This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk04: Good morning, everyone, and welcome to Portland General Electric Company's second quarter 2022 earnings results conference call. Today is Thursday, July 28, 2022. This call is being recorded, and as such, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star 11 on your telephone keypad. If you do not intend to ask a question, please avoid the, if you do intend to, please avoid the use of speaker phones. For opening remarks, I would like to turn the conference call over to Portland General Electric Senior Director of Finance, Investor Relations, and Risk Management, Chardhan Haramijo. Please go ahead, sir.
spk07: Thank you, Jonathan. Good morning, everyone. I'm happy you can join us today. Before we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion, which we will be referencing throughout the call. The slides are available on our website at investors.portlandgeneral.com. Referring to slide two, some of our remarks this morning will constitute forward-looking statements. We caution you that such statements involve inherent risks and uncertainties, and actual results may differ materially from our expectations. For a description of some of the factors that could cause actual results to differ materially, please refer to our earnings press release and our most recent periodic reports on forms 10-K and 10-Q, which are available on our website. Feeding our discussion today are Maria Pope, President and CEO, and Jim Magello, Senior Vice President of Finance, CFO, Treasurer, and CCO. Following their prepared remarks, we will open the line for your questions. Now, it's my pleasure to turn the call over to Maria.
spk09: Thank you, Jordan, and good morning, everyone, and thank you for joining us today. Beginning with slide four, I'll start by discussing our strong quarter and provide some operational and regulatory highlights. We reported GAAP net income of $64 million, or $0.72 per share, compared with net income of $32 million, or $0.36 per share, in the second quarter of last year. Due to these strong results, we're revising our GAAP earnings guidance to $2.60 to $2.75 per share. Additionally, after further evaluating the first quarter write-off of the 2020 wildfire and COVID deferrals, and after receiving further clarification from the Oregon Public Utility Commission, we're also initiating non-GAAP adjusted earnings guidance of $2.74 to $2.89 per share. This addition reflects our ongoing work to provide the most meaningful comparison of our earnings and assessment of ongoing financial performance. Our results this quarter reflect several key drivers. We're seeing continued growth in energy deliveries, particularly on the industrial side with semiconductor, high-tech, and digital customers. Several new and existing semiconductor manufacturers are expanding their operations in our region. This builds upon decades of investment in the state and extends a longer secular trend in immigration and business growth. Many of our investments at Portland General are critical to the infrastructure that supports the technology sector. As we discussed in the first quarter call, Operating expenses are also higher due to wildfire mitigation, as well as grid resilience and enhancements to customer and other digital technologies. On the power and fuel expense front, we've had a great hydro year and have benefited from the very favorable power market conditions. As many as you know, our region experienced the wettest second quarter in the last 81 years, as well as record-breaking spring snowfall. Moving to slide five, as we look to the future, we're focused on three key areas, advancing investment that drives growth in alignment with the state's energy policies, enhancing performance and operating efficiency, and operating our system with a focus on risk management. We are pleased with the operational and financial progress we're making in these areas, and we're well positioned as we execute through year-end and beyond. Let me start with growth. We're living in a transformational moment in the energy industry, and Portland General Electric is leading the way by advancing the state's policy goals and investing strategically to build a clean energy future. We continue to see opportunity related to resource acquisition as we seek to reduce greenhouse gas emissions to meet 2030 admissions targets. And on July 15th, the OPC verbally acknowledged our RFP shortlist. Given inflationary pressures, a process is underway for parties to refresh their bids. While we hope this is short, we will need to be patient as we work with independent evaluator to ensure the best price and lowest risk for customers while maintaining the attractive diversity of wind, solar, battery, and pump storage resources. We remain optimistic that we will announce executed agreements by the end of this year. The projects are expected to be in service by the end of 2024 to capture expiring federal production tax credits for the benefit of customers. While the process is ongoing, any new generation capacity ownership opportunities will have an impact on our equity needs in 2023 and beyond, which Jim will discuss shortly. The RFP process represents an important step in accelerating the clean energy transformation and is a key aspect in our ability to decarbonize our power supplies while continuing to provide reliable, affordable energy to everyone we serve. While the ink is not yet dry, we are also looking ahead and expect to issue our next integrated resource plan and file our inaugural clean energy plan in early 2023. Turning to performance. During a period of significant inflation and growth, we are all the more disciplined in managing our costs. Like most companies, we're dealing with the impacts of a strong labor market and high inflation. We are intently focused on driving operational productivity and performance while holding overall cost trends stable. As an example, on the T&D side, crew productivity is up about a third since 2018, thanks to better use of technology, investments in the grid, and improvements in overall workflow. Today, we are getting a lot more work done at the same cost. Much of our digital improvements have been focused on customers. We have improved web-based solutions, payment options, communications, and better reliability through greater visibility and distributed automation. On the generation side, our thermal plant operating performance has remained high over the last five years. Today, our peaker plant utilization has more than tripled to support renewable adoption all the while saving money and maintaining availability. While we're operating more efficiently, we're also improving safety. Safety statistics, including vehicle incidents, have shown an 80% improvement over the last five years. Now turning to risk management. As the work we're doing to manage costs supports our ability to invest in robust and improved risk management. First, As a vertically integrated utility, we're well positioned. For example, while commodity prices, in particular natural gas prices, have shown significant volatility throughout 2022, our regulatory mechanisms, hedging strategies, strong balance sheets, and credit ratings have all helped to mitigate potential impacts to customers and shareholders. In late April, the OPC approved our 2022 wildfire mitigation plan, which was timely in light of the Oregon Department of Forestry's recent declaration that all of Oregon is now in wildfire season. While wildfire season typically extends from May through October, wildfire related planning is year round. Our mitigation initiatives this year are well underway and showing results. This work is paired with long-term investments in wildfire cameras, automated reclosers, weather stations, all to increase situational awareness and provide visibility in high-risk fire zones. Our risk mitigation, of course, goes beyond wildfires. Our climate is becoming more extreme in every season. The investments we're making today are making our system more resilient and reliable. Our integrated operations center is a great example as it allows us to monitor control our entire system in real time. It centralizes a range of vital functions that is critical to resource and system integration. It helps us manage and improve reliability with daily grid management, and it serves as a central hub to offer efforts to increase resilience and security. As you all have seen in the press, we are in the middle of an extreme heat wave in the Pacific Northwest, and this facility our Integrated Operations Center is improving our ability to respond to these circumstances, which put a great deal of stress on the grid. Finally, I'd like to touch on our focus on areas in the coming quarter. Market conditions for power costs are favorable as they were in the second quarter, and our outlook for the third quarter is solid. We're monitoring the possibility of constraints in regional power markets that could produce significant higher energy costs, such as we saw last year. We're laser focused on closely managing O&M in light of our run rate in the first half of the year and our current inflationary environment. And finally, yesterday, we filed for the amortization of major deferral expense balances related to the 2022 Labor Day wildfire the February 2021 ice storm, and the 2021 Power Costs Adjustment Mechanism, or PCAM. All of these represent a total of 132 million of outstanding major deferrals. Additionally, we plan to file for amortization of the 34 million COVID-19 deferral in late 2022 or early 2023. As we close the books on a solid quarter, It's worth noting that the key to our success is focusing on what matters most, safe, reliable, affordable, clean energy with customers at the center of all we do, enabling their well-being and the advancement of the communities we serve, all the while creating opportunities to invest, delivering value for all stakeholders and shareholders alike. With that, thank you, and let me turn it over to Jim.
spk05: Thank you, Maria, and good morning, everyone. Moving to slide six, our second quarter results reflect the strength of our service territory and a dynamic and favorable power market, as well as broader economic conditions. A regional economy continues a trend of strong growth, and within migration, industrial development, all driving rising demand. You saw the unemployment rate in our service territory decline to 3.2% in June of 2022 compared to 5% in June of 2021. We also continue to witness strong growth fundamentals in our service territory, highlighted by high growth in the industrial sector. Overall, Q2 2022 loads increased by 1% weather adjusted compared to Q2 2021. Residential load decreased 3.2% year-over-year weather adjusted as we began to witness a moderation from usage patterns during the peak of the pandemic. Residential customer account growth remained steady at 1.3% compared to Q2 2021. Commercial load decreased 1.7% year-over-year, weather adjusted due in large part to decreased need for irrigation in 2022 after record rainfall during the spring. The high-tech and digital services sectors continued on their existing growth trajectory as we saw over 9.8% higher industrial loads weather-adjusted year-over-year. On a weather-adjusted basis, total load increased 0.4% year-over-year. Weather-adjusted retail deliveries were up 2.7% year-over-year first half of 2022. Beyond the continued strength of our region, we observed significantly more favorable relative to the prior year. These conditions, coupled with deliberate actions by our power operations team to manage purchase power and fuel costs on behalf of customers, led to improved financial results compared to last year. As we look at the broad economy, we are closely watching the impacts of inflation. In the near term, we are managing inflation pressures on O&M by focusing on an efficient spend throughout our business and believe that O&M pressures are manageable within our current guidance. I'll note that from 2017 to 2022, our base O&M increased at a compounded annual growth rate of approximately 1%. If one adds in non-deferrable vegetation management, wildfire mitigation expenses, the CAGR is closer to 2% based on the midpoint of 2022 O&M guidance. Yet, I think we could do better. As we look to the remainder of 2022 and beyond, we are focused on creating more efficient operations and effectively managing commodity risks to minimize the impact of cost pressures on customers. I'll now cover our financial performance quarter over quarter. We experienced a $0.05 increase in total revenues attributed to the previously mentioned increase in deliveries. led by industrial customers. While load was up 0.4% quarter over quarter, the significant increases in industrial load were partially offset by decreases in residential and commercial loads, resulting in some offsetting effects due to the composition of customer prices. This created a 7 cent decrease in total revenues. As noted earlier, Q2 2021, power cost conditions were challenging. At 31 cents of the quarter over quarter earnings change, relates to headwinds in 2021 that did not recur. $0.19 is attributed to a more favorable power market in the current quarter, driven by strong hydro conditions in the region, as well as conditions and company strategies that allowed us to resell power and gas into the market at optimal times and prices. This includes the strategic dispatch of our generation fleet, which gives us the opportunity to respond to market conditions, reducing power when it is cheaper relative to market rates and selling excess power when market prices are advantageous. This is all to mitigate risk and volatility and manage costs to the benefit of our customers. It was a $0.07 decrease in EPS from higher operating expenses due to 22 O&M drivers include $0.02 of additional wildfire mitigation, reflecting incremental work performed in 2022 to implement our recently approved wildfire mitigation plan. $0.02 of customer service spend related to transportation electrification, enablement, and enhancements to the digital customer experience. $0.02 of additional outside service and labor costs for grid reliability and resiliency. And finally, $0.01 decrease of higher administrative expense, primarily driven by insurance cost increases. With a $0.04 decrease due to lower market-derived returns on the non-qualified benefit trust compared to Q2 2021. Turning to slide 7, which shows our capital forecast through 2026, we have again increased our capital expenditure forecast for 2022 by an additional $70 million, up by $105 million compared to the original forecast of $650 million. This reflects additional opportunities for plant and grid resiliency investments. As a reminder, our current investment plan calls for over $3.3 billion of capital investment over the next five years, primarily related to system resiliency and transportation electrification. But this number does not include any expenditures related to the possible RFP ownership options. Turning to slide eight, we continue to maintain a solid balance sheet, including strong liquidity and investment-grade credit ratings accompanied by a stable credit outlook. Total available liquidity on June 30th is $870 million, and we remain in a strong liquidity position. We plan to fund investments from cash from operations and an issuance of $220 million of debt later in 2022. This debt is expected to be issued under our green financing framework as we continue to seek out opportunities to tie our long-term debt to our sustainability strategy with capital investments. On to slide nine, as we look forward to our capital needs in 2023 and beyond, we are assessing the equity needs primarily related to the potential RFP investments, as well as creating balance sheet flexibility. Previously, We've discussed the long-term equity needs to rebalance our capital structure for regulatory purposes and to maintain strong credit ratings. We believe a strong balance sheet creates important benefits to both shareholders and customers, including optimal financing costs while facilitating growth options. Most notably, for successive rounds of RFP investment opportunities needed to achieve the 2030 DCARM goals. While our ultimate equity needs will be linked to RFP investment opportunities, our capital structure will likely need to align to historical regulatory ranges over time. We are excited about our growth prospects for the new generation of capacity assets, which are in addition to the $3 billion of base CapEx to be spent between 22 and 26. As mentioned by Maria, We are revising our GAAP basis earnings guidance from $2.50 to $2.65 to a new number of $2.60 to $2.75 per diluted share. We also received additional information after our first quarter call that allowed us to further evaluate our earnings guidance, particularly related to the deferral reductions recorded in Q1 2022 as a result of the general rate case order. Importantly, we received clarification from the OPUC that reiterated that the Commission has an established practice of evaluating deferrals on a case-by-case basis and will continue to employ this fact-specific approach on each case going forward. In light of this clarification, as we look ahead to the second half of 2022, we are also initiating non-GAAP basis adjusted earnings guidance of $2.74 $2.89, which excludes the impact of the release deferrals associated with the year ended 2020. The second quarter results reflect continued low growth and strong power cost performance. As we move past the midpoint of the year, we remain focused on strong execution for the balance of 2022. We anticipate continued economic growth in our region, driving weather-adjusted retail load growth of 2 to 2.5%. led by continued high-tech and digital growth and continued in-migration. We will further employ our power cost framework, which yielded successful risk management strategies in the second quarter, and help dampen the impact on customer prices in the run-up of commodity prices in the current year. Operating cost challenges remain, and we are continuing to take proactive measures to manage O&M for the remainder of 2022, including Continue focus on operational efficiency and high return O&M activities, deploying technology and digital solutions to manage customer needs, while optimizing performance and managing costs. I am confident we are on the right track as we continue to drive efficiencies through the end of the year, which, coupled with continued low growth, will allow us to achieve our long-term earnings guidance growth of 4% to 6%. We will evaluate this growth rate as we get certainty around the RFP process. I'm optimistic our outlook for the second half of 22 and beyond is strong. Our near-term growth, investment opportunities, and the ability to raise capital for growth is also strong. The ongoing commitment to providing clean, reliable, and affordable energy and long-term focus to decarbonize the grid and electrify the economy is unwavering. And we have established the framework for PGE to accomplish our long-term financial goals, and deliver value to our customers, investors, and communities. And now, operator, we're ready for questions.
spk04: Certainly. Ladies and gentlemen, if you have a question at this time, please press star 1-1 on your telephone. One moment for our first question. And our first question comes to the line of Julian Doolan Smith from Bank of America. Your question, please.
spk02: Hey, good morning, everyone. This is actually Ryan on for Julian. Good morning. Appreciate the update. Good morning. Appreciate the update here. So maybe just on that last point, Jim, in terms of revisiting the longer-term growth rate, is final resolution of the RFP process the only gating item at this point? And any other considerations that are kind of more dynamic in nature and factoring into how you think about things? Yeah, thanks, Ryan.
spk05: I think that is the gating item for us. We'll determine where we are with the RFP awards in the fourth quarter. We'll focus in on a more precise vision of our financing plan. And obviously, we're modeling scenarios now. But we're already operating, as you will know, and see the new guidance. in the five plus five range right now so we're comfortably inside the current guidance and i think the rfp will give us an opportunity on balance to grow the growth rate even more so yes in a word excellent any shift in the macro backdrop that's impacting the process and how you're thinking about ability to participate here um Maria mentioned that bidding is being refreshed, and it's probably no surprise to anyone given what's happening in the macro environment with the cost of money, supply chain issues, inflation, and the like. And so we think that's a natural part of the process. We think it could be dispatched pretty quickly, and we still are confident that we can get resolution by the end of the fourth quarter with awards in place. But the macroeconomic environment to no one's surprise, is affecting these bids, as you might expect.
spk02: Yep, understood. And then maybe just lastly, any way to quantify how you're thinking about the impact of getting rid of decoupling here and how that could factor into your longer-term trajectory?
spk05: Yeah, good question. Clearly, we have a stub here that we're present in new rates and the decoupling mechanism. elimination, although there's a tracker there, you probably have seen that for the balance of the year, reflect a year where it's not fully effective, let's put it that way. Starting next year, the lack of decoupling will be fully effective. Just to remind everyone, we bargained for that result because we think on balance, we're one of the growthier utilities, if I can use that word. There's tremendous growth here. So I think that want to be able to realize on that return capital to invest in the business. I don't have a quantification for you right now. Look for that in your guidance that we'll publish in February of 23. Excellent.
spk02: I'll leave it there. Thanks so much for the time.
spk04: Thank you. One moment for our next question. And our next question comes from the line of Inso Kim from Goldman Sachs. Your question, please. Hey, thank you.
spk01: Morning, Inso.
spk06: Morning, Maria. First question, I guess, as we think about 22 and the guidance and performance for the year and into 23 as well, So I guess the adjusted guidance, excluding the regulatory items and with the strong performance on the power side, kind of gets you back to where the original guidance was for the year with, I guess, the power benefits offsetting maybe some of the O&M inflationary aspects. And if I heard it correctly, your third quarter is set up pretty well, it seems, just from a power side as well. How are you trying to think about positioning for 23, whether it's pull forward of even more costs, And how much of that lever do you have? And on a 23 versus 22 basis, do you have any initial indications of whether you're, you know, more like better positioned or roughly the same as, you know, when you started off the year?
spk09: Sure. And so your analysis of where we are is spot on, and it's a good question. So we are doubling down on our focus on costs, and it's really important that we continue to invest in the business, but also to lower costs at the same time. It's important for customers, and it's important for our results overall. With regards to power costs, we're really focusing on technology that will give us better visibility across the market and better tools to be able to manage in a more volatile environment, and as well as making sure that we have the kind of hedges and mechanisms in place that can really protect the company and customers from spikes that could come as a result of scarce power supply high heat events or extreme cold that we're seeing. So we're really living in a much more volatile environment and therefore the power operations practices we have, the hedging that we do, and overall management and visibility is really important. There's no question that we as well as Everyone in corporate America is facing increased inflation, labor issues, and challenges that we haven't seen in a long time in our economy, and we're recognizing them and hitting them head-on.
spk05: Just to add one thing, and, Sue, we anticipate transitioning to the adjusted-only presentation into 23, right? So please keep our framework today in mind as we go forward there.
spk06: Yep, no, that makes sense. As you talk about the potential for additional investments through the RFP and the equity financing needs that may take place, as we think about just the legislative potential bills in the hopper right now as of last night and the different components of it, any initial look on the net impact to those financing considerations if whatever versions out there were to take place?
spk09: Sure. So I think on the energy side, there's still a lot to work through. As you know, we have been strong advocates for a clean energy policy at the federal level. Everything from sort of tech neutral to the ability for utilities to utilize investment tax credits on an equal playing field. We also are really encouraged with what's happened with regards to the CHIPS Act. And so what you may not realize is that about 15% of semiconductor manufacturing actually takes place in Portland General Service territory. Intel has very large operations, and much of their R&D is done here. In particular, they're investing in their advanced lithography, and we have several other companies who service the semiconductor industry or who are semiconductor manufacturers themselves who are increasing their investment. And you can see our quarter-on-quarter growth in that area, and we would expect it to only continue and to be quite robust, not just for the next couple of years, but really for the decade to come.
spk05: I think it's through the prospect of legislation, the so-called Manchin-Schumer arrangement from last night, the inflation bill, portends potentially significant benefits with PTC, ITC extensions, and the like. And so, I think this plays into our strategy very, very well, as does IIJA, which we've been examining for a number of months now. Yes, we have a lot of capital to deploy. Yes, that'll bring a lot of financing. I also think that these legislative tailwinds, if they become enacted, could be very significant for us.
spk06: Got it. Just a quick, I guess, based on what's out there relative to, you know, I guess the potential amount of equity needs that you, you know, had modeled in with this potentially reduce that or would there be not much of a change?
spk05: Well, I'm assuming now that we are sort of on our own until we see the tangible benefits coming out of Washington, right? So we'll be sizing our needs based on the RFP awards. And in addition to the balance sheet strengthening that I mentioned relative to the ratios that we'll have to achieve over time. And it's our very, very strong belief that we should be keeping stout investment grade ratings stable outlooks because we have the next seven years in front of us, not the next two or three only, excessive RFP opportunities. So we want to go into that period to achieve the 80% DCARP goals through investment in a very strong financial way.
spk06: Got it. Thanks, Jim. Thanks, Maria.
spk09: Thank you.
spk04: Thank you. And as a reminder, ladies and gentlemen, if you have a question, please press star 1-1. One moment for our next question. And our next question comes from the line of Sophie Karp from KeyBank. Your question, please.
spk01: Hi, good morning. Thank you for taking my question. Morning, Sophie. Good morning. So I just wanted to ask you about the potential for, I guess, tax credit transferability or direct pay that I understand is very somewhere in the bill, right? And I appreciate it's 700 pages and you probably put it into it. But historically, I think you were a little bit of a disadvantage versus some of the non-regulated entities when bidding into renewable projects because of tax treatment. And does that change things for you potentially where it levels the playing field?
spk09: Sure. So, Sophie, first of all, thank you for the question, and you're right. We do have production tax credit carry-forwards. Direct pay would be beneficial. It's our view that actually a level playing field to be able to utilize the same – Investment tax credits for solar, battery storage, and other mechanisms that don't put regulated utilities at a disadvantage is the most important aspect of the legislation going forward. We remain very encouraged, and I would add that we're very fortunate that our senior senator from Oregon, Senator Wyden, has been front and center in the negotiations as chair of the Senate Finance Committee. And we've been in contact with him as late as last night. So this is something we're spending a lot of time on and are deeply involved in and will make a difference to our business.
spk01: Thank you. That's all I had. Appreciate the answer.
spk04: Excellent. Thank you. One moment for our next question. And our next question comes from the line of Anthony Crowdell from Mizzou. Your question, please.
spk08: Good morning, Jim. Good morning, Maria. Good morning. Jim, I just want to make sure I heard correctly. I believe you said going forward, the guidance that you will be providing is on a non-GAAP basis. Is that correct?
spk05: Yeah, I mentioned that you should anticipate that we'll carry on with that basis into 2023.
spk09: So, Jim, what you're saying is that we will exclude items that might be extraordinary or unusual and not reflective of the overall run rate of our business. That's right.
spk05: In order to provide more transparency and really to demonstrate what the actual earnings power of the underlying business is.
spk08: Great. Thank you. I'm just referencing slide six on this question. If I look at the biggest variation there, it's mainly related to PCAM. At least for me, I struggle. It's a challenge for me to forecast it. Any thoughts to maybe excluding the PCAM, whether it's a plus or a minus from the non-GAAP measure, just to highlight the strength and earnings of the utility? Because sometimes maybe up or down, it may get distorted by the PCAM and on the non-GAAP. Any thoughts of excluding it?
spk05: Yeah, I really appreciate the question, because as I look at the volatility year over year, right, I understand exactly why you asked that question. It did not occur to us this first time out, if you will, using adjusted earnings to do that, but maybe we can examine how to make that more transparent. It gives me the opportunity to say that there are dramatic differences year over year in terms of weather. We had a nice, cool spring. We had wonderful hydro. Last year was the absolute opposite. We had enormous heat and when you flush through these activities in the mechanism, it really demonstrates the volatility of that. So we look at the mechanism all the time, and we'll take into account your question about how to present that. Certainly the quarter-over-quarter differences suggest the same question to us.
spk08: And just lastly, a quick follow-up. On the load growth guidance that you have for this year, maybe going forward, Are you guys assuming pre-pandemic levels? I know there was a change in the customer mix here on the margin, but is guidance based on the pre-pandemic level or you guys have, you know, altered it?
spk09: So, overall, our guidance represents, you know, really quite extraordinary growth in the high-tech and digital areas. In particular, I noted the semiconductor companies expanding in our area. What you'll also see is commercial has been a little bit slower to come back than we would have expected, and we do see slower growth probably in the residential side. But overall, our mix is certainly shifting, and that provides opportunity not only to spread our fixed costs over higher levels of growth, but particularly the semiconductor business requires pretty substantial investments.
spk08: Great. Thanks so much for taking my questions, and congrats on a good quarter.
spk09: Thank you.
spk04: Thank you. One moment for our next question. Our next question comes from the line of Aditya Gandhi from Wolf Research. Your question, please.
spk03: Yeah, hi. You actually have Steve Fleischman here. Can you hear me okay, Maria and Jim? Yep. Sure. Okay. Sorry to sneak in there. So I have a couple questions. First, just Jim, you mentioned kind of getting the equity ratio back to what's in your jurisdictional rates. Could you just give me, give a sense of where the equity ratio is now and how much equity you might need to get it to kind of, you know, to the level that's in your jurisdictional rates?
spk05: Yeah, the first question Steve is pretty easy. It's we estimate by the end of 2022 pro forma here will be a Scotia over 46% on a regulated basis of 50 in terms of getting it back. You know, it depends on how we do this and how much time you know we we have to do this. Typically a point. of equity is close to 100 million bucks, right? But that depends on so many other things. It depends on how we grow the company otherwise to the RFPs and the like. So I wouldn't necessarily just calculate that out at four points.
spk03: Okay. That's helpful. Thank you. And then on the RFP itself, you mentioned the inflation aspect and just the which I guess to the degree you win them means more rate-based growth opportunity. But just is there any way to get a sense of how meaningful the increase related to that might be in terms of like inflationary changes from what you would have thought before? All the increase related to that might be in terms of inflationary changes from what you would have thought before?
spk05: Right now, Steve, those prices are being refreshed. And directionally, the bid package, I could say, is higher than the last time we went to the market. back a few years ago. So they were already higher than the base of what we saw a few years back, and now I suspect they'll be refreshed upwards a little bit as well. I don't have an exact number for you now. We're still in the process of getting those new bids refreshed.
spk09: Steve, as you can see from the materials, we do have a number of bids. We have PPA options, we have company-owned options, and we have hybrid options. It's a robust and very competitive environment. And when you go back out to refresh bids, things could change.
spk03: Okay. Okay. So it's hard to figure out kind of where the – okay. That's helpful. And then just in terms of I guess more broadly, you know, between the, you know, equity needed to kind of get the balance sheet, back to the 50% plus this growth, that if you do win the RFP, just how are you thinking about – I mean, have you thought of some options other than straight equity, I guess, to facilitate that? How are you thinking about getting all that funding?
spk05: Yeah. Steve, we've really focused on this a lot lately and get a lot of inbound questions about it because – Yeah, we could see a very large opportunity here, right? And I want to make sure we do this in the most non-dilutive way as we possibly can. I will tell you that, you know, equity forwards make a lot of sense. You know, the projects are going to be delivered on a billed on transfer basis. We'll be making progress payments on them if we're aware. COD is in 24, and so the big funding requirement is in 24. Beyond an equity forward, I suspect an at-the-market program makes sense as we fill in the needs that we have. So, you know, that's my sense right now of technique. The amounts are to be determined, as I said a moment ago. We'll trigger that off for the actual RFP awards, and we'll want to make sure that we, you know, principally position ourselves here with growth. And over time, managing that equity ratio, there's no immediacy and no immediate pressure, you know, to do that balance sheet work. And I'd rather do it in concert, you know, efficiently issue when we have both the growth and the balance sheet stuff together.
spk03: Okay, that makes a lot of sense. Thank you. Appreciate the time. You're welcome.
spk09: Thanks, Steve.
spk04: Thank you. Once again, if you have a question, please press star 1-1. And this does conclude the question and answer session of today's program. I'd like to hand the program back to Maria Pope for any further remarks.
spk09: Great. Thank you very much for joining us today. Before we finish up, I'd like to thank Dave Robertson, our Vice President of Public Policy, who has announced his retirement and is leaving us at the end of the month after 18 years of extraordinary leadership at our company. He's been responsible for much of our clean energy future and the legislation that we benefit from today. We welcome Nick Blosser, who joins us most recently from the Biden administration in the White House. and prior to that was a key member of the governor's office here in Oregon. Welcome, Nick, and we look forward to working with you in the public policy communications area. Today, we appreciate your interest in our company and hope to connect with you in the near future at some of the investor conferences, and please follow up with us. Thank you very much.
spk04: Bye-bye. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Have a good day.
spk09: The conference will begin shortly. To raise your hand during Q&A, you can dial star 1 1.
Disclaimer