Q1 2024 New Jersey Resources Corp Earnings Call

February 6, 2024

24 first quarter conference call.

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one again, thank you.

I would now like to turn the call over to Adam Prior director of Investor Relations. Please go ahead.

Thank you and welcome to New Jersey Resources fiscal 2024 first quarter conference call and webcast I'm joined here today by Steve West children, Our President and CEO, Roberto Bell, our senior Vice President and Chief Financial Officer, as well as other members of our senior management team.

Certain statements in today's call contain estimates and other forward looking statements within the meaning of the securities laws, we wish to caution listeners of this call at the current expectations assumptions and beliefs, forming the basis of our forward. Looking statements include many factors that are beyond our ability to control or estimate precisely this.

Thank you for standing by my name is Jessica and I will be your conference operator today at this time I would like to welcome everyone to the New Jersey resources fiscal 'twenty 'twenty four first quarter conference call all.

This could cause results to materially differ from our expectations as found on slide one.

All lines have been placed on mute to prevent any background noise.

These items can also be found in the forward looking statements section of today's earnings release furnished on form 8-K and in our most recent forms 10-K and 10-Q as filed with the SEC we.

After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

We do not by including this statement assume any obligation to review or revise any particular forward looking statements referenced herein in light of future events.

If you would like to withdraw your question Press Star one again, thank you.

I would now like to turn the call over to Adam Prior director of Investor Relations. Please go ahead.

We will also be referring to certain non-GAAP financial measures such as net financial earnings or NFC, We believe that NFC net financial loss of utility gross margin financial margin adjusted funds from operations and adjusted debt to provide a more complete understanding of our financial performance. However, these non-GAAP measures are not intended to be a substitute for GAAP.

Thank you welcome to New Jersey resources fiscal 2024 first quarter conference call and webcast.

And here today by Steve West Carrollton, our President and CEO, Roberto Bell, our senior Vice President and Chief Financial Officer, as well as other members of our senior management team certain.

Our non-GAAP financial measures are discussed more fully in item seven of our 10-K.

Certain statements in today's call contain estimates and other forward looking statements within the meaning of the securities laws, we wish to caution listeners on this call that the current expectations assumptions and beliefs, forming the basis of our forward. Looking statements include many factors that are beyond our ability to control or estimate precisely this.

The slides accompanying today's presentation are available on our website and were furnished on form 8-K filed this morning, our agenda for today is found on slide four Steve.

Steve will begin with this quarter's highlights followed by Roberta who will review our financial results. Then we will open the call for your questions.

This could cause results to materially differ from our expectations as found on slide one.

That I will turn the call over to our President and CEO, Steve Weston. Please go ahead Steve.

These items can also be found in the forward looking statements section of today's earnings release furnished on form 8-K and in our most recent forms 10-K and 10-Q as filed with the SEC we.

Thanks, Adam Good morning, everyone.

Fiscal 2024 is off to a good start and we delivered strong performance in the first quarter positive momentum continued into the start of the second quarter as energy services outperformed in January capitalizing of weather volatility as a result, we are announcing a 15th increaser in NSE EPS guidance to $2 85 to $3 per share.

We do not by including this statement assume any obligation to review or revise any particular forward looking statements referenced herein in light of future events.

Before we discuss our quarterly results and forecast for fully I'll begin with an update on our sustainability and de carbonization efforts on slide five.

Last month, we issued <unk> fiscal 2023, corporate sustainability report, our 15th consecutive report dating back to 2008.

Our non-GAAP financial measures are discussed more fully in item seven of our 10-K.

The slides accompanying today's presentation are available on our website and were furnished on form 8-K filed this morning, our agenda for today is found on slide four Steve.

This report is an important part of our commitment to transparency with all of our stakeholders and the evolving energy landscape.

The details of our leadership and accomplishments and emissions reduction in renewable energy as.

Steve will begin with this quarter's highlights followed by Roberta who will review our financial results. Then we will open the call for your questions.

As well as our long term vision for the role of existing pipeline infrastructure and a lower carbon future.

I will turn the call over to our President and CEO, Steve Weston. Please go ahead Steve.

Just as important this year's report also shows have a strong culture of innovation and our organization is having a positive impact on how we execute strategies engaged and dynamic partnerships and deploy cutting edge technology in new ways.

Thanks, Adam and good morning, everyone.

Fiscal 'twenty 'twenty four is off to a good start and we delivered strong performance in the first quarter positive momentum continued into the start of the second quarter as energy services outperformed in January capitalizing of weather volatility as a result, we are announcing a 15% increase or a N S. EPS guidance to $2 85 to $3 per share.

I'd like to cover just a few of the reports highlights.

Last year, we invested approximately $60 million and Sacred New Jersey natural gas energy efficiency program.

Clean energy ventures continued to innovate commissioning the largest cap landfill and floating solar rays in North America.

Before we discuss our quarterly results and forecast more fully.

We advanced cutting edge lower carbon energy solutions, including the installation of localized carbon capture technology at our wall, New Jersey headquarters at high efficiency gas heat pumps at other facilities in the state.

And as I mentioned, we engaged a new partnerships with a number of well known academic and research entities to support our innovation efforts.

Finally, <unk> was recognized by Newsweek as one of America's most responsible companies for the fifth consecutive year.

We hope that you've all had an opportunity to review the report.

Moving to the first quarter and year to date operating highlights on slide six we executed our business strategy and delivered net financial earnings of <unk> 74 per share in the first quarter, which was in line with our expectations.

Yes.

At New Jersey natural gas, we filed a base rate case to recover capital investments of approximately $850 million since the settlement of our last rate case in 2021.

In addition, new Jersey natural gas filed for a new say agreed program of approximately $482 million, which is the largest energy efficiency filings in our history.

At clean energy ventures, we placed another four megawatts into service and continue to grow and diversify our project pipeline in.

And finally reported solid contributions from S&P and energy services in line with expectations.

Moving to slide seven in November we provided NSE EPS initial guidance range of $2 70 per share to $2 85 per share and.

And as I mentioned earlier, we benefited from our outperformance at energy services. During the January weather event that allowed us to raise our NSE EPS 2024, and at the EPS guidance by 15 to $2 85 to $3 per share.

As discussed in prior calls, we expect fiscal 2024 to exceed our stated 7% to 9% long term growth rate.

Slide eight shows the expected NSE EPS contribution by business segment for fiscal year, 2024, which reflects the MA contribution as well as a significant portion of our net financial earnings coming from our utility business.

$6 million since the settlement of our last rate case in 2021.

In addition, new Jersey natural gas filed for a new sampling program of approximately $482 million, which is the largest energy efficiency filings in our history.

Looking ahead, we feel comfortable with our long term growth rate in future years, and we expect to return to a more normalized segment contribution in fiscal 2025.

At clean energy ventures, we placed another four megawatts into service and continue to grow and diversify our project pipeline.

And finally reported solid contributions from S&P and energy services in line with expectations.

With that I will turn to discussion of our business units beginning on slide nine.

We invested $102 million at New Jersey natural gas through a variety of programs in the first quarter of fiscal 2024.

Moving to slide seven in November we provided a <unk> initial guidance range of $2 70 per share to $2 85 per share and.

With 46% of that Capex, providing near real time returns.

And as I mentioned earlier, we benefited from our outperformance at energy services. During the January weather events that allowed us to raise our Nf EPS 2020 for NFC EPS guidance by <unk> 15 to $2 85 to $3 per share.

Within that 46% is the same dream program as I mentioned earlier, which.

Which helps residential and commercial customers lower their energy usage.

We spent approximately $13 million in the first quarter to help our customers save money and reduce their carbon footprint.

As discussed in prior calls, we expect fiscal 2024 to exceed our stated 7% to 9% long term growth rate.

Finally, we achieved solid new customer growth during the period, adding approximately 2100, new customers through the combination of new construction and conversions.

Slide eight shows the expected NSE EPS contribution by business segment in fiscal year 2024.

Slide 10 provides additional detail on our base rate case filings.

Which reflects the MA contribution as well as a significant portion of our net financial earnings coming from our utility business.

On January 31, we requested an increase of base rates of $222 6 million.

Looking ahead, we feel comfortable with our long term growth rate in future years, and we expect to return to a more normalized segment contribution in fiscal 2025.

Equivalent to an increase of approximately $159 million in operating income.

Since the conclusion of our last case in 2021, New Jersey natural gas has invested nearly $850 million to upgrade and enhance the safety and reliability of our transmission and distribution systems as well as our it investments.

With that I will turn to discussion of our business units beginning on slide nine.

We invested $102 million at New Jersey natural gas through a variety of programs in the first quarter of fiscal 2024.

Moving to slide 11, our solar business <unk> clean energy ventures, followed an exceptional 2023 with continued momentum heading into the new year.

With 46% of that Capex, providing near real time returns.

Within that 46% is the same green program as I mentioned earlier.

We added four megawatts of new solar capacity and continue to grow our pipeline, which now includes approximately 870 megawatts of potential investment options.

Which helps residential and commercial customers lower their energy usage.

We spent approximately $13 million in the first quarter to help our customers save money and reduce their carbon footprint.

Over the past few years, we have continued to expand our portfolio geographically with 51% of our pipeline now located outside of New Jersey.

Finally, we achieved solid new customer growth during the period, adding approximately 2100, new customers through the combination of new construction and conversions.

Our focus is on delivering solar investment opportunities that provide high single digit Unlevered returns.

Slide 10 provides additional detail on our base rate case filings.

With that I'll turn the call to Roberto for a review of our financial results Roberta.

On January 31, we requested an increase of base rates of $222 6 million equivalent.

Thank you, Steve and good morning, everyone. Slide 13 shows the main drivers of oriented fee for the first quarter of fiscal 2024.

Equivalent to an increase of approximately $159 million in operating income.

We reported <unk> of $72 4 million or 74 per share.

Comparable within the fee of $110 $3 million or <unk> 14 per share last year.

New Jersey natural gas reported in our fleet in line with expectations of higher utility gross margin.

Moving to slide 11, our solar business clean energy ventures, followed an exceptional 2023 with continued momentum heading into the new year.

Offset by higher depreciation and operating expenses.

We memory debentures increasingly fee rate of approximately $14 $1 million.

We added four megawatts of new solar capacity and continue to grow our pipeline, which now includes approximately 870 megawatts of potential investment options.

Largely due to the timing of <unk> revenue for the period.

The enrichment transportation and a few decline versus Q1 of last year.

Over the past few years, we have continued to expand our portfolio geographically with 51% of our pipeline now located outside of New Jersey.

Result of higher operating revenues related to winter storm earlier.

First quarter of fiscal 2023.

Finally energy services reported EBIT of $7 8 million owner.

Our focus is on delivering solar investment opportunities that provide high single digit Unlevered returns.

<unk> to $52 $5 million in Q1 of the prior year.

With that I'll turn the call to Roberto for a review of our financial results Roberta.

Minor the first quarter of last year benefited from increased natural gas price volatility related to winter storm LDL during December of 2022.

Thank you, Steve and good morning, everyone.

<unk> showed a main driver of our revenue for the first quarter of fiscal 'twenty going forward.

In addition, <unk> revenue recognized in the first quarter of fiscal two Nathan before with <unk>.

We reported <unk> of $72 $4 million <unk> per share.

<unk> recognized in Q1 of last year.

Compared with any fee of $110 $3 million or <unk> 14 per share last year.

As Steve mentioned earlier, our guidance for fiscal 2024, if you're to energy services performance in January 2024.

New Jersey natural gas reported in our fleet in line with expectations of higher utility gross margin was offset by higher depreciation and operating expenses.

Which is a record in fiscal frequent worker.

As we look to the remainder of fiscal two reconvene for its important to note that we expect to recognize a significant portion of <unk> total revenues later in the year with a majority being recorded during our fiscal fourth quarter.

We memory debentures increasingly fee rate of approximately $14 $1 million.

Largely due to the timing of FERC revenue for the period.

So restaurant transportation and a PV claim versus Q1 of last year.

Turning to our capital plan was like 14 over.

The result of higher operating revenues related to winter storm earlier in the first quarter of fiscal 2023.

Over the next two years, we're expecting between one two and $1 5 billion across our company.

Finally energy services reported EBIT of $7 8 million owner.

It did not make any changes to our capital plan on Portola protocol.

<unk> to $52 $5 million in Q1 of the prior year.

Our covenant projections are anchored by strong cash flow from operations.

Minor the first quarter of last year benefited from increased natural gas price volatility related to winter storm LDL during December of 2022.

On Slide 15, you can see that we expect cash flow from operations to range between 450 and $490 million in both fiscal 2024 and fiscal 2005.

In addition, <unk> revenue, making the first quarter of fiscal 2024 was later than that recognized in Q1 of last year.

Slide 16 shows our credit metrics.

We continue to project an year suggests a difficult budget for that to be between 17 and 18% for the year.

As Steve mentioned earlier, our guidance for fiscal 2024 is due to energy services performance in January 2024.

And while we have no plans, we should look at our attrition due to reimbursement program includes the waiver is going feature that allows us to raise equity on an opportunistic basis.

Which is a record in fiscal second quarter.

As we look to our remainder of fiscal two years before it is important to note that we expect to recognize a significant portion of <unk> total revenues later in the year with the majority being recorded during our fiscal fourth quarter.

Finally on slide 13, we provide a breakout of our long term debt as you can see most of our debt is fixed rate in nature and will not have significant maturities in any particular year.

Turning to our capital plan is like 14 over.

Our <unk> guidance for fiscal two Newton before on our long term and if it would be a broad guidance assume high interest rates for the foreseeable future.

Over the next two years, we expect to invest between one two and $1 5 billion across our company.

We did not make any changes to our capital plan compact or protocol.

We have substantial liquidity at both <unk> and <unk>.

Our capital projections are anchored by strong cash flow from operations.

Overall, we are in an outstanding position to fund our growth objectives.

On Slide 15, you can see that we expect cash flow from operations to range between 450 and $419 million in both fiscal 2024 and fiscal 2025.

With that I will turn the call back to Steve.

Thanks Roberto.

In conclusion <unk> is off to a good start and we expect fiscal 2024 to be a strong year due to higher NFC contributions from energy services and steady performance from our core businesses and.

Slide 16 shows our credit metrics.

We continue to project in gear for Jetblue difficult to adjust for that to be between 17 and 18% for the year.

In addition, we've been able to take advantage of the opportunities in energy markets that have resulted in considerable upside to our growth targets in recent years and as always I want to thank all of our employees for their hard work and with that I'll now open the call for your questions.

And while we have no plans to we should look equity our existing dealer reimbursement program includes a waiver and it's gone feature that allows us to raise equity on an opportunistic basis.

Finally on slide 19, we provide a breakout of our long term debt as you can see most of our debt is fixed rate in nature and will not have significant maturities in any particular year.

Okay.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad and if he would like to withdraw your question simply press Star one again.

Our first question comes from the line of Richard Sunderland with Jpmorgan.

Our <unk> guidance for fiscal two Newton for an hour long term and if it would be a broad guidance assume high interest rates for the foreseeable future.

Please go ahead.

Hi, Good morning can you hear me.

We have substantial liquidity at both <unk> and <unk>.

Good morning Rich.

Thank you.

The guidance.

Overall, we are in an outstanding position to fund our growth objectives.

Guidance range, sorry guidance raised does that fully reflect the January weather benefit.

With that I will turn the call back to Steve.

Not just services, but anything.

Thanks Robert.

In conclusion <unk> is off to a good start and we expect fiscal 2024 to be a strong year due to higher NFC contributions from energy services and steady performance from our core businesses and.

Or even on the Bgs and set aside so the extend realized.

Yes, the financial team did a nice job of really going through everything and our budget.

In addition, we've been able to take advantage of the opportunities in energy markets that have resulted in considerable upside to our growth targets in recent years.

Impacts from the weather and tried to put that all in QR our numbers going forward. So we believe it does fully reflect January weather across all the businesses.

As always I want to thank all of our employees for their hard work and with that I'll now open the call for your questions.

Understood that's helpful color. Thanks.

Okay.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad and if he would like to withdraw your question simply press.

The big shale number at CEB.

I guess largely a timing factor can you unpack that a little bit more I was surprised to see that.

Alright, one again.

Yes.

Our first question comes from the line of Richard Sunderland with Jpmorgan. Please go ahead.

As it goes as abstracts are commodity ECS sales take place and we recognize that revenue impact at the time of the sale. So it's really just dependent on when those transactions really occur so.

Hi, Good morning can you hear me.

We can hear you Ed good morning rich.

Thank you.

The guidance.

Guidance range, sorry guidance raised does that fully reflect the January weather benefit.

I would read anything into it there's just a normal business.

Not just services, but anything at SMT or even on the bgs in southern side to the extent realized.

Understood and then I know you've put a spotlight on the Aam's benefits. This year now the weather benefits from January versus that long term growth rate I.

Yes, the financial team did a nice job of really going through everything and our budget.

I guess turning to the base growth, though in 'twenty five.

From the weather and tried to put that all in QR our numbers going forward. So we believe it does fully reflect the January weather events across all the businesses.

Can you provide any color around the shape to that meaning do you expect it on a base business basis to be linear or should there be a bigger step up in 'twenty five given the rate case will be coming in that year.

Understood that's helpful color. Thanks.

The big shale number at CEB.

I mean this is really the power of the portfolio of the company and we're going through a rate case cycle now that should be settled by the time, we get to 'twenty five and you've got.

It's largely a timing factor.

Tack that a little bit more was surprised to see that.

Yes.

Slight changes in percentage contribution.

As it goes as abstracts are commodity ECS and Thats when the sales take place and we recognize that revenue impact at the time of the sale. So it's really just dependent on when those transactions really occur so.

Given we shared with the financial community.

Our growth rate in the company.

As well as our segment contribution can we expect those to be intact. As we said before we expect them to normalize as we go into the future. So I hope that answers your question.

Don't read anything into it is just our normal business.

Yeah.

Okay.

Very helpful color as always and thank you for the time today.

Understood and then I know you've put a spotlight on the Aam's benefits. This year now the weather benefit from January versus that long term growth rate.

Alright, thanks rich.

Your next question comes from the line of sharp <unk> with Guggenheim Partners. Please go ahead.

Turning to the base growth, though in 'twenty five.

Hey, guys good morning.

Sure.

Good morning. Good morning, So just real quick on the 24 financing plans, obviously you guys now expect to issue.

Less debt, but then also raised your equity issuance guidance, despite sort of that unexpected inflow from energy services I guess, just remind us what's driving the higher equity and plan.

I mean this is really the power of the portfolio companies were going through a rate case cycle now that should be settled by the time, we get into 'twenty five and you've got.

HRD Roberto.

Slight changes in percentage contribution.

And each submarine slowly increasing acreage by the way is related to our great program as you know as part of our.

Given.

We shared with the financial community.

Our growth rate in the company.

Over the period as well as our segment contributions we expect those to be attacked as we said before we expect that to normalize as we go into the future. So I hope that answers your question.

In equity buyback program.

Sorry, I was talking to forward free program, we have the option to each Olivia will take would be.

We exercise that option, so thats really what youre seeing there.

Very helpful color as always and thank you for the time today.

Okay. Okay got it and then just I know obviously.

Alright, thanks rich.

Highlighted a little bit peak earnings from the asset management agreement you struck in 2020, just I guess remind us what the remaining years.

Your next question comes from the line of sharp <unk> with Guggenheim Partners. Please go ahead.

Hey, guys good morning.

Looks like in terms of earnings and cash contribution and sort of the cadence, especially as we're thinking about 25 and beyond just maybe just elaborate a little bit on that prepared remarks. Thanks, Yes. These are worth again Charles.

Sure.

Good morning. Good morning, So just real quick on the 24 financing plans, obviously you guys now expect to issue.

And the last debt, but then also raised your equity issuance guidance, despite sort of that unexpected inflow from energy services I guess, just remind us what's driving the higher equity and plan.

He is going to be the peak year for Jamie in terms of how we're running the contributions from here not from here on weekly 25 uncertain Hawaii.

Yeah.

I'll leave it there.

HRD from Banco <unk>.

In terms of the.

And each submarine slowly increasing acreage by the way is related to our great program as you know as part of our.

<unk> pharma here and every year the economy.

Revenues around $15 million to $20 million.

In equity buyback program.

Okay got it.

Sorry, I started the hard free program, we have that option to each Olivia will take will be from <unk>.

So let me just I know this was asked from the prior question, but I just want to maybe hit that hit it a little bit more accurately are you with sort of a step downs that you are seeing.

This time, we exercise that option, so thats really what youre seeing there.

With AMIA and maybe the energy services business go into a little bit more of a recurring figure versus what Youre seeing now are you just confident that you can hit sort of the midpoint of that guidance range at least to show linear or should we just assume some gyrations I know that was sort of the impetus of the prior question, but I didn't get it.

Okay. Okay got it and then just I know obviously.

Highlighted a little bit peak earnings from the asset management agreement you struck in 2020, just I guess remind us what the remaining years.

Kind of look like in terms of earnings and cash contribution and sort of the cadence, especially as we're thinking about 25 and beyond just maybe just elaborate a little bit on that prepared remarks, yes.

Sense on whether you still assume there is going to be linearity in spite some of that.

Yes.

Step down in earnings we should be expecting in the near term.

So again chart.

He is going to be the peak year for Jamie in terms of our earnings contributions from here not from here on <unk>.

Yes.

We'll confirm our long term growth range.

So I can do normalize it.

Do you have a site and we expect some other business units did contribute more going forward as you'd expect that as the percentage to normalize but yes. We are confirming our long term growth rate, yes, yes, just to clarify we've seen or our earnings presentation.

Yes.

In terms of the.

Fermi here and every year they become <unk>.

Revenues around $15 million to $17 million.

Okay got it.

Can you let me just I know this was asked from the prior question, but I just want to maybe hit that hit it a little bit more accurately are you would sort of the step downs that you are seeing.

You should take our initial <unk> guidance and then basically grows at between seven and 9% every year to find what our normalized expected earnings every year.

With <unk> and maybe the energy services business go into a little bit more of a recurring figure versus what Youre seeing now are you just confident that you can hit sort of the midpoint of that guidance range at least to show linear or should we just assume some gyrations I know that was sort of the impetus of the prior question, but I didn't get it.

Alright, let me, let me take the rest offline I appreciate it guys. Thank you.

Alright, Thanks Scott.

Yes.

Our next question comes from the line of Chris <unk> with Siebert Williams Schenck.

Please go ahead hey, good.

Sense on whether you still assume there is going to be linearity in spite some of that.

Everybody.

Have you guys got any color at this point in terms of the solar Capex range, where where do you think you might be landing this year.

Step down in earnings we should be expecting in the near term.

Yes.

We'll confirm our long term growth range.

It's kind of the best I can do normalize it it's Jason.

Yes.

What we're showing in the presentation. So we are not deviating from from that software each year, what we expect from salt Lake to be between 114 $200 million roughly.

We expect some other business units did contribute more going forward as you would expect.

It is normalized but yes, we are confirming our long term growth rate, yes, just to clarify what we've seen or our earnings presentation.

Have you got a number or some thoughts on what youre seeing for solar costs all in for what at this point.

You should take our initial <unk> guidance, and then basically grow that between seven and 9% every year to find what our normalized expected earnings we every year.

Okay.

Nothing that deviate significantly than what we've had historically.

Alright, let me, let me take the rest offline I appreciate it guys. Thank you.

Some inflationary pressures we've had some hedging in some of our solar panels as well.

Alright, Thanks Charles.

Yes.

We're continuing to install solar.

Our next question comes from the line of Chris <unk> with Siebert Williams.

Probably around that $2 per watt type range give or take.

Please go ahead hey, good.

Thank you.

Morning, everybody.

So hopefully that helps.

Have you guys given any color at this point in terms of.

Yes that helps.

Through the CSI process this year.

The solar Capex range, where where do you think you might be landing this year.

Gleaned anything that's valuable.

Yes.

I don't think the CSI process has been that robust theres been some changes at the Btu and things like that so a number of these.

It is what we're showing in the presentation. So we're not deviating from from that software need year, what we expect to resolve our ACB between added unfortunate $201 million roughly.

Initiatives have been drawn out a little bit they are still working through it.

I believe that the bids are all doing to February and then there's going to be some time to analyze those so continuing to move along but really nothing to share as far as.

Yeah.

Have you got a number or some thoughts on what youre seeing for solar costs all in for what at this point.

Kind of a milestone event or some sort of a change.

Change your insight into what's happening next.

Nothing that deviate significantly than what we've had historically and then theres been some inflationary pressures we've had some hedging in some of our solar panels as well, but we're continuing to install solar.

Okay.

One last thing as far as the rate case goes is there anything that you're aware of.

In the GPU environment.

<unk> system that would suggest.

Around that $2 per watt type range give or take.

Sort of a traditional settlement is.

As unlikely.

A few a few pay.

So hopefully that helps.

Hey, Chris This is Pat Migliaccio.

Yes that helps.

As we've talked.

Through the CSI process this year and you guys gleaned anything that's valuable.

Really for quite some time now this is zane.

Hello rate case, we're seeking recovery of investments in the safety and reliability. So 370 is piped in other as well as some.

I don't think the CSI process has been that robust.

But in a recovery for IHG investments.

Some changes at the Btu and things like that so a number of these <unk>.

If you look across the I'll call them sort of occurred right under the rate cases, they've been constructive as our historical rate came rate cases have been constructive so I would not expect any deviation from that okay.

Initiatives have been drawn out a little bit they are still working through it.

I believe that the bids are all doing February and then there's going to be some time to analyze this continuing to move along but really nothing to share as far as.

Okay, Great. That's helpful. Alright, Thanks, a lot appreciate it.

And Justin just a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

Kind of a milestone event or some sort of a change.

Change your insight into what's happening next.

Okay.

And our next question comes from the line of Roger Liddell with clear Harbor asset management.

One last thing as far as the rate base goes is there anything that you're aware of.

Roger go ahead.

Sort of in the GPU environment ecosystem that would suggest.

Thank you and good morning.

Alright.

Just wanted to.

It's sort of a traditional settlement is as unlikely.

I wanted to get some texture on the energy efficiency program.

Hey, Chris This is Pat Migliaccio.

As we've talked.

To me it's.

Really for quite some time now this is zane.

It's S symmetrically important because <unk>.

L. A rate case, we're seeking recovery of investments in the safety and reliability, So taking 370, <unk> pipe and other as well as some.

Illustrates how far this company has gone beyond the industry standard mindset in the old days with customer was the meter.

The recovery for IHG investments.

If you look across the problems that have occurred right over the rate cases, they've been constructive in our historical rate km Richardson and constructive so I would not expect any deviation from that okay.

And you guys have just transformed that kind of old models.

Alright.

The seriousness.

Grab them.

Okay, Great. That's helpful. Alright, Thanks, a lot appreciate it.

The efficiency offerings to me illustrates that point so it matters.

And Justin just a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

I'm looking at the call of disconnect between the $60 million.

Energy efficiency investments and the $482 million.

And our next question comes from the line of Roger Liddell with clear Harbor asset management.

Which I believe you said is a three year.

What's your go ahead.

Thank you and good morning.

Program so.

Alright.

How do we get from the 60 kinds of levels too.

Just wanted to.

I wanted to get some texture on the energy efficiency program.

<unk> the <unk>.

Aggregate $4 82, and how are you measuring the outcomes.

Yeah.

Those programs is it simply on the investment being made or are there. Some measure of poles that you can take back and used for fine tuning the program.

To me it's.

It's S symmetrically important because.

It illustrates how far this company has gone beyond the industry standard mindset of in the old days with customer was the meter.

Okay.

Hey, good morning, Roger.

Sure.

Thank you for your question and thank you for your log ownership and then Jr. Just good to hear from you.

And you guys have just transformed that kind of old models.

So I appreciate you acknowledging that the role that energy efficiency plays in greenhouse gas emissions. We believe it's one of the most important things we can do to help drive a reduction in <unk>.

The seriousness.

Grab some of the efficiency offerings to me illustrates that point so it matters.

I'm looking at the call of disconnect between the $60 million.

Over time, and because we are decoupled.

We're able to offer those energy efficiency programs.

Energy efficiency.

$60 million that you referred to.

Investments and the $482 million.

A significant number because it's our largest ever investment in energy efficiency, but that was really all I'll say gold trading of what our Q1 as we refer to it and so that was a three year charter.

I believe you said so.

Three year.

Program so.

How do we get from the 60 kinds of levels.

To the <unk>.

Roughly $39 million program, so that spending is being.

I agree I get $4 82, and how are you measuring the outcomes.

Recovered and divested under.

Those programs is it simply on the investment being made or are there. Some measure of poles that you can take back and used for fine tuning the program.

The upcoming trading them too.

$482 million issue referred to.

That includes an increase in the size of certain programs that we normally offer.

Okay.

Hey, good morning, Roger.

Thank you for your question and thank you for your log ownership and then Jr. Because it's good to hear from you.

When we refer to as customized energy programs for small and large commercial customers.

So I appreciate you acknowledging that.

But also new elements that are related to building de carbonization.

The role that energy efficiency plays in greenhouse gas emissions. We believe it's one of the most important things we can do to help drive a reduction in <unk>.

And to your point, while we do measure the investment certainly save it for our investors. They're also measurable goals related to energy savings that we have to hit as well as part of that.

Over time, and because we are decoupled.

We're able to offer those energy efficiency programs.

$60 million that you referred to.

Approval of that program.

Significant number because it's our largest ever investment in energy efficiency, but that was really all I'll say gold trading of water to one as we refer to it and so that was a three year charter.

That answers your question Roger.

Yes. It does thank you.

A related question is a year or so ago.

The context is hydrogen.

Roughly $39 million program that that spending is being.

You are.

Estimate.

Back then at least was in the range of $8 an mcf equivalent.

Recovered and divested under.

The upcoming training them too, which is the $482 million issue referred to.

And the contrast, with the federal objectives of around $2.

That includes an increase in the size of certain programs that we normally offer.

Is there any progress to speak up has that number.

What we refer to as customized energy programs for small and large commercial customers.

To the right direction.

I mean, the program is still being put together now and some of the rules associated with <unk>.

But also new elements that are related to building de carbonization.

Taxes, and how theyre going to applied are coming through but I think generally speaking the amount of dollars going towards hydrogen is going to drive down that price of harsh and that their target price.

And to your point, while we do measure the investment certainly saving for our investors. They're also measurable goals related to energy savings that we have to hit as well as part of that.

We're at a dollar a telegram, which equates to about $8 seven btu natural gas almost pricing parity. So we expected to go in that direction, but those programs are moving forward as we speak and we will see in time.

Approval of that program.

That answers your question Roger.

Yes. It does thank you.

A related question is a year or so ago.

Finally ends up.

Yeah.

The context is hydrogen.

Okay last question, you mentioned gas fired heat pumps.

Your.

Estimate.

And maybe it's better handled offline, but it's useful for the call.

Back then at least was in the range of $8 an mcf equivalent.

I wasn't really aware that there was <unk>.

And the contrast, with the federal objectives of around $2.

Critical mass of technology, and the gas fired heat pump area could that be a meaningful opportunity.

Is there any progress to speak up has that number.

To the right direction.

Rogers.

Yes, so gas heat pumps have been available at the commercial level for some time.

I mean, the program is still being put together now and some of the rules associated with <unk>.

Taxes, and how theyre going to applied are coming through but I think generally speaking the amount of dollars going towards hydrogen is going to drive down that price of harsh and with their target price.

There are a number of vendors and manufacturers that have.

I'll call them early stage, but commercially available residential gas heat pumps, some are being used in the European market broadly here yet.

We're at a dollar a telegram, which equates to about $8 seven btu natural gas almost pricing parity. So we expected to go in that direction.

In North America.

But those heat pumps, Kevin equivalent efficiency of north of 30% and so they represent.

But those programs are moving forward as we speak and we'll see in time.

Moving over a high efficiency natural gas a furnished today and so we do think that moving into the future that represents an opportunity for us to continue to drive.

Finally ends up.

Yeah.

Okay.

Question, you mentioned gas fired heat pumps.

Efficiency gains in natural gas heating appliances.

Maybe it's better handled offline, but it's useful for the call.

Right and thank you and thank you all for the execution deliver again and again.

Yes.

I wasn't really aware that there was a critical mass of technology and the gas fired heat pump area.

Thanks, Scott and thanks for the questions.

Could that be a meaningful opportunity.

Yeah.

As a reminder, if you'd like to ask a question. Please feel free to do so now by pressing star one on your telephone keypad.

Roger just ask.

So again, yes, so gas heat pumps have been available at the commercial level for some time.

And our next question comes from the line of Gabe Moreen with Mizuho.

There are a number of vendors and manufacturers that have.

Please go ahead.

Thank you good morning, everyone.

I'll call them early stage, but commercially available residential gas heat pumps, some are being used in the European market broadly here yet.

Just had a question on the CEB backlog additions it seems like you've had success in adding to the backlog and it's skewed heavily towards how does new Jersey I'm just wondering.

North America.

If anything happened in changing in the competitive landscape to make that happen. This past quarter and also just longer term how you envision I guess the breakup between Jordan, New Jersey, or non New Jersey projects kind of shaking down if there's an ideal target that youre targeting.

Those heat pumps getting equivalent efficiency of north of 30% and so they represent an improvement over our high efficiency natural gas a furnished today and so we do think that.

Moving into the future that represents an opportunity for us to continue to drive.

So we talked for a long time gave about diversifying outside of the state of New Jersey heading towards jurisdictions that we believe have a similar risk profile and what you see in that number is essentially just executing that plan. So and do we have a target on it.

The gains in natural gas heating appliances.

Right. Thank you and thank you all for the execution that you deliver again and again.

Thanks, Scott and thanks for the questions.

That is split no I don't think so.

Yeah.

At this point, it's really whereas the jurisdiction.

As a reminder, if you'd like to ask a question. Please feel free to do so now by pressing star one on your telephone keypad.

That's friendly towards solar and where can we make the investments.

It's best for the deals that we're able to put together.

And our next question comes from the line of Gabe Moreen with Mizuho.

We're happy to see that number growing project pipeline.

Keith Please go ahead.

Thank you good morning, everyone.

Our available investments in that space, continuing to increase and support our continued investment in solar going forward.

Just had a question on the CEB backlog additions. It seems like you had success in adding to the backlog and it's skewed heavily towards out of New Jersey I'm just wondering.

Thanks, Steve and I'll ask maybe every quarter, but any update on a potential leaf river expansion and I'm also just curious with.

If anything happened in changing in the competitive landscape to make that happen. This past quarter and also just longer term how you envision I guess the breakup between New Jersey, and non New Jersey projects kind of shaking down if there is an ideal target that youre targeting.

More winter weather under your belt and Adelphia, how that asset has been performing and whether there's any room to squeeze more capacity out.

So I'll take the first one so we are continuing to look at maybe forever.

So we talked for a long time gave about diversifying outside of the state of New Jersey heading towards jurisdictions that we believe has a similar risk profile. What you see in that number is essentially just executing that plan. So and do we have to target 100% is split no I don't think so.

I keep saying.

We are working on transactions, we don't have anything to update at this point in time, but certainly the market has supported and triggers.

Triggers adelphia gateway is doing well three point year on year is up.

A significant percentage and we're continuing to watch that asset and see where we can pursue organic growth opportunities just like we are across the whole company.

At this point, it's really whereas the jurisdiction.

Friendly towards solar and where can we make the investments and where is it.

It's best for the deals that we're able to want to put together.

Okay. Thanks, Dave.

Alright, thank you.

Yes, we're happy to see that number growing project pipeline.

Thank you that concludes our Q&A session for today and with that I will pass it back over to Adam for some closing remarks.

Our available investments in that space continued increase in support our continued investment in solar going forward.

Thanks, Jessica and thanks, everyone for joining us this morning.

Thanks, Steve and I ask maybe every quarter, but any update on a potential leaf river expansion Im also just curious with.

A recording of this call is available for replay on our website and as always we appreciate your interest and investment in and Jr. Thanks, everyone have a good one.

More winter weather under your belt, and adelphia, how that assets been performing and whether there's any room to squeeze more capacity out.

Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Yeah.

So I'll take the first one so we are continuing to look at peace River and like I keep saying, yes, we're working on transactions. We don't have anything to update at this point in time, but certainly the market has supported and.

Triggers adelphia gateway is doing well three point year on year is up.

By a significant percentage and we're continuing to watch that asset and see what we can pursue organic growth opportunities just like we are across the whole company.

Okay. Thanks, Steve.

Alright, thank you.

Thank you that concludes our Q&A session for today and with that I'll pass it back over to Adam for some closing remarks.

Thanks, Jessica and thanks, everyone for joining us this morning.

A reminder, a recording of this call is available for replay on our website and as always we appreciate your interest and investment in and Jr. Thanks, everyone have a good one.

Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Yeah.

Okay.

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