Avangrid, Inc.

Good morning or good afternoon all and welcome to AvantGrid's first quarter 2023 earnings conference call. If you'd like to ask a question on today's call, please press star followed by one on your telephone keypad to enter the queue. I'll now turn the call over to Alvaro Ortega, Vice President of Finance, Investor Relations and Treasury.

Over to you. Thank you, Adam, and good morning to everyone. Thank you for joining us today to discuss AvantGrid's first quarter 2023 earnings results. Presenting on the call today are Pedro Asagra, our Chief Executive Officer, and Patricia Joskel, our Chief Financial Officer. Also joining us today for the question and answer part of the call will be Catherine Esten, PM, President and Chief Executive Officer of Avangrid Networks, and Jose Antonio Miranda, Chief Executive Officer and President of Avangrid Renewables. Other members of the executive team are also joining us today, and my big call happened to assist with the Q&A part of the call. If you do not have a copy of our press release or presentation for today's call, they are available on our website at avangrid.com. During today's call, we will make various forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, based on current expectations and assumptions, which are subject to risk and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in Avangrid's earnings news release in the comments made during this conference call, in the risk factor section of the accompanying presentation, or in our latest reports on filings with the Securities and Exchange Commission, each of which can be found on our website, avangrid.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slide accompanying today's presentation for definition of information and reconciliations of non-GAAP financial measures to the closest GAAP financial measures. I will now turn the call over to Pedro.

Thank you, Alvaro, and good morning, everyone. Thank you for joining us today for our first quarter results presentation. Let's get started on slide five. Overall, AvantGrid had a solid start for the year. with many important operational achievements, and our team remains highly focused on the successful delivery of our strategic initiatives. For the first quarter, our earnings per share and adjusted earnings per share were 63 and 64 cents per share, respectively. On a year-over-year basis, the comparison is driven by the absence of the 40-cent offshore wind restructuring gain recorded in the first quarter of last year. Most importantly, we are taking meaningful steps forward on the strategic initiatives that will drive future growth across both businesses. In networks, we are advancing on our rate cases in New York, Maine, and Connecticut, and we continue to anticipate having new rates in effect across all jurisdictions this year. In addition, in February, we received approval from the New York Public Service Commission for our CLCPA Phase II portfolio. A $2.25 billion investment that will reduce grid congestion, create a pathway for nearly two-year water renewable energy resources, and play an integral role in achieving New York's nation-leading climate goals. Together with CLCPA Phase 1, the transmission investment opportunities in New York beyond 2025 will reach over $3 billion. For our New England Clean Energy Connect project, The jury trial in Maine's Business and Consumer Court concluded last week and unanimously found that the project can legally proceed. This is another major success for NECC, following positive rulings over the last month from the Maine Law Court and FERC. We're also progressing on PNM resources merger, and in recent weeks, we have taken several key steps forward. Last month, I've agreed PNM Resources and the New Mexico Public Regulation Commission file a joint motion with the new Supreme Court in New Mexico to dismiss the merger appeal and remand the case back to the PRC. Additionally, we extended our merger agreement through July 20th, reinforcing our continued commitment to PNM as we work through the legal and regulatory review process. In renewables, we signed or renegotiated PPAs for 524 megawatts of solar capacity projects and commissioned 205 megawatts in Oregon. Additionally, we are advancing the construction of approximately one gigawatt of new onshore capacity for COD over the next two years. Construction on our Binger Wind 1 offshore project is progressing as planned, keeping the project on track to deliver its first power later this year and reach full commercial operations next year. We expect to install the first monopile during the second quarter, which will mark a major milestone for the construction works. Throughout the year, we will continue working to close these core initiatives, which create a strong value proposition for Avangrid and positions as well to deliver on our annual obligations and estimations. Slide six illustrates one of our most essential priorities. developing trust and collaboration with our key stakeholders, as well as accomplishments and constructive outcomes that have resulted from our efforts. As discussed on the previous slide, during the first quarter, we delivered several significant accomplishments, including the positive core ruling on HNCEC and progress from our PNM resources merger. We have resumed collections in mid-April, while continuously advocating on behalf of our customers to reduce build impact in response to the pandemic and supply cost challenges. In addition to over $50 million in assistance secured in 2022, this year New York approved the second phase of its utility assistance program, which provides another $34 million to NYSEX and Energy NE customers to help reduce substantial arrears that accumulated during and after the pandemic. On the renewable side of the business, we are engaging with officials and regulators in New England on the solutions needed to ensure a healthy and competitive offshore wind market and economically viable projects. Last week, we announced a new partnership with the Navajo Tribal Utility Authority to explore opportunities to develop up to one gigawatt of renewable energy projects, including wind, solar, and storage within the Navajo Nation in New Mexico and Arizona. This partnership is a great example of how the IRA is unlocking innovative investment opportunities and how we are committed to engaging our communities in the transition by delivering jobs and fostering economic growth and development. Additionally, we have fully funded DAX equity for our 194-megawatt land-heel solar project and our focus on maintaining solid credit ratings. Recently, FITS affirmed its rating for avant-garde and improved its outlook to stable. We look forward to seeing more green checkmarks on this slide in the months to come. Our focus on engagement and strong relationship building will continue to be essential. As we work towards successful conclusions for our rate cases, New England offshore wind projects, NECC, and PNM Resources merger, we are encouraged by the strong coalitions of support we have already built, which include businesses and labor groups, environmental organizations, policy leaders, and others. Let's turn now to our network business on slide seven. Across the business, we are focused on providing safe, reliable, and affordable service and investing to create the stronger, more resilient grid that will be the backbone of a cleaner energy future. We're making good progress on our rate cases. Starting with New York, we continue to advance on our settlement negotiation and expect rates to be effective as of April 22nd with a make-hold provision recently approved by the Commission. In Maine, we reached an agreement with Parted to enter into settlement negotiations in March. We expect CMP's new rates to be effective in August. In Connecticut, we completed evidentiary hearings and briefings are currently ongoing. For UI, we expect new rates will be effective in September. And in Massachusetts, new rates are already authorized and came into effect at the start of the year. While we work to bring new rate plans into effect across our remaining states, we continue to drive a focus on operational excellence. We have planned or launched several transformative multi-year investments that will modernize our operations and provide improved service to our customers. This includes $2.25 billion in approved Phase II CLCPA transmission investments, bringing the total transmission opportunities in New York beyond 2025 to over $3 billion, plus the deployment of 1.9 million smart meters across our New York service territories. These meters will be essential to provide our customers with better access to data and insights to help manage costs. Additionally, we are accelerating the digitalization of our customer experience. Today, more than 42% of our customers utilize e-bills, compared with under 30% in 2020. Over the same time, we increase use of our mobile app by a factor of 15, and outage alerts by a factor of six. All of these help us to reduce cost to customers. improve cash flow, and reduce call volumes while improving customer satisfaction. We have had some issues with customer service, and that is important to recognize. But we are taking action to address those issues, and in the last four months, we're getting back on track. We have worked to overcome pandemic-related staffing challenges, and since October, have hired nearly 250 new customer service representatives and billing specialists. At our New York companies, customer escalation rates have fallen considerably and calls are being answered more quickly. And in Maine, we continue to meet or exceed every customer metric. I'm very proud of our team's commitment to our customers and to continuous improvement and the results we have delivered so far. Let's turn to our renewable business on slide eight. We have increased our stone capacity to 8.6 gigawatts, including 205 megawatts from our MONTAX solar project recently commissioned. In total, we have an additional 1.7 gigawatts of capacity under construction, supporting the delivery of our long-term plan. This includes around 800 megawatts of solar, 106 megawatts of onshore wind, and 806 megawatts of offshore wind. Panel supply for all solar projects under construction has been secured. Additionally, we are focused on building relationships that support our continued growth and drive operational excellence. In the first quarter, we executed a new PPA for our 321 MW True North Solar project and successfully renegotiated an existing 203 MW PPA for Powell Creek. In total, we have renegotiated nearly 1 GW of PPAs over the last year, which has helped to address a challenging macroeconomic environment and keep plant growth on track. Furthermore, we have recently joined the California ISOS, KISOS, Western Energy Imbalance Market as its first generation-only entity. Our participation in the market will create operational efficiencies by supporting more cost-effective resource balancing and enabling sales of excess power. Turning to our offshore business, our team continues to make excellent progress on the construction of our landmark Vinger Wind 1 project. This month, we received the type certificate for our turbines, initiating the 60-day period for BOEM approval to begin the installation campaign. We plan to install the project's first monopile during the second quarter. Regarding our New England projects, we are progressing development to achieve the record of decision and recently completed the geotech survey. In parallel, we're continuing PPA discussions with the stakeholders in Massachusetts and Connecticut seeking the best way forward for these projects to help deliver the ambitious climate goals in both states. Above all else, the future of U.S. clean energy looks bright. The Inflation Reduction Act unlocks transformative incentives and significant untapped value for renewable development. While we are awaiting guidance on its implementation, we believe the IRA provides a long and visible runway for investment. In response to this historic opportunity, we are planning to accelerate growth across renewable technologies and hydrogen and beyond our long-term outlook. Turning now to Slate 9, At Avangrid, we believe being a true sustainable leader requires transparent disclosures, consistent reporting, and science-based targets. Last week, we released our 2022 sustainability report, which demonstrates the strong progress we have made toward achieving our key environmental, social, governance, and financial goals. On this slide, we have highlighted several of our key metrics. As you can see, we are performing very well in our major environmental and social commitments, and we remain well on track to reach our 2025 goals. We are also proud that our leadership has been consistently recognized and validated by external parties. In 2023, Avangrid was named one of the Ethisphere's world's most ethical companies for the first consecutive year, one of just nine utilities and energy companies to receive the honor. We are also listed as one of the just 100 for the third time consecutive year, number one in the environment category, and we joined Bloomberg's Gender Equality Index. As part of Iberdrola Group, our ESG plus F commitments are a fundamental part of our company's strategy and vision. For more than two decades, Eventrola and AvantGrid have anticipated the transition to a more sustainable energy model and have invested substantially to accelerate that transition. We're raising the bar with clear and ambitious goals, including achieving a Scopes 1 and 2 carbon neutrality by 2030, and we continue to build on these commitments to create value for customers, community shareholders, and all stakeholders. Now, I'd like to hand the call to Patricia to provide more details on our financial results.