Q2 2024 PNM Resources Inc Earnings Call
And then just with Nick and make major <unk> face to face time well mix.
Nick.
Speaker Change: Good day.
Speaker Change: [music].
Speaker Change: Yes.
Yes.
Okay.
Okay.
Speaker Change: Charlotte Charlotte will barely banana banner poparelli be viable morale is surely yes.
Speaker Change: And I think that Lincoln will be nimble nanoparticle banked and gain momentum.
Speaker Change: Great.
Speaker Change: Come on everybody.
Speaker Change: I've been a lift.
Speaker Change: Uh huh.
Speaker Change: <unk> got right now.
Speaker Change: Outstanding about his name.
Speaker Change: The first letter name.
Speaker Change: I treated laggan was are there.
Speaker Change: But if we are in NAFTA.
Speaker Change: Lauren and will not be yeah.
Speaker Change: And then I say bow out of me when I say the name then banana fan oriented.
And then I'd say the name of Dan <unk> with <unk>.
Speaker Change: High end up mode.
Speaker Change: When I say their name agenda with an emphasis in time and there isn't any name that bag scan arrives.
Speaker Change: I Dunno, Unallowable bonobo narrowband pocano viable mono.
Speaker Change: Uh huh.
Speaker Change: Okay.
Speaker Change: But first I will let him talk about the same a drop that will then say the name of like Bob and Bob Secondly, bulk bid spread rapidly.
On their reman, rejecting am I right with.
Speaker Change: That's a new rule that is done right.
Speaker Change: Okay.
Speaker Change: Oh, Oh now Tony with a b.
Speaker Change: So when.
Dennis: When you say the name again with them have downplayed this morning Dennis.
Speaker Change: And then if the pie in the mode right now, but as you said.
Speaker Change: Okay.
Speaker Change: Good day and welcome to the PNM resources second quarter 2024 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
Speaker Change: After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two.
Speaker Change: Please note this event is being recorded.
Speaker Change: I would now like to turn the conference over to Lisa Goodman Investor Relations. Please go ahead.
Lisa Goodman: Thank you Danielle and thank you everyone for joining us this morning for the PNM resources second quarter 2024 earnings call.
Speaker Change: Please note that the presentation for this conference call and other supporting documents are available on our website at PNM resources Dot Com. Joining me today are PNM resources, Chairman and CEO, Pat Vincent Claude.
Speaker Change: Resident and Chief operating Officer, John Perry.
Speaker Change: Senior Vice President and Chief Financial Officer, Lisa Eden.
Speaker Change: Before I turn the call over to Pat I need to remind you that some of the information provided this morning should be considered forward looking statements pursuant to the private Securities Litigation Reform Act of 1995.
Speaker Change: We caution you that all of the forward looking statements are based upon current expectations and estimates and that PNM resources assumes no obligation to update this information.
Pat: For a detailed discussion of factors affecting PNM resources results. Please refer to our current and future annual reports on Form 10-K.
Pat: Thirdly reports on Form 10-Q, as well as reports on form 8-K filed with the SEC with that I will turn the call over to Pat.
Pat: Thank you Lisa Lisa Babysat Banana fan is supposed to be the C. Five millimeter Lisa and thank all of you and good morning. This is one of our favorite National days Nashville, Avocado day, but since this is the third time our earnings call has fallen on all the Kadow day. This decade, we havent get months given much credit to the other days.
Pat: Recognized on July 31st, but today, we are changing that.
Speaker Change: In 1970, the British Royal Navy Sadly ended its daily run rashes or taught on July 31.
Speaker Change: So we're commemorating black Hot day.
Speaker Change: They alert gathered grew more than 200 years from 11, a M to noon to enjoy their daily taught although we are going to wait for ours for later this evening.
Speaker Change: I'll start on slide four with our financial results and company updates.
Speaker Change: Ongoing earnings for the second quarter, our 60 cents above our expectations were.
Speaker Change: We are affirming our 2024 guidance at a range of $2 65 to $2.75 and we are also affirming our long term target.
Speaker Change: Lisa will provide more detail on the numbers and our expectations for the year.
Speaker Change: Don will provide highlights from our utility operations, along with some color about our upcoming system resiliency plan filing in Texas and other infrastructure investment areas.
Speaker Change: Before that.
Speaker Change: I have a couple of company updates first the reason behind our wells using this morning are shareholders overwhelmingly approved our name change and next week, we will officially operate a T X and and energy. This name better represents the entirety of our business as T. N. M. P is currently.
Speaker Change: 40% of our rate base and grows to be our largest jurisdiction over the next few years.
Speaker Change: On Monday, we will visit the New York stock exchange for the opening Bell to Mark our first day of trading under the T X and in stock ticker.
Speaker Change: I also want to provide some comments in response to the events recently impacting our service territories and new Mexico. Many of you followed the South Fork and Salt Flyers in June that began outside of our service territory and then moved into the area of Riodosa.
Speaker Change: In July <unk>.
Speaker Change: Hurricane barrels knocked out power were approximately 116000 of our Texas Gulf Coast customers.
Speaker Change: In both cases, our number one focus was safely restoring our customers.
Speaker Change: Our teams live and work in the same community.
Speaker Change: <unk>, our family friends and neighbors.
Speaker Change: We recognize that having power is necessary for daily lives and we do not take our responsibility lightly.
Speaker Change: As weather events become more extreme we need to continue our strong focus on mitigation and popery preparation efforts and system resiliency and system pardon me the.
Speaker Change: The system resiliency play and we will file in Texas is one example of this.
Speaker Change: The response from our team at both PNM and TNMP was remarkable and I can't say enough about our crews and our mutual assistance crews that went into these areas to restore service to our customers.
Don: As we move forward, we will continue to look for opportunities to continue improving our customers experience by advancing our grid infrastructure with that I'll turn it over to Don.
Don: Thank you Pat and good morning, everyone I'll pick up on slide six with highlights for the quarter at TNMP N PNM and TNMP. We reached another all time system peak in May at just over 2700 megawatts, 6% higher than our summer peak last year since 2020, our system demand.
Don: And Texas has grown at a 10% compound annual growth rate driving an increased level of investments to expand our infrastructure to keep up with our customer demand.
Speaker Change: This year, we have experienced an increased number of storms, most notably hurricane barrel earlier this month before barrel here.
Speaker Change: We enacted our emergency operation plan, which brought in additional TNMP crews and contractors and stage them strategically throughout the service territory in advance of the storm.
Speaker Change: Additional TNMP crews were also put on standby in our north Central service territory. Just in case, the storm impacted those areas ultimately it didn't not and these crews along with mutual assistance were brought into our Gulf Coast area for storm restoration.
Speaker Change: As Pat mentioned over 116000 of our customers had lost power when the storm passed our industrial customers did not lose service. Once we were able to safely get crews into our field restoration began and 50% of our customers were back online within 24 hours, leaving only those areas with significant three.
Speaker Change: Removal and rebuild left to restore.
Speaker Change: Our teams worked around the clock until the last customer was restored storms like barrel or one type of extreme weather events that is considered in our system resiliency analysis that we plan to file next month.
Speaker Change: Well I'll come back to that in a minute to discuss in more detail.
Speaker Change: Our regulatory updates in Texas Tnmp's investment plan over the last two decades has been in response to grow like we've seen in our system peak our T cost in our D. C. R. S filings reflect these investments and these capital recovery mechanism to reduce the regulatory lag on these growing amounts the first of our two.
Speaker Change: <unk> this year for both transmission and distribution recovery have been approved and implemented recovering $300 million of investments placed into service last year. Our second set of filings were submitted this month, capturing the investments placed into service through the end of the second quarter.
Speaker Change: Now shifting over to P&L at the end of the quarter. Our two six megawatt batteries approved last year for our distribution system became operational.
Speaker Change: This is a new solution for reducing constraints on our theaters and we plan to use the next few months to calibrate the operation used to best benefit our customers.
Speaker Change: Our capital plans.
Speaker Change: We will place another 30 megawatts or five six megawatt units on our system over the next couple of years. We are studying these batteries to confirm they are functioning as expected. Once our assessment is complete will bring forward that plan for additional installation before the commission.
Speaker Change: Before moving into Pnm's regulatory items I'll speak to our team's response to the South Fork and salt buyers that at their peak displaced around 10000, new Mexicans.
Speaker Change: Although these fires started outside our service territories, we closely monitor as they approach the areas in which we have infrastructure. Our teams quickly integrated with first responders and local state and federal incident command centers to be energized and re energize lines in the manner that best supported emergency responders, we all.
Speaker Change: Prepared crews and secured mutual assistance, including TNMP crews, so that we could begin to rebuild lines and restore customers as quickly as possible.
Speaker Change: The work, we had done and updating our wildfire mitigation plan and establishing our public safety power shutoff when inmates helped us in our preparation planning and coordination.
Speaker Change: Once it was deemed safe to return PNM crews along with mutual assistance crews worked around the clock to rebuild our system that was impacted by the fire. We have also provided funding and resources to leaders of this community.
Speaker Change: They worked to rebuild we also have a few regulatory updates for new Mexico, We filed our annual update to FERC formula rates, which incorporated a $120 million of new investments, reflecting a 23% increase.
Speaker Change: At the New Mexico Commission, we received approval during the quarter for our 'twenty 'twenty six resource adequacy filing, which proposed 410 megawatts of resources to serve to serve growing customer demand, including 60 megawatt owned a battery.
Speaker Change: We also have plans for grid modernization investments that are tied to a filing in front of the commission.
Speaker Change: The plan includes integration of smart meters at PNM, which opens the door to more advanced rate structures and customer offerings. We requested approval for six years of investment as a part of a longer 10 year plan with recoveries through a rate rider. We expect a recommended decision from the hearing examiner and a commission decision during the third.
Speaker Change: Third quarter.
Speaker Change: And last but certainly not least we submitted our 2025 rate request to the commission on June 14th the filing is for a future test year running from July one of 2025 through June 32026 to help mitigate impacts on customers. We requested a phased in implementation for new rates.
Speaker Change: The requested non fuel increase would be implemented on July one of 2025 and the other half in January of 2026.
Speaker Change: We are still very early in the process based on procedural schedules issued by the hearing examiner a deadline for stipulation or intervenor testimony in the case is late November and hearings are scheduled to begin in late February of next year, you can find more details about our filing in the appendix.
Speaker Change: Turning to slide seven the resiliency legislation passed last year in Texas is a different way of investing in the grid beyond just demand growth. The commission rules for our system Resiliency plan recommends a third party assessment and we engaged experts to identify ways to improve our system's response to extreme events are steady models a variety.
Speaker Change: The weather events that have impacted our service territory over the last 20 years, because we have a service territory on three areas central and North, Texas, The Gulf Coast and West, Texas. This includes a wide variety of events.
Speaker Change: The model looks at the type and age of our infrastructure in different areas, along with our customer base and it identifies the areas and investments with the highest benefit with respect to costs.
Speaker Change: We expect to submit our filing in mid August.
Speaker Change: Right available information and lessons learned from Hurricane barrel, we estimate that our filing will include approximately $600 million of capital investments, which is $150 million higher than the amounts previously included in our investment plan.
Speaker Change: <unk> also allows for deferral of depreciation expense or income incremental distribution O&M to the balance sheet until the matching recovery of these amounts began.
Speaker Change: The approach goes a step further then T cost in D. C. R F filings to eliminate regulatory lag.
Speaker Change: Eight legislation called for a six month approval process for the resiliency filing, which we would put the deadline for our approval in the first quarter of 2025.
Speaker Change: Turning to slide eight I'll cover other items that will advance our infrastructure.
Speaker Change: Texas legislation also called for a study on the development of transmission in West Texas.
Speaker Change: With a more forward looking view on potential new load ERCOT has been providing updates on each study for needs in the area by 2030, and 2038 with significant increases in demand and additional investments needed in the area ERCOT filed to reliability plans for West, Texas last week or 2030 plan in it.
Speaker Change: 138 plan over.
Speaker Change: Over the coming months, we will work with the ERCOT regional planning groups The commission and other transmission service providers in the area to gain clarity around the level of investment for TNMP projects. The original timeline had been for the commission to provide an order by September, but we will need to see how they will likely proceed.
Speaker Change: And lastly in Texas. The Commission has published its proposed rules for mobile generation for comment and we expect the rules to be finalized by the end of the year, We think mobile generation as a valuable resource in some of our more rural parts of our service territory. We will look to the final rules before making a proposal and incorporating into our plans.
Speaker Change: In new Mexico, we will be filing a proposal in the fourth quarter for new resources to be in service in 2028, New Mexico is limited on available transmission capacity and any new resource will likely require associated transmission investments.
Speaker Change: Looking forward, we will need to consider new transmission investments to meet the growing demand on our system and across the southwest.
Speaker Change: Expansion would also provide for increased utilization of generation resources, particularly new Mexico's high wind and solar potential and also strengthen our ability to secure cost benefits for PNM customers. We have been developing a 20 year transmission plan, which includes evaluating alternatives for expanding capacity on our system, we will collaborate.
Speaker Change: With stakeholders on each of these investment opportunities to ensure we are bringing benefits to our all of our customers with that I'll turn it over to Lisa for more detailed look at the numbers.
Lisa: Thank you Don and good morning, everyone I'll start on slide 10, with a summary of the key year over year changes in the second quarter.
Lisa: Earnings per share were <unk> 67, compared to <unk> 55 cents in the prior year.
Speaker Change: The recovery of capital investments.
Speaker Change: Got it.
Speaker Change: D E. R. S mechanism has seen an increase.
Speaker Change: Increased earnings year over year.
Speaker Change: In addition, the implementation of new retail rates at PNM in January.
Speaker Change: On a future test year of 2020 for consumers is to increase.
Speaker Change: Increased earnings most growth at PNM combined with hotter temperatures.
Speaker Change: PNM above our expectation.
Speaker Change: While TNMP experience increased usage from hotter temperatures. This was offset by a shift in demand be silly to retransmission rates structure for certain data center.
Speaker Change: Income from our PNM decommissioning Trust also increased earnings based on market performance.
Speaker Change: Setting these increases were reduced PNM transmission margins due to lower market prices.
Speaker Change: Continued investments in capital projects.
Speaker Change: Serve growing customer demand resulted in increases depreciation and property tax.
Speaker Change: Just expand.
Speaker Change: Yes.
Speaker Change: Now turning to slide 11, I'll cover our guidance assumptions for the rest of the year.
Speaker Change: We are affirming our annual guidance range for 2024 of $2 65 to $2 75.
Speaker Change: We are ahead of expectations in the first half of the year, we will revisit our year end assumptions next quarter. Given this third quarter typically accounts for the largest portion of our earnings.
Speaker Change: On slide 12, we're also affirming our long term targets.
Speaker Change: We have rate based growth of 10%.
Speaker Change: Based on our existing capital plans, which do not yet incorporate the additional $150 million resiliency investments.
Speaker Change: TNMP.
Speaker Change: We will update our capital plan next quarter in the meantime, I'll provide an update on our financing plan.
Speaker Change: In June we completed our planned issuance of $550 million of junior subordinated convertible notes.
Speaker Change: We received votes favorable pricing and a 50% equity credit.
Speaker Change: Not only does this enable us to refinance a large portion of our holding company debt.
Speaker Change: But it also benefited our income statement and balance sheet.
Speaker Change: We were pleased with our success.
Speaker Change: Issuing these notes, which underscore the market's appreciation of our growth opportunities.
Speaker Change: In addition, we issued debt at both PNM and TNMP to support this year utility investment.
Speaker Change: Looking forward, we expect to refinance the remaining portion of our corporate term loan similar favorable manner.
Speaker Change: We're focused on ensuring that our credit metrics and balance sheet continue to stay strong as we grow the business.
Speaker Change: We plan to issue an average under a million dollars of equity per year to fund planned capital investments through 'twenty three.
Speaker Change: We continue to assume that additional investment will be financed with 40% to 50% equity.
Speaker Change: Finally, our 2024 and 2025 industry hedges will help reduce volatility from fluctuations in interest rates.
Speaker Change: We have $600 million in place this year and $300 million in 2025.
Speaker Change: All in all we are executing against our plan and we are on track to deliver on our earnings growth target of 6% to 7% through 2020.
Pat: I'll turn it back over to Pat Thank.
Pat: Thank you Lisa before we open it up for questions I again want to recognize our employees that dropped everything in their lives and went out to restore our customers both at PNM and TNMP.
Pat: Crews from both of our utilities, along with those from other mutual aid utilities and our support personnel looked for ways to help the impacted communities and provided examples of what it means to put our customers first.
Pat: The crews work long days and nights keeping each other safe while pushing ahead.
Pat: This is our company spirit and showcases our values of safety caring and integrity to all of our employees. Thank you you are appreciated not only for what you do but for how you do it Daniel.
Pat: Danielle, let's open it up for questions.
Danielle: Thank you we will.
Speaker Change: I'll now begin the question and answer session to ask a question you May Press Star then one on a touchtone phone.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: The first question comes from Julien Dumoulin Smith from Jefferies. Please go ahead.
Speaker Change: Hey, good morning, guys Raj I appreciate the time.
Speaker Change: Good morning, and welcome back.
Raj: Good to be back so flavor.
Speaker Change: You guys have had a fun time in the interim.
Speaker Change: Lots to talk about here.
Speaker Change: So maybe just kicking it off here on the just.
Speaker Change: Just on the resource filing here.
Speaker Change: I'm actually curious just to talk to this a little bit right you you've done this resource filing there's a good chunk of ppas within the total I mean, how do you think about ownership and utility owned assets at this point, obviously storage is kind of an interesting tweener. That's a key piece of the ownership piece, but how do you think about the eligibility for other assets here, especially given what you're putting forth.
Speaker Change: The research filing here.
Speaker Change: Thanks, Julian and good morning, and almost didn't recognize your voice so just get it.
Speaker Change: You know as you think about the 2026th resource filing you know anytime we do a resource file and it's heavily focused on whatever benefits our customers.
Speaker Change: And can best utilize our grid for reliability purposes, and so that's the core of how we evaluate our rfps.
Speaker Change: I will point out in the 2026 resource filing that we received approval for last quarter. It was a mess. It was a mix of company owned we got approval for 60 megawatt battery that we could utilize to best benefit the grid that benefited our customers and then PPA solar and battery as well as we look forward.
Speaker Change: Though the 2000 22028 resource we're in the process of going through that filing right now in the RFP process and I wouldn't want to get ahead of the regulatory process and again I mean, it's focused on the benefits of the customer I will point out and as I as I talked about it that the transmission.
Speaker Change: We're transmission constrained as we add new resources, so theres always transmission opportunities as well too.
Speaker Change: Alright, you preempted my follow up on 28, which is the logical next step. So indeed, we'll stay tuned on that now the next piece of this though is as you say right transmission.
Speaker Change: Some constrained you've got ERCOT, leading the charge on this effort to implement legislation.
Speaker Change: How could that change your outlook here right. So 2028 resources would imply that you need transmission prior rate in the five year outlook by contract ERCOT. They talk about 2030 could that have an impact and in the medium term here in the next five years.
Speaker Change: I believe the wood and let me give you I'll just run through a quick history of where they're at in that process of legislation was developed in 2023 unapproved to focus on you know the growth that we're seeing in other tiers.
Speaker Change: Transmission and distribution providers are seeing in Texas.
Speaker Change: That's what that report was just filed with the Commission for America and to kind of give you a feel ERCOT.
Speaker Change: When they filed the report said 24 Gigawatts of load is expected by 2030 in Texas and the West Texas area with another three Gigawatts by 2038, ERCOT went through a process of coming up with a couple of different options.
Speaker Change: And at the same time ERCOT studying the whole ERCOT area as well to the other locations within ERCOT.
Speaker Change: So the two options that they came up with were very focused on what we would say is $3 45 kv kind of structure and then another two extra high voltage options.
Speaker Change: And so they just filed that report on the 26 with the commission.
Speaker Change: And they recommended that the commission give it a few more months. So they can study the whole stage as it relates to the extra high voltage option, but the caveat that they put in there is under either option, there's about $4 billion of investments in the West Texas area that you know could can proceed under each.
Speaker Change: So the commission now has that and they have a.
Speaker Change: Until or they they looked at may based on legislation in September that they will have some decision on that and they've already sent out questions to the transmission and distribution providers with an August 9th the comment period for us it depends on.
Speaker Change: What comes out of that but we do see upside associated with that.
Speaker Change: Got it excellent and then lastly on mobile John I mean, just the latest developments shift how you're thinking about tackling that opportunity just maybe what would be relevant to install or what have you I can obviously, it's gotten to a certain degree of attention here of late.
Speaker Change: Thanks, Julie and good question, especially based on some of the comments over the last month or so our focus has always been let the rules get developed and that's where the process is our focus given our service territory and the needs that we have always been based on to kind of give you a thought to fill mobile generation Thats 500 kw to.
Speaker Change: To one megawatt that we could actually move around as necessary for our rural area. So I I don't believe I mean, I don't believe that that will change.
Speaker Change: And our focus as we move forward, we see it as very beneficial so.
Speaker Change: Excellent guys I'll leave it there. Thank you so much Steve soon.
Steve: Thanks will.
Steve: Yeah.
Steve: The next question comes from Nick Campanella from Barclays. Please go ahead.
Nick Campanella: Hey, Thanks for the time and good morning, everyone.
Joe: Good morning, Joe.
Nick Campanella: Morning, I went back on track and this is my second avocado day, Wow wall covering the stock wherever I may have been.
Speaker Change: It was a pleasure.
Speaker Change: Hey, I wanted to ask on the resiliency filing just this is essentially zero lack capital.
Speaker Change: So when you layer that into the plan you still need we still need to be kind of thinking about that 40% to 50%.
Speaker Change: Equity funding factor that you discussed or just how should we kind of think about that.
Speaker Change: Well I think first element as you know we had assumed 450 million. This is a three year of resiliency filing. So that covers 25 to 27, we would look to make another resiliency of filing for the periods of 28% to 30 in 2027, so keep that in mind $450 million of the capital is already assumed.
Speaker Change: What's what was added or what we expect to add in the August time frame when we fly actually file their resiliency ball will be another 150.
Speaker Change: Yeah, and Nick we our objective is to continue to balance equity and growth at great values and so we are always been transparent with our equity funding needs and so when we update our capital plan in Q3, we will provide more transparent.
Speaker Change: Regarding our equity assumptions in our model.
Nick: That's great I appreciate that I just wanted to ask on new Mexico rate case process quickly you talked about stipulation and intervenor testimony I believe.
Nick: In November but is it still the case.
Speaker Change: You expect intervenor testimony to come out regardless of the ability to achieve a stipulation just wanted to confirm that.
Speaker Change: You know it depends I think kind of wanted to kind of think about it as you think about the timing is right now it's very early in the process. We filed in June what's going on right now is theres discovery by intervenors to understand the different components of what we filed you know my guess is you know ahead of November clearly they'll they'll start to be.
Nick: Some discussions associated with that is traditionally it's been a couple of months before that you kind of let the intervenors get through asking their questions and get into understanding and then you can kind of move to settlement discussions ahead of the November period.
Speaker Change: Okay. Thank you very much I appreciate the time.
Nick: The next question comes from Michael Monaghan from Evercore ISI. Please go ahead.
Michael Monaghan: Hi, Good morning, Thanks for taking my question. So you identified $150 million of incremental taxes capex through the 2007 period for the resiliency filing I know you talked about another one for 28% to 30, just wondering how much is baked in your current plan through 28.
Speaker Change: Or in 28 for resiliency spending.
Speaker Change: What could be incremental upside there.
Speaker Change: Yeah, so what's baked into our plan is $450 million from 2025 to 2027. So when you think about out there that'll be a whole new filing it's not baked into our current capital for 28 and beyond.
Speaker Change: Got it. Thank you and then going back to the new Mexico rate case.
Speaker Change: The settlement you have.
Speaker Change: Sentiment you have the controversial legacy issues behind you.
Speaker Change: Pertaining to four corners prudency in Palo Verde leases.
Speaker Change: Obviously, it's early in the case, but do you see.
Speaker Change: A much stronger possibility you could obviously, if so you know their Sps subsidiary reached a settlement not too long ago.
Speaker Change: You know I think getting the legacy cases puts us in a better position to sit down with the intervenors.
Speaker Change: I don't want to jump out there today and see you got to see what their concerns are after they do their their discovery and then sit down and have a discussion so.
Speaker Change: Got it great. Thanks for taking my questions.
Michael Monaghan: Thank you <unk> good morning, Michael.
Speaker Change: The next question comes from Jonathan Reeder from Wells Fargo. Please go ahead.
Jonathan Garrett Reeder: Hey, good morning team actually all my questions have been asked and answered so I am all set.
Speaker Change: Thank you Jonathan good morning enjoy around.
Speaker Change: [laughter] as a reminder, if you have a question. Please press star one.
Speaker Change: The next question comes from Ryan Levine from Citi. Please go ahead.
Ryan Michael Levine: Good morning.
Ryan Michael Levine: Good morning.
Ryan Michael Levine: Hi in terms of the archived Permian transmission opportunity in your earlier question you highlighted the $4 billion. That's local I guess the common local upgrades is that what you're highlighting is specifically related to your service territory and do you see any opportunities in the <unk>.
Speaker Change: Import paths are incremental local upgrades that are outlined in the filings.
Speaker Change: And the 4 billion, absolutely we see opportunities there.
Speaker Change: Right now what the PUC will do well.
Speaker Change: On the question that they sent out they'll have to kind of sort through which utilities get those upgrades I think as you look broader when the other options that are out there theres potential for those as well too in ERCOT finishes.
Ryan Michael Levine: They're full study, but for the 4 billion is a.
Ryan Michael Levine: A lot of these are in our backyard. So there are great opportunities.
Speaker Change: Okay, and then what are the main components incremental $150 million in the Texas resiliency filing.
Speaker Change: How have stakeholder engagement and the dialogue regarding the hurricane impact your Capex outlook.
Speaker Change: The first question is we haven't filed yet so I don't want to get out there ahead of.
Speaker Change: The filing so we'll file it and then we can have a lot more in depth conversation of the break outs associated with it.
Speaker Change #101: I'll tell you the hurricanes and restoration.
Speaker Change #102: Like we do with all of storm events, we have after action reviews, we look at opportunities that we did really well out of it I can't say enough about our folks in the mutual assistance crews that Pat alluded to did a tremendous job, but there's always areas that you can improve on there's always areas that you get as you move forward as it relates to resiliency that.
Ryan Michael Levine: You need to look at and so that's what we're going through right now so there I think the hurricane does play a role of what additional areas do we need to really focus on and that's why we've kind of weighted a little bit longer to kind of go through that and make our filing mid August.
Speaker Change #100: And has there been any change to your tree trimming or veg management program in response to what's happened elsewhere in the state.
Speaker Change: We've continued to increase our veg management and in Texas.
Speaker Change: And the tools that we utilize as well too so.
Speaker Change: I think as you look at the resiliency filing theres opportunities to do just based on the way. The legislature is designed to even additional.
Ryan Michael Levine: Engine management so.
Ryan Michael Levine: And I would remind you that you know in Texas, specifically in our service territories.
Ryan Michael Levine: There's a good portion of what caused the outages there that were outside of our right of ways.
Ryan Michael Levine: But you know thats working with communities and.
Ryan Michael Levine: As well as the PCT and legislature is that how you fix to solve that piece of the puzzle as well too and I think that's probably one of the bigger learnings that came out of this hurricane.
Speaker Change #107: Yes. It was just one follow up on that I don't know if anyone else has questions in terms of the percentage of.
Speaker Change #105: Of veg management that may be associated with trees that aren't within your right of ways do you have a sense of what that does for your service territory.
Speaker Change: Yeah for this specific hurricane it was in the range of 55% to 60%.
Speaker Change #104: Okay. Appreciate it thank you.
Brian: Thank you thanks, Brian.
Speaker Change: Yeah.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Pat Vincent <unk> for closing remarks.
Patricia K. Vincent: Thank you again for joining us this morning enjoy around this evening and please tune in to watch lease Eaton ring. The opening Bell at the New York Stock Exchange This coming Monday morning Stacy.
Speaker Change #103: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change #106: Uh huh.