Emera Incorporated Q1 2024 Earnings Call
Following the presentation, we will conduct a question and answer session.
At any time during this call you'll require immediate assistance. Please press star zero for the operator.
Also note that this call is being recorded on Monday may 13th 2024, and I would like to turn the conference over to David <unk>. Please go ahead Sir.
David: Thank you Sylvia and thank you all for joining US. This morning for <unk> first quarter 2024 conference call and live webcast <unk> first quarter earnings release was distributed this morning via newswire and the financial statements management's discussion and analysis and the presentation being referenced on this call are available on our website at <unk> Dot com.
David: Joining me for this morning's call are Scott Balfour, <unk>, President and Chief Executive Officer, Greg Blunden, <unk>, Chief Financial Officer, and other members of <unk> management team.
David: Before we begin I will take a moment to advise you that this morning's discussion will include forward looking information, which is subject to the cautionary statement contained in the supporting slide today's discussion and presentation will also include references to non-GAAP financial measures you should refer to the appendix for definitional information and reconciliations of historical non-GAAP.
GAAP measures to the closest GAAP financial measure now I'll turn things over to Scott.
Scott Balfour: Thank you, Dave and good morning, everyone.
Scott Balfour: This morning, we reported Q1 2024 earnings of 76 per share as compared to 99 per share in the first quarter of 2023.
Scott Balfour: As we look at our first quarter I want to provide some context on our results and to express our confidence as we look ahead to the rest of 2024.
Results this quarter compare to an unusually strong first quarter last year across many of our businesses as.
Scott Balfour: As a result.
Scott Balfour: Our results don't seem as strong in comparison and Greg will talk more about this in a few minutes.
Greg Blunden: Despite the reduction in EPS for the quarter, we remain confident about the year ahead, and our ability to deliver solid earnings.
Greg Blunden: Across the board our regulated utilities continued to execute well on their business plans.
Greg Blunden: They remain focused on safely and reliably delivering energy to their customers and investing in their systems and to continue to do so with investments focused on reducing carbon improving reliability and supporting electrification.
Greg Blunden: Since the start of 2024, we've already deployed more than $600 million in capital.
Greg Blunden: We're well on the way to fully executing our 2024 capital plan, where we will invest almost $3 billion.
Greg Blunden: Part of our 7% to 8% three year rate base growth forecast and a driver of our forward looking earnings growth expectations.
Greg Blunden: Our capital investments are focused on the core pillars of reliability and energy transition.
Greg Blunden: Our work this year will help our operating companies ensure the reliability of the grid, while managing through the energy transition in a manner that is as cost effective as possible for their customers.
Greg Blunden: We're also working to ensure we continue to secure the timely return on and return of our investments, which is even more important within the higher cost of capital environment. We're in today.
Greg Blunden: Our operations in Florida continue to be the growth engine of our mirror.
Greg Blunden: Three quarters of our capital plan is being deployed into customer focused investments at peoples gas in Tampa electric largely to support the overall growth we continue to see in the region.
Greg Blunden: Florida is one of the fastest growing economies in populations in North America.
Greg Blunden: Tampa Electric investments include our storm protection plan, where we expect to spend 185 U S million dollars. This year to continue to increase the resiliency and reliability of Tampa electric system.
Greg Blunden: This capital program will see Tampa electric underground approximately 100 miles of higher risk existing overhead lines this year and upgrade more than 1100 Poles.
Greg Blunden: Of more than 12500 miles of distribution system more than half are now underground.
Greg Blunden: The team in Tampa is also continuing to invest in solar generation, which is both cost effective for Tampa electric customers, but also reduces reliance on fossil fuels.
Greg Blunden: By the end of 2024, we expect to have 30 550 megawatts of installed solar capacity.
Greg Blunden: The team continues to deliver value to Tampa electric customers and these projects are excellent examples of that value.
Greg Blunden: Still looking at Florida peoples gas is investing to support growth in the state and its role as an integral part of the energy ecosystem.
Greg Blunden: Peoples gas has recently signed up another renewable natural gas or LNG facility.
As it continues to invest in diverse and cleaner energy solutions to meet the growing needs of Floridians.
Greg Blunden: The Pope R&D facility will connect the Polk County landfill operation in Winter Haven, Florida, with the Florida gas transmission system.
Greg Blunden: This important project is in the engineering stages and should take approximately 12 months to complete.
Greg Blunden: Additionally, the team at peoples gas or supporting Florida, and its highway 98 expansion, which involves replacing 12 miles of existing transmission pipeline to accommodate the widening of highway 98 in Polk in Pasco counties.
Greg Blunden: And of course the growth in this business continues as peoples gas is adding approximately 20000 new customers this year.
Greg Blunden: Peoples gas is on pace to soon become our second largest business.
Greg Blunden: Reliability efficiency and safety are common themes across our operating companies.
Greg Blunden: In Nova Scotia, the Nova Scotia power team continues to work with our New Brunswick neighbors to advance work on the Atlantic reliability time.
Greg Blunden: This project will strengthen the transmission connection between the two provinces to deliver more reliable electricity to Nova Scotia and to support the integration of new wind energy that we expect to be added to the grid in the future.
The project has received environmental approval in Nova Scotia, and Engineering and project management work will continue through 2024.
Greg Blunden: Nova Scotia power is targeting an in service date of late 2027 to mid 2028.
Greg Blunden: The Nova Scotia, a portion of this project is estimated to cost $800 million.
Greg Blunden: Of which Nova Scotia power will be responsible for investing 50% with the remaining 50% funded by the Canada infrastructure Bank.
We remain confident in our ability to not only successfully execute on our three year capital plan, but also to ensure a timely recovery.
Greg Blunden: On prudently incurred investments through a rate case cadence that aligns our infrastructure investments with the regulatory processes required to support them.
Greg Blunden: Given how topical it is I would like to note that while datacenters are not yet impacting our service territories. We are working with the economic development agencies in Tampa to better position and ready the Tampa region, and Tampa electric for the opportunity.
Greg Blunden: In the meantime, Tampa electric team remains focused on serving our existing growing customer base reliably and safely.
Greg Blunden: Tampa Electric has filed a petition for future rate increases with the Florida Public Service Commission.
Greg Blunden: Questing $297 million in new rates effective January one 2025.
Funded by the Canada infrastructure Bank.
Greg Blunden: The rate case outlines additional increases that would take effect January one 2026 of $100 million.
We remain confident in our ability to not only successfully execute on our three year capital plan, but also to ensure a timely recovery.
Greg Blunden: And $72 million on January one 2027.
On prudently incurred investments through a rate case cadence that aligns our infrastructure investments with the regulatory processes required to support them.
Greg Blunden: These subsequent year increases would be tied to the successful completion of specific capital projects that are already in motion.
Greg Blunden: We expect hearings for the rate case to take place in the second half of August with a decision in the fourth quarter of 2024.
Given how topical it is I would like to note that while datacenters are not yet impacting our service territories. We are working with the economic development agencies in Tampa to better position and ready the Tampa region, and Tampa electric for the opportunity.
Greg Blunden: On April 30th Nova Scotia power received $117 million from the province of Nova Scotia for the securitization of the balance of 2024 fuel costs.
In the meantime, Tampa electric team remains focused on serving our existing growing customer base reliably and safely.
This is an important example of the province, working collaboratively collaboratively with Nova Scotia power to develop solutions that benefit in <unk> and health, Nova Scotia power continued to focus on reliable service delivery for customers, while maintaining the financial integrity of the business.
Tampa Electric has filed a petition for future rate increases with the Florida Public Service Commission.
Requesting $297 million in new rates effective January one 2025.
We were pleased that the new Mexico gas team and all intervenors achieved a settlement in new Mexico gas rate case, supporting an annual base revenue increase of $30 million U S to take effect October one of this year pending final review and support by the PRC.
The rate case outlines additional increases that would take effect January one 2026 of $100 million.
And $72 million on January one 2027.
These subsequent year increases would be tied to the successful completion of specific capital projects that are already in motion.
Greg Blunden: The ROE and capital structure remain unchanged at $9, 375% and 52% respectively.
We expect hearings for the rate case to take place in the second half of August with a decision in the fourth quarter of 2024.
Greg Blunden: Our teams worked very hard to engage with regulators and stakeholders to achieve regulatory outcomes that first and foremost benefit customers.
On April 30th Nova Scotia power received $117 million from the province of Nova Scotia for the securitization of the balance of 2024 fuel costs.
Greg Blunden: But which also and essentially deliver reasonable financial outcomes, thus ensuring continued access to competitive cost of capital at our utilities.
This is an important example of the province, working collaboratively collaboratively with Nova Scotia power to develop solutions that benefit in Nova Scotia, and help Nova Scotia power continued to focus on reliable service delivery for customers, while maintaining the financial integrity of the business.
Greg Blunden: I am pleased to report that our regulatory agenda remains on track for the year.
Greg Blunden: Despite the fluctuations that can happen in any given quarter the underlying drivers of growth in our business remain strong.
Greg Blunden: We have significant population growth in our core geographic service territories of Florida, and Nova Scotia, we have significant demand for investments to be made in support of our utility customers and we have constructive and professional regulators that understand the business we operate in.
Okay.
Okay.
Okay.
Speaker Change: Thank you.
Speaker Change: $30 million U S to take effect October one of this year pending final review and support by the PRC.
Greg Blunden: This is underpinned by the focus we have in America.
Speaker Change: The ROE and capital structure remain unchanged at $9, 375% and 52% respectively.
Greg Blunden: Planning focused investments and focused teams.
Speaker Change: Before I turn it over to Greg I want to say that while we don't have anything to announce today on our asset sale program. We continue to be encouraged by what we've seen so far in the processes. We continue to be on track to provide clarity by the end of June.
Speaker Change: Our teams worked very hard to engage with regulators and stakeholders to achieve regulatory outcomes that first and foremost benefit customers.
Speaker Change: But which also and essentially deliver reasonable financial outcomes. Thus ensuring continued access to competitive cost of capital that are utilities.
Speaker Change: And with that I'll turn it over to Greg to take you through our financial results.
Speaker Change: I'm pleased to report that our regulatory agenda remains on track for the year.
Thank you Scott and good morning.
Greg Blunden: This morning, we reported first quarter adjusted earnings of $216 million and adjusted earnings per share of <unk> 76.
Speaker Change: Despite the fluctuations that can happen in any given quarter the underlying drivers of growth in our business remain strong.
Greg Blunden: Compared to $268 million in 99 and 2023.
Speaker Change: We have significant population growth in our core geographic service territories of Florida, and Nova Scotia, we have significant demand for investments to be made in support of our utility customers and.
Greg Blunden: The reduction in EPS. This quarter was not unexpected Q1, 2023 was an unusually strong quarter with new Mexico gas in Emera energy reporting their highest quarterly earnings ever and Tampa electric experiencing very strong weather driven load compared to historical norms.
Speaker Change: And we have constructive and professional regulators that understand the business we operate in.
Greg Blunden: Whereas in Q1 2024, we've experienced the mildest weather seen in West Central Florida, 50 years higher operating cost, resulting from growth in our business and investments in reliability.
Speaker Change: This is underpinned by the focus we have in a mirror focused planning focused investments and focused teams.
Speaker Change: Before I turn it over to Greg I want to say that while we don't have anything to announce today on our asset sale program. We continue to be encouraged by what we've seen so far in the processes. We continue to be on track to provide clarity by the end of June.
Greg Blunden: And increased holding company costs largely from the timing differences on the mark to market of our hedge on our long term compensation plan.
Greg Blunden: On the positive side of things this quarters results reflect increase and continuing customer growth in Tampa electric peoples gas and Nova Scotia power.
Speaker Change: And with that I'll turn it over to Greg to take you through our financial results.
Greg: Thank you Scott and good morning.
Greg Blunden: It reflects new rates at peoples gas, resulting from the 2023 rate case, and a solid start the year for emera energy, albeit lower than last year.
Greg: This morning, we reported first quarter adjusted earnings of $216 million and adjusted earnings per share of <unk> 76.
Compared to $268 million and 99 in 2023.
Greg Blunden: Operating cash flow before changes in working capital decreased modestly year over year, largely as a result of the lower operating earnings in the quarter.
Greg: A reduction in EPS. This quarter was not unexpected Q1, 2023 was an unusually strong quarter with new Mexico gas in Emera energy reporting their highest quarterly earnings ever and Tampa electric experiencing very strong weather driven load compared to historical norms.
Speaker Change: And now I'd like to take a deeper look into the details of our quarterly results.
Speaker Change: Peoples gas recorded its highest quarterly earnings ever driven by new rates at the beginning of the quarter that reflect the growth that has been experiencing over the last three years.
Greg: Whereas in Q1 2024, we've experienced the mildest weather seen in West Central Florida in 50 years higher operating cost, resulting from growth in our business and investments in reliability.
Speaker Change: This increase was muted a little by a return to more normal earnings at New Mexico gas.
Speaker Change: As a result, the gas segment was up $3 million for <unk>.
Greg: And increased holding company costs largely from the timing differences on the mark to market of our hedge on our long term compensation plan.
Speaker Change: Very mild weather in the quarter was responsible for $14 million or nearly two thirds of Tampa electric's $22 million or <unk> <unk> earnings decrease.
Greg: On the positive side of things this quarters results reflect increase and continuing customer growth in Tampa electric peoples gas and Nova Scotia power.
Speaker Change: The balance was due to higher costs to run the business, partially offset by new base rates and customer growth Tampa electric is seeking recovery of these higher costs in its base rates application.
Greg: It reflects new rates at peoples gas, resulting from the 2023 rate case, and a solid start the year for emera energy, albeit lower than last year.
Speaker Change: Nova Scotia power earnings were $11 million or <unk>, <unk> lower quarter over quarter as they experienced higher operating cost to support the customer growth that we are experiencing.
Operating cash flow before changes in working capital decreased modestly year over year, largely as a result of lower operating earnings in the quarter.
Speaker Change: Partially offset by higher revenues as a result of that customer growth.
Speaker Change: And now I'd like to take a deeper look into the details of our quarterly results.
Speaker Change: <unk> energy recorded second best Q1 ever but it didnt compare to the strength of Q1 of 2023 as I mentioned earlier when they benefited from a much stronger natural gas market, they were down $10 million or <unk> for the quarter.
Speaker Change: Peoples gas recorded its highest quarterly earnings ever driven by new rates at the beginning of the quarter that reflects the growth that has been experiencing over the last three years.
Speaker Change: This increase was muted a little by a return to more normal earnings at New Mexico gas.
Speaker Change: And higher share count decreased adjusted earnings per share by four in the quarter as a result of our drip and ATM activity over the last year.
Speaker Change: As a result, the gas segment was up $3 million or <unk>.
Speaker Change: Our corporate costs increased by nearly $24 million or eight this quarter, primarily driven by higher long term compensation hedge expense and higher interest expense offset by lower corporate taxes.
Speaker Change: Very mild weather in the quarter was responsible for $14 million or nearly two thirds of Tampa electric's $22 million or <unk> <unk> earnings decrease.
Speaker Change: The balance was due to higher cost to run the business, partially offset by new base rates and customer growth Tampa electric is seeking recovery of these higher costs in its base rate application.
By far the largest driver of this would be the hedges, which negatively impacted pre tax earnings by $18 million or <unk> <unk>.
On our fourth quarter call I outlined three key areas of focus for us as we work diligently to strengthen our balance sheet.
Speaker Change: While the Scotia power earnings were $11 million or <unk> lower quarter over quarter as they experienced higher operating costs to support the customer growth that we are experiencing.
Speaker Change: I am pleased to say that we continue to make progress on all three fronts.
Speaker Change: Partially offset by higher revenues as a result of that customer growth.
Timely collection of deferrals remains a key area of focus for us, particularly in Nova Scotia.
Speaker Change: As Scott mentioned, we have received $117 million of fuel funding from the province, and we are actively working with stakeholders on a plan to collect the remaining Tam deferral in a way that balances timely recovery with customer affordability.
Speaker Change: <unk> energy recorded second best Q1 ever but it didnt compare to the strength of Q1 of 2023 as I mentioned earlier when they benefited from a much stronger natural gas market, they were down $10 million or <unk> for the quarter.
Minimizing regulatory lag is an important part of managing our growth.
Speaker Change: And higher share count decreased adjusted earnings per share by <unk> in the quarter as a result of our drip and ATM activity over the last year.
Last month, Tampa electric meters, and 2025 base rate applications.
Speaker Change: Given the outcome of the peoples gas rate case last year. We are confident that we will receive a constructive outcome that will allow tampa electric to recover on the rate base investments as we're making since 2022.
Speaker Change: Our corporate costs increased by nearly $24 million or <unk> <unk>. This quarter, primarily driven by higher long term compensation hedge expense and higher interest expense offset by lower corporate taxes.
Speaker Change: By far the largest driver of this would be the hedges, which negatively impacted pre tax earnings by $18 million or <unk>.
Our traditional financing plan supports our rate base investment program. In addition to reinvesting cash flow the ATM and drip will remain an important source of equity for us in 2024.
On our fourth quarter call I outlined three key areas of focus for us as we work diligently to strengthen our balance sheet.
Speaker Change: We also continue to evaluate the hybrid capital markets on both sides of the border and we believe this presents an opportunity a viable opportunity to further strengthen our capital structure.
Speaker Change: I am pleased to say that we continue to make progress on all three fronts.
Speaker Change: Timely collection of deferrals remains a key area of focus for us, particularly in Nova Scotia.
Speaker Change: In addition to our traditional sources of financing we remain committed to executing our asset sale program. We intend to use the proceeds to retire variable rate holding company debt, which will further improve our ratio of holding company debt to total debt and strengthen our overall credit profile.
Speaker Change: As Scott mentioned, we have received $117 million of fuel funding from the province, and we are actively working with stakeholders unplanned to collect the remaining firm deferral in a way that balances timely recovery with customer affordability.
Speaker Change: We are firmly committed to retaining investment grade ratings and are confident that our actions to sell assets and reduce holding company debt will significantly improve our credit metrics.
Speaker Change: Minimizing regulatory lag is an important part of managing our growth.
Last month, Tampa electric made into 2025 base rate application.
Speaker Change: These activities are further supported by our ongoing rate base investments in regulatory filings that will drive predictable cash flow growth over time.
Speaker Change: Given the outcome of the peoples gas rate case last year. We are confident that we will receive a constructive outcome that will allow tampa electric to recover on the rate base investments, we're making in 2022.
Speaker Change: Executing in these three areas will ultimately result in a stronger balance sheet and return us to stable investment grade metrics in the near future.
Speaker Change: Our traditional financing plan supports our rate based investment program. In addition to reinvesting cash flow the ATM and drip will remain an important source of equity for us in 2024.
Speaker Change: And with that I'll turn it back over to Scott.
Scott Balfour: I'd like to wrap up today's call by reiterating that we are confident in the path we're on.
Speaker Change: We also continue to evaluate in the hybrid capital market on both sides of the border and we believe this presents an opportunity a viable opportunity to further strengthen our capital structure.
Scott Balfour: Whether thats executing this year's portion of our nearly $9 billion three year capital plan successfully navigating Tampa electric rate case or strengthening our balance sheet through asset sales, we are focused on delivering value for our customers and creating value for our shareholders.
Speaker Change: In addition to our traditional sources of financing we remain committed to executing our asset sale program. We intend to use the proceeds to retire variable rate holding company debt, which will further improve our ratio of holding company debt to total debt and strengthened our overall credit profile.
Scott Balfour: We have meaningful growth in front of us and in the short term our focus to ensure we are best positioned to fund that growth.
Speaker Change: We are firmly committed to retaining investment grade ratings and are confident that our actions to sell assets to reduce holding company debt will significantly improve our credit metrics.
Scott Balfour: That concludes our remarks, and I'll turn the call back to Dave.
Dave: Thanks, Scott, we would now like to open the call for questions from analysts.
Dave: Thank you gentlemen.
Speaker Change: These activities are further supported by our ongoing rate base investments in regulatory filings that will drive predictable cash flow growth over time.
Speaker Change: Ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone you will hear a prompt at your hand has been raised should you wish to withdraw from the question queue simply press star followed by two.
Speaker Change: Executing in these three areas will ultimately result in a stronger balance sheet, a return to stable investment grade metrics in the near future.
Speaker Change: Using a speaker phone please lift the handset before pressing any Keith. Please go ahead ma'am Crestar one now if you do have any questions.
Speaker Change: And with that ill turn it back over to Scott.
Scott: I'd like to wrap up today's call by reiterating that we are confident in the path Ron.
Speaker Change: And your first question will be from <unk>.
Scott: Whether thats executing this year's portion of our nearly $9 billion three year capital plan successfully navigating Tampa electric rate case or strengthening our balance sheet through asset sales, we are focused on delivering value for our customers and creating value for our shareholders.
Speaker Change: Choi of RBC. Please go ahead.
Choi: Thank you and good morning, everyone I wanted to pick up on your 2020 outlook on Tampa Electric.
Choi: Mike the weak Q1 results at the utility you cannot change the commentary in the MD&A for the outlook. So what are you expecting may happen over the balance of the year they'll keep you towards the low end up to <unk> range.
Scott: We have meaningful growth in front of us and in the short term our focus to ensure we are best positioned to fund that growth.
Scott: That concludes our remarks, and I'll turn the call back to Dave.
Dave: Thanks, Scott, we would now like to open the call for questions from analysts.
Mike: Thanks for the question Archie.
Mike: I'll, let you respond to <unk>.
Speaker Change: Thank you gentlemen, ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone.
Archie: Sure Greg Good morning Maurice.
Greetings from from Tampa, Florida.
Archie: A couple of things a recent in response to the question first of all.
Speaker Change: You'll hear a prompt at your hand has been latest should you wish to withdraw from the question queue simply press star followed by two.
Archie: As Greg and Scott alluded to the weather in.
In Q1 was unusually mild meaning it was neither warm nor cold we generally benefit from.
Speaker Change: We are using a speaker phone please lift the handset first before.
Speaker Change: Before question any key.
Speaker Change: Please go ahead, ma'am Crestar one now if you do have any questions.
Archie: Fair level of.
Archie: Heating degree days in the first quarter, driven by cold weather and we just didn't get that in the first quarter of this year. It was just.
Speaker Change: And your first question will be from Maurice Choy of RBC. Please go ahead.
Maurice Choy: Thank you and good morning, everyone I wanted to pick up on your 2020 outlook on Tampa Electric.
Archie: Just mild weather.
Archie: Not good for heating and not good for cooling either over the balance of the year. We expect the we expect to see a reversion to the mean and a return to the historical 20 year average the first quarter tends to be a quarter that contributes a disproportionately small portion of our of our overall annual net.
Maurice Choy: The weak Q1 results at the utility you cannot change the commentary in the MD&A put outlook. So what are you expecting may happen over the balance of the year they'll keep you towards the low end up to <unk>.
Maurice Choy: <unk> range.
Maurice Choy: Okay.
Archie: And so as we as we look towards the last nine months of the year. We just have every confidence that we'll see.
Thanks for the question Archie I'll, let I'll.
Speaker Change: I'll, let you respond to <unk>.
Archie: Sure Greg Good morning Maurice.
Archie: Greetings from from Tampa, Florida.
Archie: Stronger weather.
And increased discipline on O&M management, and some of the other costs that the.
Speaker Change: Couple of things some recent in response to the question first of all.
Speaker Change: As Greg and Scott alluded to the weather in.
Archie: The drag this down in Q1.
Speaker Change: In Q1 was unusually mild meaning it was neither warm nor cold we generally benefit from.
Archie: Okay.
Speaker Change: I understand that management bit, but you mentioned whether are you expecting the nine months to have stronger weather then pass to offset the weaker weather in Q1, yes.
Speaker Change: A fair level of.
Speaker Change: Heating degree days in the first quarter, driven by cold weather and we just didn't get that in the first quarter of this year. It was just.
Speaker Change: Yes, yes, again again Maurice.
Speaker Change: Like the earnings contribution from Q1 is disproportionately.
Speaker Change: Mild weather.
Speaker Change: Not good for heating and awkward for cooling either over the balance of the year. We expect the we expect to see a reversion to the mean and a return to the historical 20 year average the first quarter tends to be a quarter that contributes a disproportionately small portion of our of our overall annual net income.
Tends to be our weakest quarter, our smallest quarter I shouldn't I should rephrase that our smallest quarter from a from an earnings contribution perspective, so ample opportunity over the remaining nine months to more than make up for our shortfall.
Speaker Change: In revenue in Q1.
And just to clarify O&M management, you mentioned that what type of O&M management that you're expecting to kind of control.
Speaker Change: And so as we as we look towards the last nine months of the year. We just have every confidence that we'll see stronger weather.
Speaker Change: I think the biggest ones would be in the first quarter.
Speaker Change: And and and.
Speaker Change: And increased discipline.
Speaker Change: We saw higher bad bad debt than historical and that's just driven by it's a bit of.
Speaker Change: On O&M management, and some of the other costs that.
Speaker Change: The drag this down in Q1.
Speaker Change: A lag associated with.
Speaker Change: Okay.
Speaker Change: Higher rates higher bills from 2023, the fact that we have reduced electricity rates. So substantially in 2024, largely driven by a sharp decline in the fuel markets.
Speaker Change: I understand that.
Speaker Change: And bit, but you mentioned whether are you expecting a nine months to have stronger weather than the Pos to offset the weaker weather in Q1.
Speaker Change: Yes, yes, again again, Maurice the like the earnings contribution from Q1.
Speaker Change: It has manifested itself into lower bills for customers that are easier for them to manage and therefore lower bad debt expense over the balance of the year.
Speaker Change: <unk> is disproportionately.
Speaker Change: It tends to be our weakest quarter, our smallest quarter I shouldn't I should rephrase that our smallest quarter from a from an earnings contribution perspective, so ample opportunity over the remaining nine months to more than make up for our shortfall in revenue in Q1.
Speaker Change: First quarter of the year also tends to be a big one for us from a.
Speaker Change: From an O&M perspective.
Speaker Change: On generation maintenance that tends thats, our shoulder season, where we're doing a lot of our big major maintenance and we had a fair level of that in the first quarter of this year.
Speaker Change: And just to clarify O&M management, you mentioned that what type of O&M management are you expecting to get it.
Speaker Change: Sure.
Speaker Change: Understood. Thank you and if I could finish up with the asset sale program.
I think the biggest ones would be in the first quarter we.
Speaker Change: We saw higher bad bad debt than historical and that's just driven by it's a bit of.
Speaker Change: From what I recall, the asset sale program was sized to be up to 15% of your roughly 9 billion Capex plan.
A lag associated with.
Speaker Change: Higher rates higher bills from 2023, the fact that we have reduced electricity rate so substantially in 2024, largely driven by a sharp decline in.
Speaker Change: As you are very encouraged by the process and you do have clarity coming by the end of Q2 I Wonder if you could just refresh us.
Speaker Change: US on how you see the size of this program.
Speaker Change: So the number of asset sales.
Speaker Change: The fuel markets.
Speaker Change: Sales that you have ongoing right now.
Speaker Change: Has manifested itself into lower bills for customers that are easier for them to manage and therefore lower bad debt expense over the balance of the year.
Speaker Change: Okay.
Speaker Change: Yes, Bruce it's Scott again, so as we chatted about in our Q4 call.
First quarter of the year also tends to be a big one for us from a.
Speaker Change: Sure.
Scott Balfour: We're running two processes with this.
From an O&M perspective.
Scott Balfour: Really to ensure that we're successful with at least one that would meet that objective in terms of the capital funding programs.
On generation maintenance set turns that's our shoulder season, where we're doing a lot of our big major maintenance and we had a fair level of that in the first quarter of this year.
Scott Balfour: As you described but to the extent that we can be successful with.
Scott Balfour: Both and achieve achieve value expectations then.
Speaker Change: Understood. Thank you and if I can finish up with the asset sale program.
Scott Balfour: Then we would execute on on both and we hope to have as I say clarity on all of that by the end of June.
Speaker Change: From what I recall, the asset sale program was sized to be up to 15% of your roughly 9 billion Capex plan.
Scott Balfour: Let's be clear you expect to have clarity on both processes by the end of June.
Speaker Change: Very encouraged by the process and you do have clarity coming by the end of Q2, I Wonder whether you could just refresh us.
That's right.
Speaker Change: Alright, thank you.
Speaker Change: Thank you next question will be from Rob Hope at Scotiabank. Please go ahead.
Speaker Change: US on how you see the size of this program.
Speaker Change: And also the number of assets.
Rob Hope: Good morning, everyone.
Rob Hope: Question on the credit metrics.
Speaker Change: Sales that you have ongoing right now.
Rob Hope: When we take a look at the target 412% for 2024.
Speaker Change: Okay.
Speaker Change: Yes Bruce.
Speaker Change: Scott again, so as we chatted about in our Q4 call.
Rob Hope: Just given the weaker than expected start to the year can you do that organically or will you have to.
Speaker Change: Sure.
Scott: We're running two processes with this.
Rob Hope: Rely on asset sales to get there.
Rob Hope: As well as how our kind of fuel costs trending relative to collections.
Scott: Really to ensure that we're successful with at least one that would meet that objective in terms of the capital funding programs.
Rob Hope: Yes, Rob it's Greg good morning.
Scott: As you described but to the extent that we can be successful with the with both been achieved.
Rob Hope: Yes.
Greg Blunden: If you think of what we experienced in the first quarter. Despite the disappointing earnings results a large portion of that is noncash and the timing of the mark to market on the <unk>.
Scott: Cheap value expectations than.
Scott: Then we would execute on on both and we hope to have as I say clarity on all of that by the end of June.
Greg Blunden: On the hedge our operating cash flow was still well north of $600 million in the quarter. So nothing from an organic perspective.
Scott: BK you expect to have clarity on both processes by the end of June.
Greg Blunden: That was overly material in the quarter, although as we said all along one of the things one of the reasons why we were looking at asset sales was to Derisk. The achievement of those targeted credit metrics and and nothing has changed from that side of it either so between the organic growth, we're seeing in the business and with the asset sales. We are confident that we will be.
BK: That's right.
Speaker Change: Alright, thank you.
Speaker Change: Thank you next question will be from Rob Hope at Scotiabank. Please go ahead.
Robert Hope: Good morning, everyone.
Robert Hope: Question on the credit metrics.
Robert Hope: When we take a look at the target 412% for 2024.
Greg Blunden: Where we need to be in 2024.
Robert Hope: Just given the weaker than expected start to the year can you do that organically or will you have to.
Speaker Change: Thanks for that and then.
Robert Hope: Rely on asset sales to get there.
Maybe we can revisit the Atlantic look I appreciate the commentary on it however, its been fairly topical in recent weeks and the media with various people.
Robert Hope: As well as how our kind of fuel costs trending relative to collections.
Robert Hope: Yes, Rob it's Greg good morning.
Speaker Change: When you take a look at the path forward for this project to kind of what do you think are the risks or the key gating factors that we should be looking for.
Robert Hope: Yes.
Greg: If you think of what we experienced in the first quarter. Despite the disappointing <unk> results a large portion of that is non cash and the timing of the mark to market on that.
Speaker Change: Rob So so Peter's here and I'll pass to him in a second but just just.
On the hedge our operating cash flow was still well north of $600 million in the quarter. So nothing from an organic perspective.
Rob Hope: For clarity obviously.
Part of the solution to address the clean energy.
Rob Hope: Ambitions for province of Nova Scotia is the need for incremental transmission.
Greg: It was overly material in the quarter, although as we said all along.
One of the things one of the reasons why we were looking at asset sales was to Derisk the achievement of those targeted credit metrics.
Rob Hope: And the Atlantic Loop is still a projected is.
Peter: In light of sight, but isn't what the current focuses and maybe that setup Peter can take it from there. Thanks, Scott Hi, Rob Yes. So we're focused on the Nova Scotia, Nebraska, Taiwan to three and $3 45 kv transmission project connecting negotiate too.
Greg: And nothing has changed from that side of it either sold between the organic growth, we're seeing in the business and with the asset sales. We are confident that we will be where we need to be in 2024.
Speaker Change: Thanks for that and then.
Peter: Two new Brunswick, primarily for reliability purposes.
Speaker Change: Maybe we can revisit the Atlantic lift, but I appreciate the commentary on it however, its been fairly topical in recent weeks and the media with various people.
Rob Hope: That would run from Oslo.
Rob Hope: Those scotia side itself.
Speaker Change: When you take a look at the path forward for this project.
Rob Hope: You've probably heard it referred to as the first leg of the Atlantic loop, but we're not currently developing.
Speaker Change: What do you think are the risks or the key gating factors that we should be looking for.
Peter: That total at this point, we're just focused on the Taiwan I think your question was around the risks.
Speaker Change: So so peter's here and I'll pass to him in a second but just just for clarity obviously.
Peter: The risk of that project or like any transmission project, but we have been progressing very well in terms of land acquisition.
Peter: Part of the solution to address the clean energy.
Peter: Ambitions for province of Nova Scotia is the need for incremental transmission.
Peter: All the early engineering that.
What we're doing in cooperation with New Brunswick power is growing well looking to supply chain.
Peter: And the Atlantic Loop is still a project that is.
Peter: Make sure we get what we need on time and so Scott I think mentioned in his earlier comments have been serviced by <unk>.
Peter: In light of sight, but isn't what the current focus is maybe that set up Peter can take it from here. Thanks Scott.
Peter: 2027 or at least the first half of 2008 certainly is achievable.
Peter: So we're focused on the Nova Scotia to Taiwan to three to $3 45 kv transmission project connecting negotiate too.
Speaker Change: Thank you.
Peter: Two new Brunswick, primarily for reliability purposes.
Speaker Change: Thank you next question will be from Tom of.
Peter: That will run from Oslo.
Tom: BMO. Please go ahead.
Tom: Hi, good morning.
Peter: Scotia side itself.
Tom: Maybe on that continuing on that last question on that.
Peter: You've probably heard it referred to as the first leg of the Atlantic look, but we're not currently developing.
Hi, Ann.
Tom: You mentioned, the Canada infrastructure Bank earlier.
Peter: That total at this point, we're just focused on that Taiwan I think your question was around the risks.
Tom: Was that reference to the deck.
Ann: A component of it are.
Peter: The risk of that project or like any transmission project, but we have been progressing very well in terms of land acquisition.
Ann: Or is it.
Ann: Or are they investing.
Ann: Alongside differently.
Ann: Yes.
Peter: All the early engineering.
Early days, yet we haven't finalized that so is the concept.
Peter: We're doing that in cooperation with new Brunswick power as well.
Ann: But we're looking at a special purpose vehicles versus entity, where we would fund 50% of that project in CIB would fund 50% of that project.
To supply chain.
Peter: Let's make sure we get what we need on time and so Scott I think mentioned in his earlier comments to add that in service by late 2027 or at least the first half of 2008.
Ann: I would expect that it will be a combination of debt and equity on their side.
Speaker Change: Certainly is achievable.
Speaker Change: Okay got it.
Speaker Change: Thank you.
Speaker Change: And maybe at.
Speaker Change: As you think about your Europe.
Speaker Change: Thank you next question will be from Tom at.
Speaker Change: Payout for the year, you've reaffirmed the different growth of four 5%.
BMO. Please go ahead.
Tom: Hi, good morning.
Tom: Maybe on that continuing on that last question on that.
Speaker Change: As you look at that internally.
Speaker Change: As Amir normalized for weather volatility.
Tom: Hi, Ann.
Tom: You mentioned, the Canada infrastructure Bank earlier.
Speaker Change: The volatility.
Speaker Change: Do you think about the payout.
Tom: Was that reference to the deck.
Speaker Change: Is there a scenario here, where your payout ratio could be increasing versus 2023 results.
Ann: A component of it are.
Ann: Or is it.
Ann: Or are they investing.
Ann: Alongside differently.
Speaker Change: Okay.
Amir: Yes, Ben.
Ann: Yes.
Ann: Sure early days, yet we haven't finalized that so is the concept.
Ben: We don't we don't generated look to sort of normalized weather for purposes of calculating our our payout payout ratio, we just really drive that off of.
Ann: But we're looking at.
Ann: Actual purpose vehicles special purpose entity, where we would fund 50% of that project and CIB would fund 50% of that project.
Ben: Adjusted adjusted earnings and we think about that obviously.
Ben: Both as to where.
Ann: I would expect that it will be a combination of debt and equity on there Sean.
Ben: Where we're at relative to current adjusted earnings in historical adjusted earnings and of course, we also look at it on a forward looking.
Sean: Okay got it.
Speaker Change: And maybe.
Ben: Forward looking basis.
Speaker Change: As you think about your.
Ben: And but but no we don't we don't get into the fine tuning that in terms of in terms of.
Speaker Change: Your payout for the year, you've you've reaffirmed the debit growth of four 5%.
Pro forma calculating that on a weather weather adjusted basis.
Speaker Change: As you look at that internally.
Speaker Change: Does it mirror normalized for weather volatility.
Ben: And then maybe just how you think that that payout then you have some of the directional earned.
Speaker Change: The volatility.
Speaker Change: Do you think about the payout.
Speaker Change: Is there a scenario here, where your payout ratio could be increasing versus 2023 results.
Ben: Earnings drivers you mentioned Tampa up.
Ben: Gas is up.
Ben: Flat is that.
Speaker Change: Okay.
Speaker Change: Yes, Ben.
Ben: Do you think about the puts and takes that that payout ratio you Youre thinking Directionally then it's.
Ben: We don't we don't generated look to sort of normalized weather for purposes of calculating our our payroll.
It could probably be improving versus 23 or <unk>.
Ben: Payout ratio, we just really drive that off of.
Ben: Potentially St Gallen either side.
Ben: Adjusted adjusted earnings and we think about that obviously.
Ben: Yes.
Speaker Change: I'm not going to get into a forecast of what our payout ratio will be for 2024, and I know youll understand that but maybe maybe let me get at it this way.
Ben: Both is too.
Ben: Where we're at relative to current adjusted earnings in historical adjusted earnings and of course.
Ben: We also look at it on a forward looking.
Speaker Change: Ben is to say look we know our payout ratio was higher than where we would like it to be as higher than where our target is but I'd also say that we continue to believe that our dividend current dividend growth profile as is sustainable.
Ben: Forward looking basis.
Ben: And.
Ben: But no we don't we don't get into the fine tuning that in terms of in terms of.
Ben: Pro forma calculating that on a weather weather adjusted basis.
Speaker Change: Debt overtime.
Speaker Change: Over time, our EPS growth will outpace.
Ben: And maybe that ties.
Ben: Think of that the payout then you have some of the directional.
Speaker Change: That 4% to 5% dividend growth profile, and therefore, our payout ratio will come down over time.
Ben: Earnings drivers you mentioned Tampa up.
Ben: Gas is up.
Speaker Change: <unk>.
Speaker Change: Obviously.
Ben: <unk> flat is that.
Speaker Change: That will take some time, but we continue to be confident that our payout ratio will come down over time now I will say that we have.
Ben: Like what the puts and takes that that payout ratio you you're thinking Directionally then it's.
Speaker Change: We have had.
Speaker Change: Feedback and input from some investor, suggesting that moderating that dividend growth.
Ben: It could probably be improving versus 23 or.
Speaker Change: Profile.
Speaker Change: We potentially think on either side.
Might be something that we should consider and we've certainly heard that input looking at dividend growth in the <unk>.
Speaker Change: Yes.
I'm not going to get into a forecast of what our payout ratio will be for 2024, and I know youll understand that but maybe maybe let me get at it this way.
Speaker Change: Setting a dividend of course that as you know is a decision for.
Speaker Change: For the board not for.
Speaker Change: Is to say look we know our payout ratio was higher than where we would like it to be as higher than where.
Speaker Change: Not for Greg and I, but.
Speaker Change: But we will engage with the board and chair of course at that Investor feedback in.
Speaker Change: Our target is but I'd also say that we continue to believe that our dividend our dividend growth profile is.
Speaker Change: And discuss that with them, but in the meantime, we continue to.
Speaker Change: To believe that that payout ratio will come down over time as a result of our earnings growth expectations.
Speaker Change: Is sustainable.
Speaker Change: <unk>.
Speaker Change: Over time, our EPS growth will outpace.
Speaker Change: Exceeding the dividend growth guidance.
Speaker Change: Okay got it okay. Thanks Scott.
Speaker Change: That 4% to 5% dividend growth profile, and therefore, our payout ratio will come down over time.
Speaker Change: Thank you next.
Speaker Change: Our next question will be from Mark Jarvi CIBC capital markets. Please go ahead.
Speaker Change: And.
Speaker Change: Obviously.
Speaker Change: That will take some time, but we continue to be confident that our payout ratio will come down over time now I will say that we have.
Mark Jarvi: Yes, good morning.
Just clarify on the comments around the clarity from the asset sales by the end of June is that that you have seen indicative offers youll proceed with that or is that expectations to have buying base at that point.
Speaker Change: We have had.
Speaker Change: Back and input from some investor, suggesting that moderating that dividend growth.
Speaker Change: Profile.
Speaker Change: Might be something that we should consider and we certainly heard that input.
Mark Jarvi: Yes, I'm not going to get too fine tuned in terms of where we're at in the process. Given the end of the end of June is only six weeks away.
Speaker Change: At dividend growth in the setting of dividend of course that as you know is a decision.
Speaker Change: For for the board not four.
Speaker Change: Mark but.
Speaker Change: Obviously, we would expect to be providing clarity.
Speaker Change: Not for Greg and I, but.
Speaker Change: But we will engage with the board and chair of course at that Investor feedback.
Speaker Change: In terms of in terms of where we sit and path forward by the by the end of June. So I think you could reasonably interpret that to be in a position, where we're hoping to make an announcement within within the timeframe between now and the end of June.
Speaker Change: And discuss that with them, but in the meantime, we continue to.
<unk> believes that that payout ratio will come down overtime as a result of our earnings growth expectations.
Speaker Change: Understood and then Greg coming back to you made some comments around hybrid market north and south of the border would you say that the opportunity to access that market is stronger today than maybe a couple of months ago.
Speaker Change: Exceeding the dividend growth guidance.
Speaker Change: Okay got it okay. Thanks a lot.
Speaker Change: Thank you next.
Speaker Change: Our next question will be from Mark Jarvi CIBC capital markets. Please go ahead.
Speaker Change: Yes.
Greg Blunden: It is mark.
Greg Blunden: Well, it's certainly stronger in the United States, we have seen spreads tighten up quite a bit.
Mark Thomas Jarvi: Yes, good morning.
Mark Thomas Jarvi: Just clarify on the comments around the clarity from the asset sales by the end of June is that that you have seen indicative offers you will proceed with that or is that expectations to have buying base at that point.
Greg Blunden: Some of the change methodology changes that the rating agencies have implemented that have made it a little bit more attractive you certainly would have seen some of our peers in the U S do fairly substantial hybrid offerings in the United States.
Mark Thomas Jarvi: Yes, I'm not going to get too fine tuned in terms of where we're at in the process. Given the end of the end of June is only six weeks away.
Greg Blunden: Not necessarily say the Canadian market.
Greg Blunden: <unk> has been this constructive recently, but we're certainly seeing a much more constructive U S market.
Mark Thomas Jarvi: Mark.
Mark Thomas Jarvi: Obviously, we would expect to be providing clarity.
Greg Blunden: Okay.
Mark Thomas Jarvi: In terms of in terms of where we sit and path forward by the by the end of June. So I think you could reasonably interpret that to be in a position, where we're hoping to make an announcement within that with.
Greg Blunden: And then obviously a lot of chatter about load growth, particularly in the U S data centers, Richard and all that kind of stuff.
Anything with Tampa electric.
Greg Blunden: It's at a fairly high level of load growth great population growth activity their economic activity is.
Mark Thomas Jarvi: The other two.
Mark Thomas Jarvi: And then Greg you made some comments around hybrid market north and south of the border would you say that the opportunity to access that market is stronger today than maybe a couple of months ago.
Greg Blunden: Is there a less of an upside case and Tampa electric or do you think sort of that spreads between current load growth and where it could go across the U S could translate as well into Florida in your service territory.
Mark Thomas Jarvi: Yes.
Greg: It is mark.
Speaker Change: Yeah, Let me, let me start and Archie can art chicken can backfill.
Greg: And well it is certainly stronger in the United States, we have seen spreads tighten up quite a bit.
Archie: Youre right Mark.
And some of the.
Speaker Change: We're fortunate enough.
Greg: Methodology changes that the rating agencies have implemented have made it a little bit more attractive you certainly would have seen some of our peers in the U S do fairly substantial hybrid offerings in the United States.
The economy business climate population.
Speaker Change: Growth in Florida are all very strong and we're blessed to have not just one but two utilities of course based in that.
Greg: Wouldn't necessarily say the Canadian market.
It has been this constructive recently, but we're certainly seeing a much more constructive U S market.
Speaker Change: In that in that state and as a result of that underlying.
Speaker Change: Growth economic population growth, we're obviously seeing good growth of those utilities.
Greg: Okay.
Greg: And then obviously a lot of chatter about load growth, particularly in the U S data centers re shoring and all that kind of stuff.
Speaker Change: <unk>.
Speaker Change: The data center driven the.
Greg: Have you seen with Tampa electric.
Speaker Change: Generative AI driven AD load growth that I know is.
Greg: Starts at a fairly high level of load growth great population growth activity their economic activity is there a less of an upside case and Tampa electric or do you think sort of that spread between current load growth and where it could go across the U S could translate as well into Florida in your service territory.
As evidenced in some service territories has not been part.
Speaker Change: Of our story, thus far but.
Speaker Change: <unk> in Tampa, and Archie and team are our positioning to see if they can take advantage of some of that opportunity to position, the Tampa region, and and Tampa electric to be able to respond to.
Yeah, Let me, let me start and Archie can our chicken.
Greg: Back to.
Speaker Change: Youre right.
Speaker Change: Mark where we're <unk>.
Speaker Change: And maybe even attract that kind of opportunity into the service territory, but it has not been been part of the growth story.
Speaker Change: Fortunate enough.
The economy business climate population.
Speaker Change: The growth stories, thankfully quite robust without it but to the extent that there is some success and seeing some of that data.
Speaker Change: Growth in Florida are all very strong and we're blessed to have not just one but two utilities of course are based in that.
Speaker Change: <unk> datacenter generative AI type.
Speaker Change: In that in that state and as a result of that underlying.
Speaker Change: Loan activity.
Speaker Change: That creates incremental opportunity for for growth for.
Speaker Change: Growth economic population.
Speaker Change: For Tampa Electric Archie anything anything else you'd want to add to that.
Speaker Change: Growth, we're obviously seeing good growth of those utilities.
The data center driven.
Well.
Speaker Change: The generative AI driven AD load growth that I know.
Archie: I think you answered that well Scott.
Archie: Yes.
Archie: I think mark is asking the question because it is a cost of service utility there is a.
Speaker Change: As evidenced in some service territories has not been part.
Speaker Change: Of our story, thus far but.
Archie: There is a range within which we are permitted to earn.
Speaker Change: The team at Tampa, Archie and team are our positioning to see if they can take advantage of some of that opportunity to position, the Tampa region and and Tampa Electric.
Archie: And so trying to figure out whether or not.
Archie: Added low driven by data centers, what does that really represent from a from a net income perspective, we're required by regulation here in the state of Florida to maintain 20% reserve margins in our winter and summer capacity so to the extent.
Speaker Change: <unk> to be able to respond to.
Speaker Change: And maybe even attract that kind of opportunity into the service territory, but it has not been been part of the growth story to date the growth stories, thankfully quite robust without it but to the extent that there is some success and seeing some of that.
Archie: There is meaningful data center growth that impinges on our on our current reserve margins then.
We would need to add new generation in order to maintain the thickness of those reserve margins.
Speaker Change: Data center generative AI type.
Archie: You know the other side of the coin for US is while we while we are.
Upload activity.
Speaker Change: That creates incremental opportunity for for growth for.
Archie: Running hard at data centers from a from a growth perspective.
Speaker Change: For Tampa Electric Archie anything anything else you'd want to add to that.
I think our real interest in data centers is really driven by customer affordability, the best way for us to keep electricity price increases in tech is to grow revenues and as you said Mark we.
Speaker Change: Well.
Archie: I think you answered that well Scott.
Archie: Yes.
I think mark was asking the question because it is a cost of service utility there is a.
Archie: There is a range within which we are permitted to earn.
Archie: We benefit from strong revenue growth on an annual basis now because of because of customer count increases annually.
Archie: And so trying to figure out whether or not added load driven by data centers, what does that really represent from a from a net income perspective, we're required by regulation here in the state of Florida to maintain 20% reserve margins in our winter and summer capacity so to the extent.
Archie: But to the extent, we could we could meaningfully grow revenues through through data center growth and pushed down residential rate increases or commercial industrial rate increases, we're very very interested in pursuing that on behalf of our customers.
Archie: There is meaningful data center growth that impinges on our on our current reserve margins then.
Archie: So if I if I just kind of summarize that the view would be that the load growth that you've seen in last couple of years persists.
Archie: We would need to add new generation in order to meet.
Archie: To maintain the thickness of those reserve margins.
Speaker Change: Not even fucking up higher yet.
Speaker Change: If it goes higher beyond the current rate case that you are pursuing right now.
Archie: I think the.
Archie: The other side of the coin for US is while we while we are.
Speaker Change: Yes, Okay, alright, thanks Ross.
Running hard at data centers from a from a growth perspective.
Speaker Change: Thank you.
Archie: I think our real interest in data centers is really driven by customer affordability, the best way for us to keep electricity price increases in check.
Speaker Change: As a reminder, ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone.
Speaker Change: And your next question will be from Patrick Kenny of National Bank. Please go ahead.
Is to grow revenues and as you said Mark we we benefit from strong revenue growth on an annual basis now because of because of customer counted.
Speaker Change: Yeah.
Patrick Kenny: Thank you and good morning, everybody just on Tampa electric and the new <unk> standards and the CCR rules is.
Patrick Kenny: Is it too early to quantify the costs to comply with these rules.
Archie: Ali.
Archie: But to the extent, we could we could meaningfully grow revenues through through data center growth and pushed down.
Patrick Kenny: Maybe the timing of when these costs might occur.
Patrick Kenny: So I'm just wondering from a cost recovery standpoint, if it's.
Archie: Residential rate increases or commercial industrial rate increases, we're very very interested in pursuing that on behalf of our customers.
Patrick Kenny: Okay. It might be too late to go back in for a bump to the revenue requirement through 2027, four these costs or if you have to wait until the 2028 timeframe.
Mark Thomas Jarvi: So if I if I just kind of summarize that the view would be that the load growth that you've seen in last couple of years persists.
Speaker Change: Or what are you Archie.
Mark Thomas Jarvi: And fucking up higher yet inflection if it was higher beyond the current rate case that youre pursuing right now.
Archie: Good morning, Patrick.
Patrick Kenny: I think the short answer on this is the.
Archie: The incremental costs.
Speaker Change: Definitely yes, okay, alright, thanks, a lot.
Tampa electric would have to incur to comply with the.
Yeah.
Speaker Change: Thank you.
Archie: With the new the final version of these power plant rules is.
Speaker Change: Minder, ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone and.
Archie: Very very small and it's largely because of the.
Speaker Change: And your next question will be from Patrick Kenny National Bank. Please go ahead.
Archie: It's the result of the proactive actions the company has taken quite frankly over the last 10 or 15 years that have insulated customers from being impacted by these regulations today.
Patrick Kenny: Thank you and good morning, everybody just on Tampa electric and the new <unk> standards and the CCR rules.
Archie: And I think thats something that Tampa electric can be very proud of and how it's run I would manage the business over the last 10 or 15 years I don't think all utilities.
Patrick Kenny: Is it too early to quantify the costs to comply with these rules.
Patrick Kenny: Maybe the timing of when these costs might occur.
Patrick Kenny: Also just wondering from a cost recovery standpoint, if it's.
Archie: Ben is forward looking our <unk> is well positioned the only impact to us from our examination of the various elements of those power plant rules is that.
Patrick Kenny: It might be too late to go back in for a bump to the revenue requirement through 2027% for these costs or if you have to wait until the 2028 timeframe.
Archie: Our one remaining coal burning asset, which is a big Ben for.
Speaker Change: Or what are you Archie.
Archie: Which two years ago was converted to be able to consume achieved full load.
Archie: Good morning, Patrick.
I think the short answer on this is the.
Archie: The incremental costs.
Archie: Natural gas.
Archie: The only impact is that.
Archie: Tampa electric would have to incur to comply with the.
Archie: Unless we elect.
Patrick Kenny: With the new the final version of these power plants rules.
Archie: To invest in the best available technology in the year 2039 to extend the life of Big men for Big Bend for would have to retire in the year 2039, our current expectation what's on our books.
Patrick Kenny: Very very small and it's largely because of the.
Patrick Kenny: It's the result of the proactive actions the company has taken quite frankly over the last 10 or 15 years that have insulated customers from being impacted by these regulations today.
Archie: We're depreciating big Ben for out till 2040.
Archie: So its a pretty nominal impact in in one year shorter life on Big Bend for should we not elect to invest in the best available technology in 2039.
Patrick Kenny: And I think thats something that Tampa electric can be very proud of and how it's run I would manage the business over the last 10 or 15 years I don't think all utilities.
Patrick Kenny: <unk> been as forward looking our <unk> is well positioned the only impact to us from our examination of the various elements of those power plant rules is that.
Speaker Change: Okay, that's great thanks for that Archie.
Speaker Change: And then maybe just for Greg.
Speaker Change: It looks like there is still $176 million remaining under your existing ATM program, just wondering in light of the.
Patrick Kenny: Our one remaining coal burning asset, which is a big Ben for.
The mid course fuel cost adjustment for Tampa.
Patrick Kenny: Which two years ago was converted to be able to consume achieved full load.
Other moving parts that might be affecting near term <unk> just.
Greg Blunden: If you are considering maybe upsizing the ATM program at all through 2024.
Patrick Kenny: Natural gas.
Patrick Kenny: The only impact is that.
Greg Blunden: So thats I guess contingent on how the asset sale program goes.
Patrick Kenny: Unless we elect.
Patrick Kenny: To invest in the best available technology in the year, 2039% to extend the life of Big men for Big Bend for would have to retire in the year 2039, our current expectation what's on our books.
Patrick Kenny: Yes, Patrick.
Patrick Kenny: Yes, I mean, the mid year course correction obviously.
Speaker Change: Well, let me say it this way it doesn't really have that impact any impact on cash because the reason, we're making that correction is because gas prices are low.
Patrick Kenny: We're depreciating big Ben for out till $2040.
Patrick Kenny: So its a pretty nominal impact in in one year shorter life on Big Bend for should we not elect to invest in the best available technology in 2039.
Speaker Change: So.
Speaker Change: We're paying less for gas and therefore collecting less from customers. So net net it doesn't really have an impact on operating cash flow for 2024.
Speaker Change: We haven't made any determination obviously.
Speaker Change: Okay, that's great thanks for that Archie.
Speaker Change: Our normal course business outside of asset sales, we had raised somewhere around $250 million to $300 million a year on our ATM program that we were to continue down our traditional path over the balance of $24 25, then obviously we'd need to.
Speaker Change: And then maybe just for Greg.
Speaker Change: It looks like there is still $176 million remaining under your existing ATM program, just wondering in light of.
Speaker Change: Midcourse fuel cost adjustment for Tampa.
Speaker Change: Other moving parts that might be affecting near term <unk> just.
Speaker Change: Amid the shelf to have the capacity to do that but we're not doing that at this moment.
Greg: If you are considering maybe upsizing the ATM program at all through 2024.
Speaker Change: Okay, that's great I'll leave it there thanks.
Greg: Or if thats I guess contingent on how the asset sale program goes.
Speaker Change: Patrick.
Speaker Change: Next question will be from Linda as regardless of TD Cowen. Please go ahead.
Patrick Kenny: Yes, Patrick.
Patrick Kenny: Yes, I mean, the midyear of course correction obviously.
Linda: Thank you.
Linda: Trying to get a sense of with respect to asset sales to.
Speaker Change: Well let.
Speaker Change: Let me say it this way it doesn't really have that impact any impact on cash because the reason, we're making the correction is because gas prices are low.
To the extent that they will clearly be credit positive I'm, just trying to get a sense in terms of order of magnitude as to.
Speaker Change: No.
Speaker Change: We're paying less for gas and therefore collecting less from customers. So net net it doesn't really have an impact on operating cash flow for 2024.
Linda: How dilutive.
Speaker Change: Actually they might be on an EPS basis and has the board.
Speaker Change: Kind of.
Speaker Change: We haven't made any determination obviously.
Speaker Change: <unk> taken that reset potentially into account when they.
Our normal course business outside of asset sales, we had raised somewhere around $250 million.
Speaker Change: Consider the dividend growth over the next couple of years or is that something that might get reassessed. Once you kind of crystallize the asset sale number and volume.
Speaker Change: To $300 million a year on our ATM program that we were to continue down our traditional path over the balance of 'twenty four 'twenty. Five then obviously we'd be too.
Speaker Change: Yes.
Speaker Change: Amend the shelf to have the capacity to do that but we're not doing that at this moment.
Greg Blunden: It's Greg.
Greg Blunden: Thank you for the question, but.
Greg Blunden: I'm not going to get into specifics in terms of expectations on value and impact on Oi.
Speaker Change: Okay, that's great I'll leave it there thanks.
Speaker Change: Thanks, Patrick.
Greg Blunden: On credit metrics and EPS.
Speaker Change: Next question will be from Linda as regardless of TD Cowen. Please go ahead.
Speaker Change: It's premature to do that that would all get disclosed with any associated announcement, but I think it is fair to say that as we have.
Linda: Thank you.
Linda: Trying to get a sense of with respect to asset sales.
Speaker Change: <unk> evolved our financial plans going forward.
Linda: To the extent that they will clearly be credit positive.
Speaker Change: And use those financial plans to also evaluate our dividend policy all of those things are of course always taken into account.
Linda: Trying to get a sense in terms of order of magnitude as to how.
Speaker Change: Okay. Thank you and.
Linda: How dilutive.
Linda: Actually they might be on an EPS basis and has the board.
Speaker Change: Maybe you can help me understand one of the shifts in your outlook semantics that I picked up and maybe you can let me know if there was anything substantive beyond this was in your new Mexico gas.
Linda: Kind of taken.
Linda: <unk> taken that reset potentially into account when they.
Linda: Consider the dividend growth over the next couple of years or is that something that might get reassessed. Once you kind of crystallize the asset sale number and volume.
Speaker Change: Higher higher expenses.
Speaker Change: Got it.
Speaker Change: Was that a substantially.
Speaker Change: Substantially in Q1 or is there kind of a run rate of hire.
Linda: Yes.
Expenses in your in your gas utilities expected going forward can you help us understand that.
Greg: It's Greg.
Greg: Thank you for the question, but.
Greg: I'm not going to get into specifics in terms of expectations on value and impact on credit metrics and EPS.
Speaker Change: Brian maybe you could respond to that.
Brian: Yes, Im happy too.
Brian: Yes, we had higher cost in Q1, and I would expect those to continue.
Greg: I think it's premature to do that that would all get disclosed with with any associated announcement.
Greg: I think it is fair to say that as we have continually evolve their financial plans going forward.
Brian: In the second and third quarter, but we do anticipate rate star.
Brian: Starting in October, which should cover the increase in cost.
Greg: And use those financial plans to also evaluate our dividend policy all of those things are of course always taken into account.
Brian: So it would just be it would just be for the second and third quarter, where we were seeing.
Brian: <unk> seen that increase not covered and in revenues.
Speaker Change: Okay. Thank you and.
Speaker Change: Okay. Thank you.
Speaker Change: Maybe you can help me understand one of the shifts in your outlook semantics that I picked up and maybe you can let me know if there was.
Speaker Change: And are there any other areas of your business that have a shift in outlook in terms of the.
Speaker Change: Run rate cost this year or is that the main one.
Speaker Change: Anything substantive beyond this was in your new Mexico gas.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: I guess, there is a higher higher expenses expected.
Speaker Change: So think cylinder.
Speaker Change: Ed.
Speaker Change: Would that substantially.
Speaker Change: A little bit higher operating costs of those grocery power largely because of the customer growth and the reliability.
Speaker Change: Substantially in Q1 or is there kind of a run rate of hire.
Speaker Change: Expenses in your in your gas utilities expected going forward can you help us understand that.
The work the team is doing there that was not unexpected to us.
Speaker Change: Brian maybe you could respond to that.
Speaker Change: We would have provided deals look at in our year end results that would have would have contemplated that that kind of run rate we would.
Yes, Im happy too.
Brian: Yes, we had higher cost in Q1, and I would expect those to continue.
Speaker Change: Maybe not at the same pace, but continue to some degree over the balance of the year.
Brian: In the second and third quarter, but we do anticipate rate star.
Speaker Change: And then of course from a from a consolidated basis on the corporate side.
Brian: Starting in October, which should cover the increase in cost.
Speaker Change: The mark to.
Speaker Change: Market on the hedges is effectively a timing difference.
Brian: So it would just be it would just be for the second and third quarter, where we won't see that increase not covered and in revenues.
Speaker Change: Yeah, Okay. Thank you and I realize that.
Speaker Change: Still a lot of runway in the year to have some hot days and air conditioning load et cetera, but can you just give us a sense Q2 to date.
Speaker Change: Okay. Thank you.
Speaker Change: And are there any other areas of your business that have a shift in outlook in terms of the.
Speaker Change: What sort of whether you've been seeing.
Speaker Change: Run rate of cost this year or is that the main one.
Speaker Change: In your.
Speaker Change: Yeah.
Speaker Change: Regions, and how that might be deviating from normal.
Speaker Change: Yes.
Speaker Change: So think cylinder.
Speaker Change: Yeah.
Speaker Change: Had a little bit higher operating costs of those Scotia power, largely because of the customer growth and the reliability.
Speaker Change: Let me speak globally.
Speaker Change: At a high level, Linda I mean, I think what we experienced.
Speaker Change: In the shoulder season in Florida.
Speaker Change: The work the team is doing there that was not unexpected to us.
Speaker Change: Sort of continued through through a good chunk of April.
Speaker Change: We would've provided deals look at in our year end results that would have.
Speaker Change: Be a surprise to anybody.
Speaker Change: But summer has now hit in Tampa.
Speaker Change: Contemplated that that kind of run rate we would.
Speaker Change: And so.
Speaker Change: Not at the same pace, but continue to some degree over the balance of the year.
Speaker Change: We're certainly pleased to see that there is a lot of uncomfortable people because of the heat in Florida. These days. So thats certainly helpful. It's been a little bit spotty or here in Nova Scotia, It's actually it is.
And then of course from a from a consolidated basis on the corporate side.
Speaker Change: The mark to market on the hedge is effectively a timing difference.
Speaker Change: Unseasonably cool.
Speaker Change: Okay. Thank you and I realize that there is still a lot of runway in the year to have some.
Speaker Change: Which too early to tell but we suspect that that will probably be slightly constructive for load in the second quarter as most of us having turned the heat up in our house yet.
Speaker Change: Hot days and air conditioning load et cetera, but can you just give us a sense Q2 to date.
Speaker Change: Okay. Thank you.
Speaker Change: Whether you've been seeing.
Youre welcome.
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: Regions, and how that might be deviating from normal.
Speaker Change: At this time Mr. <unk>, we have no other questions registered please proceed.
Speaker Change: Yes.
Speaker Change: Okay. Thank you very much. Thank you all for your interest in Amira and participating in our first quarter 2024 conference call. Please reach out to Investor Relations. If you have any further questions. Thank you and have a great day.
Speaker Change: Let me speak globally.
Speaker Change: At a high level, Linda I mean, I think what we experienced.
Speaker Change: In the shoulder season in Florida.
Speaker Change: Sort of continued through through a good chunk of April.
Speaker Change: Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we ask that you. Please disconnect your lines.
Speaker Change: But it won't be a surprise to anybody.
Speaker Change: Summer has now hit in Tampa.
Speaker Change: And so on.
Speaker Change: [music].
We're certainly pleased to see that Theres, a lot of uncomfortable people because of the heat in Florida. These days. So that's certainly helpful. It's been a little bit spotty or here in Nova Scotia, It's actually.
Speaker Change: Its been unseasonably cool.
Speaker Change: Which too early to tell but we suspect that that will probably be slightly constructed for load in the second quarter as most of us having turned the heat up in our house yet.
Speaker Change: Okay. Thank you.
Speaker Change: Youre welcome.
Speaker Change: Thank you and at this time Mr. <unk>, we have no other questions registered please proceed.
Speaker Change: Okay. Thank you very much. Thank you all for your interest in Amira and participating in our first quarter 2024 conference call. Please reach out to Investor Relations. If you have any further questions. Thank you and have a great day.
Speaker Change: Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we ask that you. Please disconnect your lines.
Speaker Change: [music].