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spk01: The presentation will begin shortly.
spk03: Our futures are drawn from our pasts. The roads we choose add up to a sum far greater than its parts. Experiences are powerful. And at Williams, experience powers us. We've been around for more than a century. We've seen energy transform our society, powering innovations from horseless carriages to electric vehicles, telegrams to smartphones. And throughout it all, we have evolved to meet that increasing energy demand head on. Our experience guides us as we operate 33,000 miles of energy infrastructure and transport a third of the country's natural gas. And it shapes how we look ahead toward a future where we can sustainably meet rising energy demand while reducing emissions. We're investing in carbon capture and satellite monitoring while delivering natural gas both domestically to support electrification and globally to create a better world. One ready for new moments, new discoveries, new experiences. Because all those moments that help us grow and learn, those experiences matter. Because experience powers us.
spk01: All of us. Please welcome to the stage Danilo Giuveni, Vice President of Investor Relations, ESG, and Investment Analysis.
spk00: Good morning, everyone. Thank you for joining us, and thank you for your interest in the Williams Companies. This morning, we released our presentation and earnings press release. And starting off the event, we will have our president and CEO, Alan Armstrong. He will kick off our event. He will be followed by Michael Dunn, our chief operating officer. Subsequent to that, we'll have Chad Zamarin, our executive vice president of corporate strategic development. And then John Porter, our chief financial officer, will end the presentation with the financial outlook portion of the event. We will then take a very quick break and have Lane Wilson, our general counsel, and Debbie Pickle, our chief HR officer, join us for the Q&A portion of the presentation today. For some housekeeping here, in our presentation materials, you'll find a disclaimer related to four related statements. This disclaimer is important and integral to our remarks, and you should review it. Also included in the presentation materials are non-GAAP measures that we reconcile to generally accepted accounting principles, and these reconciliation schedules appear at the back of today's presentation materials, and we'll get the event started this morning. So with that, I'll ask Mr. Alan Armstrong to come up and kick it off. Thank you.
spk02: Let me get the remote for the slide advance here and we'll get going. Thanks, sir. OK, well, good morning. So glad to have you all here in D.C. and appreciate a lot of you all that were able to join us yesterday and yesterday evening for dinner as well last night. So yesterday was a great day kind of exposing the efforts that we've been putting in to making sure that natural gas. has the right advocacy here in dc and you know we've been working that issue very hard and you're going to hear why we why we're so committed to the natural gas strategy today and why we think it's so important for uh the future of our company and as a result a great opportunity for williams and for our shareholders so i'm very thankful to have such a great team today uh On our presentation, you're going to hear some really good news today, so I'll prepare you for that. And so I'm excited to go ahead and get into the presentation. First of all, the three things that you're going to hear today, just kind of a summary here of this, is first of all, our value proposition. We've got quite a great track record of creating value for our shareholders, and we'll put some metrics around that for you as well. and also give you a glimpse into the future in terms of our guidance as we look forward. We'll also talk about the importance of natural gas and really continuing to press upon the importance of natural gas and how critical it is becoming. It's no longer just an accompanying fuel here in the U.S. It really is becoming the fuel here in the U.S. in terms of both our industry, our power generation, and our way of life here in the U.S. And then finally, we'll talk about the future as well and how we're positioned as changes do occur on the energy front, how well positioned we are to take advantage of that as well. So, you know, just a little bit on Williams. A lot of you all know very well the story, but We have been around for about 115 years now, and we have really worked hard to build a great reputation. You saw a little bit of our efforts on that yesterday, what we do to really impress our reputation. And it's incredibly important that we do that in terms of our ability to continue to build out and expand our existing infrastructure and us having opportunities. the right reputation both here in DC and in the states that we operate is critical and you don't get that by not following through in your actions and so I'm very proud to work for a company that really does value its reputation and is always focused on doing things the right way you hear a lot of people say that I can tell you at Williams we absolutely live that The this slide just is kind of a grounding on our financials. And, you know, this looks like a very basic Venn diagram here. But this is very much the fundamental and the foundation for how we run the company from a financial perspective. And this metric is something that we see loud and clear as a management team. I'm proud to have a board that really brings a focus to this. And balancing these three measures does create tremendous shareholder value. So if you think about... Any one of these, if you drove too hard in any one of these directions, you probably would not drive the kind of optimum value for shareholders. But driving our growth on a per share basis, and I'll stress the per share basis there, because you see a lot of people posting big growth numbers, but if they're not doing it on a per share basis, it doesn't mean a whole lot to you as an investor. We also have been focused on our return on capital employed. And importantly, all three of these measures over the last... All three of these measures have been used in varying balances for our long-term incentive comp for the management team. So not only do we run our business and think about our capital allocation according to these, but again, the board, I think, has done a nice job of keeping the management team aligned with shareholder answers. interest by being balanced on these. And so when I hear people ask about our capital allocation, you can look to these three primary metrics, and it'll drive to a lot of answers about the way we think about capital allocation within our business. And importantly, we have grown our ROSI over this period, over the same period, by 58%. We've grown our AFO per share by 47%, and we've reduced our net debt to EBITDA by 25%. So a great trajectory on all three of these measures. Again, it'd be easy to drive one of these metrics, but driving all three of these at the same time takes care and close attention to the returns on capital that we're able to produce. Just another picture here of what we've accomplished here from 2015 and now through our guidance for 2025. There you can see going from $4.1 billion of adjusted EBITDA to $7.4 billion of adjusted EBITDA. And so not a real complicated slide here. This is 3.3 billion of growth, roughly 80% of EBITDA growth over this period. But I think an even more balanced look at what we've accomplished over this period. It shows up here, and it really does show us really checking all the boxes here. And so you can see here now 11 consecutive years of growing our EBITDA with an 8% CAGR on that. Importantly, and I think this is an industry-leading kind of number, a nine and a half percent return on our invested capital. And John will give you some more detail on that today. But this is the kind of returns that we are going to continue to experience. And if you look forward, these returns are even looking better, frankly, because we've got a lot of heavy capital that's been spent that's already behind us that will lead to some big deep water growth, as well as some very high return transmission projects that are on the horizon. But really if you look across this mosaic of boxes that we've been checking these really are the important things and again it's one thing to be checking uh one of these or a few of these boxes but checking all of these really is leading us to be both well shareholder value both now and certainly in the future So our strategy around natural gas is something you've heard over and over. We continue to be probably today. I would tell you I am more bullish today than I've ever been on the strategy, mostly because of the domestic growth in demand that we're seeing here in the U.S. And it is really starting to show its way. And actually, we're in the very early innings on that. And here's the reason that we've been so fixated on natural gas and we believe in it so strongly is that it does meet all of these needs that are really critical needs by the public and by the economies both here and around the world. And so just to, you know, one of the things that I always like to make sure people appreciate is that when we think about affordable gas, You know, you'll hear everybody always knows the math on the six to one on gas to crude oil as the math on the BTU conversion on a barrel of crude to natural gas. But what's really missed in that equation is the fact you don't actually just burn crude oil. You have to go through the refining process to make a valuable product. And so if you really use the end value product. on gas to diesel, it is a tremendous advantage for us here at home to continue to drive our industries, not just lightly, but our heavy industries as well, on the backs of natural gas. And it is so inexpensive to relative to the other fuels and the alternatives that people use around the world, that it is driving our industry and it's driving opportunity here at home. In fact, you're going to see today, not just around the world is it driving it, it's actually here in the U.S. We're starting to see industry and manufacturing start to relocate to people that have adequate energy supplies versus places like the Northeast. that have cut themselves off from low-cost energy supplies. And you're going to see that as we look at growth in our business here that is starting to really occur in the Mid-Atlantic and Southeast and Gulf Coast as a result of that. So, you know, everybody knows about how important our grid is becoming and the reliability of our grid. It's really just, I would say, in the early innings of concern on that front. We think there's good reason for that. If you look at what the capacity values are for wind versus solar and you look at how much we continue to invest in this, we have got to keep front and center that we've got to have spending reserves backing up our renewables. And I would tell you from a Williams standpoint, we are excited about the renewables coming into the market. But we have got to make sure that that gets backed up. And there's a lot of regions that we've oversaturated the area with renewables, and we've become very dependent on those on a regular basis. And Texas and the ERCOT is a great example of that, where we are now having to go back and invest very heavily in spending reserves in Texas. to be able to back up the renewables. So it's great to have renewables, but what they really accomplish is reducing fuel consumption. They don't really replace the need for spending reserves and for having backup power. And so as we build out renewables, gas is really becoming the alternative, whether we like it or not. Whether people want to accept that or not, it really is becoming... the fuel of choice for the utilities because nuclear is just too far out given the strong surge in growth that's going on right now. I personally think it's a great solution, but in terms of practical opportunities right now, you're going to see gas surpass that by a pretty strong margin. Obviously, coal, I think, would be very, very difficult to lean into these days. And so we really are left today with natural gas as the primary choice. And historically, we have not seen a whole lot of growth in the power market. But this is a picture that has just started to change, really just in the last year, as we've started to see the impact of both the drive to electrification as well as the data centers and the hyperspace data centers that are starting to come on right now that are really going to drive a tremendous amount of growth. You're going to hear a lot more about that today. But if this graph is right, in terms of this load growth, this is a major shift for our country, and it's a major shift for the natural gas market to be able to keep up with this. So just a few, a little bit of math on the data centers. Right now, by 2030, we're projecting... Thank you. The same as all of the power in the New York ISO today is what we're expecting just from data centers. And we're starting to see that come through in requests for proposals for capacity from our customers. And they are really starting to be urgent about understanding how they're going to meet the incremental load that's coming at them. On top of that, this is the gap that is being developed as we're installing more renewables and projected to install more renewables. This is the gap that is growing between the nameplate capacity on the renewables versus the reliable capacity that's got to come with that. And so you can see a huge opportunity there. If we want to enjoy the same reliability that we have in the U.S. today, you can see the gap there that's ahead of us. This is a really powerful slide, and we touched on this last year, and we unpack it a little more here. McKinsey did a study on what the impact on peak day loads would be on natural gas if... the state mandates and the public commitments were all met. So in other words, they took all the public commitments that have been stated by the states and they said, okay, if this actually occurs, what would the peak day load be on natural gas into these markets? And this is what you can see that they show that grows to. So in the PJM, which is obviously one of our important markets, 167% increase increase in the peak day demand. Now, we are definitely seeing our peak days continue to crank up. In fact, in November of this year, we saw, or sorry, November of 23, we hit one of our top 10 peaks ever. The strange thing about that, we always hit our peaks usually January, February. This was a November. So this wasn't a peak for November. This was an all-time annual peak, and we hit it in November of last year on Transco. And the driver for that is the combination of both power gen load that's picked up at the same time with some heating load in the northeast that actually was fairly moderate. So we are already starting to see the signs of that in our systems where our peaks are growing much faster than the average annual demand for natural gas in our markets. And I think if this study that McKinsey's looked at is accurate. Now, I'm not telling you that I think we will meet all those public commitments. But to the degree that you're concerned about what happens to our business. To the degree we do install that much renewables, it's actually going to be a big positive for us. And I'll remind you that, you know, a lot of you all know this very well, but I always like to remind people that you see so much information on average annual demand of natural gas. All the forecasters use that. When it comes to the gas pipeline business, we don't really care that much what the average annual demand is. We care very much what the peak is because that's what we sell our capacity based on. So an important distinction to make around the way we run our business at Williams, especially when you consider that our capacity is 100% sold out. So we've talked about, you know, the importance of decarbonizing. We've talked about reliability. But affordability... is only available if we have enough infrastructure and a business in natural gas and the markets that it serves will only be sustainable if it is affordable. And the good news, natural gas has a lot to offer. A lot of room on that front, and you can see here four times less expensive than electricity and more than half. I mean, think about this advantage in a market. If you think about what a big industry this is, and to run with this kind of margin room between this and the competing sources of heat. This is pretty amazing if you think about how strong natural gas is and how powerful it is to consumers. And so a lot of talk about electrification of heat loads. Frankly, we will sell more peak capacity if the heating loads do get converted to electricity, we'll be selling more peak day capacity than we will on the heating load. You might question that, and how could that be? Well, the truth is that obviously it's not as efficient to heat a home. When you start at the molecule level and you go all the way through the process, by the time you convert that molecule into power generation and are there for the peak loads that you'll have to be, It is going to take more electricity. So I would just say as to electrification, we're kind of throw us in that briar patch attitude towards it because we think this will be positive for us one way or the other. Another look at cost here is electricity. is looking at industrial-level costs for gas versus electricity and looking at it around the world. And you can see what a huge advantage the U.S. has both on power costs, mostly because of our gas-fired generation, but as well – and, again, this is not at the consumer level now. This is at the industrial level. So this is what attracts long-term heavy industry. And you can see what a huge advantage the U.S. has today – on these fronts. And frankly, as we become a bigger and bigger LNG exporter, we almost cement in that advantage by having low-cost natural gas here. Obviously, if we're exporting it to other countries, we are the cheapest source if we're in the business of exporting to other, given the cost of infrastructure, to liquefy, ship, and then gasify the LNG. So the U.S. is extremely well positioned to take advantage of natural gas. A lot of the onshoring that's occurring, and even when you start to think about the very intensive power load associated with data centers, the U.S. is very well positioned on this front. So now we'll talk a little bit more on the emissions front, and a lot of you all have seen and heard this, but this is a look at what was accomplished between 05 and 22 with the use of natural gas. The number one reason that the US, as you probably know, is the only country to actually meet its goals on the Paris Climate Accord. We had a goal of being down from 2005. We had a goal of being down to 17%, and we actually, as a country, delivered 19% lower emissions. And the vast majority of that advantage on the power generation came from natural gas and power generation was by far the largest source. So the numbers on that are 563 million metric tons of reduction for natural gas to coal conversion. So that's the amount of tonnage that actually got reduced during that period. And that was up against a 1,451 million metric tons of total reduction that the US accomplished. So 39% of all of the emissions reductions came on the back of natural gas. So I can tell you, it is really frustrating for those of us in the gas industry when we go to places like Dubai and we hear that we really shouldn't be there because we don't have that much to offer when we actually have been the number one source of emissions reduction. And so we have a lot to be proud about, I think, in the industry, and we also have a lot more to go. And so if you look at... This slide, we still have 217 coal plants running in the US today. That's taking 80% of the cars off the road today. So think about how hard we are working to electrify and go to EVs on the one hand. And on the other hand, we still have this much coal running, which is powering a lot of those vehicles. And so this is a lot more powerful. Actually, this is taking cars completely off the road. This isn't converting them to EVs. This is taking them completely off the road. So tremendous opportunity. And the one thing, the one thing that stands in our way of doing this is infrastructure. And so right now, you know, TVA, the Tennessee Valley Authority, is trying to... has made the decision to go to gas-fired generation. And, of course, what does the environmental opposition do? They are now trying to block the pipelines into that facility and the expansions of pipes into that facility. And so it really, really makes me wonder what their real goal is often, because if it's reducing emissions, I really don't understand. Now, one of the arguments we hear... from the environmental opposition, and the one they started with, they're starting to fade a little bit on this one, but the one they started with was, well, the fugitive methane emissions associated with natural gas are so high that that's what's going to ruin the opportunity for natural gas to help contribute. Well, this is IEA information. For those of you who don't know who IEA is, that's the International... energy agency and they are about as far to the green side of this as you could get in terms of collecting data and yet their data shows that that in terms of methane emissions by source that natural gas was only six percent of this in 2022 and it's been coming down pretty rapidly by the way Thanks to good efforts by the oil and gas industry. And I think it's also important to note here that while we continue to grow coal use around the world and we continue to say, well, gas is not as good as coal because of the emissions associated with it. You can see here the data actually says otherwise in terms of the emissions associated with natural gas. So I think this is a very powerful slide as we get into this debate around LNG exports and what natural gas can actually do. And it's nice to have the data coming from IEA. This is kind of what remains out there on the global front in terms of coal. It's a huge opportunity. You can be very upset by the fact here that we are continuing to grow coal use. 22 was a record, 23 was another record. You can be very frustrated by that on one hand, or you can see it as a huge opportunity for continued reduction of emissions. And if your goal is, in terms of climate change, your goal should be reducing emissions as fast as we can. And if you actually want to reduce emissions and not just fight about how we're doing it, this is such a great opportunity for us to do so. China continues to talk a really good game about renewables, and they are installing a lot of renewables, but yet they continue to grow both their coal use and their emissions. And if we can't, by the way, if we can't make, if we can't get gas in there affordably because we don't have the infrastructure to do it, they will continue and they and everybody else will continue to use coal if our infrastructure here in the U.S. is so expensive and so burdened by the permitting process, we will not be able to take advantage of that. So, you know, a lot of great story here about demand, a lot of great story about the opportunity for natural gas and the opportunity to export around the world. Well, The one thing that is now starting to be questioned is, well, do we really have enough resources? You heard that kind of surfaced by the administration last week with the LNG pause or freeze or however you want to refer to that. And. And yet, they know the answer to this question. This is not like there's not plenty of reserve studies out there about how much natural gas we have. This is the information here that's on the technically recoverable resources. Now, I'll be the first to warn you, this is not proven resources, and so I don't want to be guilty of being too fast with the facts myself. This is technically recoverable resources, so this is not proven resources this is resources that we expect um that we have and that could be recovered but it's not it's they don't go to the trouble of trying to decide what the economics are of recovering those resources but i will tell you if you look at so that 53 percent of our uh even if we're on this fairly strong growth pattern of demand that you can see on the bottom that's the cumulative uh natural gas so it's really the inflection and the curve there at the bottom that's the growth um this we still would have fifty three percent of our natural gas resources remaining and so a skeptic would say well that's all fine and good but that's just technically recovered and so what does that really mean well on the next slide here this is the proven reserves And the important thing about this is the fact that we've continued, even though our demand has continued to go up and up and up, 43% growth in demand over the last 10 years, look at how much we've been able to grow our proven reserves against that demand. So we are continuing, despite a very hard draw, On natural gas reserves, we are continuing to crank up or continue to increase reserves. In fact, in the Appalachian area, over a 10-year from 2012 to 2021, we saw a 17.5% growth in production growth. and a 15% increase in reserve growth. So almost keeping complete pace with the demand growth at a very rapid pace that's been going on there. So the Appalachian is an incredibly important resource. As you can see here, 36% growth. of the proven reserves here in the U.S. And one of the things that, you know, we hear from time to time as it relates to Williams is, well, that's been a great ride and, you know, it's been some great growth out there, but now when Mountain Valley and REA get built, that might be the last expansions out of the area and might really stymie the growth coming out of the Northeast. And I wouldn't try to argue with you that, you know, it If that growth does stop, then we would be in a position of losing that gathering growth. But talk about a fantastic opportunity from a shareholder perspective because the free cash flow growth, if you think about most gathering basins, most gathering basins go up, they drill themselves as fast as economically possible, and then you go into a decline. That's the typical US approach. I've been in the gathering business a long time, seen plenty of basins go into decline. That is the typical situation. The Appalachian could be very different and a very different economic picture for us because most of our rates out there have escalators on them, have inflation escalators on them, number one. Number two, if we go flat for a long period of time out here and are not having to put capital into this gathering system, the returns and the free cash flow off of our investments out here are going to be like none we have ever seen in the gathering business. I'm actually kind of fascinated with the concept of seeing this get flattened out because the reduction in our capital load is enormous, and the returns and free cash flow that come off of this asset are very powerful, and you'll see some of that from Michael today. But I would just tell you, whether we see the growth or we don't see the growth, we're in a fantastic position in the Appalachian, primarily because of its very long-lived reserves that exist in this basin. So now a little more about, from a Williams perspective, about how we take this opportunity and convert it into shareholder value. First of all, as you've heard me mention several times, the lack of infrastructure really does stand in between us and taking advantage as a nation, taking advantage of this. You can see here that over the last 10 years, we've seen a 43% growth in natural gas demand and only 25% increase in the infrastructure. And really importantly, we've only seen a 2% growth in storage. Now, if you think about the drivers for storage going forward, And by the way, look at how the fact we've actually declined. If you look at the last five years, we've actually declined in terms of storage capacity available to the market. But if you think about the drivers for the electricity demand that you've heard about today, one being the demand for backing up power generation and backing up renewables, that is going to be volatile. That is going to require a lot of storage. Number two, a market where we finally get the LNG capacity built out here in the U.S., operating in a capital-intensive business, operating at 100% load factor capacity, is not where markets wind up they wind up in 85 to 90 percent load factor because people are going to over invest a little bit to capture those peaks in an efficient market and if that occurs and if we're running at a 25 to 27 bcf a day u.s export facility the amount of storage that's required to be able to back up lng when it comes in and out of favor is going to be tremendous And people are going to really start to understand the value of storage. And so we're very bullish on this. And it's not a mystery. It's not like we had to run a month-long AI model on this to come up with this. This is pretty simple logic. Story for us in terms of what the drivers of this demand and we are seeing it on our systems already. We're seeing those peak days grow much faster right now than the end. And if you think about the constraints and infrastructure that exists, that also drives volatility, which also requires storage to back that up as well. So if you look at kind of the way Williams is positioned up against this on the power demand side, tremendous amount of growth coming on on that side. LNG growth, I'll talk about that here in just a moment, but that is despite the pause or freeze, there is a lot of LNG growth coming at us one way or the other. It's a question of what it does to that tail end of growth, but we certainly over the next five years are going to see a lot of growth there. And then finally, on the coal retirements, that is a big opportunity for Williams, as you'll see here in a second as well. And so this is a really interesting chart. If you really take time to unpack this, look at the power generation market share in the Transco corridor here and look at how that's grown. So we've seen our market share on the gas fire generation grow by 4% from 20 to 23. And you can see that wind and solar has grown by 3%. So despite the huge investments that we've been making in wind and solar, the market share on the Transco system has actually been growing on an absolute basis more than wind and solar has. And we're continuing to see this in the power market, and it's just now. It is just now beginning. Honestly, this is the very early innings of a lot of the conversion that's going on in our markets. And so this next slide I think might be my favorite slide of the deck and really speaks to what our customers are seeing today. So some quotes here, and this is very fresh stuff. This isn't stuff that's two years old here. This is very fresh, and we are working very closely with our customers now to try to help solve their problems and take advantage of the opportunity. So you can see here Georgia Power came out and said that their forecast in 22, their forecast was 400 megawatts of growth through 2030. They now have come out and said they missed that by 17 times. and they expect 6,600 megawatts of growth, mostly from both data center load, industrial load, and manufacturing that's moving from the Northeast into their markets where there's hopefully going to be ample energy supplies, and we hope to help enable that. The next picture there, one of our great customers, Duke Energy, also saying that they missed their load growth that they projected two years ago is already off by a factor of eight. The load growth that's coming into these markets is tremendous. The big project that you'll hear about from Michael today that we just signed up last year and just filed with the FERC earlier, that's just the beginning of this. That was really based on their 22 IRPs and what they were planning on there. There's even more growth now coming at them, and they're just now trying to figure out how they're going to be able to address that. So I would say this is very early innings. If we look at Dominion here on the next slide, you can see what's going on in the PJM market, and you can see the data center load that is cranking things up here. PJM is now saying that they expect 178 gigawatts in 2039 to which is a 31% increase over the 15-year period. Now, that does not include, if you're thinking about it purely from a gas-centric perspective, that doesn't include the 24 gigawatts of coal retirement that you have to add on to that as well in terms of the load and the opportunity for natural gas. So really big loads. And a lot of this, particularly in the PJM area, a lot of this is coming from power centers, and so Dominion Energy now, pretty much the electric arm there, obviously, is forecasting some huge growth on the electric side, and we are very fortunate to be well-positioned to help serve that load. So now turning to LNG real quickly and the load there, you can see here the footprint Our footprint up against the LNG, and we've kind of grouped these into three things. First of all, in the dark blue is the already up and operational. So that's 14.3 BCF a day of load on our system, or sorry, across the LNG space that we serve a lot of. And then 11.6 BCF a day that is now under construction. So in operation, under construction is 11.6 BCF. and the 13.7 is the LNG exports that are permitted, but they likely won't, well, I'll just say this, big question mark on how much of that 13.7 gets built given the pause, but even if you say that we're only going to get a couple of BCF a day out of that, which I think is not a bad estimation as we sit here today, we're going to see a doubling of demand growth here in the near future that's coming from these facilities that are under construction so a lot of talk about when that will actually occur whether that's going to be early 25 or late 25 or even into 26 but under any scenario there's a lot of demand growth coming on the LNG side. If we go back to the coal picture, this is now narrowing that 217 coal plants we talked about earlier down to the coal plants that Transco would have an opportunity to serve and that are in our markets. And you can see still 69 coal plants and 9.8 BCF a day. of capacity needed to serve the backup gas fire generation behind that so really opportunities abound and this again this is just replacing coal this isn't responding to the growth in uh in power generation that we're seeing coming at us So, you know, kind of back where we started here, really Williams is extremely well positioned today. We're really excited about the return projects that we've got on the slate right now and the very high returns that we're able to capture. on the expansions of our system. And importantly, you're going to see here today, you're going to see a transition. We put a lot of growth dollars into growth capital into the Northeast over the last four or five years. And you're going to see now a pivot to a lot of growth capital going into the transmission business. And we're really excited about the returns that we're seeing in that business. For those of you who are not completely familiar with our story, One of the things that's important to understand, I get this question a lot. Well, wait a second. It's a regulated business. So how can you have high returns in a regulated business? Well, here's here's the way this works. We we have our capacity is completely sold out on our system today, and it's that existing capacity. that's out there that has a regulated rate. We're in a rate case. We're just in the throes of a rate case process right now, which we're really excited about the opportunity for what will come out of that. But that only applies to the existing previous base transportation capacity. It does not cover anything for the future. So when we have an expansion, nobody can force us, including the federal government, can force us to expand. So it gives us pricing power right up against the avoided costs associated with the expansion and if you think about how difficult it has gotten to build new greenfield pipelines that used to be the cap on and the pricing mechanism into our markets was the fact that somebody could threaten to build over the top and come in and serve the markets alongside us that has that threat has been um put to bed pretty heavily. I mean, you look at the disaster. We're excited to see Mountain Valley Pipeline come on. It's a huge bonus for us because it brings supply into our system in an area that we can distribute it. But that's a...
spk04: That's a very important piece of pipe for us.
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