Q2 2024 Fortis Inc Earnings Call

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Unknown Attendee: Good morning, everyone. Thank you for standing by.

Unknown Attendee: Good morning, everyone. Thank you for standing by.

Constance: Good morning, everyone. Thank you for standing by my name is constant gene and I will be your conference operator today.

Konstantin: My name is Konstantin, and I will be your conference operator today. Welcome to Fortis' second quarter 2024 earnings conference call and webcast. During the call, all participants will be in a listen-only mode. There will be a question and answer session following the presentation. At that time, those with questions should press a star followed by one on their telephone. If at any time during the conference, you need to reach an operator, please press star zero. At this time, I would like to turn the conference over to Stephanie Amaimo. Please go ahead, Ms. Amaimo.

Constantine: My name is Constantine, and I will be your conference operator today. Welcome to 42nd Quarter, 2024 earnings conference call and webcast. During the call, all participants will be in a listen-only mode. There will be a question and answer session following the presentation. At that time, those with questions should press tar followed by one on their telephone. If at any time during the conference, you need to reach an operator, please press tar zero.

Speaker Change: Welcome to <unk> second quarter, 'twenty 'twenty four earnings conference call and webcast.

Speaker Change: During the call all participants will be in a listen only mode.

Speaker Change: There will be a question and answer session. Following the presentation.

Speaker Change: That time, those with questions should press star followed by one on your telephone.

Speaker Change: If at any time during the conference you need to reach an operator, Please press star zero.

Stephanie Amaimo: At this time, I would like to turn the conference over to Stephanie Amaimo.

Speaker Change: This time I would like to turn the conference over to Stephanie Mimo. Please go ahead Mr. Mimo.

Stephanie Amaimo: Please go ahead, Mr. Maimo. Thanks, Constantine, and good morning, everyone.

Stephanie A. Amaimo: Thanks, Constantine, and good morning, everyone. Welcome to Fortis' second quarter 2024 results conference call. I'm joined by David Hutchins, President and CEO; Jocelyn Perry, Executive VP and CFO; other members of the senior management team, as well as CEOs from certain subsidiaries. Before we begin today's call, I want to remind you that the discussion will include forward-looking information, which is subject to the cautionary statement contained in the supporting slide sheet. Actual results can differ materially from the forecast projections included in the forward-looking information presented today.

Stephanie A. Amaimo: Thanks, Constantine and good morning, everyone welcome to afford us the second quarter 'twenty 'twenty four results conference call I'm joined by David Hutchens, President and CEO, Jocelyn Perry Executive VP and CFO other members of the senior management team as well as Ceos from certain subsidiaries.

Stephanie Amaimo: Welcome to Fortis' second quarter 2024 results conference call. I'm joined by David Hutchens, president and CEO, Jocelyn Perry, executive VP and CFO, other members of the senior management team, as well as the CEO from certain subsidiaries. Before we begin today's call, I want to remind you that the discussion will include forward-looking information, which is subject to the cautionary statement contained in the supporting slideshow. Actual results can differ materially from the forecast projections included in the forward-looking information presented today. All non-GAAP financial measures referenced in our prepared remarks are reconciled to the related US GAAP financial measures in our second quarter, 2024 MD&A.

Speaker Change: Before we begin today's call I want to remind you that the discussion will include forward looking information, which is subject to the cautionary statement contained in the supporting slide show.

Speaker Change: Actual results can differ materially from the forecast projections included in the forward looking information presented today.

Stephanie A. Amaimo: All non-GAAP financial measures referenced in our prepared remarks are reconciled to the related U.S. GAAP financial measures in our second quarter 2024 MD&A. Also, unless otherwise specified, all financial information referenced is in Canadian dollars. With that, I will turn the call over to David.

Speaker Change: All non-GAAP financial measures referenced in our prepared remarks are reconciled to the related U S. GAAP financial measures in our second quarter 2024 M. DNA also unless otherwise specified all financial information referenced is in Canadian.

Stephanie Amaimo: Also, unless otherwise specified, all financial information referenced is in Canadian dollars.

Speaker Change: With that I will turn the call over to David.

David Hutchens: With that, I will turn the call over to David. Thank you and good morning, everyone. Today, we are pleased to report our second quarter results. Operationally, our teams delivered reliable service to our customers, despite a variety of severe weather conditions experienced during the quarter. Through the end of June, we invested capital of approximately $2.3 billion focused on system reliability and resiliency, customer growth and economic development, as well as cleaner energy investments. These capital investments supported rate base and EPS growth. On the regulatory front, we had a number of key proceedings advance. Notably at ITC, the Iowa Supreme Court granted a motion filed by ITC Midwest requesting a stay of the injunction issued by the Iowa District Court for Tronch1 projects in Iowa.

David Gerard Hutchens: Thank you and good morning everyone. Today we are pleased to report our second quarter results. Operationally, our teams delivered reliable service to our customers despite a variety of severe weather conditions experienced during the quarter. Through the end of June, we invested capital of approximately $2.3 billion focused on system reliability and resiliency, customer growth, and economic development, as well as cleaner energy investments. These capital investments supported rate base and EPS growth. On the regulatory front, we had a number of key proceedings advance. Notably, at ITC, the Iowa Supreme Court granted a motion filed by ITC Midwest requesting a stay of the injunction issued by the Iowa District Court for Tranche One projects in Iowa.

David: Thank you and good morning, everyone. Today, we are pleased to report our second quarter results operationally our teams delivered reliable service to our customers. Despite a variety of severe weather conditions experienced during the quarter.

Speaker Change: Through the end of June we invested capital of approximately $2 $3 billion focused on system reliability, and resiliency customer growth and economic development as well as cleaner energy investments. These capital investments supported rate base and EPS growth on.

On the regulatory front, we had a number of key proceedings advance, notably at ITC I was Supreme Court granted our motion filed by ITC Midwest requesting a stay of the injunction issued by the I would district court for tranche one projects in Iowa.

David Hutchens: With this stay in place, ITC is now permitted to advance construction of all Iowa Tronch1 projects originally awarded to the company in 2022. This is a positive development as ITC looks to invest in critical transmission infrastructure to support the clean energy transition and load growth in the region.

Speaker Change: With this stay in place.

David Gerard Hutchens: With this stay in place, ITC is now permitted to advance the construction of all Iowa Tronch One projects originally awarded to the company in 2022. This is a positive development as ITC looks to invest in critical transmission infrastructure to support the clean energy transition and load growth in the region. And today, we released our 2024 Sustainability Report. It includes new information on resiliency efforts, biodiversity programs, and actions to support energy efficiency and lower emissions.

Speaker Change: D. C is now permitted to advance construction of all our tranche one projects originally awarded to the company. In 2022. This is a positive development as ITC looks to invest in critical transmission infrastructure to support the clean energy transition and load growth in the region.

David Hutchens: And today, we released our 2024 Sustainability Report. It includes new information on resiliency efforts, biodiversity programs, and actions to support energy efficiency and lower emissions. The report also contains information regarding our progress on key sustainability targets. Our 2024 capital plan of $4.8 billion remains on track. During the quarter, construction of the 1,800-kilometer Latin-Akinia Power Transmission Project was completed. We are proud to be a part of this project that is a majority owned by 24 First Nations, provides socio-economic benefits, and reduces greenhouse gas emissions associated with diesel-fired generation previously used in these remote locations. We continue to execute our five-year capital plan of $25 billion that has comprised of virtually all regulated investments and a diverse mix of highly executable, low-risk projects.

Speaker Change: And today, we released our 2020 for sustainability report it includes new information on resiliency efforts by the diversity programs and actions to support energy efficiency and lower emissions.

David Gerard Hutchens: The report also contains information regarding our progress on key sustainability targets. For example, our 2024 capital plan of $4.8 billion remains on track. During the quarter, construction of the 1,800-kilometer Watson-Akiniyak Power Transmission Project was completed. We are proud to be a part of this project that is majority owned by 24 First Nations, provides socioeconomic benefits, and reduces greenhouse gas emissions associated with diesel fire generation previously used in these remote locations. We continue to execute our five-year capital plan of $25 billion that is comprised of virtually all regulated investments and a diverse mix of highly executable, low-risk projects. Rate base is expected to increase by approximately $12 billion to over $49 billion by 2028, supporting average annual rate base growth of 6.3%.

Speaker Change: The report also contains information regarding our progress on key sustainability targets.

Speaker Change: Our 2024 capital plan of $4 8 billion remains on track during.

Speaker Change: During the quarter construction of the 1800 kilometer Watson of Kenny power transmission project was completed we are proud to be a part of this project that has a majority owned by 24 first nations provide socioeconomic benefits and reduces greenhouse gas emissions associated with diesel fired generation previously used in these remote.

Speaker Change: Locations.

Speaker Change: We continue to execute our five year capital plan of $25 billion that is comprised of virtually all regulated investments and a diverse mix of highly executable low risk projects.

David Hutchens: Right-base is expected to increase by approximately $12 billion to over $49 billion by 2028, supporting average annual rate-based growth of 6.3%. At ITC, MISO released a near-final map of its LRTP tranche 2.1 projects, with transmission investments now estimated in the range of $23 to $27 billion US dollars, up from an earlier estimate of $17 to $23 billion US dollars. While it's still too early to estimate the investment opportunities within ITC's footprint, MISO board approval is anticipated in late 2024. In June, MISO also confirmed that transmission projects included in tranche 2.1 would be insufficient to meet the demand and needs of the MISO Midwest sub-region under the future 2A scenario.

Speaker Change: Rate base is expected to increase by approximately $12 billion to over 49 billion by 2028 supporting average annual rate base growth of six 3%.

David Gerard Hutchens: Behind the plan, regulated growth opportunities progressed during the quarter. At ITC, MISO released a near-final map of its LRTP Tronch 2.1 projects, with transmission investments now estimated in the range of 23 to 27 billion U.S. dollars, up from an earlier estimate of 17 to 23 billion U.S. dollars. While it is still too early to estimate the investment opportunities within ITC's footprint, MISO board approval is anticipated in late 2024. In June, MISO also confirmed that transmission projects included in TRANCH 2.1 would be insufficient to meet the demand and needs of the MISO Midwest subregion under the future 2A scenario.

Speaker Change: Behind the plan regulated growth opportunities progressed during the quarter.

Speaker Change: At ITC MISO released a near final map of its LRT P. Tranche 2.1 projects with transmission investments now estimated in the range of 23 to 27 billion U S dollars up from an earlier estimate of 17 to 23 billion U S dollars.

Speaker Change: While it is still too early to estimate the investment opportunities within <unk> footprint MISO Board approval is anticipated in late 2024.

Speaker Change: And June MISO also confirm that transmission projects included in tranche 2.1 would be insufficient to meet the demand and needs of the MISO Midwest subregion under the future to a scenario.

David Hutchens: As a result, MISO expects additional transmission will be required, likely through a tranche 2.2 portfolio. While MISO has not provided any firm details regarding timing or scope of this new tranche, it certainly underscores both the need and opportunity associated with transmission investments in the Midwest, considering decarbonization and load growth trends.

David Gerard Hutchens: As a result, MISO expects additional transmission will be required, likely through a TRANCH 2.2 portfolio. While MISO has not provided any firm details regarding timing or scope of this new TRANCH, it certainly underscores both the need and opportunity associated with transmission investments in the Midwest considering decarbonization and load growth trends. In British Columbia, a Federal Environmental Assessment Certificate was issued in the quarter for the Tilbury Marine Jetty Project. The construction of the jetty supports further expansion of FortisBC's Tilbury LNG facility.

Speaker Change: As a result, MISO expects additional transmission will be required likely through a tranche 2.2 portfolio well MISO has not provided any firm details regarding timing or scope of this new tranche. It certainly underscores both the need and opportunity associated with transmission investments in the Midwest considering de carbonization.

Speaker Change: <unk> and load growth trends.

David Hutchens: In British Columbia, the Federal Environmental Assessment Certificate was issued in the quarter for the Tilbury Marine Jetty project. The construction of the jetty supports further expansion of Fortis BC's Tilbury LNG facility. The site is scalable and can accommodate additional storage and liquefaction equipment and is close to international shipping lanes. Once constructed, the jetty will utilize Fortis BC's assets at the Tilbury site, including the future Phase 1B expansion project to serve marine bunkering and reduce greenhouse gas and other emissions. In addition to the developments at ITC and Fortis BC, our utilities across North America are focused on expanding and extending growth opportunities in their jurisdictions, especially in the areas of clean energy, continued electrification, and load growth.

Speaker Change: In British Columbia, the federal environment Mental assessment certificate was issued in the quarter for the Tilbury Marine Jetty project. The construction of the jetty supports further expansion of Florida, Sbcs Tilbury LNG facility.

David Gerard Hutchens: The site is scalable and can accommodate additional storage and liquefaction equipment and is close to international shipping lanes. With a strong track record of increasing dividends for the past 50 consecutive years, coupled with our low-risk growth strategy, we remain confident in our 4-6% annual dividend growth guidance through 2028. Now, I will turn the call over to Jocelyn for an update on our second quarter financial results.

Speaker Change: The site is scalable and can accommodate additional storage in liquefaction equipment and as close to international shipping lines.

Speaker Change: Once constructed the jetty will utilize forest species assets at the Tilbury site, including the future Phase <unk> expansion project to serve marine Bunkering and reduce greenhouse gas and other emissions and.

Speaker Change: In addition to the developments at ITC, and Florida P. C. Our utilities across North America, our focus on expanding and extending growth opportunities in their jurisdictions, especially in the areas of clean energy continue to electrification and load growth.

David Hutchens: With a strong track record of increasing dividends for the past 50 consecutive years, coupled with our low-risk growth strategy, we remain confident in our 4% to 6% annual dividend growth guidance through 2028.

Speaker Change: With a strong track record of increasing dividends for the past 50 consecutive years, coupled with our low risk growth strategy, we remain confident in our 4% to 6% annual dividend growth guidance through 2028.

Jocelyn Perry: Now I will turn the caller to Jocelyn for an update on our second quarter financial results. Thank you, David, and good morning, everyone. For the second quarter, reported an adjusted EPS was 67 cents, 5 cents higher than adjusted EPS last year. Year-to-date June reported an adjusted EPS was $1.60, resulting in an increase in adjusted EPS of 7 cents year over year. EPS growth was mainly driven by rate-based investments across our utilities, new customer rates, and warmer weather in Arizona, as well as new cost of capital parameters in British Columbia, which were approved in late 2023 and retroactive to January 1, 2023.

Speaker Change: Now I will turn the call over to Jocelyn for an update on our second quarter financial results.

Jocelyn H. Perry: Thank you, David, and good morning everyone. For the second quarter, reported and adjusted EPS was 67 cents, 5 cents higher than adjusted EPS last year. Year-to-date June, reported and adjusted EPS was $1.60, resulting in an increase in adjusted EPS of 7 cents year-over-year. EPS growth was mainly driven by rate-based investments across our utilities, new customer rates, and warmer weather in Arizona, as well as new cost of capital parameters in British Columbia, which were approved in late 2023 and retroactive to January 1, 2023.

Jocelyn: Thank you David and good morning, everyone for the second quarter reported and adjusted EPS was <unk> 67 cents.

Jocelyn: <unk> higher than adjusted EPS last year year to date June reported and adjusted EPS was $1 60, resulting in an increase in adjusted EPS of seven cents year over year.

Jocelyn: Growth was mainly driven by rate base investments across our utilities, new customer rates and warmer weather in Arizona as well as new cost of capital parameters in British Columbia, which were approved in late 2023 and retroactive to January one 2023.

Jocelyn Perry: The chart on slide 9 highlights the EPS drivers for the second quarter by segment. Our US electric and gas utilities contributed at 5 cent EPS increased quarter over quarter. In Arizona, EPS was up 7 cents due to the favorable impacts of new customer rates and higher retail revenues due to warmer weather. Weather impacts were 2 cents quarter over quarter. At Central Hudson, EPS decreased 2 cents quarter over quarter, largely due to a one-time impact of a regulatory settlement associated with the CIS implementation, which I'll discuss later, as well as the recognition of a regulatory performance target in the second quarter of 2023.

Jocelyn: The chart on slide nine highlights the EPS drivers for the second quarter by segment.

Jocelyn H. Perry: The chart on slide 9 highlights the EPS drivers for the second quarter by segment. Our U.S. electric and gas utilities contributed a $0.05 EPS increase quarter over quarter. In Arizona, EPS was up $0.07 due to the favorable impacts of new customer rates and higher retail revenues due to warmer weather. Weather impacts were $0.02 quarter over quarter.

Jocelyn: Our U S electric and gas utilities contributed a five cent EPS increased quarter over quarter in Arizona EPS was up seven cents due to the favorable impacts of new customer rates and higher retail revenues due to warmer weather weather impacts were two cents quarter over quarter.

Jocelyn H. Perry: At Central Hudson, EPS decreased two cents quarter over quarter, largely due to a one-time impact of a regulatory settlement associated with the CIS implementation, which I'll discuss later, as well as the recognition of a regulatory performance target in the second quarter of 2023. At ITC, the $0.02 APS increase was mainly driven by rate-based growth tempered by higher holding company finance costs. Our Western Canadian utilities increased EPS by $0.02, the increase largely due to the timing of the new cost of capital parameters in BC.

Jocelyn: At Central Hudson, EPS decreased <unk> <unk> quarter over quarter, largely due to a one time impact of a regulatory settlement associated with the <unk> implementation, which I'll discuss later as well as the recognition of a regulatory performance target in the second quarter of 2023.

Jocelyn Perry: At ITC, the 2 cent EPS increase was mainly driven by rate-based growth, tempered by higher holding company finance costs. Our Western Canadian Utilities increased EPS by 2 cents. The increased largely related to the due to the timing of the new cost of capital parameters in BC. The higher allowed return in Alberta for 2024 was tempered by the timing of operating costs and the recognition of income tax expenses. At other electric segment, EPS decreased 1 cent mainly due to higher cost and lower equity income. For the corporate and other segments, the decreased mainly reflects the disposition of a concrete in 2023 and higher holding company finance costs.

Jocelyn: At ITC. The two cent EPS increase was mainly driven by rate base growth tempered by higher holding company finance costs.

Jocelyn: Our western Canadian utilities increased EPS by <unk>, the increase largely related to the due to the timing of the new cost of capital parameters in B C. A higher allowed return in Alberta for 2024 was tempered by the timing of operating costs and the recognition of income tax expenses.

Jocelyn H. Perry: The higher allowed return in Alberta for 2024 was tempered by the timing of operating costs and the recognition of income tax expenses. At our other electric segment, EPS decreased one cent, mainly due to higher costs and lower equity income.

Jocelyn: In our other electric segment EPS decreased <unk>, <unk>, mainly due to higher costs and lower equity income.

Jocelyn H. Perry: For the corporate and others segment, the decrease mainly reflects the disposition of Aitkin Creek in 2023 and higher holding company finance costs. And lastly, higher weighted average shares reflect shares issued under a dividend reinvestment plan. We have not used the ATM program to date as participation under the DRIP remains strong.

Jocelyn: For the corporate and other segment. The decrease mainly reflects the disposition of Aitken Creek in 2023, and higher holding company finance costs, and lastly, higher weighted average shares reflect shares issued under our dividend reinvestment plan. We have not used the ATM program to date is participation under the drip remains strong.

Jocelyn Perry: And lastly, higher weighted average shares reflect shares issued under a dividend reinvestment plan. We have not used the ATM program to date, as participation under the drip remains strong.

Jocelyn Perry: Turning to side 10, many of the factors discussed for the quarter are the same for the year-to-date period. There are a few items to note for the year-to-date results. For a Western Canadian utility, specifically at Fortissa, Alberta, higher demand charges and customer additions also favorably impacted the year-to-date results. In Arizona, in addition to the new customer rates at TEP and higher retail revenue driven by warmer weather, higher margins on wholesale sales tempered by higher operating costs also impacted EPS in the first half of the year. At our corporate and other segments, the disposition of a concrete unrealized losses on derivative contracts compared to the gains in the first half of 2023 and higher holding company finance costs for the main drivers of EPS.

Jocelyn: Turning to slide 10, many of the factors discussed for the quarter are the same for the year to date period. There are a few items to note for the year to date results.

Jocelyn H. Perry: Turning to slide 10, many of the factors discussed for the quarter are the same for the year-to-date period. However, there are a few items to note for the year-to-date results. For Western Canadian utilities, specifically at Fortis Alberta, higher demand charges and customer additions also favorably impacted the year-to-date results. In Arizona, in addition to the new customer rates at TEP and higher retail revenue driven by warmer weather, higher margins on wholesale sales tempered by higher operating costs also impacted EPS in the first half of the year. And finally, higher weighted average shares outstanding have reduced EPS by 3 cents through year-to-date June.

Jocelyn: For our western Canadian utilities, specifically at Florida, Subpart out higher demand charges in customer additions also favorably impacted the year to date results.

Jocelyn: In Arizona in addition to the new customer rates at T P and higher retail revenue driven by warmer weather higher margins on wholesale sales tempered by higher operating costs also impacted EPS in the first half of the year.

Jocelyn: At our corporate and other segment the disposition of Aitken Creek unrealized losses on derivative contracts compared to the gains in the first half of 2023 and higher holding company finance costs were the main drivers of EPS.

Jocelyn Perry: And while negative for the quarter and year-to-date periods on an annual basis, the disposition of a concrete will be neutral to EPS. And finally, higher weighted average shares at standing reduced EPS three cents through year-to-date June. Through June, we have raised approximately 1.4 billion of debt to repay borrowings and to fund our capital program. We remain in a strong liquidity position as we execute our five-year capital plan and maintain our investment-grade credit ratings. As I mentioned last quarter, we expect to have further engagement with S&P in the fall, particularly on Fortissa's mitigation plans around physical and climate risks.

Jocelyn: And while negative for the quarter and year to date periods on an annual basis. The disposition of Aitken Creek will be neutral to EPS.

Jocelyn: And finally higher weighted average shares outstanding reduced EPS three three year to date June.

Jocelyn: Through June we have raised approximately $1 4 billion of debt to repay borrowings and to fund our capital program. We remain in a strong liquidity position as we execute our five year capital plan and maintain our investment grade credit ratings.

Jocelyn H. Perry: As I mentioned last quarter, we expect to have further engagement with S&P in the fall, particularly on Fortis' mitigation plans around physical and climate risk. Looking ahead, we are on track to achieve average cash flow to debt metrics of 12% over the five-year period. As David noted, earlier this month, the Iowa Supreme Court granted a stay of the injunction issued by the Iowa District Court with respect to the construction of the MISO Long Range Transmission Plan Transformed Projects in Iowa.

Jocelyn: As I mentioned last quarter, we expect to have further engagement with S&P and the fall, particularly on Fortas's mitigation plans around physical and climate risks.

Jocelyn Perry: Looking ahead, we are on track to achieve average cash flow to debt metrics of 12% over the five-year period.

Jocelyn: Looking ahead, we are on track to achieve average cash flow to debt metrics up 12% over the five year period.

Jocelyn Perry: As David noted, earlier this month, the Iowa Supreme Court grants the stay of the injunction issued by the Iowa District Court with respect to construction of the MISO Long Range Transmission Plan Tronch-1 Projects in Iowa. With the stay of the injunction in place, ITC is permitted to advance construction on all Iowa Tronch-1 projects originally awarded to the company in 2022. Certain complaints and complaints have requested that the judges' order be reviewed by a full quorum of the Iowa Supreme Court. Regardless of any quorum review by the Iowa Supreme Court, approximately 70% of the Iowa Tronch-1 Projects are upgrades to ITC's facilities along existing rights of way, which under MISO's tariff grants ITC the option to construct the upgrades.

Jocelyn: As David noted earlier this month, the Iowa Supreme Court granted a stay of the injunction issue by the Iowa District Court with respect to construction of the MISO long range transmission plan tranche one projects in Iowa.

Jocelyn H. Perry: With the stay of the injunction in place, ITC is permitted to advance construction on all Iowa Tronch One projects originally awarded to the company in 2022. However, certain complainants have requested that the judge's order be reviewed by a full quorum of the Iowa Supreme Court. Regardless of any quorum review by the Iowa Supreme Court, approximately 70% of the Iowa Trans1 projects are upgrades to ITC's facilities along existing rights-of-way, which, under MISO's tariff, grants ITC the option to construct the upgrades.

Jocelyn: With the stay of the injunction in place.

D. C: D. C is permitted to advance construction on all Iowa tranche one projects originally awarded to the company in 2022.

Jocelyn: Certain complaint dense have requested that the judge's order be reviewed by a full quorum of the Iowa Supreme Court.

Jocelyn: Regardless of any chrome review by the Iowa Supreme Court, approximately 70% of the Iowa tranche, one projects are upgrades to itc's facilities, along existing rights of way, which under MISO tariff grants ITC the option to construct the upgrades.

Jocelyn Perry: Further, MISO is conducting a variance analysis for the Tronch-1 projects in Iowa, and we believe the process should reaffirm the initial award of the projects in 2022.

Jocelyn H. Perry: In addition, MISO is conducting a variance analysis for the TRANS1 projects in Iowa, and we believe the process should reaffirm the initial award of the projects in 2022. In Arizona, the generic regulatory lag docket continues to advance. The Arizona Corporation Commission will host workshops in the third quarter to further assess the possibility of using formulaic rates or forward-looking tests instead of the historical text you're currently in use. While the timing and outcome remain unknown, we are encouraged by these efforts to evaluate regulatory constructs that may reduce regulatory lag.

Jocelyn: Further <unk> is conducting a variance analysis for the tranche one projects in Iowa, and we believe the process should reaffirm the initial award of the projects in 2022.

Jocelyn Perry: In Arizona, the generic regulatory lag docket continues to advance. The Arizona Corporation Commission will host workshops in the third quarter to further assess the possibility of using formulaic rates or forward-looking test years instead of the historical test year, currently in use. When the timing and outcome remain unknown, we are encouraged by these efforts to evaluate regulatory constructs that may reduce regulatory lag.

Speaker Change: In Arizona, the generic regulatory lag docket continues to advance the Arizona Corporation Commission will host workshops in the third quarter to further assess the possibility of using formulaic rates or forward looking test years instead of the historical test year currently in use.

Jocelyn: While the timing and outcome remain unknown. We are encouraged by these efforts to evaluate regulatory construct that may reduce regulatory lag.

Jocelyn Perry: In June, the New York Public Service Commission issued an order concluding the investigation into the implementation of Central Hudson's billing system. As part of the order, the independent third-party monitor reported that the CIS system was deemed stable, and critical issues were resolved. The order also stipulates certain costs are not to be recovered from customers, including $4 million US dollars for a contribution to a customer benefit fund, which was recognized in the second quarter. The vast majority of the remaining costs were previously recognized in prior periods. Future impacts are not expected to be material.

Jocelyn: In June the New York Public Service Commission issued an order concluding the investigation into the implementation of central Hudson's billing system.

Jocelyn H. Perry: As part of the order, the independent third-party monitor reported that the CIS system was deemed stable, and critical issues were resolved. The order also stipulates certain costs are not to be recovered from customers, including $4 million U.S. dollars for a contribution to a customer benefit fund, which was recognized in the second quarter. The vast majority of the remaining costs were previously recognized in prior periods. And earlier this month, the New York Public Service Commission also issued an order on Central Hudson's 2024 general rate application. The decision, retroactive to July 1st, includes an allowed ROE of 9.5%, 50 basis points higher than the previous allowed return.

Jocelyn: As part of the order the independent third party monitor reported that the CIM system was deemed stable and critical issues were resolved.

Jocelyn: The order also stipulate certain costs are not to be recovered from customers, including 4 million U S dollars for a contribution to a customer benefit fun, which was recognized in the second quarter.

Jocelyn: The vast majority of the remaining costs were previously recognized in prior periods future impacts are not expected to be material.

Jocelyn Perry: And earlier this month, the New York Public Service Commission also issued an order on Central Hudson's 2024 General Rate Application. The decision, retroactive to July 1, includes an allowed ROE of 9.5%, 50 basis points higher than the previous allowed return. Central Hudson expects to file its 2025 General Rate Application in the third quarter.

Jocelyn: And earlier this month, the New York Public Service Commission also issued an order on central Hudson's 'twenty 'twenty four general rate application. The decision retroactive to July 1st includes an allowed ROE of nine 5% 50 basis points higher than the previous allowed return.

Jocelyn:

Jocelyn: Central Hudson expects to file its 2025 general rate application in the third quarter.

David Hutchens: And with that, I'll now turn the call back to David. Thank you, Jocelyn. The first half of the year continued our long track record of executing our growth strategy. We continued to implement our $4.8 billion annual capital plan, made progress on opportunities beyond the plan, and advanced our regulatory proceedings.

Jocelyn: And with that I'll now turn the call back to David.

David: Thank you Jocelyn.

David: First half of the year continued our long track record of executing our growth strategy. We continued to implement our $4 $8 billion annual capital plan made progress on opportunities beyond the plan and advanced our regulatory proceedings. This.

David Hutchens: This is an exciting time to be a regulated transmission and distribution company, and we continue to pursue additional growth opportunities to deliver a cleaner energy future while continuing to prioritize safety, reliability, and affordability for our growing customers' needs.

David: This is an exciting time to be a regulated transmission and distribution company and we continue to pursue additional growth opportunities that deliver a cleaner energy future, while continuing to prioritize safety reliability and affordability for our growing customers needs.

David Hutchens: That concludes my remarks.

David: That concludes my remarks, I will now turn the call back over to Stephanie.

Stephanie Amaimo: I will now turn the call back over to Stephanie. Thank you, David.

Stephanie A. Amaimo: Thank you, David. This concludes the presentation. At this time, we'd like to open the call to address questions from the investment community.

Stephanie A. Amaimo: Thank you David This concludes the presentation at this time, we'd like to open the call to address questions from the investment community.

Stephanie Amaimo: This concludes the presentation. At this time, we'd like to open the call to address questions from the investment community. Thank you. We will now conduct the question-and-answer period. If you would like to register a question, please press tar followed by the number one on your telephone. If your question has been answered and you would like to withdraw your registration, please press star two. If you are using a speaker phone, please lift your handset before entering your request. And we kindly request you to speak loudly and slowly to ensure all participants can hear your questions. One moment, please, for the first question.

David: Okay.

Speaker Change: Thank you we will now conduct the question and answer period. If you would like to register a question. Please press star followed by the number one on your telephone is.

Unknown Attendee: If your question has been answered and you would like to withdraw your registration, please press star 2. If you are using a speakerphone, please lift your handset before entering your request. And we kindly request you speak loudly and slowly to ensure all participants can hear your question. Our first question comes from the line of Maurice Choy from RBC Capital Markets.

Speaker Change: If your question has been answered and you would like to withdraw your registration. Please press star two.

Speaker Change: If you are using a speaker phone. Please lift your handset before entering your request and we kindly request you speak loudly and slowly to ensure all participants can hear your questions.

Speaker Change: One moment please for the first question.

Maurice Choi: Our first question comes from the line of Maurice Choi from RBC Capital Markets. Please proceed with your questions. Thank you and good morning, everyone.

Speaker Change: Our first question comes from the line of Maurice Choy from RBC capital markets. Please proceed with your question.

Maurice Choy: Thank you and good morning, everyone. If I could start with your updated view of the electric and gas demand outlooks across your utilities. There is obviously a broad anticipation for higher load do you see a number of reasons.

David Hutchens: If I could start with your updated view of the electric and gas demand outlooks across your utilities. There is obviously a broad anticipation for higher load due to number reasons, and that could also lead to higher gas power and potentially some changes in future IRP. So can you speak to which utilities you're seeing a normal change in demand outlook versus a year ago? And how utilities might respond to this? Yeah, thanks, Maurice. I'll start with a broad overview, and if you want to dig down into any of the individual utilities, actually we have everybody in the same room for once. This call, so I can ping it over to them if need be.

Speaker Change: It could also lead to higher gas fired power and potentially some changes in future IR piece.

Speaker Change: Can you speak to which utilities you're seeing.

Speaker Change: Notable change in demand milk prices a year ago.

Speaker Change: Our utilities might respond to this.

Maurice: Yeah. Thanks Maurice.

Speaker Change: I'll start with kind of a broad overview and if you want to dig down into.

Speaker Change: Any of the individual utilities.

Speaker Change: Actually we have everybody in the same room for for once this this call. So I can I can pick it over to them.

David Hutchens: But I think probably especially from a gas generation perspective, really the only big utility that we have that we're considering an additional gas generation right now is at UNS. We have, as you know, the two different utilities: TEP and UNS Electric, and as part of the integrated resource plans that they filed last year, we're adding a total of 600 megawatts, 400 at TEP and 200 megawatts at UNS Electric. We have a lot of electric combustion turbines to help fill in the variability associated with adding quite a bit more renewable energy into the portfolio. So that was what we filed last year; obviously, that was based on prior information on load growth, et cetera.

Speaker Change: <unk> b, but.

Speaker Change: I think probably the especially from a gas generation perspective really the the only.

Speaker Change: Our big utility that we have that we're considering additional gas generation right now is that at UNFI.

Speaker Change: We have as you know the two different utilities or TEP of newness electric and as part of the integrated resource plans that they filed last year, we're adding a total of 600 megawatts 400 at TEP in 200 megawatts at a U S electric combust.

Speaker Change: Combustion turbines to help fill in.

Speaker Change: The variability associated with adding quite a bit more renewable energy into the portfolio. So that's a that was what we filed last year obviously.

David Hutchens: So we are seeing a lot of potential for additional load growth related to manufacturing and data centers in that footprint, but at this point we haven't changed our integrated resource plan or changed any timing or additions to it, although we do, as every resource plan is good the day you file it. And then you look at the additional assumptions, the load growth and you know, retirement schedules, et cetera, and adjust them accordingly. But right now we don't have a lot of that built into the current plan, but we are working very hard behind the scenes to see where that might come.

David Gerard Hutchens: As with every resource, it is as good the day you file it, and then you look at the additional assumptions, the load growth, and, you know, retirement schedules, et cetera, and adjust them accordingly. But right now, we don't have a lot of that built into the current plan, but we are working very hard behind the scenes to see where that might come. ITC also has, as we mentioned on the last call, some data centers looking to come into its footprint in both Iowa and Michigan. There's a lot of efforts to attract data centers into those utilities' footprints, of course, that we serve from a transmission perspective. So, they're there, but there's still a lot of TBD to be determined on how that lands.

David Hutchens: ITC also has, as we mentioned on the last call, some data centers looking to come into its footprint in both Iowa and I'm sure you're aware in Michigan as well. There's a lot of efforts to attract data centers into those utilities' footprints, of course, that we serve from a transmission perspective. So they're there, but there's still a lot of TBD to be determined on how that lands. So there are primarily our two jurisdictions that will see the biggest impact from those types of load. Now, of course, I should mention Alberta as well. I guess Fortis Alberta, while the distribution company up there, I think we'll see some knock-on impacts of data center growth there.

Speaker Change: TBD to be determined on how that land. So theyre, primarily our two jurisdictions that we will see the biggest impact from those types of.

David Gerard Hutchens: Those are primarily our two jurisdictions that will see the biggest impact from those types of load. Now, of course, I should mention Alberta as well, because Fortis Alberta is, while a distribution company up there, I think we'll see some knock-on impacts of data center growth there. And just due to the comments of the government up there, they are receptive to citing data centers up there, but they have what I'm calling a BYOP, bring your own power, sort of philosophy to make sure that folks who come up there are going to come and either build generation or contract with it to make sure that they're not pulling it all out of the market. So, if you want to go into any more details, just let

Speaker Change: Now of course, I should mention Alberta as well.

Speaker Change: Florida, South, Florida, Alberta, while the distribution company up there I think we will see some knock on impacts of data center growth there and just due to the comments of the government up there they are receptive to.

David Hutchens: And just due to the comments of the government up there, they are receptive to citing data centers up there. But they have what I'm calling a BYOP, bring your own power sort of philosophy to make sure that folks who come up there are going to come in and either build generation or contract with it to make sure that they're going to come up there. But they're not pulling it all out of the market. So that's if you want to go into any more details, just let me know.

Speaker Change: Citing data centers up there, but they have what I'm, calling a BYOB bring your own power.

Speaker Change: Sort of philosophy to make sure that folks who come up they're going to.

Speaker Change: And either build generation or contract with it to make sure that they're not pulling it all out of the market.

Speaker Change: So that's if you wanted to go into any more details just let me know.

Unknown Attendee: Maybe just a quick follow-up on that, and obviously there's a lot of discussion about sharing of transmission costs and any other costs related to this new load. How are you seeing, or which part of your portfolio are you seeing the greatest progression in policymaking, and are you anticipating all the other jurisdictions to follow suit?

David Hutchens: Maybe just to click pull up on that, and obviously that's a lot of discussion about sharing of transmission costs and any other costs related to this new load. How are you seeing, or which part of your portfolio you're seeing the greatest progression and policy making, and anticipating all the other jurisdictions to follow suit? I think we're testing out a lot of stuff. I think a big test that I suppose is in Arizona because we have a vertically integrated utility and we can offer different kind of options for customers that come in there from special contracts to special rates, etc.

Speaker Change: Maybe just a quick follow up on that and obviously, there's a lot of discussion about sharing the transmission costs and any other costs related to this new load.

Speaker Change: How are you seeing or which which part of your portfolio are you seeing.

Speaker Change: The greatest progression.

Speaker Change: Progression and policy, making and then are you.

Speaker Change: Anticipating all the other jurisdictions to follow suit.

Speaker Change: Yeah.

Speaker Change: I think we're testing out a lot of stuff.

Speaker Change: I think the big Testbed disposes in Arizona, because we are a vertically integrated utility and we can offer a different kind of options for customers that come in there from special contracts too.

Speaker Change: Special rates et cetera. There is there's one principle that I think everyone. Every utility. This isn't just unique to us will be following in that as these this load has to pay for itself.

David Hutchens: There's one principle that I think everyone, every utility isn't just unique to us; we'll be following, and that is this load has to pay for itself. And in fact, we think that it should have and will have a positive impact on customer affordability because of the additional high-level utilization that these high load factor customers bring. So overall, we think it's a good story both from a growth perspective and a customer affordability perspective. That's great.

Speaker Change: And in fact, we think that it should have and will have a positive impact on customer affordability because of the additional high level of utilization that these high load factor customers bring so overall, we think it's a it's a good story both from a growth perspective, and a customer affordability perspective.

Speaker Change: Oh, that's great.

Unknown Attendee: That's great. If I could finish up on ITC to just better understand the district court, the Supreme Court judge's order here. Can the stay of the injunction continue indefinitely? For so long as the full quorum of the Supreme Court does not review this judge's order.

Linda Apsey: If I can finish up on ITC to just better understand the district court, the Supreme Court judges' order here. Can the state of the injunction continue endlessly for so long as the full quorum of the Supreme Court not review this judge's order? Yeah, I'll turn that over to Linda Abzi, as you know, CEO of ITC. Yeah, good morning. Thank you, Maurice. I suppose yes, it could. There's no requirement that the Supreme Court act in any certain timeline. They do act at their discretion. So, to the extent that there was never any ruling or further decision or determination, then yes, the state of the injunction would remain in place.

Speaker Change: If I can just finish up on ITC to just better understand.

Speaker Change: The district Court the Supreme Court judges.

Speaker Change: Order here.

Speaker Change: Yeah.

Speaker Change: Can a stay of the injunction continue endlessly for so long as the full quorum the Supreme Court not view this judge disorder.

Speaker Change: Yeah.

Unknown Attendee: Yeah, I'll turn that over to Linda Apsey, as you know, the CEO of ITC. Good morning.

Speaker Change: Yes, I'll turn that over to Linda Apsey.

Linda H. Blair Apsey: Yeah, good morning. Thank you, Maurice.

Linda H. Blair Apsey: Yes. Good morning, Thank you Maurice.

Speaker Change: I I suppose.

Linda H. Blair Apsey: Yes, it could there's no requirement that the Supreme Court Act.

Linda H. Blair Apsey: Any certain timeline they do act at their discretion are so to the extent that there was never any ruling or further decision or determination then yes. The stay of the injunction would remain in place.

Linda Apsey: And just to just fall upon that, if we have a decision on tranche 2.1 and I suppose ITC is going to proceed with investments in tranche 1, 2.1, how should we think about these investments if one day, let's say, months, years, a decade from now. The original position is referred back. Is there any risk of any stranded risk, stranded effort? Yeah, Maurice. No, we have no concern of any stranded asset risk. Obviously, we are continuing to pursue and invest in these projects, according to the Mysore Terrace. And so the associated expenses related to that would all be under the premise that these projects were awarded to us, and that we have continued to pursue and develop under all provisions of the Mysore Terrace.

Speaker Change: I guess just go up and that if we have a position on tranche 2.1, and I suppose ITC is going to proceed with investments in tranche one 2.1.

Linda H. Blair Apsey: How should we think about these investments.

Speaker Change: One day, let's see months years, a decade from now.

Linda H. Blair Apsey: The the original.

Unknown Attendee: The position is reverted back. Is there any risk of any stranded athlete? Do you have more...

Linda H. Blair Apsey: The position has reverted back.

Speaker Change: Is there any risk of any stranded risk trying to athletes.

Linda H. Blair Apsey: Yeah.

Linda H. Blair Apsey: Yeah, Maurice. No, we have no concern about any stranded asset risk. Obviously, we are continuing to pursue and invest in these projects according to the MISO tariff. And so the associated expenses related to that would all be under the premise that these projects were awarded to us and that we have continued to pursue and develop under all of the provisions of the MISO tariff.

Speaker Change: No that we have no concern of any stranded asset risk and obviously, we are continuing to pursue and invest in these projects. According to the MISO tariff.

Speaker Change: And so the associated expenses are related to that we'd all be under the premise that these projects were awarded to us.

Speaker Change: And we have continued to pursue and develop under all of the provisions within MISO tariff.

Maurice Choi: Great, thanks for the color. Thanks, Maurice.

Rob Hope: Our next question comes from the line of Rob Hope from Scotia Capital. Please proceed with your question. Morning, everyone. I just want to take a maybe some additional commentary on the regulatory outlook for Central Hudson. So the billing issues seem to be behind you and stabilize. New rates are in service July 1. You know, do you think the new rates are going to be sufficient to largely close the gap between the achieved and allowed? Are we, or is this something that probably is more of a the next rate piling? Yeah, so that should help definitely close that gap.

Unknown Attendee: Morning, everyone. I just want to take a maybe some additional commentary on the regulatory outlook for central Hudson. So, the billing issues seem to be behind you and have stabilized. New rates are in service. Uh, July 1, you know, do you think the new rates are going to be sufficient to largely close the gap between the achieved and the allowed rates? Are we, or is this something that probably is more of the, uh, next rate filing?

Unknown Attendee: Yeah, so that should definitely close that gap. And obviously, the difference between allowed and earned over the past couple of years has been related to the CIS implementation costs, the additional costs that we were seeing associated with that, which, of course, was part of that settlement that we agreed we wouldn't recover. So that's all behind us. So on a going forward basis, we expect to see, you know, a much, much closer correlation between earned and authorized ROE.

Rob Hope: And obviously, the difference between allowed and earned over the past couple of years had been related to the CIS implementation cost, the additional cost that we were seeing associated with that, which, of course, was part of that settlement that we agree we won't recover. So that's all behind us. So on a going forward basis, we expected to see, you know, what might be much much closer correlation between earned and authorized ROE. And as Jocelyn mentioned, to where we're filing the next rate case because it is important to note that that rate case was just a one year rate case.

Unknown Attendee: And as Jocelyn mentioned, too, we're filing the next rate case because it is important to note that that rate case was just a one-year rate case. So it's only good for a year. And so we're required to file another one. And we're doing that tomorrow.

Rob Hope: So it's only good for a year, and so we're required to file another one, and we're doing that tomorrow. All right, thanks for that.

Speaker Change: Alright, Thanks for that and then more broadly I'm you know in a relatively surprised moved to Vancouver counsel Riverside gas band there.

David Hutchens: And then more broadly, you know, in a relatively surprise move to Vancouver Council, reverse a gas band there. But when you think about, or I mean, what are your thoughts on the continued need for natural gas in a world where gas-fired and cooking could help reduce the cost of home ownership, as well as just to be incremental load that we're seeing pop up for electrical demand there as well. Like, could we, you know, is this the beginning of a change in sentiment on the gas? So Marie, I think that change in sentiment has been around in almost every one of our jurisdictions.

Speaker Change: But when you think about <unk>.

Speaker Change: What are your thoughts on the continued need for natural gas and in a world where.

Speaker Change: Gas fired heating and cooking could help reduce the cost of home ownership as well as just kind of the incremental load that we're seeing a pop up for electrical demand there as well like could we is this the beginning of a.

Speaker Change: Change in sentiment.

Speaker Change: On the gas side.

Speaker Change: So I think that change in sentiment has been around and in almost every one of our jurisdictions.

David Hutchens: And with maybe the slight exception of British Columbia, which now I think is coming around that the impact on affordability has to be, you know, top line conversation. And as we look at different pathways for, you know, the energy service from an electric and gas perspective, we do believe that there is a necessity to have both of those contribute and supply energy in order for us to do it both affordably and reliably. So we do see, you know, some of those, you know, some of the LDC changes as we've seen in B.C. We see our role being a little bit different and maybe more of a capacity role on a going forward basis.

Speaker Change: But maybe the slight exception of British Columbia, which now I think is is coming around that the MTR impact on affordability.

Speaker Change: Has to be <unk>.

Speaker Change: Topline conversation and as we look at the different pathways for.

Speaker Change: Energy services from.

Speaker Change: Electric and gas perspective, we do believe that there is a necessity to have both of those contribute and supply of energy in order for us to do it both affordably and reliably so we do see some of those.

Speaker Change: Some of the LDC changes is as we've seen in D. C. We see we see our role being a little bit different and maybe more of a capacity roll on a going forward basis, but the necessity for that capacity is getting clearer and clearer across.

David Hutchens: But the necessity for that capacity is getting clearer and clearer across every jurisdiction. So I do think people are recognizing that. And I think also, you know, one of the main things we have to remember is we're still, we're still marching towards the clean, you know, energy future here. And we, I think, are also getting people to understand the ability for us as LDCs and gas companies to be able to supply clean molecules. That's a huge thing that we need to, need to remind people of and to, and to focus on as you, as you probably well know it out in Vancouver.

Speaker Change: Every jurisdiction. So I do think people are recognizing that and I think also one of the main things. We have to remember is we're still we're still marching towards.

Speaker Change: The clean energy future here and we I think are also getting people to understand the ability for us as LDC is again as gas companies.

Speaker Change: To be able to supply clean molecules.

Speaker Change: Huge.

Speaker Change: Thing that we need to need to remind people of and took them to focus on.

Speaker Change: As you probably well know that.

Speaker Change: Hoover, We also got a good approval from the.

David Hutchens: We also got a good approval from the B.C. UC for RNG to be a part of the portfolio for every one of our customers. That was a big win for Roger and his team out there in B.C. And something that I think that, you know, the compound that with the decision to allow natural gas and new buildings again or new construction. I think we're starting to see how we can make this blend work and cost effectively afford, affordably, but still hit in some clean energy. Thank you. I'll hop back on the chair. Can I call you Maurice, Rob?

Speaker Change: <unk> you see for RMG to be a part of the portfolio for every one of our customers that was a big win for Roger and his team out there in BC and something that I think.

Speaker Change: Compound that with the decision to allow natural gas in new buildings again or new construction I think we're starting to see how we can make this blend work and cost effectively affordable affordably, but still hitting some clean energy targets.

Unknown Attendee: Thank you all. Bye. Thank you.

Speaker Change: Thank you I'll hop back in the queue.

Speaker Change: Okay.

Robin: What can I tell you any more east Robin.

Unknown Attendee: If I call you Maurice, I'm sorry, but I know who you are, Rob, very clearly. Ladies and gentlemen, as a reminder, if you would like to register a question, please press star followed by the number one on your telephone. If you are using a speaker for your telephone, please make sure to lift your hands up before entering your request.

Unknown Attendee: If I call you Maurice, I'm sorry, but I know who you are, Rob, very clearly.

Maurice Choy: As I called you Maurice.

Maurice Choy: I'm, sorry, but I know who you are.

Maurice Choy: But very clearly.

Speaker Change: Ladies and gentlemen, as a reminder, if you would like to register a question. Please press star followed by the number one on your telephone if you are using a speaker phone. Please make sure to lift your handset before entering your request.

Unknown Attendee: Ladies and gentlemen, as a reminder, if you would like to register a question, please press star followed by the number one on your telephone. If you are using a speakerphone, please make sure to lift your handset before entering your request.

Mark Jarvi: Our next question comes from the line of Mark Jarvi from CIBC Capital Markets. Please proceed with your question. Good morning, everyone. Maybe just going back to the iOS situation and the relief on the injunction. I'll be there, I guess. A couple of months are going to be on how this all plays out. How does that impact your thinking and activity around procurement and moving out of the projects that might come through in 2025, 26, or you'd be a bit more cautious pushing things out a little bit. And then those projects that maybe wouldn't fit under the right away, that 30%.

Mark Thomas Jarvi: Our next question comes from the line of Mark <unk> from CIBC capital market. Please proceed with your question.

Mark Thomas Jarvi: Hey, good morning, everyone.

Speaker Change: Just coming back to the Iowa situation.

Speaker Change: Beef on the injunction, albeit there is I guess still of uncertainty on how this all plays out.

Speaker Change: How does that impact your thinking and activity around procurement and moving out of a project that might come through in 2025 and six.

Speaker Change: Are you being a bit more cautious pushing things out a little bit and then.

Speaker Change: Both projects that maybe it wouldn't fit under the right away that 30%. How are you managing those projects in terms of permitting or trying to advance them quite a bit before you put capex to work.

Linda Apsey: How are you managing those projects in terms of permitting or trying to advance them, quite before you have to put CAPX to work? Thanks, Mark. I'll have Linda ask that. It was a question related to both how do we manage in the risk and this from a from a supply chain perspective? Obviously, we are in the early stages of advancing all of the LRTP-1 projects. As you recall, obviously there's significant work that has to go into citing, permitting, regulatory applications. So, as it relates to the iOS, we're trying to run projects. We're still in the early stages.

Speaker Change: Thanks, Mark I'll have Linda asked that it was a question related to both how do we manage the risk in this from a from a supply chain perspective.

Speaker Change: Obviously, we are in the early stages of advancing all of the <unk> One project as you recall, obviously there's significant.

Speaker Change: Work that has to go into siting permitting regulatory applications.

Speaker Change: As it relates to the Iowa tranche one projects, we're still in the early stages.

Linda Apsey: And so we haven't even received the IUB regulatory approval for those projects yet. And in fact, we haven't even begun the franchise process that's required under state law. And so I would say there is no immediate effect or impact in terms of how we think about supply chain. We have strategic relationships with all of our major vendors. So we have Q capacity for all of our major components of our infrastructure, our Q capacity for the LRTP-1 projects, as well as our other projects as well in hand. And we don't anticipate any supply constraints related to this project or others.

Speaker Change: And so we havent even received the IU be a regulatory approval for those projects yet and in fact, we haven't even begun the franchise a process that's required under state law and so I would say you know there is no.

Speaker Change: There's no immediate effect or impact and how we can in terms of how we think about supply chain.

Speaker Change: We have a strategic relationships with all of our major vendors. So we have Q capacity for all of our major components of our infrastructure and our Q capacity for the L. R. T. P tranche, one projects as well as our other projects as well in hand, we don't anticipate any supply.

Speaker Change: Supply constraints related to this project or.

Speaker Change: Or others and so you know that's for us not a risk or.

Linda Apsey: And so that's for us not a risk or anything that we are concerned about. We are keenly focused, obviously, in sort of the legal issues, the regulatory process, those are in the landowner issues. Those are the primary areas of focus for us at this stage of those LRTP projects. Can you remind us again what the plan spending would have been for next year, and whether or not that could be impacted here as you sort through these issues? Oh, plan spending for next year. Yeah, we're continuing. Obviously, there's no change at this point in time in terms of our plan spend.

Speaker Change: Or anything that we're concerned about we are keenly focused obviously in in sort of the legal.

Speaker Change: Issues the regulatory process those are the and the landowner issues. Those are the primary areas of focus for us at this stage Oh those allergy P projects.

Unknown Attendee: Can you remind us again what the planned spending would be for next year?

Speaker Change: Can you remind us again, what the planned spending would have been put up for next year.

Unknown Attendee: Oh, plan spending for next year. Yeah, we're continuing.

Linda Apsey: We obviously will continue to reassess that as we release our next vintage of our five-year plan, but obviously we're continuing to move forward and pursue the projects as identified. And we certainly will update if there's any delay or slide specific to the LRTP-1 projects, but at this time there's no change in our overall capital. Okay.

Unknown Attendee: Obviously, there's no change at this point in time in terms of our planned spend. We obviously will continue to reassess that as we release our next vintage of our five-year plan. But obviously, we're continuing to move forward and pursue the projects as identified. And we certainly will update if there's any delay or slide specific to the LRTP1 projects. But at this time, there's no change in our overall capital plan.

Unknown Attendee: And then on the regulatory leg docket in Arizona, what would you be advocating for as you work through these workshops in the fall and try to push that forward?

Susan Gray: And then on the regulatory leg, talking in Arizona, what would you be advocating for as you work through these workshops in the fall and kind of push that forward? Yeah, I'll turn that over to Susan Gray, CEO of UNS. All right. Good morning, Mark. Thanks for the question. The commission is considering basically either a forward test year or a formula rate. And so we're having another workshop coming up in the fall to the process to discuss that. And I think either format can work for us as long as we get the design of it correct.

Susan M. Gray: Yeah, I'll turn that over to Susan Gray, the CEO of UNF. All right, good.

Susan M. Gray: All right. Good morning, Mark.

Susan M. Gray: Thanks for the question. The commission is considering basically either a forward test year or a formulaic rate. And so we're having another workshop coming up in the fall to discuss that. And I think either format can work for us as long as we get the design of it correct. We did emphasize the formulaic rate, but I think in either case, we can design it to benefit our company.

David Hutchens: I think it's a good sign that we're talking about changing our longstanding ratemaking policy here. And I think either way we'll end up reducing lag. In the workshop, we did emphasize the formulae rate, but I think in either case, we can design it to benefit our company. That sounds like you're pretty cool. She's doing stuff down there at TPI on the dream job. That was something that we've always been looking for is trying to figure out how to get out of some of that regulatory lag. And we've been doing things with other tracker mechanisms, et cetera.

Speaker Change: C. P. I only dreamed of that was something that we've always been looking for is it was trying to figure out how to.

Speaker Change: Get out some of that regulatory lag and we've been doing things with other tracker mechanisms et cetera, but this is this is a quite a bit better and cleaner solution.

David Hutchens: But this is quite a bit better and cleaner solution, and probably a little bit more simpler too. It sounds like there is momentum behind it, but they could say you think something will come to fruition and you won't get your little blocks where this falls out. What are optimistic. Okay.

Speaker Change: Probably a little bit more simpler too.

Speaker Change: It sounds like there is momentum behind it so they could pay you think something will come to fruition, we won't hate roadblocks, where this falls out.

Speaker Change: But we're optimistic.

Speaker Change: Okay.

David Hutchens: And with the completion of the watching project, what would be the sort of long-term vision around your ownership there? Is there strategic benefits to stay invested? Did you think there's potential projects or investments around that? That that's a position that you can pursue or to just become sort of a catch-blowing asset that you hold and potentially monetize if and when opportunity presents itself? I think we've always seen that as a bit of an entry point into the Ontario market. I mean, it gives us a good anchor for looking at additional projects and additional transmission development.

Speaker Change: And with the completion of the <unk> project.

Speaker Change: That's sort of a long term vision around your ownership there is their strategic benefits to stay invested in do you think there's potential projects.

Speaker Change: The investments around that.

Speaker Change: Ownership position that you can pursue or is it just becomes sort of a a cash flowing asset that you hold and potentially monetize if and when the opportunity presents itself.

Unknown Attendee: No, I think we've always seen that as.

Unknown Attendee: No, I think we've always seen that as a bit of an entry point into the Ontario market. I mean, it gives us a good anchor for looking at additional projects and additional transmission development. We obviously created a tremendous relationship with the First Nations up there. So yeah, we'd always love to build more transmission in Ontario, and frankly, anywhere within our footprint. So we would look at, you know, we don't have any plans on a going forward basis other than owning that asset. Okay, thanks, everyone. Thanks, Mark.

Speaker Change: No I think we've always seen that as a as a bit of a entry point into the Ontario market I mean, it gives us a good anchor for looking at additional projects and additional transmission development. We obviously created a tremendous relationship with the first nations up there.

Unknown Attendee: We obviously created a tremendous relationship with the First Nations up there. So yeah, we'd always love to build more transmission in Ontario, up to frankly anywhere within our footprint. So we would look at, you know, we don't have any plans on a going forward basis other than owning that asset. Okay. Thanks, Ellen. Thanks, Mark. Ladies and gentlemen, as a reminder, if you would like to register a question, please press star followed by the number one on your telephone. If you are using a speaker phone, please lift your handset before entering your request.

Speaker Change: So yeah, we believe we'd always love to build more transmission in Ontario, but frankly anywhere within our within our footprint.

Speaker Change: So it we would we would look at you know we don't have any plans.

Speaker Change: On a going forward basis other than owning that asset.

Speaker Change: Okay. Thanks, so much.

Mike: Thanks, Mike.

Speaker Change: Ladies and gentlemen, as a reminder, if you would like to register a question. Please press star followed by the number one on your telephone if you are using a speaker phone. Please lift your handset before entering your request.

Unknown Attendee: Ladies and gentlemen, as a reminder, if you would like to register a question, or if you are using a speakerphone, please lift your handset before entering your request.

Unknown Attendee: Thank you for participating. This concludes today's conference call. You may now disconnect.

Stephanie Amaimo: As there are no further questions, I would like to turn the call back to Miss Amimo. Thank you, Constantine. We have nothing further at this time.

Mike: As there are no further questions I would like to turn the call back to Mr. Mimo.

Mr. Mimo: Thank you Constantine we have nothing further at this time. Thank you everyone for participating in our second quarter 2024 results Conference call. Please contact Investor Relations should you need anything further and thank you for your time and have a great day.

Stephanie Amaimo: Thank you, everyone, for participating in our second quarter, 24 results conference call. Please contact investor relations. Should you need anything further? And thank you for your time, and have a great day. Thank you for participating.

Speaker Change: Thank you for participating this concludes today's conference call you may now disconnect.

Unknown Attendee: This concludes today's conference call. You may now.