Q2 2019 Earnings Call
Greetings and welcome to the Pinnacle West Capital Corporation, 2019 second quarter earnings Conference call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Stephanie latent director of Investor Relations. Thank you you may begin.
Thank you Christine I would like to thank everyone for participating in this conference call and webcast to review our second quarter earnings recent developments and operating performance. Our speakers today will be our chairman and CEO , John Brandt, and our CFO , Jim Hatfield, Jeff Gardener, Ats is president and Daniel such or Ats is executive Vice President of operations are also here with us.
First I need to cover a few details with you the slides that we will be using are available on our investor Relations website, along with our earnings release and related information note that the slides contain reconciliations of certain non-GAAP financial information today's comments and our slides contain forward looking statements based on current expectations and the company assumes no obligation to update these statements.
Because actual results may differ materially from expectations, we caution you not to place undue reliance on these statements. Our second quarter 2019 Form 10-Q was filed this morning. Please refer to that document for forward looking statements cautionary language as well as the risk factors and Mdna sections, which identifies risks and uncertainties that could cause actual results to differ materially from those contained in our disclosures.
A replay of this call will be available shortly on our website for the next 30 days. It will also be available by telephone through August 15th.
I will now turn the call over to dawn.
Thanks, Stephanie and thank you all for joining US today, our operating performance and financial management remain in line with our expectations for the year.
As you know weather provided above average revenue in the first quarter and significantly below average revenue in the second quarter.
Before Jim discussed was the impacts of weather on our expectations for 2019 and details of our second quarter results.
I'll provide a few updates on our recent regulatory and operational developments.
I have repeated many times over the years is our top priority every day as safety the safety of our team our customers and our communities takes priority over all other objectives.
Recently, we experienced a loss of an Ats team member.
Rico could steal from an event that occurred while performing planned underground construction work.
In downtown Phoenix.
This event is being fully reviewed and we continue to keep Rico's family in our.
I thought some prayers.
Turning to our operations Palo Verde generating station completed its planned refueling maintenance outage for unit one on May nine.
Additionally, the ocotillo modernization project.
Was completed on budget and with all five units in service by May Thirtyth.
This valuable asset in the Metro Phoenix load pocket has been performing well and is available to serve our customers through the summer peak.
In preparation for summer, we not only ensure we have adequate generation resources to meet our peak demand. We also prepare for the summer wildfire season.
In fact, we work year round to minimize the risk of wildfires.
Our fire mitigation efforts include maintaining safe clearances, removing vegetation around equipment physical pole inspection.
Coordination with fire and Forest service, the Thirtys and partnering with community organizations that educate the public on how to protect their property from wildfires.
As you know on April 19th we experienced an equipment failure at the Mic Mickens substation battery storage facility.
We're looking into the cause of the failure at the site discharges of batteries has been completed.
And we have now begun to forensic analysis.
The review is progressing but will take time to complete we will continue to post updates at eight PS Dot com backslash Mick Mick.
Because safety is our top priority, we will temporarily be delaying our investments in new battery storage resources to incorporate our learnings from this incident.
Accordingly, the request for proposals issued in April for 60 megawatts of storage on our existing solar facilities and a new 100 megawatt solar facility paired with 100 megawatts of battery storage had been put on hold.
I want to reinforce that we remain committed to investing in new clean energy resources, including battery storage distal blaze simply reflects a thoughtful and responsible pause to ensure we move forward in a safe and informed manner.
All the storage facilities are delayed we will be issuing two new requests for proposals.
The first RFP is for up to 150 megawatts.
Of Hps owned solar generation to be in service by 2021.
This solar generation will be designed with the flexibility to install energy storage in the future.
The second RFP is for up to 250 megawatts of wind generation to be in service as soon as possible, but no later than 2022.
These new RFP use will expand our renewable energy portfolio.
About 2500 megawatts by 2021.
On August Onest, we filed a preliminary integrated resource plan or I, RFP, which includes a 15 year forecast of electricity demand and the resources needed to reliably serve our customers in the future.
The IR P. is designed to explore a variety of options that can provide reliable and affordable power for our customers.
And drafting the RP, we worked closely with a diverse group of stakeholders. The stakeholder group was engaged provided constructive input and valuable feedback. We appreciate the collaborative effort of this group and look forward to participating with interested stakeholders in the future.
Going forward, we project that our annual peak demand and energy need both to increase at a compound annual growth rate of more than 2% from 2020 through 2035.
This forecast incorporates future demand side management and distributed generation.
The future growth is primarily driven by population growth economic growth and changing customer trends related to electric vehicles.
And distributed generation.
The final integrated resource plan will be filed with the commission in April 2020.
Turning to our regulatory updates at their June open meeting the Arizona Corporation Commission implemented a requirement that atps file a rate case no later than October 30, Onest 2019.
Using a June 32019 test year.
That's a July open meeting the HCC resolve the customer complaint in order to hps to implement additional customer education and outreach programs.
The Commission also approved an electric vehicle policy implementation plan at the July open meeting.
The easy policy implementation plan is intended to support he these avi infrastructure and the electrification of the transportation sector in Arizona.
The plan encourages utilities to propose Avi pilot programs, focusing on infrastructure incentives and cost recovery among other items to the commission by September Onest 2019.
We are aligned with the commission mix in exploring the opportunities electric vehicles present to advance our clean energy objectives.
Our goal is to make driving Avi is more convenient by reducing range anxiety through access to charging infrastructure.
Our new take charge is a pilot program does just that.
Take charge easy provides charging infrastructure for fleets.
Workplaces and multifamily housing communities.
As well as highway fast charging infrastructure.
We're also exploring innovative strategies to own and operate the fast charging stations, while partnering with local businesses to identify the most useful locations.
On July Thirtyth, The commission held a workshop discussing both staffs draft retail competition rules.
And commissioner Olson's recommendations on retail competition.
Among other challenges the proposed retail competition rules worked with the Arizona Constitution.
Put reliability in jeopardy required the creation of a regional transmission operator.
Or independent system operator.
And conflict with the Commission's interest in establishing clean energy rules.
A report sponsored by Arizona Energy Policy group.
And prepared by concentric energy advisors.
Analyzing retail competition.
Over the past 20 years was filed with the commission on July 26.
The report illustrates it states with retail competition has higher residential rates than traditionally regulated states.
And recognizing the potential negative impact on residential customers.
And the challenges I discussed we knew that believe that retail electric competition is in the best interest of our customers are the state of Arizona.
As I mentioned at the beginning of this call safety is our top priority.
After we recently became aware of a customer's passing last September .
We temporarily stopped residential power disconnects for nonpayment.
Subsequently, the Arizona Corporation Commission issued a temporary rule.
Imposing a state wide moratorium on disconnects.
Through the warmest months into mid October .
Addressing the needs of vulnerable, Arizona loans is a statewide objective. That's why we have committed to work with a broad range.
Of Arizona stakeholders to develop solutions that help ensure Arizona ins have access to assistance when they need it most.
In closing as a company we have so much to be proud of in 2019.
Public lands Alliance awarded Atps to corporate Stewardship award for our support of the Grand Canyon Conservancy.
The annual award recognizes a company that demonstrated exceptional achievement to enhance the quality of visitors experience in Americas public lands.
In addition, we earn the advocacy Excellence award for our efforts around the defeat to the 2018 ballot initiative.
This award highlights of public policy engagement of VIP member companies like Hps.
And I am continually honored and proud to work with such a dedicated and talented team.
We remain focused on preparing to meet the future needs of our customers and continuing to deliver long term value to our investors.
Ill now turn the call to over to Jim.
Thank you Don and thank you again, everyone for joining us today.
This morning, we reported our financial results for the second quarter of 2019, we earned a $1.28 per share in the second quarter of 2019 compared to $1.48 per share in the second quarter 2018, the lower results were largely due to unfavorable weather.
As shown on slide two of the materials adjusted gross margin was down 53 cents per share.
Compared to the prior year second quarter period.
Higher sales the LFCR and transmission revenues were more than offset by unfavorable weather, what's negatively impacted gross margin by 31 cents per share.
To understand the magnitude of weather May was the coolest may since 1980, and then memorial day high temperature on Phoenix tied for the coolest on record.
Additionally, Jim as a clue us in the last eight years.
Also contributing to the lower gross margin work.
Lower other margin and refund to customers due to tax reform. This quarter, we had a negative net impact from tax reform due to the timing of the park corporate tax refund to customers, Let's list implemented in June of last year.
Continuing on what the drivers lower adjusted operation and maintenance expense positively impacted earnings 20 cents per share primarily due to lower planned outage costs and lower parent level costs.
Last quarter I shared that we will be implementing lean principles initiative to continue our track record.
Cost management discipline and streamlining our processes. This process of part of a larger effort. What we are calling customer for our ability to identify sample saving that have a positive impact on customer bills by simplifying the way we work.
Over the past few months, we have engaged many employees from across the enterprise and hosted workshop to identify ways to streamline our processes deployed technology and ultimately reduce costs. While this effort will take time to mature we continue to manage costs consistent with our historical track record.
Turning now to Arizona economy, as you can see on slide three the state focus on growth has continued to pay dividends.
In particular, we continue to see data center and other manufacturing development on the west side of Metro Phoenix.
Last week, Microsoft Windfarm plans to build three world class data center campuses and Goodyear now Mirage.
Construction on all three sites has begun and Microsoft intends to power the facilities with a 100% renewable energy.
In addition, Nike announced plans to build a multimillion dollar manufacturing plant and Goodyear, bringing approximately 500 jobs to the area.
Last month Compass, Datacenters announced the construction of its first of two datacenters, which are projected to be completed in the fourth quarter of 2019.
The two that data center, our spec to you by 72 megawatts of new load.
Going forward Compass Datacenters expect to campus could grow up to 350 megawatts within onsite 230 kv substation.
As a result, the Metro Phoenix area continues to show strong job growth and has consistently been above the national average.
Through may of 2019, employment and Metro Phoenix increased 3% compared to 1.7% for the entire US construction employment increased by 11.6% and manufacturing employment increased by 4.5%.
The strong job growth in the construction sector can easily be seen in downtown Phoenix.
Numerous job sites equivalent cranes and staff of construction crews are visible across the downtown area, we expect business expansion and related job growth to continue to support economic development.
The Metro Phoenix residential real estate market has also continued its upward trend.
In 2019, we expect a total of 30000 housing permits an increase of about.
2900, compared to 2018, driven by single family permits.
We believe that solid job growth and income growth and relatively low low mortgage rates should allow the metro Phoenix housing market and the economy more generally to continue to expand faster than the national average.
Reflecting this day improvement and.
Economic conditions, Apss retail customer great customer base to 1.8% in the second quarter of 2019.
We expect that this growth rate will continue to accelerate when response to the economic trends I just discussed.
Importantly, the long term fundamentals supporting future population job growth and economic development in Arizona I remain.
Turning to guidance and our financial outlook as we look to the second half of 2019, we continue to evaluate our financial expectations and opportunities.
As Don mentioned, we are temporary temporarily delay and investment in new energy storage, although the projects are delayed our total projected capital expenditure levels to the forecast that period remain the same.
We have reallocated the capital that what had been pinned on energy storage to accelerate other distribution and fossil projects.
Also with the change in timing of for our next rate case, we have reevaluated our financing plant as a result, we will not require any additional equity apparent level long term debt for the remainder of 2019.
However, we will continue to have a strong equity layer the equity ratio at the end of the test year was approximately 54.7%.
Despite the mild weather in the first half of the year. We continue to expect Pinnacle West consolidated earnings for 2019 will be in the range of $4.75 to $4 or 95 cents per share.
However, I would guide you to the low end due to weather today.
The third quarter represents over 60% of our full year results and as we have experienced weather in the third quarter can vary significantly.
Keys to success, we'll be managing our costs the impact of increases in customer load primarily from the Datacenters I mentioned earlier and normal weather for the remainder of 2019, a complete list of our key factors and assumptions underlying our guidance is included on slide six and seven other materials.
We expect to issue up to 600 million of long term debt at Apss during the remainder of 2019.
This excludes any funding for the refinancing.
Apss $250 million at 2.2% senior notes, which mature in January 2020.
Overall liquidity remains strong.
And that concludes our prepared remarks, I'll now turn the call back over to the operator for questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
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One moment, please while we poll for questions.
Thank you. Our first question comes from the line of Michael Weinstein with Credit Suisse. Please proceed with your question.
Hi, guys.
Michael Hi, Michael Hi.
Thanks, Thanks for the update do you have any kind of update on what's going on with the four corners CR.
Step up order.
At this point.
Hey, Michael it's Jeff.
So the as you know we've got a recommended opinion and order out on that it went through the hearing process.
Has not moved to the commission, yet and I think given the timing of the upcoming rate case, there's three potential pass you could see it could go before the case gets filed.
It could be decided sometime while the cases pending.
Or it could end up just being consolidated with that rate case in both the rate case and that decision being voted out, but we don't have clarity as to which of those passes on.
Got you and on the rate case filing there was some discussion I remember at the commission meeting about.
That is so tight deadline to get done by October 31st Im just wondering if you guys are.
Or how you're coping with that deadline at this point yet.
It's it is tight normally takes about six months to put a case together, but we just had to accelerate.
The work that we're doing on it so it's in process of being prepared right now and then we'll hit the target.
Okay great.
I'll get back in the queue. Thank you.
Our next question comes from the line of Greg Gordon with Evercore. Please proceed with your question.
Thanks, Good morning.
Good morning, Greg.
You know, it's sort of DJ Vu all over again with this this commission thinking about the efficacy of retail competition.
So ultimately I you know.
Based on my history of looking at the state I would tend to agree with your view of the outcome, but what is the timeline and the next milestones that we should look for.
Two over the next.
I don't know how long period of time till we get to a point, where we know.
Sort of that the commission has been fully educated on this and we might get better view as to the next steps.
Hi, Doug Greg Jeff. So this was discussed at the Commission staff meeting yesterday, and I think what I'm not surprisingly.
What they're looking for is more information on what the potential impacts are.
What the technical issues would be.
All the analysis that you would need to make a decision on whether it's.
Appropriate to move forward.
I think it is clear on that that they're going to have another workshop on it and they're working on getting additional questions and whether that next workshop will provide enough information as you know this is a really complicated.
Issue to work through particularly in the.
Situation that we're in without being already in an RTL are NY ESO.
And so I think watching for that workshop probably in October .
We will be the next milestone and then how it progresses from there it's hard to see right now.
Can you refresh my memory, though I mean last time.
We went through this process they were.
And very very large number of educational.
Sessions like that before they came to the conclusion that they should move forward can you refresh my memory.
Roughly having my last process to that last process actually took multiple years and it started kind of similar to how the California.
The California Blue book process started as they had broken into a number of different working groups. So legal working group the technical working group.
And again that was before you had retail competition and a lot of states.
But it took multiple years of folks working through the different issues and then it took multiple years to move forward on the implementation path that we were pursuing them.
Until the California energy crisis hit and that's what put everything on hold and then we had to unwind. Some of the work that had been done during that process. So I don't know that it would take as long. This time given that theres been more experience in retail competition, but as you know if you're actually talking about standing up in our T O.
There is a lot of issues that you have to that you'd have to work through particularly how it would interface with with California.
And and what impact that would have since we're participating in the energy imbalance market and credit and customers with off system sales revenues that we get from that.
You know if you stopped doing that because you stand your own archeo up that's going to affect all customers and so they've got to work through a lot of these technical issues I think to come to that.
Conclusion of whether to move into a formal rulemaking or how that formal rulemaking would would develop.
Last question for.
For Jim as I look at the guidance drivers on page six and I think about.
You are guiding towards the low end of the range because of weather and I think about it should I just be flexing. The adjusted expected gross margin down towards the lower lower end of the range or are there other.
Moving parts here.
The share count is obviously a bit lower given the change in the financing package, but right.
Inside those guidance ranges can you give us some sense of what the moving parts are.
So I would say that.
Oh and am but would be toward the lower end.
I'm thinking about our three or.
Sort of things, we have to focus on our NAV I think.
Sales will be within the range, we we had gross.
Fairly strong residential sales in the first half we have the commercial customer that onetime outage that hurt.
Commercial sales, but I would think with.
We're seeing the impact of data centers.
Upon the timing that they actually come on.
Since there is a.
Hello, Flex there and then I think you'll see gross margin towards the lower end just due to weather as we as we go forward.
Okay. Thank you gentlemen.
Thank you Greg.
Our next question comes from the line of Julien Dumoulin Smith with Bank of America Merrill Lynch. Please proceed with your question.
Hi, Good morning. This is dairy Islam's me on for Julian instead of question around the renewable RFP that you said you will be issuing shortly on any sense as to like what the associated Capex spend would those will be.
Well I don't think there is no incremental capex associated with that we as we go forward you know we have battery storage and we have other renewable are based in our plan. So we'll know more when we get to the actual RFP backed by that I don't see any incremental capital at this point.
Okay. Thank you and maybe can you talk a little bit more just about the the plan going forward as far as energy storage I know the on the investigation is ongoing can you talk a little bit it's to the sense of the timing of when you will know more and when you'll be able to kind of proceed more on.
On the plan there.
This is Daniel.
To your point the first phase of the main event investigation has been completed and we moved on to the second phase.
The forensic phase if you will you actually equipment for season involve discharging the remaining modules at the moment.
Facility.
Uh huh.
Two.
Speculate.
Specific timelines I know that the second stage for renting.
Hello.
Oh, it will involve a couple of months.
Cautiously optimistic that we'll have some returns back in the late September October timeframe.
That is speculative at this point.
Hi, I'm listening to.
Eco brass comments.
His remarks, we want to be approaches prudently safely.
So confidence in the technology and so we're just not pause in that space.
Okay. Thank you very much.
Our next question comes from the line of Insoo Kim with Goldman Sachs. Please proceed with your question.
Thank you starting with the I think the recent consideration for extending the gas generation moratorium I think the proposal or the consideration was that it would only be until early 2020, but if that were to.
It happened and stretch out further.
All right what other items do you have to offset any potential you know faisel.
Bill that you have in your Capex plan.
Insoo. This is Jeff just to just to clarify if the if the gas moratorium is extended and if you look at the language of it what it requires.
Is that if we needed to construct so I just want to clarify that is that if we needed to construct that we would have to go get can commission approval essentially to do that which I think again you know.
That's something we would do irrespective of whether there was a moratorium in place.
And it's limited to gas generation, that's going to be likely disgust on the September .
Open meeting.
So I don't think its would have any impact on capital.
Yeah also you know it wasn't prohibit PPH long forward and to the extent that we.
Needed to fulfill that need.
Understood.
And then in terms of the device financing plan you mentioned that the Aes equity layer was around 54.8 I believe at the end of 2019 and with no plans for additional equity does that just imply that will be likely fever. The amount that's filed and the upcoming rate case.
I would expect that Didnt end of the tests, you're at June 30 that you'll see the equity layer approximately 54.7%.
Oversight.
Okay. Thank you very much.
Our consistent and within our 53 to 55 eight that we've had historically so.
Understood. Thank you.
Our next question comes from the line of Ali Agha with Suntrust. Please proceed with your question.
Thank you good morning.
Hey, Alex.
Hey, first question on Slide 18, you laid out the implications for the four corners step increase not taking place all the pluses and minuses.
I just wanted to clarify Jim when you talk about.
Sort of guiding towards the lower lower end of the range. This year does that assume that the floor going a step increase does not happen. This year or are you still counting on some learnings from that even within that scenario.
Well, Jeff talked earlier about the path going forward. So again, we don't know the path but.
Assuming.
We get it or don't get it we're still going to be towards the low end of guidance just based on the factors I talked about earlier.
Hi, Doug.
Okay.
And then secondly, a more general question you know you had a couple of new commissioners.
Come on board this year just wondering.
Got it and interactions with the commission up in General how are you seeing that today or say say you know 18 months ago 12, 18, 24 months ago in General you know.
As you're dealing with the commission on various issues.
You know every.
Commissions dynamics. So you know you always have changes when other commissioners come in and that they'll have different priorities.
And so we're in.
Kind of in the process of trying to make sure were opened in explaining the issues and the policies as we see him.
And in general the interaction has been similar.
Hi, it's it's similar I mean, it's it's challenging because as you know when you get into rate case issues and you get index part a situations you can't discuss pending matters and so.
Depending on how busy your docket is that affect sometimes how how you know how much interaction that you can have.
Right and then lastly, Jim also there's one of the identified as you mentioned in this rate case filing.
You won't need any equity as you plan on long time, when you laid out some longer term capex plans.
When at the earliest you think.
Equity comes back into the scenario for you guys.
I don't really have a view on that today, you know in provinces filing the rate case and.
Gain a constructive outcome and we'll go from there.
Got it.
Thank you.
Our next question comes from the line of Charles Fishman with Morningstar. Please proceed with your question.
Good morning on the IR team.
Don if I could just confirm that.
Make sure I got this right the 2% CAGR.
In.
Load growth between 2020, and 2035 that is net of distributed generation.
Yes.
So that's like a Wow huh.
Yeah that's.
I said it was both peak demand in energy, we expect to grow at that figure two person.
So is this a you know you had that one slide with all the data centers that some of what's driving this I guess all of the above but those things are huge.
Energy users correct.
Yes, they are.
Were very attractive.
Areas due to.
Little probabilities of natural disasters reasonable.
Price on energy living conditions for their employees.
Very attractive for energy centers, but as we look out the window here, there's cranes all over.
Downtown Phoenix, and if you drive around the valley and other.
Growth areas of the state there is a lot of activity going on and.
And I continue to hear from developers labor shortages is the only thing that's holding some of it back so.
We've we're pretty convinced there is a lot more to happen here in Arizona.
So when Microsoft says there they're going to source it with renewables is that the standard thing or is that those renewables could come from.
Other locations, they're just saying that to offset what they use in.
In Arizona.
Yeah, Charles we did a as special contract.
Arrangement with Microsoft which allows them to.
To do something that in the industries similar to what's called a contract for differences it lets them go out and.
Construct a renewable energy.
Kinda wherever and we give them a market price the price and so it gives flexibility the customer to go out and and achieve the energy objectives that they're looking for and so that was a relatively unique tariff arrangement, but we're looking at again, that's a model that we can apply to other data centers.
And we expect to see more datacenters and we have tailored our rate designs to to also be attractive to these high load factor customers and just to underscore the benefit of this for all customers. When these customers come on because they're using the system. It increases the efficiency that we.
We are able to use our system and it actually takes price pressure off of other customers.
Right.
Last question I didn't slug, my way through the RP I'm, just a little bit I read.
I see where you're talking about the importance of natural gas, but is there do you address.
The actual.
Need to build some more natural gas. In addition, all the renewables and storage and the RFP.
Charles This is Daniel we don't make that distinction is if you will from a natural gas build standpoint.
Given the deferral.
And the.
The status of our energy storage.
We've obviously come to work with the interest additional solar and wind.
Gas has been and will continue to be needed as a bridge fuel.
Looking resource, where we move through the next three to five to seven years.
And that will inform our decisions.
Relative to additional gas acquisitions, either through PVA or 13, it at some point.
In discussion to though.
And Charles just the stuff again, just to the policy issue to watch on that and how the IR P and the stakeholders are engaging this is kind of a fundamental policy issue around.
Around this future of clean energy is do you have do you have a 100% clean energy is that the path that you moved to with the understanding that the the getting that last 10% or 20% could be very expensive.
Where do you move more quickly and have gas involved in the resource mix, but then electrify and move things onto a lower carbon system and so that's going to be a policy issues to get up further in.
Ill pass the five to six seven year horizon that I know, we're going to have that discussion I expect we'll have it in Arizona, but it's similar to what you're seeing around the country.
[noise] fascinating sounds like it's worth reading the rest of the RFP. Thank you that's all I have.
Our next question comes from the line of Paul Patterson with Glenrock Associates. Please proceed with your question.
Hey, good morning.
Hey, Paul.
There was this.
Emergency moratorium on shuttle.
And I just was wondering where that stood.
Is it still a <unk> did they make some final rule or not and whats your experience been to four with.
Rich if you follow me or.
You know sometimes when you have these moratoriums you have these problems are people.
Oh, yeah, who have tight budgets.
[noise] stopped paying their bills and then get behind and what have you I'm. Just wondering if you guys experienced anything like that if you have any update.
Yeah, Paul this is Jeff.
The emergency rules that are in place the emergency rules are meant to be in place while the commission conducts a formal rulemaking.
On whatever the disconnect policy will be going forward.
And so so the emergency rules are in place through this summer and then the formal rulemaking is likely to start.
Fairly soon.
We are seeing and we report to the commission what the Arrearages are and they've asked for monthly reporting on that and you're you're right as expected. We're seeing the Arrearages go up and some one of the things that we're focused on is how we're going to engage and Don mentioned that how we're going to engage.
Customers with community support organizations in October 15th when the moratorium comes up and we know we're going to have a.
Circumstance, where a lot of customers will be behind or months of summer bells, and so we're working forward with how will.
How we'll deal with that with the number of stakeholders, who are engaged in supporting those customers.
Okay.
And then.
Just to go back to two quick questions regarding the a the retail choice issue I mean.
Having been around long enough to remember when this was a sad in parts of the country and and how it became not so much.
It is a little bit surprising seen through the enthusiasm you got to put forward. A report what have you. There has been a considerable amount of process already and there's still seems to be at least of the port of a few commissions. It seems a lot of enthusiasm for this in the staff I think seems to be sort of okay with everything but residential switching it's or at least they don't that seems to be where they seem to voice their concern. So.
I guess, what I'm wondering is.
If you could give a little more color as to you know.
Why so much enthusiasm for something that.
We're hearing actually sort of unpopularity around at least from consumer groups and what have you around parts of the country.
You know.
Yeah, I do and certainly in you know you can read Commissioner olson's.
Letters and if you watch the workshops, he's he's certainly a proponent of abroad retail competition Commissioner Burns Chairman Burns I'm, sorry has been a proponent since he has been on the on the bench I think the staff's concern is let's make sure we do understand all the consequences all the potential impacts.
And so it's not a new pressure, it's certainly has more attention now, but we've worked on the commercial side in our last couple of rate cases in putting.
Some creative by through provisions that allowed or those customers some customers to go out and.
Kind of working through us go out and secure power resources.
For themselves, it's a it's a limited.
Number of megawatts that can do that because of the need if you scale that up you've got to get an RTL in place and so that you know we've done it to where we can accommodate it.
But there's there's interest in saying can can you go do more and I and you know I think you're right. I mean, this is primarily something that is of interest to the.
To the large commercial customers, who see an opportunity to.
Go out and buy on an energy only basis and part of what you have to talk about is.
How do you fairly reflect the capacity value that the incumbent utilities fleets bring to the system.
And so that's where a lot of the interest is and you know residential I think that they're interested in talking about it but that's a really hard.
Really hard when to do and certainly hard to do community choice aggregation I think is probably impossible to do community choice aggregation without being in an RFP on having some kind of underlying dispatch going on.
Okay. I appreciate you definitely have been [laughter] do it here.
Fool exhausting, but because it's so much going on there, but thanks again and have a good one.
Okay. Thanks, Paul.
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