyer and continue to make good progress on this front.
What remains to be completed is for the buyer in or stead to finalize several documents.
Such as the new joint venture agreement, we expect this process to wrap up shortly allowing us to execute our sales agreement with the buyer and announced the terms of the seal.
As you see on slide number three I am very happy to report that our fourth wind project is expected to fully go into service in early 2024.
The onshore construction is complete and connected to our export cable.
Offshore construction is significantly advanced with the offshore substation and a rate cables installed and connected.
Currently the.
The turbine installation is underway and we expect to have seven to nine turbines operationally complete by the end of this year with the remaining turbines installed in January This project will spearhead the U S offshore wind industry and will be one of the country's first utility scale offshore.
Wind farms built by Connecticut labor from various unions.
On October 31, our joint venture announced.
That we have taken our final investment decision RFID on Revolution wind.
This is an important project milestone that allows it to advance to full onshore and offshore construction and installation and have this project in service in late 2025.
I'd like to now address the recent events in New York, which I know has been a source of great interest for many of you on.
On October 12.
Public Service Commission denied petitions for pricing adjustments from several renewable developers, including the petition for us Sunrise wind project.
The petition sought to address the extraordinary macroeconomic challenges from higher inflation and interest rates.
Along with supply chain disruptions that develop.
Our <unk> agreement was executed in the fall of 2019. These.
These factors were incorporated by the New York State Energy Research and development authority or a nice shirt in their recent offshore wind solicitation.
While we are disappointed with the New York PSC decision, especially given that <unk> had publicly advocated for pricing adjustments, we support their commitment to transparent competitive RFP process. We.
We are very encouraged to see that New York is working to establish an accelerated re bidding process, which includes the accelerated track, we're winning bids could be announced as early as next year.
Together with our JV partner or did we responded to <unk> request for information together, we will work towards developing a bid that will reflect the attractive nature of this project.
We feel confident that Sunrise wind will deliver clean and reliable energy to New York and support economic development in the region much earlier than many other projects.
We will continue to evaluate ways to maximize project economics and to ensure project schedules remain on track.
We have begun limited onshore construction for Sunrise wind and we have also identified solutions for our installation vessel.
Which many of you have been asking us about to maintain the project schedule for Sunrise wind and Revolution wind.
We expect both projects to be in service in late 2025.
We're excited by the recent actions.
<unk> taken by the six regional Governors, who asked the by the administration to clarify tax benefits for current U S offshore wind projects and provide relief on federal offshore wind lease costs as.
As well as encouraging and accelerated permitting process for offshore wind projects.
And in October, Connecticut, Governor Ned Lamont announced the first of its kind partnership between Connecticut, Massachusetts, and Rhode Island to seek offshore wind proposals that will expand the benefits for the region and help reduce costs all three states have issued rfps.
Two procure over 6000 megawatts with bids due in early 2024 <unk>.
<unk> will play a key role in providing the transmission and distribution infrastructure investment needed to connect these important resources to our grid.
Moving over to our core business as you know everything we do here at <unk> is done with a focus to continue to enhance our service for customers.
As shown at the top of slide four we continued to serve customers well.
<unk> top decile electric reliability performance at nearly two years between interruption in our gas emergency response are exceeding our internal target.
These high performance levels.
As a result of the investment we've made in our electric and gas systems over the past several years investments focused on ensuring our system is strong and resilient and ready to adapt to the needs of our customers for years to come.
Looking at our clean energy focus we continue to move forward on enabling clean energy in our region and we continue to make good progress in reaching our carbon neutrality goal by 2030 <unk>.
In Massachusetts, we are investing nearly $2 billion.
In our electric transmission and distribution system to advance clean energy resources.
Moving to the bottom of slide four our customers continue to be burdened by high energy prices, particularly during peak winter months.
While this winters supply prices will be high compared to summer rates. They are expected to be significantly lower than last winters.
Welcome relief for our customers.
To date, Connecticut is fully procured at prices significantly lower than last year, Massachusetts is at 50% New Hampshire is procured.
Through January.
If current market conditions continue the expectation is that the winter supply rates in all three states will be much lower than last year.
So prices across the region are lower than last winter, we recognize that our customers are feeling the pinch of high cost in many areas. That's why we're doing what we can today to help our customers lower their bills. This winter.
Along with our industry, leading energy efficiency programs. We're also launched a new outreach campaign in Connecticut.
To encourage customers to sign up with competitive suppliers to save money. We're also educating customers on new energy assistance auctions.
I'm happy to report that Connecticut residential customers have responded.
The share of residential customers receiving standard service from ever source has dropped from over 90% last winter to 70% heading into this winter.
To serve our customers and ensure they optimize their energy use we continue to build out our industry, leading energy efficiency programs and.
In fact, <unk> ranks number one as the best energy efficiency provider in the country. As you can see on the left side of the slide we invested over $600 million in these programs last year.
Voiding lifetime greenhouse gas emissions of nearly 3 million metric tons.
We will continue to build on this great Foundation moving forward.
By enabling energy efficiency encouraging customers to shop for supply and educating customers on energy assistance options.
We're doing what we can to lower customer bills today.
Longer term, we are working with our states to provide the infrastructure investment.
Investment necessary.
To access reliable renewable energy like offshore wind and solar generation.
Turning to slide five the shift to electric vehicles in zero carbon seating will add tremendous incremental electric demand to a grid as you can see here, new England electric demand growth is expected to more than double by 2050 and winter peak.
Demand is expected.
This is in Stark contrast to a relatively flat electric demand.
We have seen over the past decade.
Along with the rest of the utilities across the country. We are aggressively planning for the clean energy future here at <unk>.
On September one we filed our electric sector modernization plan our SMP.
This plan is a roadmap for our partnership with Massachusetts to enable the state's clean energy climate plan.
And details how we will continue to maintain safe and reliable service for our customers as we transition to a decarbonize future.
In addition to our base investments necessary to increase distributions system capacity, including the implementation of Ami and other technology platforms.
<unk> has proposed additional investment that goes beyond the nearly $2 billion of clean energy investment in Massachusetts through 2027.
This investment will go towards improving the resiliency of our system integrating additional solar generation and implementing new technology to enable additional <unk>.
Distributed energy resources.
Our proposed plan is expected to exceed Massachusetts, 2040 goals and achieve 70% of the state's 2050 greenhouse gas emission goals.
By requiring electric distribution companies to submit in a fully transparent manner via long term grid modernization plans, Massachusetts is taking a leadership role in enabling decarbonization.
Not just setting policies, but tying infrastructure clean energy and customer engagement together.
We're excited to engage with environmental Justice and consumer and business advocates to establish the right framework for all Massachusetts customers to advance toward the clean energy future. We will look forward to engaging with all stakeholders as we work towards a final decision from the GPU later next year.
<unk>.
Moving on to Connecticut, the regulatory environment remains challenging as evidenced by aquarium in the United Illuminating rate case decisions, which produce returns that are value destructive for investment but.
But we are encouraged by the recent actions by Governor Lamont supporting offshore wind investment in the region.
We see the government support is a realization that investment at a reasonable return is necessary to provide the clean energy future that our region and country.
Moving towards.
In closing I couldnt be prouder of the effort that the <unk> team puts in everyday.
Providing for our customers' needs.
We have the experience and the expertise to guide our customers as we develop a bold bright energy future for new England and the northeast.
You again for your time I will now turn the call over to John.
Thank you Joe and good morning, everyone. This morning, I will review our results for the third quarter of 2023 discuss the status of our offshore wind investment.
And review our cash flow position.
Let me start with slide six our GAAP and recurring earnings were both 97 per share in the third quarter of 2023, compared with GAAP and recurring earnings of one dollar per share and $1 one per share respectively for the third quarter of 2022.
GAAP results for 2022 include transition.
And transaction costs related to our resource gas company of Massachusetts of approximately $2 2 million.
As a reminder results for the third quarter of 2023 reflect a negative <unk> <unk> per share impact for and Star Electric's rate design change as shown on slide seven adjusted earnings for the third quarter of 2023 by this amount would.
And both GAAP and recurring earnings of $1 five per share.
As I have previously mentioned this rate design change does not impact full year results.
Moving back to slide six and looking at some additional details on the third quarter earnings by segment, starting with our electric transmission segment, which earned 46 cents per share in the third quarter of 2023 as compared with earnings of.
44, <unk> per share in the third quarter of 2022.
Improved results were driven by our continued investments in our transmission system.
Our third quarter 2023 electric distribution earnings were <unk> 50 per share.
With earnings of <unk> 65 per share in the third quarter of last year.
The earnings decrease is due primarily to the timing of the rate design change at <unk> electric that I mentioned earlier as well as higher storm related costs higher interest cost depreciation and property tax expense.
These factors were partially offset by higher distribution revenues.
And Starr electric and from capital trackers that we have in place.
Our natural gas distribution segment loss of <unk> 10 per share in the third quarter of 2023 as compared to a loss of <unk> <unk> per share in the third quarter of 2022.
The increased losses were due to higher regulatory and operating expenses depreciation and interest expense and were partially offset by higher revenues from <unk>.
The base rate increases at star gas and GMA, which took effect November one of 2022.
Our water distribution segment earned <unk> <unk> per share in the third quarter of 2023.
<unk> is the same level, we earned in the third quarter of last year.
Software and other companies recurring earnings were <unk> <unk> per share in the third quarter of 2023 as compared to a loss of <unk> <unk> per share in the third quarter of 2022.
The improved third quarter results, primarily reflect a lower effective tax rate that was partially offset by higher interest expense turning to slide eight based on our financial results to date and our strong cost discipline. We are narrowing our 2023 recurring earnings projection.
To between $4 30 to $4 43 per share compared with our previous range of $4 25 to.
To $4 43 per share.
Looking at our longer term earnings growth rate expectation as you saw in our news release and can see on slide eight.
Eight we are reaffirming our long term EPS growth rate solidly in the upper half of the 5% to 7% range.
We are also reaffirming our 'twenty, one 5 billion, our five year regulated capital program as shown on slide nine.
Current capital expenditures total approximately three two.
$2 billion in the first nine months of 2023.
Now to further expand on what Joe covered we reached.
An important milestone in our effort to exit our offshore wind business on September seven <unk> completed the sale of its 50% interest in the lease area that includes approximately 175000 developable acres to offset four 620.
$5 million in an all cash deal.
We also closed on our tax equity investment in.
In South Fork win with Austin, we used $528 million of the proceeds from the lease area sale for our tax equity investments.
As a current 50% equity partner in south for half of this tax equity investment or $264 million was returned to us in October.
We expect to recover that tax equity investment primarily in the form of tax credits.
Once the turbines are placed in service. These tax credits will be utilized to reduce ever sources federal income tax liability and quote and refunds from prior years expected over the next 12 to 18 months.
As Joe mentioned we.
We continue to make good progress on advancing the sale of our existing 50% interest in our three offshore wind projects.
On our second quarter earnings call I discussed one of our contingent considerations with the sale of the projects.
We expected a positive outcome from the sunrise win or repricing petition representing approximately $450 million in value to <unk>.
Although we were very disappointed by the New York Public service Commission's rejection of the price and petition we are encouraged by nine <unk> quick reaction and its request to run an accelerated RFP process as.
As I previously indicated advancing the sales transaction was not contingent on a resolution of sunrise's already repricing petition.
As we assess our options for an old rebid for Sunrise, we could potentially see a scenario whereby we move forward with the sale for South Fork and Revolution wind followed by a transaction for the sale of Sunrise with the buyer.
As we navigate through this accelerated RFP process. We will continue to look at every alternative to keep this sales process moving forward in an efficient and timely manner now I'd like to update you on our expectations for qualification for the two additional 10.
Sent investment tax credit adders under the inflation reduction act or IRI.
We had previously assumed a positive outcome regarding one additional 10% adder for Sunrise wind and Revolution wind that represented approximately $400 million in value to ever sauce.
Let me start with the energy communities.
We do believe there is a good path around the prospects for qualifying for the energy community provision of the IRI for both Sunrise and Revolution, which would increase our potential itc's, 240% of the eligible basis.
For these projects.
Therefore, the energy communities qualification would cover this contingent value that we have recognized also we will continue to explore opportunities to engage with the treasury department as they clarify.
The rules around the domestic content provisions of the IRI to qualify for an additional 10% investment tax credits.
As a reminder, the $400 million in value I. Just mentioned is based on achieving a single qualification outcome between either the energy communities or the domestic content Adams.
As assumed in our second quarter offshore wind impairment charge, we only assumed one additional 10% ITC adder as a contingent consideration.
Should the projects qualify for both the energy communities and a domestic content AD as it would result in upside to <unk>.
We will continue to monitor both the RFP process and the ability to qualify for one or more of the ITC adders and evaluate their impacts along with other potential impacts as part of our continual review of our impairment model.
As a part of this evaluation and important consideration will be the likelihood of success of any future bid award for Sunrise win from this accelerated RFP.
Turning to cash flows.
Let me say that maintaining strong credit ratings is very important to us. Therefore, we are disappointed with the recent credit rating action taken by Moody's as the timing was a bit unfortunate our short term ratings were not impacted by this action and therefore, we should not see.
See any impact on our commercial paper costs as it relates to future long term financing costs, we see potentially minimal impact.
We expect our cash flows will be enhanced and more specifically an improvement in our ratio of funds from operation relative to debt or <unk> of that although we expect that our 2023 <unk> that would be a bit weak primarily given the delay.
In closing the offshore wind sales transaction. However, moving forward, we expect our cash flow position to increase significantly.
There are several factors, we expect to contribute to enhancing our <unk> to debt ratio well beyond the new threshold of 13% of <unk> to debt by 2024 and beyond.
A key factor driving an improvement in cash flows or the proceeds from the sale of our offshore wind projects along with eliminating the project funding required.
You may recall that as of June 30th.
Of 2023, the carrying value of our offshore wind investment was $2 1 billion net of the 401 million pretax impairment charge and the proceeds from the sale of the lease area.
We have previously indicated that there are approximately $850 million of contingent considerations as part of the sale that is comprised of the $450 million pricing adjustment.
Or now and RFT rebid for Sunrise Oreck.
If successful with the RFP Award this cash flow would be received when the transaction closes. In addition, as I previously discussed a potential $400 million from the energy communities of a 10% ITC adder qualification would be received when the projects reach.
Carrying value of our offshore wind investment was $2 1 billion net of the 401 million pretax impairment charge and the proceeds from the sale of the lease area.
At which we expect in 2025.
Cash flows will be further enhanced.
From our core regulated businesses from electric and gas distribution rate adjustments, primarily in Massachusetts, and other cost recovery mechanisms. We anticipate additional deferred storm cost recovery of about $400 million to $500 million rolling into rates during 2012.
We have previously indicated that there are approximately $850 million of contingent considerations as part of the sale that is comprised of the $450 million pricing adjustment.
Or now and RFT rebid for Sunrise <unk>.
For that will be recovered over a five year period also of note, we will fully monetize our $528 million of Southfork tax equity investments through lower tax payments and refunds, which will further contribute to an improvement in our cash flow and provide the ability.
If successful with the RFP Award this cash flow would be received when the transaction closes. In addition, as I previously discussed a potential $400 million from the energy communities of a 10% ITC adder qualification would be received when the projects reach C O, which we expect.
To pay down debt, including a portion of the $1 4 billion of parent debt maturing in 2024.
<unk> in 2025.
Cash flows will be further enhanced.
Lastly, we are committed to completing the $1 billion equity as part of our ATM program.
From our core regulated businesses from electric and gas distribution rate adjustments, primarily in Massachusetts, and other cost recovery mechanisms. We anticipate additional deferred storm cost recovery of about $400 million to $500 million rolling into rates during 2012.
As shown on slide 10, we have issued no additional equity under this program through October we also anticipate raising an additional equity through our dividend reinvestment and employee incentive programs through October and we have issued 900000 shares under that program.
For that will be recovered over a five year period also of note, we will fully monetize our $528 million of South Fork tax equity investments through lower tax payments and refunds, which will further contribute to an improvement in our cash flow and provide the ability.
Thank you for joining us this morning, and I look forward to seeing many of you next week I will now turn the call back over to Bob for Q&A.
Thanks, John I will turn the call back to the operator to begin Q&A.
To pay down debt, including a portion of the $1 4 billion of parent debt maturing in 2024.
Thank you that's my mind asked a question he compressed style led by one on your telephone keypad.
Lastly, we are committed to completing the $1 billion equity as part of our ATM program.
I'd like to remove your question you May press Star two.
Please ensure your unmeetly Luckily when asking your question.
As shown on slide 10, we have issued no additional equity under this program through October we also anticipate raising an additional equity through our dividend reinvestment and employee incentive programs through October and we have issued 900000 shares under that program.
Our first question for state comes from Sean <unk> of Guggenheim Partners.
Your line is now open. Please go ahead.
Hey, guys good morning.
Can you hear me.
Good morning, Shar good morning.
We just saw obviously your partner <unk>, taking the total impairment of around 900 million for the three projects can you just talk a little more about why it and taken additional impairment this quarter and maybe just provide more clarity regarding sunrise and that accelerated RFP process in New York with the buyer I guess John what.
Thank you for joining us this morning, and I look forward to seeing many of you next week I will now turn the call back over to Bob for Q&A.
Thanks, John I will turn the call back to the operator to begin Q&A.
Thank you. That's a reminder to ask a question you can press star one on your telephone keypad.
Alternatives were you referencing thanks.
Great well, thanks, Shar, let me start with the RFP, while the merits of our repricing position were in line with the recent nicer to Rfps and the resulting price ask from our petition was lower than the average price of a recent New York Awards are repricing petition was denied unfortunately by the New York PSC.
To remove your question you May press Star two.
Please ensure your unmeetly Luckily when asking your question.
Our first question for state comes from Sean <unk> of Guggenheim Partners.
Your line is now open. Please go ahead.
Hey, guys good morning.
The primary reason sure they cited was.
Can you hear me.
Good morning, Shar good morning.
The pricing adjustments would have been done administratively rather than through competitive procurement, which is what they did not want to do however.
Sorry, we just saw obviously your partner <unk>, taking the total impairment of around 900 million for the three projects can you just talk a little more about why you didn't take an additional impairment this quarter and maybe just provide more clarity regarding sunrise and that accelerated RFP process in New York with the buyer I guess John what.
Youll see that nice shorted, then issued an RFP right. After the denial for future RFP for additional offshore wind. We have responded to that a recent new York RFID and we will evaluate the RFP terms given the maturity of Sunrise.
Alternatives were you referencing thanks.
Great well, thanks, Shar, let me start with the RFP you know, while the merits of our repricing position were in line with the recent nicer to Rfps and the resulting price ask from our petition was lower than the average price of a recent New York Awards are repricing petition was denied unfortunately by the New York PSC.
In terms of the siting permitting and early construction of this project is probably best positioned to win this RFP. John you can hit on the <unk> question for sharply sure. Good morning shot. So it's pretty few look at the impairment charge that apartment took.
Last week and what happened to us in Q2, the impairment charge that we took a pre tax $401 million, which was reflective of the gain on the lease area, it's pretty comparable so I would portray it this way that I think there is alignment between what has happened to us on these projects in.
The primary reasons they cited was.
The pricing adjustments would have been done administratively rather than through competitive procurement, which is what they did not want to do however.
Youll see that nice sure then issued an RFP right. After the denial for future RFP for additional offshore wind. We have responded to the recent New York RFID and we will evaluate the RFP terms given the maturity of Sunrise.
And what we saw just last week with the offset so for that reason and also the assumptions are very comparable with what they assumed and announced and what we considered back in June.
In terms of the siting permitting and early construction of this project is probably best positioned to win this RFP. John you can hit on the <unk> question for sharply sure. Good morning, Shar. So it's pretty few look at the impairment charge that upon the took.
And the last part of that question as to from a structural.
Standpoint, you heard in my formal remarks that it's still very very early in the process, but it could be a scenario where.
We move forward with the buyer on South Fork, and RAF and kind of.
Last week and what happened to us in Q2, the impairment charge that we took before pre tax $401 million, which was reflective of the gain on the lease area, it's pretty comparable so I would portray it this way that I think there is alignment between what has happened to us on these projects in.
A second transaction with this buyer.
To wrap up Sunrise obviously.
It should be no surprise to anyone on the call from a project financing standpoint, you need to be locked in on the revenue agreement. So if there's an ability for us to enhance the revenue agreement.
And what we saw just last week with the offset so for that reason and also the assumptions are very comparable with what they assumed and announced and what we considered back in June.
And that takes.
Four or five months, we are very supportive of that project delay in closing.
Got it and then John you mentioned that the sale process could be split with Sunrise later, which is kind of helpful. I guess, what could that look like how should we think about the implications for investing in the project and timing basically will you be on the hook for it in any contingencies. Thanks guys.
And the last part of that question is to from a structural.
Standpoint, you heard in my formal remarks that it's still very very early in the process, but it could be a scenario where.
We move forward with the buyer on South Fork, and RAF and kind of.
Sure sure, Yes, we'll continue to have a funding requirement.
A second transaction with this buyer.
The negotiations that we already have with buyer we would.
To wrap up Sunrise obviously.
We would be reimbursed for that.
It should be no surprise to anyone on the call from a project financing standpoint, you need to be locked in on the revenue agreement. So if there is an ability for us to enhance the revenue agreement.
Extra funding at the time that we close and so I think it's important to realize that based on what we have heard come out of <unk>.
This is a very expedited RFP process theres actually two and so we could actually see a decision.
And that takes.
Four or five months, we are very supportive of that project away and closing.
In advance of US closing the transaction on South Fork and Revolution. So I don't want to lose sight of that but in case. There is a further delay by nicer and clarifying that.
Got it and then John you mentioned that the sell process could be split with Sunrise later, which is kind of helpful. I guess, what could that look like how should we think about the implications for investing in the project and timing basically will you be on the hook for it in any contingencies. Thanks guys.
The win of bidders of those RFP processes. There is a scenario, where we would still move forward on.
Sure sure, Yes, we'll continue to have a funding requirement.
On the path that we that we have in front of us for those two projects followed by Sunrise.
The negotiations that we already have with buyer we would.
Got it perfect I appreciate it guys I'll jump back in the account of others I want to ask thanks.
We would be reimbursed for that.
Thank you.
Extra funding at the time that we close and so I think it's important to realize that based on what we have heard come out of <unk>.
Thank you.
Our next question comes from Steve Fleishman of Wolfe Research.
Your line is now open. Please go ahead.
This is a very expedited RFP process, there is actually two and so we could actually see a decision.
Yes, good morning.
Good morning.
Hey, good morning, Joe and John.
In advance of US closing the transaction on South Fork and Revolution. So I don't want to lose sight of that but in case. There is a further delay by nicer and clarifying that.
The.
Yes on the comment on the Moody's action the timing unfortunate can you just maybe give a little more color on.
Kind of like.
Your thoughts on that comment.
The win of bidders of those RFP processes. There is a scenario, where we would still move forward on.
Just from a corporate standpoint, ignoring the rating agencies.
How should we think about these.
On the path that we that we have in front of us for those two projects followed by Sunrise.
So does that your overall expecting targeting going forward.
Yes.
Got it perfect I appreciate it guys I'll jump back in the kind of numbers on this I'm going to ask thanks.
Sure sure as I said in my formal remarks, we pride ourselves in having very strong credit ratings and that's important to us and my remark on the unfortunate <unk> of it is that the fact that we do see.
Thank you.
Thank you.
Our next question comes from Steve Fleishman of Wolfe Research.
A significant enhancement.
Your line is now open. Please go ahead.
In 2024 that would get us well above the 13% and quite honestly.
Yes, good morning.
Good morning.
Hey, good morning, Joe and John.
Probably exceeding the 15% threshold, but we fully understand the predicament that Moody's.
The.
Yes on the comment on the Moody's action the timing unfortunate can you just maybe give a little more color on.
They've been in with a negative outlook for for quite some time.
Kind of like.
Your thoughts on that comment.
Storm activity as I've mentioned in the past three years have been.
Just from a corporate standpoint, ignoring the rating agencies.
Has created a headwind for us.
From a cash flow perspective, but we do see that enhancement in the years to come.
How should we think about these.
PFS over to that your overall expecting targeting going forward.
Okay and then the you mentioned that you maybe could have gone to the <unk>.
Sure. So as I said in my formal remarks, we pride ourselves in having a very strong credit ratings and that's important to us and my remark on the unfortunate reality of it is that the fact that we do see.
24, just like what do you have a sense, John or kind of what you're targeting.
Going forward now for the episode of debt as we are thinking about your overall.
Lansing playing well.
A significant enhancement.
Steve Let me start by saying that having been at 13% right now does give us a little bit more flexibility, where we can be opportunistic from an equity standpoint, but as I've said I don't want to lose sight of the fact that.
In 2024 that would get us well above the 13% and quite honestly.
Probably exceeding the 15% threshold, but we fully understand the predicament that Moody's.
They've been in with a negative outlook for for quite some time.
We.
Strive on maintaining a very strong credit rating and right now based on our plan I do see everything else being equal I do see us getting to a 15% by the end of 2024.
Storm activity as I've mentioned in the past three years have been.
Have created a headwind for us.
Our cash flow perspective, but we do see that enhancement in the years to come.
Okay.
Okay and then the you mentioned that you maybe could have gone to the <unk>.
Okay and then.
So from that standpoint, given that that you don't do you not see that any need for more.
24, just like what do you have a sense John kind of what you're targeting.
And the plan beyond what you've already talked about.
Going forward now for the episode of that Azure as we're thinking about your overall.
That's why I confirmed in my formal remarks that is correct.
Playing well.
Steve Let me start by saying that haven't been at 13% right now does give us a little bit more flexibility, where we can be opportunistic from an equity standpoint, but as I've said I don't want to lose sight of the fact that.
Okay great.
And then just could you maybe I remember early in the year, you talked to about the plan being kind of.
You saw kind of conservative on interest rate exposure and how you judge that just could you talk to just I.
We.
I know you had a slide going through some of the stuff, but just overall.
Strive on maintaining a very strong credit rating and right now based on our plan I do see everything else being equal I do see us getting to a 15% by the end of 2024.
Think about.
The plan in terms of interest rate exposure.
Yes, I mean, we've done a great job in managing to the current year exposure and we will continue to be focused on there.
Okay.
We are very we are very disciplined in our in our.
Okay and then.
Yeah.
So from that standpoint, given that you don't do you not see that any need for more equity in the plan beyond what you've already talked about.
And our O&M strategy and we've been very successful as a matter of fact as a result of that cost discipline, we've been able to narrow our guidance range on EPS guidance range. So, yes, I would say to frame it and when I started the year I Didnt think defense, we're going to move as rapidly as they did with increase in rates. So it has.
That's why I confirmed in my formal remarks that is correct.
Okay great.
And then just could you maybe I remember early in the year, you talked to about the plan being kind of.
Has put some further pressure.
On us.
You saw kind of conservative on interest rate exposure and how you judge that just could you talk to just.
We have a plan that would get us to where we need to bank.
And is that true for not just for this year, but for the.
I know you had a slide going through some of the stuff, but just overall kind of.
So long term growth rate.
Think about.
That's correct that is correct.
The plan in terms of interest rate exposure.
Okay, Okay, I'll, let others ask I appreciate the time thank you.
Yes, I mean, we've done a great job in managing to the current year exposure and we will continue to be focused on there.
Thank you Steve Thank you.
Thank you.
We are very we are very disciplined in our.
Question comes from David Colorado from Morgan Stanley.
And our O&M strategy and we've been very successful as a matter of fact as a result of that cost discipline, we've been able to narrow our guidance range on EPS guidance range. So, yes, I would say to frame it and when I started the year I Didnt think that first we're going to move as rapidly as they did with increase in rates. So it has it has.
Your line is now open. Please go ahead.
Hi, David Good morning, Thanks, So much for taking my question Hey, good morning.
Let's see maybe just following up on.
On Steve's last question.
If if rates stay where they are do you continue to see the ability to hit solidly in the upper half of your guidance range and maybe could you elaborate on some of the cost cutting initiative initiatives, where the opportunities are that you see going forward.
Put some further pressure.
On us.
We have a plan that will get us to where we need to be.
And is that true for not just for this year, but for the.
Sure. Thanks, David So, yes, I mean.
The long term growth rate.
Our longer forecast based on what consensus had interest rates, moving and where the fed is likely to be we have factored that into our long term growth prospects.
That's correct that is correct.
Okay, Okay, I'll, let others ask I appreciate the time thank you.
Thank you Steve Thank you.
The question is when will the fed start too.
Thank you.
Question comes from David Colorado from Morgan Stanley.
Ill turn the corner, either stabilize or perhaps even.
Your line is now open. Please go ahead.
<unk>.
Start reducing rates. So that's why we're looking at in our 24 plan.
Hi, David Good morning, Thanks, So much for taking my question Hey, good morning.
But right now as I've said the cost cutting that we have been very successful to implement has.
Let's see maybe just following up on.
On Steve's last question.
If you know if rates stay where they are do you continue to see the ability to hit solidly in the upper half of your guidance range and maybe could you elaborate on some of the cost cutting initiatives, where the opportunities are that you see going forward.
Has compensated for that from a cost cutting measure we look at a multitude of things right.
We have done a great job in introducing technology that has that has lower operational.
Sure. Thanks, David So, yes, I mean, I know in our longer forecast based on what consensus had interest rates moving and where the fed is likely to be we have factored that into our long term growth prospects.
Of course.
We look at.
On the shared services side.
What can we what can we do there so.
So those are some of the items that we are very very focused on.
The question is when will the fed start too.
Okay, Great. That's helpful. And then also just looking out at the <unk>.
It turned the corner either stabilize or perhaps even.
Trends, you've got a couple I guess I'm thinking of the tax equity payment in 2024, and Thats a bit of a one time boost but then post 2024 is that right.
Go.
Start reducing rates. So that's what we're looking at in our 24 plan.
But right now as I've said the cost cutting that we have been very successful to implement has.
<unk> off of that year, where you expect <unk> to debt.
Yes to trend naturally just based on the core business outlook.
Has compensated for that from a cost cutting measure we look at a multitude of things right.
Does it fall below 15% after that or are there ways to maintaining in that rough range no.
We have done a great job in introducing technology that has that has lower operational.
No no. If you recall my formal remarks, I said, we look right now our prospects is as we.
Of course.
We look at.
Turn the corner in 2024 and beyond so.
On the shared services side.
What can we what can we do there so.
Our core business is going to be a significant contributor to that.
So those are some of the items that we are very very focused on.
And the biggest driver of that will be the rate adjustments that we have in Massachusetts locked in.
Yeah.
Okay, Great that's helpful and then.
And what we the path way that we see to start recovering the nearly $1 6 billion of deferred storm costs in Massachusetts, and New Hampshire as I've mentioned, we have about 4% to $500 million kicking kicking in into rates in 2024 that will be recovered over the five year period and.
Just looking out at the <unk> to debt trends, you've got a couple.
I'm thinking of the tax equity payment in 2024, Thats a bit of a one time boost but then post 2024 is that right.
Trend off of that year, where you expect <unk> to debt.
To.
To trend naturally just based on the core business outlook.
And then we will be focused on on.
It does it does it fall below 15% after that or are there ways to maintaining in that rough range.
On the Connecticut deferred storm costs and as we've said in the past, we we look to file a prudency.
No no. If you recall my formal remarks, I said look right now our prospects has.
Cost review.
And get that filing into PURA later this year.
Turn the corner in 2024 and beyond so.
Our core business is going to be a significant contributor to that.
Yeah.
Okay got it thanks I appreciate the color.
Thanks, David.
And the biggest driver of that will be the rate adjustments that we have in Massachusetts locked in.
Thank you.
Our next question comes from Nicholas Campanella from Barclays.
And what we the path way that we see to start recovering the nearly $1 6 billion of deferred storm costs in Massachusetts, and New Hampshire as I've mentioned, we have about $4 million to $500 million kicking kicking in into rates in 2024 that will be recovered over the five year period and.
Your line is now open. Please go ahead.
Yeah.
Hey, everyone pointed to taking my question.
Good morning.
I just wanted to follow up on Connecticut.
I think you started to hit it there, but obviously.
The governor Youre, saying its been more supportive, but it has been a challenging backdrop from a ratemaking standpoint, just how are you kind of thinking through the timing of our next LNP rate case, and then secondly, just a strategy from a deform deferred storm balance and as I think you said that youre going to file later this year with recovery thereafter, but can you.
And then we will be focused on on.
On the Connecticut deferred storm costs and as we've said.
In the past, we will look to file a prudency.
Cost review.
And get that filing into PURA later this year.
Just kind of give us some more detail on what that process looks like thank you.
Okay.
Okay got it thanks I appreciate the color.
Sure. Thanks, Nick I'll take I'll take a crack at it and then John can pipe in.
Thanks, Thanks, David.
A couple of things we are not we have no plans of filing a rate case in Connecticut, we actually the settlement.
Thank you.
Our next question comes from Nicholas Campanella from Barclays.
Your line is now open. Please go ahead.
Okay.
Precludes that until 2025.
Hey, everyone pointed to taking my question.
Good morning.
So that would be the earliest.
I just wanted to follow up on Connecticut, I think you started to hit it there, but obviously.
Although not required at that point.
Our strong cost filing.
The governor Youre, saying its been more supportive, but it has been a challenging backdrop from a rate making standpoint, just how are you kind of thinking through the timing of our next TLLP rate case, and then secondly, just a strategy for deform deferred storm balance and as I think you said that youre going to file later this year with recovery thereafter, but can you.
Is in very good shape and.
Filing is imminent and anytime we can make that filing as well again.
Filing that.
We need to go through first the a review of it so they will go through all the documents.
And make sure that everything is in order. So that it's something that you want to deal with outside of a rate case, we will get that behind us get the amount of established.
Just kind of give us some more detail on what that process looks like thank you.
Sure. Thanks, Nick I'll take I'll take a crack at it and then junk in the pipeline.
And then that way there it makes for a for a simpler or less complex.
A couple of things we are not we have no plans of filing a rate case in Connecticut, we actually the settlement.
Our rate case, so that's the current thinking right now John if you want to add any color feel free sure I mean, it's as you can very well appreciate its a sizable amount that we will.
Precludes that until 2025.
Seek prudency review right now, it's about $650 million that we're looking to.
That would be the earliest although not not required at that point.
Our strong cost filing.
Put in front of PURA, so from a time standpoint, I would imagine that that would take.
Is in very good shape and the <unk>.
Filing is imminent and anytime we can make that filing as well again.
Quite some time probably.
Our filing that.
10 to 12 months, there's a lot of information a lot of due diligence that the regulator has to go through Nick.
We need to go through first the a review of it so they'll go through all the documents.
And make sure that everything is in order so that.
That's helpful. And then just one follow up on on the assumptions underlying that the 5% to 7% EPS CAGR here acknowledging that you are continuing to point to the high end of that range.
It's something that you want to deal with outside of a rate case, we'll get that behind us get the amount of established.
And then that way there it makes room for a simpler less complex.
You do have the ATM outstanding and you haven't issued a lot of that in multiples are lower so I'm just trying to understand is this like a true mark to market of the <unk>.
Our rate case, so that's the current thinking right now John if you want to add any color feel free sure I mean, it's as you can very well appreciate its a sizable amount that we will.
Price stays where it is you still see this as.
Seek prudency review right now, it's about $650 million that we're looking to.
And executable five to southern CAGR.
Sure sure.
<unk>.
<unk> put in front of PURA. So from a time standpoint, I would imagine that that would take.
Yes, yes, we do yes, we do.
I am hoping that the market in the whole sector doesn't stay at this level.
Quite some time.
Much longer than I am hoping that things will start to.
10% to 12 months.
Sort of information a lot of due diligence that.
To move forward in the right direction for all of Us quite honestly.
The regulator has to go through net.
But yes, we haven't issued any equity its not a mad dash to issue equity. So we will continue to monitor things and be opportunistic as we as we can.
That's helpful. And then just one follow up on on the assumptions underlying that the $5 to seven <unk>.
<unk> CAGR here acknowledging that you're continuing to point to the high end of that range.
Thank you.
You do have the ATM outstanding and you haven't issued a lot of that in multiples are lower so I'm just trying to understand is this like a true mark to market of the.
Okay.
Thank you. Our next question comes from gas Chopra from Evercore your.
Stock price stays where it is you still see this as an.
Your line is now open. Please go ahead.
<unk>, 5% CAGR.
Hey, good morning team. Thanks for taking my questions Hey, first just can you tell us whats the expected spending on the offshore projects this year.
Sure sure.
Yes, yes, we do yes, we do.
I am hoping that the market in the whole sector doesn't stay at this level.
I think you were targeting roughly $1 5 billion.
Much longer than I am hoping that things will start to.
Yes.
Yes, yes, I think we will be we will come below that significantly I.
To move forward in the right direction for all of Us quite honestly.
But yes, we haven't issued any equity its not a mad dash to issue equity. So we will continue to monitor things and be opportunistic as we as we can.
I think you'll recall that we early in the year, we moved $500 million out of 23 and into 'twenty four and beyond and currently we are behind.
So when you when you see our 10-Q youre going to see a balance for offshore wind.
Thank you.
<unk> of 930 of about two and a half but keep in mind that we got in a little bit over $300 million in mid October, so, which put which puts our year to date balance net of the impairment charge at about roughly 2223.
Yes.
Thank you. Our next question comes from Geis Chopra from Evercore your.
Your line is now open. Please go ahead.
Hey, good morning team. Thanks for taking my questions Hey, first just can you tell us what's the expected spending on the offshore projects this year.
Okay.
As compared to about two <unk> as compared to about a $2 billion balance at the end of the year.
I think you were targeting roughly $1 5 billion.
Yes.
Got it okay.
Yes, yes, I think we will be will come below that significantly I.
And then just going back to the equity question just after remaining amount that you've kind of the $1 2 billion. What's what's the any help you can give us on timing of how you might execute on that equity.
I think you'll recall that we early in the year, we moved $500 million out of 23 and into 'twenty four and beyond and currently we are behind.
So when you when you see our 10-Q youre going to see a balance for offshore wind.
We'll have to wait and see where valuations are but it's not right now.
<unk> of 930 of about two and a half but keep in mind that we got in a little bit over $300 million in mid October, so, which put which puts our year to date balance net of the impairment charge at about roughly 2223.
It'll be over the next several years.
To put it another two to three times when the timeframe.
Okay, so not not this year right obviously.
No no.
Yeah.
Thanks.
Okay.
Thank you next.
As compared to about it.
Our next question comes from Jeremy Tonet of Jpmorgan Jeremy.
Compared to about a $2 billion balance at the end of the year.
Jeremy Your line is now open. Please go ahead.
Got it okay.
Hi, good morning.
And then just going back to the equity question just after remaining amount that you've kind of the $1 2 billion. What's what's the any help you can give us on timing of how much you might execute on that equity.
Good morning, Jeremy.
Just starting off here coming back to the sales process announcement and realized.
Elements that are outside of your hands here, but.
If we're thinking about timing here is this a matter of days weeks or months and are you able to identify any material gating items at this point or other risks around these negotiations just trying to get a sense for how the process could unfold at this point.
We'll have to wait and see where valuations are but it's not right now.
It'll be over the next several years.
To put it another two to three time window.
Yes, well. Thanks, obviously this is on everyone's mind, it's a process we've been working through and as we've mentioned we have completed.
Graeme.
Okay, so not not this year right obviously.
No no okay.
Thanks.
The terms with the buyer the buyer interest now is working with our partner <unk>.
Thank you our next.
Next question comes from Jeremy Tonet of Jpmorgan, Jeremy Your line is now open. Please go ahead.
As we've mentioned this buyer is very familiar to wash did they have done transactions with them.
Hi, good morning.
And we just need to.
Good morning, Jeremy.
See that play out so I can't give you a day a week or a month. Unfortunately.
Just starting off here coming back to the sales process announcement and realize there are elements that are outside of your hands here, but.
All I can tell you is that all of the terms.
Associated with transaction with ever source have been completed.
If we're thinking about timing here is this a matter of like days weeks or months and are you able to identify any material gating items at this point or other risks around these negotiations just trying to get a sense for how the process could unfold at this point.
And that we feel very good about that the buyer is still very.
Very eager on these projects.
And we are going to work through it and John and I will remain focused and disciplined around the execution.
Of our divestiture of the wind business.
Yes, well. Thanks, obviously this is on everyone's mind, it's a process we've been working through and as we've mentioned we have completed.
Okay.
Got it very very helpful. There. Thank you and then just.
Pivoting back to equity just wanted to clarify a couple of points here make sure I got it right.
The terms with the buyer and the buyer interest now is working with our partner <unk>.
$1 2 billion of external equity needs.
We've mentioned this buyer is very familiar to wash that they've done transactions with them.
Yes.
Is this kind of embedding I guess offshore wind sales price certain level and does this assume new.
And we just need to.
See that play out so I can't give you a day a week or a month. Unfortunately.
Higher New York pricing success in one of the two ITC Adder is just trying to get clarity on what is factored in at that point and then just to confirm I guess.
All I can tell you is that all of the terms.
Associated with transaction with episodes have been completed.
And that we feel very good about that the buyer is still very.
You talked about earlier the plan reaffirmation.
Based on current stock price levels or does that need to be kind of reevaluated later for the 5% to 7% growth.
They're eager on these projects.
And we are going to work through it and John and I will remain focused and disciplined around the execution.
Sure let me take that.
A lot of.
Of our divestiture of the wind business.
A lot of items in there so.
So let me start with what we have left in ATM is not one two we have already executed 200 million. So all we have is a $1 billion left.
Okay.
Got it very very helpful. There. Thank you and then.
Just pivoting back to equity just wanted to clarify a couple of points here make sure I got it right.
And that is.
That assumption and was reiterated on the call today.
The $1 2 billion of external equity needs.
Does assume that we will prevail on the that 850 million <unk>.
This.
Is this kind of embedding I guess offshore wind sales price certain level and does assume new.
Contingent consideration that I highlighted so we've assumed that that would come in and we feel very good about it.
Higher New York pricing success on one of the two ITC Adder is just trying to get clarity on what is factored in at that point and then just to confirm I guess.
Points that we made on the call so going out on the on the stock price I mean, we have we haven't issued any equity.
You talked about earlier the plan reaffirmation.
<unk> this year for the simple fact of where values are so we will we will continue to monitor that monitor that valuation as we move forward as I've said, we have flexibility.
It's based on current stock price levels or does that need to be kind of reevaluated later for the 5% to 7% growth.
Sure Let me take that's a lot of.
I'm not looking to issue at all this year or next year as I said over time.
A lot of items in there so.
So let me start with what we have left in the ATM is not one point too we've already executed a 200 million. So all we have is $1 billion left.
Got it that's helpful I'll leave it there thanks.
And that is that assumption and was reiterated on the call today.
Thank you.
Question comes from Anthony <unk> from Mizuho.
Does assume that we would prevail on the that $850 million.
Your line is now open. Please go ahead.
Hey, good morning, just a couple of questions first on Sunrise.
Contingent consideration that I highlighted so we've assumed that that would come in and we feel very good about it.
Think on or said last week lowered their probability of being successful on a rebid.
To the points that we made on the call so going out on the on the stock price I mean, we have we haven't issued any equity this year for the simple fact of where values are so we will we will continue to monitor that monitor that evaluation as we move forward as I've said, we have flexibility.
You guys seem very optimistic on a rebid just curious if there was any change in your thinking on sunrise versus maybe less.
Last quarter.
Yes, no I mean, we still feel very good about sunrise, given where it is and the gestation process.
<unk>.
I'm not looking to issue at all this year or next year as I said over time.
The matter is the significant demand and appetite for offshore wind in the pricing that we were seeking.
Okay.
And our and our filing is less than what the average price was four other selected.
Got it that's helpful I'll leave it there thanks.
Thank you.
The project is a great project so.
Next question comes from Anthony <unk> from Mizuho.
So much.
Your line is now open. Please go ahead.
Economic development benefit jobs benefits location point of interconnection in New York that we feel very very good about it so.
Hey, good morning, just a couple of questions first on Sunrise.
I think on or said last week lowered their probability of being successful on a rebid.
That's that's our feeling on it we feel it's a winner.
You guys seem very optimistic on a rebid just curious if there was any change in your thinking on sunrise versus maybe.
Great and just curious on the pricing I don't know if you wanted to disclose it but.
I just had the pricing.
To the New York Public Service Commission was attractive on the rebid could we assume that that price would <unk>.
Last quarter.
Yes, no I mean, we still feel very good about sunrise, given where it is and the gestation process.
Exist on the rebid or through the rebid.
Fact of the matter is the significant demand.
<unk> pricing could even go up higher or lower I mean, because the pricing change.
<unk> tight for offshore wind in the pricing that we were seeking.
As you as you might imagine this is a highly competitive process.
In our in our filing is less than what the average price was four other selected.
There are other players in there and that's that's something that we're not comfortable disclosing.
The project is a great project.
So much.
Great and then just lastly.
Economic development benefit jobs benefits.
A whole bunch of moving pieces in the story.
Occasion point of interconnection in New York that we feel very very good about it so.
The big improvement in <unk> that we should start seeing in 'twenty four.
That's our feeling on it we feel it's a winner.
When we think about.
When all the dust settles I mean.
Great and just curious on the pricing I don't know if you wanted to disclose it but.
This 24, it looked like it becomes a transition year and the offshore wind clears up what do you think that havent sooner or.
I just had the pricing.
Submit it to the New York Public Service Commission was attractive on the rebid can we assume that that price would.
Does the cleanup to a fully regulated story happened more than 25.
Exist on the rebid or through the rebid.
No I feel very very confident that 24 is our year for a transition to a clean pure regulated utility.
<unk> pricing could even go up higher or lower I mean could the pricing change.
As you as you might imagine this is a highly competitive process.
Seeking singles and doubles and keeping everybody on this call very comfortable.
There are other players in there and that's that's something that we're not comfortable disclosing.
Alright, Thanks for taking my questions I appreciate it.
Great and then just lastly.
Thank you.
A whole bunch of moving pieces in the story.
Thank you.
Next question comes from Julien Dumoulin Smith of Bank of America.
The big improvement in <unk> that we should start seeing in 'twenty four.
Your line is now open. Please go ahead.
When we think about.
Hey, good morning team. Thank you guys very much for all the details so far just the clean up on a couple of things that you guys don't mind I'm just can we talk about capitalized interest.
When all the dust settles I mean.
This 24, it looked like it becomes a transition year and the offshore wind clears up what do you think that havent sooner or.
Where are we at the end of the day on the offshore wind projects and we can we talk about just what your expectations. As you think about that new normal you talked about singles and doubles, what is that parent level ongoing drag if you want to call it that.
Does the cleanup to a fully regulated story happened more than 25.
No I feel very very confident that 24 is our year for a transition to a clean pure regulated utility.
In a kind of post offshore world if you will.
Sure sure Julien so the capitalized interest.
Seeking singles and doubles and keeping everybody on this call very comfortable.
Now it is about I would say 25 ish million.
Alright, Thanks for taking my questions I appreciate it.
Thank you.
And Thats all at the parent company.
Thank you next.
Our next question comes from Julien Dumoulin Smith of Bank of America Your.
$25 $30 $30 million.
Your line is now open. Please go ahead.
Got it okay alright.
Hey, good morning team. Thank you guys very much for all the details so far just the clean up on a couple of things that you guys don't mind I'm just can we talk about capitalized interest.
Capitalized tied to the offshore 25, 30, and then how do you think about going forward for the.
Kind of that new normal if you will at the parent here.
Where are we at the end of the day on the offshore wind projects and we can we talk about just what your expectations. As you think about that the new normal that you talked about singles and doubles, what is that parent level ongoing drag if you want to call it that.
Well with the cash inflows that I've mentioned, including some of the utilization of ITC, we can't lose sight over then I feel we would be able to harvest. When the next 12 to 18 months, that's close to $500 million coming in the door.
In a kind of post offshore world if you will.
Sure sure Julien so the capitalized interest.
The proceeds from the offshore wind, we will turn the corner in 2024 and beyond.
Right now.
I would say 25 ish million.
So I do as Joe mentioned.
At the.
<unk> 24 is the pivotal turning period for us.
And Thats all at the parent company.
Now $25 $30 $30 million.
Alright fair enough.
Got it Okay, alright, right capitalized tied to the offshore 25, 30, and then how do you think about going forward for the.
In terms of Oh, Yes go for it.
And Julien we have as I mentioned in my in my formal remarks is one 4 billion that will mature at the holding company 2024, and Thats all backend half year that will those maturities will take place June.
Kind of that new normal if you will at the parent here.
Well with the cash inflows that I.
Mentioned, including some of the utilization of ITC, we can't lose sight over then.
June and October.
October.
We would be able to harvest when the next 12 to 18 months.
Right, Indeed, and just coming back to trying to compare notes between order setting yourselves and I'm sorry, just.
It's close to $500 million coming in the door plus.
They quoted a number like $4 50 here for break fees. The Sunrise doesn't have a positive I D.
Plus the proceeds from the offshore wind, we will turn the corner in 2024 and beyond.
Again, I'm not sure what's in or out of that bucket.
I do as Joe mentioned.
Where do you guys assess that.
That metric here on your side as far as you're concerned.
For us the pivotal turning period for us.
What's your understanding and also maybe what are the offshore proceeds assumed in the plan with the with the EPS CAGR.
Right fair enough.
In terms of Oh, Yeah go for it.
Sure.
Okay. So the breakup fees that Austin.
And Julien we have as I mentioned in my in my formal remarks, it's one 4 billion that will mature at the holding company 2024, and Thats all back in half year that will those maturities will take place June.
Announced on their call.
We're 50% partner and so we would be.
On the hook for that 50% as well.
June and October.
Got it and the proceeds just in the plan.
October.
Kind of think through Super quickly.
Right, Indeed, and just coming back to trying to compare notes between order setting yourselves and I'm sorry could you just I think they quoted a number like $4 50 here for break fees as Sunrise doesn't have a positive.
The proceeds from the sale.
Yes.
I mean, what are you reflecting in your plan as a placeholder. If you will right I know you're reaffirming the CAGR here today, and maybe it's too close to sale to be able to disclose but how do you broadly think about that as a big.
Again, I'm not sure what's in there out of that bucket.
Where do you guys assess that.
That metric here on your side as far as you're concerned.
A piece of the puzzle.
What's your understanding and also maybe what are the offshore proceeds assumed in the plan with the with the EPS CAGR.
Yes, I mean, we haven't disclosed that but I think he can certainly.
Sure.
Kind of assess then as to where we stand and the reason is that it's a moving target as to when the transaction closes because we still have this funding commitment, but if you draw the line in the sand as of 930 I mentioned that our total investment was two one and we have $850 million of contingent consideration that covers that balance.
Okay. So the breakup fees that Austin.
Announced on their call.
We're 50% partner and so we would be.
On the hook for that 50% as well.
Got it and the proceeds just in the plan just to kind of think through Super quickly.
So.
The balance when kind of gain the range of what you would expect.
The proceeds from the sale.
Okay excellent guys I really appreciate the details. Thank you guys. So much right you guys take care.
Yes.
I mean, what what are you reflecting in your plan as a placeholder. If you will right I know you're reaffirming the CAGR here today, and maybe it's too close to sale to be able to disclose but how do you broadly think about that as a big.
Take care, Thank you Julien.
Thank you our next.
Our next question comes from Travis Miller of Morningstar. Your line is now open. Please go ahead.
A piece of the puzzle.
Good morning, everyone and thank you.
Yes, I mean, we haven't disclosed that but I think he can certainly.
<unk> jumped over the other.
Kind of assess that as to where we stand and the reason is that it's a moving target as to when the transaction closes because we still have this funding commitment, but if you draw the line in the San as of 930, I mentioned that our total investment was two one and we have $850 million of contingent consideration that covers that balance.
Sure.
Massachusetts, Yes.
The investment for clean energy investments that you plan there.
Whats your thinking around the rate design or a rate filing you foresee.
All of these investments going into just traditional rate cases like we've done in the past or are you going to.
Think about some unique rate design or you could wrap these and more timely.
So the.
The balance would kind of be in the range of what you would expect.
Travis we're so excited about that plan that we filed.
Okay excellent guys I really appreciate the details. Thank you guys. So much right you guys take care.
Because it does differentiate Massachusetts has been very progressive in that regard and we're in we're working with our key stakeholders as Joe mentioned in his formal remarks, I would say from a cost recovery mechanism I think it's far too early for us to speculate as to what that would be we need this process to continue.
Take care, Thank you Julien.
Thank you.
Question comes from Travis Miller of Morningstar. Your line is now open. Please go ahead.
Good morning, everyone and thank you.
Hey tracking jump over the other.
You too.
Kind of play play out a bit more right now.
Jumping to Massachusetts.
And then the investment for clean energy investments that you have planned there.
As part of the legislation it's before this council this grid Mod Council.
What's your thinking around the rate design or rate filing do you foresee.
It's made up of key stakeholders and policymakers in Massachusetts, So that is still being.
All of these investments going into just traditional rate cases like we've done in the past or are you going to.
Being reviewed by the Council and we will file that early.
Think about some unique rate design or you could wrap these and more timely.
24, with a GPU, so I think it's a bit premature.
Travis we're so excited about that plan that we filed.
To start speculating on the recovery mechanisms.
Because it does differentiate Massachusetts has been very progressive in that regard and we're in we're working with the key stakeholders as Joe mentioned in his formal remarks, I would say from a cost recovery mechanism I think it's far too early for.
Okay.
What's the rough mix in terms of O&M or variable cost operating cost and <unk>.
Capital costs and.
In terms of your thinking about that.
I would say 70 30.
For us to speculate as to what that would be we need this process to continue to.
<unk> and O&M.
Okay.
Perfect and then real quick on the dividend still 60% payout ratio.
Kind of play play out a bit more right now.
Pearl legislation, it's before this council this grid Mod Council.
The way Youre thinking about going into next year.
Yes, I mean consistently we've been at 62%.
Made up of key stakeholders and policymakers in Massachusetts, So that is still being.
Our dividend policy.
<unk> supports that payout.
Being reviewed by the Council and we will file that early.
Okay perfect.
24, with a GPU, so I think it's a bit premature.
Thanks.
Thank you Trevor.
To start speculating on the recovery mechanisms.
Thank you.
Final question for today comes from Paul Patterson of <unk> Associates.
Okay.
What's the rough mix in terms of O&M or variable cost operating costs and capital costs.
Your line is now open. Please go ahead.
Good to hear you guys.
Just really Paul I guess really.
Are you thinking about that.
I would say 70 30.
All my questions have been answered, but I'm, sorry to be a little bit for <unk>.
30 billion O&M.
Timing here.
Sounds like before we May get.
Okay.
Correct, and then real quick on the dividend still 60% payout ratio.
Final transaction.
Sort of cost you started off by the end of the year.
Targeted the way Youre thinking about going into next year.
And I'm just wondering you mentioned the nice sort of rebid process could you just go over again I apologize for being a little slow on this.
Yes, I mean consistently we've been at 62% and our dividend policy.
Policy.
Supports that payout.
The timing, you're expecting on that and how that might.
Okay perfect.
The impact of this potential for splitting up.
Thank you Travis.
The south fork versus the.
Thank you our final question for today comes from Paul Patterson of.
The other projects and what have you.
Sure I guess.
Glenn wrote associates.
A transaction announced by year end would be would be ideal.
Your line is now open. Please go ahead.
Good to hear you are you guys.
And obviously, we wouldn't close that until until 2024.
Just really Paul I guess really.
All my questions have been answered, but I'm, sorry to be a little bit where it won't be.
And then with regard to nice shirt or they are the ones that are that are asserting that it would be a very quick turnaround. So that is why we have contemplated. This idea that we may in fact have not even transacted with the buyer.
The timing here.
It sounds like before we may get a.
The final transaction.
Sort of cost piece.
By the end of the year.
And I'm just wondering you mentioned the nice sort of rebid process. If you could just go over again I apologize for being a little slow on this.
When we already have line of sight on pricing around Sunrise, obviously, which would be beneficial for any buyer to understand.
The timing, you're expecting on that and how that might be.
The impact of this potential for splitting up this the south fork versus the.
What we're dealing with you so so.
It's very near term.
Other projects and what have you.
Got.
It's the end of this year, we would be optimistic that we could make an announcement and then a closing in 2024 and then some clarity around sunrise pricing.
Sure I guess.
A transaction announced by year end would be would be ideal.
And obviously, we wouldn't close that until until 2024.
Okay, and then I guess the okay.
And then with regard to nice shirt or are they are the ones that are that are asserting that it would be a very quick turnaround. So that is why we have contemplated. This idea that we may in fact have not even transacted with the buyer when we already have line of sight on pricing.
Thanks, so much.
Thank you all.
Thank you I'll now hand back to the management team for any further remarks.
Yeah, I want to thank everybody for taking the time to join US. This morning on our earnings call.
Looking forward to seeing many of you next week in the desert at the EI Financial conference and we can spend some more time digging into any of the details that are important to you and also as you know our investment relations team is always available.
Around Sunrise, obviously, which would be beneficial for any buyer to understand.
What we're dealing with you so so.
It's very near term you know not.
To answer any questions that you might have in the interim so thank you again for your time and have a wonderful day.
It's the end of this year, we would be optimistic that we could make an announcement and then closing in 2024, and then some clarity around sunrise pricing.
Thank you for joining today's call you may now disconnect your lines.
Okay, and then I guess the okay.
Thanks, so much.
Thank you all.
Thank you I'll now hand back to the management team for any further remarks.
Yeah, I want to thank everybody for taking the time to join US. This morning on our earnings call I'm looking forward to seeing many of you next week in the desert at the EI Financial conference and we can spend some more time digging into any of the details that are important to you and also as you know our investment relations team is always.
He is available.
To answer any questions that you might have in the interim so thank you again for your time and have a wonderful day.
Thank you for joining today's call you may now disconnect your lines.
[music].
Yeah.
Okay.