CenterPoint Energy, Inc. (CNP) Q2 2015 Earnings Report, Transcript and Summary

Good morning, and welcome to CenterPoint Energy's Second Quarter 2015 Earnings Conference Call with Senior Management. During the company's prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management's remarks. [Operator Instructions] I will now turn the call over to David Mordy, Director of Investor Relations. Mr. Mordy?

Thank you, Ginger. Good morning, everyone. Welcome to our second quarter 2015 earnings conference call. Thank you for joining us today. Scott Prochazka, President and CEO; Tracy Bridge, Executive Vice President and President of our Electric Division; Joe McGoldrick, Executive Vice President and President of our Gas Division; and Bill Rogers, Executive Vice President and Chief Financial Officer who will discuss our second quarter 2015 result and provide highlights on other key areas. We also have with us other members of management who may assist in answering questions following the prepared remarks. In conjunction with the call today, we will be using slides which can be found under the Investor section of our website, centerpointenergy.com. For a reconciliation of the earnings guidance provided in today's call, please refer to our earnings press release, which along with our Form 10-Q has been posted on our website. Please note that we may announce material information using SEC filings, press releases, public conference calls, webcasts and post to the investor section of our website. In the future we will continue to use these channels to communicate important information and encourage you to review the information on our website. Today management is going to discuss certain topics that will contain projections and forward-looking information that are based on management's beliefs, assumptions and information currently available to management. These forward-looking statements are subject to risks or uncertainties. Actual results could differ materially based upon factors including weather variations, regulatory actions, economic conditions, commodity prices, changes in our service territories and other risk factors noted in our SEC filings. We will also discuss our guidance for 2015. The utility operations guidance range considers performance to date and certain significant variables that may impact earnings such as weather, regulatory and judicial proceedings, volumes, commodity prices, ancillary services, tax rates, interest rates and financing activities. In providing this guidance, the Company does not include other potential impacts such as changes in accounting standards, the value of ZENS securities and the related stocks or the timing effects of mark to market and inventory. In providing midstream investment guidance, the Company takes into account such factors as Enable's most recent public forecast, effective tax rate, the amortization of our bases different in Enable and other factors. The Company does not include other potential impact such as the impact of any changes in accounting standards or Enable's unusual items. Before Scott begins, I would like to mention that this call is being recorded. Information on how to access that replay can be found on our website. And with that, I will now turn the call over to Scott.

Thank you, David and good morning, ladies and gentlemen. Thank you for joining us today, and thank you for your interest in CenterPoint Energy. This morning as noted on Slide 4, we've reported second quarter 2015 earnings of $77 million or $0.18 per diluted share, compared with $107 million or $0.25 per diluted share in the same quarter of last year. Using the same basis that we use when providing guidance, second quarter 2015 adjusted earnings would have been $0.19 per diluted share, compared with $0.21 for 2014. On a guidance basis, utility operations contributed $0.13 per diluted share versus $0.10 in 2014. Midstream investments contributed $0.06 per diluted share compared to $0.11 in 2014. Bill will discuss these results in more detail later in the call. Our utility operations' continue to perform well. We have added over 85,000 metered customers during the last 12 months, which along with system improvements remain key drivers behind our robust capital spending. We are carefully managing cost as O&M expenses net of revenue offsets are up 1% versus the second quarter of 2014. We continue to execute our regulatory strategy, filing rate increases and annual recovery mechanisms as needed in pursuit of earning our allowed returns. Our growing service territories and capital plan, coupled with constructive regulatory environments and disciplined O&M spending continue to support strong performance by our utility operations. Next let me turn to Enable midstream, which we highlight on Slide 5. As many of you know, Enable recently shared its growth outlook of 3% to 7% per unit annual distribution growth in 2016 and 2017. This includes the forecast for high single-digit growth in natural gas gathering volumes, 25% growth in natural gas processing volumes and a doubling of crude oil gathering volumes. As Enable said on their earnings call, they are well positioned for growth with assets in some of the best share plays including the SCOOP, the STACK, Cana Woodford and Cleveland Sands plays. Enable has connected more wells year-to-date through July 2015 than year-to-date through July 2014. For 2016 and 2017 combined, Enable's expansion capital outlook ranges from $1.6 billion to $2.5 billion. We continue to believe in the value of our Enable midstream investment and remain focused on providing governance in support of enhancing Enable's performance. Overall, I'm pleased with our second quarter results. Utility operations experienced strong ongoing growth, and Enable performed as anticipated in a challenging commodity market. Today, we are updating our dialogue regarding how we think about returning capital to our investors. After consideration of the current market environment, input from the investment community and discussions with our board, we believe an earnings based approach to our dividend practice will help provide clarity, simplicity and consistency. Our objective will simply be to grow our dividend in line with our consolidated earnings growth, which Bill will discuss in more detail later in the call. I want to express my appreciation to our employees who after a series of severe storms in April, May and June, worked countless hours to restore power safely and efficiently. You may have seen some of the images of flooding in Huston on National news. More than 25 inches of rain fell over two concentrated period of time and our collective utility systems performed well. The gas system was essentially not impacted by the rains and the customer effects and outages on our electric system were reduced by distribution automation. Proactive communications to those customers enrolled in our new power alert service provided them with timely outage restoration information. I'm extremely proud of our employees and their commitment to ensuring that every day our customers receive energy from safe, reliable energy delivery systems. I will now ask Tracy and Joe to discuss quarter-over-quarter operating income, as well as provide updates on their respective businesses. Bill will follow by bridging operating income to EPS and contrasting our performance with last year’s base line number. Tracy?

Thank you, Scott. Houston Electric had a solid quarter consistent with our expectations. As you can see on Slide 8, second quarter 2015 core operating income was $131 million, compared with $115 million for the same period last year. The business benefitted from higher net transmission related revenue, continued strong customer growth and a return to more normal weather. These benefits were partially offset by an expected reduction in the equity return primarily related to true-up proceeds. Houston Electric’s customer growth remains strong. Through the first-half of the year, we have added nearly 23,000 metered customers which equates to an annualized growth rate of 2%. As we have mentioned in the past, our forecasted 2% customer growth equates to approximately $25 million to $30 million of incremental revenue annually. Houston’s 4.5% unemployment rate in June remains below the national average of 5.3% and our housing market remains tight at three-month supply versus a balance supply of six months. As the chart on Slide 9 shows, employment growth may slow at times, but over the past 24 years, our residential customer compound annual growth rate has slightly exceeded 2%. Houston Electric continues to manage cost effectively. During the second quarter of 2015, O&M expenses increased approximately 2% over the second quarter of 2014. This growth rate excludes certain expenses that have revenue offsets. We will strive to continue operating the business as efficiently as possible, while maintaining a safe and reliable system to serve our growing customer base. As you will see on Slide 10, we’ve had a busy quarter on the regulatory front and we are pleased with the results. During the quarter, we filed our first Distribution Cost Recovery Factor filing or DCRF, which allows for rate adjustments associated with recovery of distribution capital invested since our last general rate case. A settlement was reached and approved for an annual revenue increase of $13 million, which will go into effect on September 1. Additionally, in December -- additionally in June, the DCRF sunset extension legislation was enacted, which extends the mechanism sunset until September of 2019, allowing us to utilize the mechanism up to three additional times before a general rate case is required. We also filed two other cost recovering mechanisms, which include our first of two planned Transmission Cost Of Service or TCOS filings this year and our annual energy efficiency cost recovery factor filing. Our TCOS filing was submitted on June 26th and seeks an annual revenue increase of $13.7 million. We anticipate a decision on this filing during the third quarter of this year. Our energy efficiency cost recovery factor filing seeks to recover next year’s estimated expenses associated with our energy efficiency program, as well as a $7 million incentive related to the program's performance in 2014. Finally, in April, we filed an application for a certificate of convenience and necessity for our Brazos Valley connection transmission line. This transmission line is the largest capital project in our five-year plan. 32 alternative routes were submitted to the PUC and the final route they select will determine the estimated capital cost of the project. We anticipate a commission decision on both the route of and need for the transmission line during the first quarter of 2015, with construction of the project being completed by mid-2018. The critical status grounded to this project highlights the load growth and our service territory -- highlights the load growth our service territory is experiencing. As an example of that load growth, during the last week in July, Houston Electric hit four consecutive July peak loads. I am pleased with Houston Electric's second quarter performance. Growth remain strong and we will continue to focus on delivering safe, reliable and efficient service. Joe will now update you on the results for gas operations.

Thank you, Tracy. Our natural gas operations which includes both our gas utilities and our non-regulated energy services business, performed in line with our expectations during the second quarter, as more normal weather returned to all our jurisdictions. As you can see on Slide 12, natural gas utility second quarter 2015 operating income was $19 million, compared with $30 million for the same period last year. This decline is attributable to return to more normal weather, in addition to higher depreciation expense. As I mentioned on the first quarter call, we exceeded our weather hedge cap in January 2014 and benefited from the subsequent extreme cold weather that persisted well into April and May that year, particularly in Minnesota. As a result, our natural gas utilities experienced a decline in operating income in the first-half of this year, but we expect year-over-year improvements in operating income through the remainder of the year. The economies continue to be strong in our service territories and we added approximately 36,000 new customers year-over-year. Excluding expenses that have a revenue offset, we are successful in managing O&M to an increase of under 1% compared to the second quarter of last year. Moving on to slide 13, I would like to highlight a number of our items that advance our long term strategy, specifically regulatory developments and capital investments to meet growth needs and ensure system reliability and safety. Recent regulatory filings represent a combination of rate cases and the annual recovery mechanisms which are intended to help recover the substantial investments we made to better serve our growing customer base. On August 3rd, we filed a general rate case in Minnesota to increase overall rates by $54 million annually. Our filing is based on forward test year and a rate base of $913 million which reflects the significant capital expenditures we're making across our Minnesota service territory. We have requested an ROE of 10.3% and a 53% equity capital structure. Interim rates are expected to go into effect in October, with a final decision around mid-2016. We reached a settlement agreement on our Texas coast rate case and are awaiting approval by the Texas Railroad Commission. The settlement provides a $4.9 million annual increase and a 10% ROE. With the Texas coast case finalized, we expect to utilize GRIP, the annual infrastructure recovery mechanism as early as March 2016 to recover incremental capital investment. In Arkansas we continue to anticipate filing a rate case the fourth quarter of 2015 and are evaluating for the case possible usage of Act 725, Arkansas' recently enacted law related to formula rate plans. Slide 14 highlights a portion of our capital spending in Minnesota. Our Belt Line replacement project begin in 2012 and is expected to be completed in 2023. This project is replacing pipe that was put in service over 60 years ago and Intel [ph] is replacing their steel pipe, upgrading cathodic protection systems and installing remote control wells. Investing capital to improve safety and reliability while reducing O&M is win for all our stake holders. I'll next turn to slide 15 and our energy services business which primarily provide competitive natural gas supply services to commercial, industrial, institutional and transportation customers. This businesses second quarter results reflects another solid performance. Operating income was $7 million for the second quarter of 2015, compare with $5 million for the same period in 2014, excluding mark to market gains of $2 million and $6 million respectively. Volumes were nearly flat as economic growth in certain regions has slowed somewhat, but overall customer counting increased 1.8% year-over-year. Additionally, O&M expenses were slightly lower, consistent with Company's focus on holding down operating costs. This was a solid quarter for natural gas operations despite the impact of a return to normal weather, and the regulatory filings I discuss should position as well to continue growing this business. I'll now turn the call over to the Bill who will cover financial activities.

Thank you, Joe, and good morning to everyone. Tracy and Joe have reviewed their respective operating income on a quarter to quarter basis. I will now provide a review over earnings per share on a guidance basis. Following that I will review utility operations for the second quarter 2015 versus the base line for the second quarter 2014 with a focus on those items that are below the operating income line. Our earnings per share on a guidance basis were $0.19 in the second quarter of 2015, compared to $0.21 for the second quarter of 2014. As a reminder, our EPS on a guidance basis excludes the impact of items such as mark to market adjustments at our energy service business and our ZENS securities and related reference shares. At Midstream Investments, as previously mentioned by Scott, Lower equity income from Enable Midstream Partners impacted EPS at CenterPoint by $0.05 per diluted share. For utility operations, we have provided two waterfall charts to help illustrate our normalized operational performance quarter over quarter. The first of these charts is on Page 17 and shows utility operations second quarter 2014 EPS on a guidance basis of $0.10 per diluted share. Houston Electric experienced cooler than normal weather in the second quarter of 2014. Therefore, we normalized up $0.01. We normalized down $0.01 to account for 2014's higher equity returns, primarily associated with timing issues around Houston Electric's equity true-up proceeds. As a result, we landed on a baseline of $0.10 per diluted share for second quarter 2014. This is the base line from which we feel operational performance should be measured. These adjustments are consistent with the baseline adjustments we highlighted in our year end 2014 call. We have included a slide from that call in the Appendix, along with a breakdown of adjustments by quarter. The second chart on Slide 18 takes you from the second quarter 2014 utility operations baseline of $0.10 to utility operations utility operations' EPS on a guidance basis of $0.13 for this quarter. As Tracy and Joe discussed, their combined core operating income on a guidance basis improved from a $150 million to $157 million in the quarter. This $7 million improvement, along with an increase of $4 million in other income resulted in a favorable earnings per share of $0.02 for the quarter. Through debt management, interest expense was flat on a period to period basis. For all of 2015, we expect interest expense to be lower when compared to all of 2014. We had a lower effective tax rate of 32% in the quarter this was due to a lower Texas tax rate and to some permanent differences. For the full year, we expect an effective tax rate of 35%. All together, the second quarter was stronger than anticipated for utility operations. Now, with respect to earnings and dividends, you will see on Slide 19, we are targeting annual earnings per share growth of 4% to 6% on a guidance basis through 2018, inclusive of our midstream investments. We anticipate dividend growth will follow EPS growth. We do recognize that our overall payout ratio for 2015 will likely be above 90%. We are comfortable with that payout ratio and related earnings retention due to the sources of cash and earnings supporting the dividend. We anticipate the overall payout ratio will result in a retention of 30% to 40% of our utility operations earnings. These retained earnings support needed capital investment without having to consider a secondary offering of common equity. In addition to these considerations, our board of directors takes into account the current state of the capital markets, our financial liquidity, capital strength and our financial forecast when reviewing and declaring our dividends. On Slide 20, I'll review our anticipated financing plans for 2015 and 2016. As stated earlier, retaining 30% to 40% of our utility operations earnings will allow us to finance our investment in rate base with minimal need for additional equity. We have strong financial liquidity and plan to use our retained earnings and balance sheet strength to source much of our financing needs. This year, we expect to have incremental borrowings of $400 million. These increased borrowings are primarily through our commercial paper program. If appropriate we will consider fix rate longer term maturity debt. Looking forward to 2016, we expect to have a similar incremental financing need as 2015. However, the ultimate amount will depend upon our capital investment, our ability to manage working capital and bonus depreciation amongst other factors. We expect to finance 2016 via fixed rate debt and commercial paper borrowings. If appropriate, we may consider equity financing through limited use of our drip and benefit plans. Finally, based on our utility operations results and forecast, and the most recent public outlook provided by Enable, CenterPoint is pleased to reaffirm our 2015 consolidated earnings estimate of $1 to $1.10 per diluted share. We believe utility operations will be on the high side of the $0.71 to $0.75 range and midstream investments will be on the low side of the $0.29 to $0.35 range. As I conclude, I would like to remind you of the $0.24 and 3/4 per share quarterly dividend declared by our board on July 24th. With that, I will now turn the call back over to David.

Thank you, Bill. We will now open the call to questions. In the interest of time, I will ask you to limit yourself to one question and a follow-up. Ginger?

At this time, we will begin taking questions. [Operator Instructions] Our first question from Neel Mitra from Tudor, Pickering.

My questions are around the dividend policy. Is the 46% something that you intend to sustain regardless of where earnings are, or is it the dividend is going to move with the earnings growth? And if the second case is true, how's that really different from I guess the policy prior to this?

Neel, the intent is that earnings or dividends will follow earnings. So what we've done on this call is we've firmed up our earnings target over the next through years of 4% to 6% growth, and that's inclusive of both the utility and the equity investment in our midstream business.

Got it. So, is it -- are you still kind of speaking as a policy of 60% to 70% of the utility earnings and paying out almost all of the Enable cash distributions out?

I think those numbers may work out fairly close. It's certainly our intent to have the utility operate such that we are retaining 30% to 40% of their earnings for reinvestment. Given the fact that we’re at relatively high payout ratio, a good amount of all the cash coming in from Enable is being paid out through the dividend. But the policy we want to really emphasize is now that we're at this elevated payout ratio, the policy is -- or the approach I should say is that we will target dividend growth with our earnings growth.

And one last quick follow-up, with the 2% customer growth, what’s the trend been for usage, I guess for customers? So has that come down or has it stayed fairly constant?

It's been very constant, Neel. We see little bit of what I’ll call noise on usage, but it has to do with imperfect calculation of -- we're making weather adjustments. But as we look over the longer period, we’re essentially seeing a very flat usage profile on a weather adjusted basis.

Our next question comes from Matt Tucker from KeyBanc Capital Markets.

Hoping you could just talk a little bit more about what’s driving the utility operations towards the higher end of your guidance range for the year?

Well, a couple of things, and I’ll let my colleagues add to it if they would like to. But first of all, we’ve got good expense management that’s occurring. We are benefiting from maintaining a very strong focus on expense management. We are also experiencing -- as we sit here today, we look forward, we can see that the weather continues to be warm here in Houston, and we know that that will have some impacts in the third quarter as we look forward. So that’s impacting us as well. Bill, do you want to add anything about?

I think Matt that I would add that through -- we'll refer to as debt management within our balance sheet, we’ll be able to lower interest expense in 2015. If you had a chance to take a look as our 10-Q, you’ll see we’re free cash flow positive for the six months of the year. That's to say that cash from operations exceeded dividends and capital investment. So we feel good about that. And then finally the last settlement would be a lower effective tax rate for the 2015 year.

And follow-up to that, I didn’t see right of way revenues mentioned. It's been a nice tailwind for Houston Electric for the past several quarters. Where are you on that year-to-date and kind of where do you expect to end up for the year?

Matt, I'm going to ask Tracy to answer that for us.

For the second quarter Matt, we had $1 million of right-of-way revenue. So through the first half of the year we’re at about $9 million. We continue to estimate that our range at year-end will be somewhere between $10 million and $20 million of right-of-way revenue.

And if I could ask one more, you had expressed interest in the past in potentially acquiring on core. It looks like [indiscernible] is going to end up buying that. Just curious if you could comment on how that process played out for you guys? How involved were you?

Matt, I’ll just respond by saying I think you know we don’t -- we’re not commenting on specific transactions. That’s the position that we’ve taken here and we like you and the rest of the industry have kind of been watching this event unfold as EFH [ph] works through their bankruptcy process.

Our next question comes from Ali Agha from SunTrust.

So I was coming back to the dividend growth policy, 4% to 6% along with earnings growth. As you know, that is pretty consistent with what normal regulated utilities are providing and telling investors as well. So I'm just curious from your vantage, point given that outlook through 2018, are you feeling that the MLP ownership is providing you that extra value added that is commensurate with the extra risk and volatility that that business brings to the table, to you and your share price?

So Ali, I would tell you that I still remain very bullish on the investment that’s going to be made in this space, and if you just look at what Enable reported on their call, their investment continues to increase, their volumes are up. It's apparent, becoming more apparent to me that producers in the U.S. are able to compete even at these lower commodity prices and we’re very pleased with many of the plays that we are in. So I am still very bullish on this space. Now the growth that we’ve put out from an earnings forecast for the Company is as you pointed out consistent with what we’ve said, that would be the utility performance and I would say it's there largely because of the near-term forecast associated with these lower commodities. So I think we all believe we’ll turn around and go back up at some point in the future, and if Enable's performance improves or increases in the future, then that gives us some upside potential to reflect on our own EPS.

So Scott, or Bill, how stress tested are those numbers, particularly from the Enable side, given where we’ve come from? If the commodity starts to go further south, how comfortable would you be in that 4% to 6% number you laid out for us?

Ali, I would characterize as it as we have done our own stress testing and sensitivity analysis beyond what Enable has provided publicly. So we've done some stress testing of their performance and we've done some stress testing around the utility performance and collectively have confidence that in the near term a 4% to 6% earnings growth target is achievable. I will say that it's within what I would consider the reasonable implications of commodity sensitivity looks. If oil gets down to $25 or $30 a barrel for a sustained period of time and gas drops to very low levels, we will have to re-evaluate but we have done stress testing beyond what Enable has shared as their ranges.

And last question Bill when at the earliest -- when you look out to this program to 2018, do you see a need for potentially blocked equity or more equity than small DRIP programs, or do you not see that at all over the 2018 period?

I'll ask Bill to answer this one for you.

Ali, we don’t see any need for a block offering of equity. We don’t see a need for issuing any equity in 2015 as I said. We continue to visit both '16 and '17 as where there is a need for any equity in those years earlier. But there is nowhere in this forecast that we are providing a view with respect to a need for block equity.

Our next question comes from Brian Russo from Ladenburg Thalmann.

Just in terms of back to the utility guidance and being at the high end, can you talk about some of the drivers you referenced earlier and which one of those drivers would you consider sustainable into '16 and '17 versus what will collective be a positive in weather event July that’s obviously not repeatable under normal weather conditions?

Sure Brian, I'll let Bill to led this one off.

Sure. And Brian, I think I will start with what I'll call some below the line factors, give you an update on that and then ask Tracy and Joe to talk about O&M cost discipline in their respective businesses. With respect to below the line, we have significant opportunities to reduce our interest expense on a going forward basis, and we recognize that on a going forward basis we'll have more debt. But we do have both maturities in '16 and '17 as well as those maturities we've had in 2015. So you'll see that come through. The second item below the line with respect to tax, I mentioned in the prepared remarks it will be 35% this year. I think we'll be somewhere between 36% and 37.5% on a going forward basis in 2016 and 2017. So those are the below line item that we would see as recurring at least looking those few years. And with that I'll ask if Tracy or Joe want to add comments on O&M discipline.

Sure. Brian, this is Joe. I would just reiterate what I said in my remarks, that obviously we had a down quarter and a down first half in gas ops. But that was expected because of the extreme cold weather we had in 2014. But we expect op income to continue growing again in second half of the year, and that’s in large part due to the O&M discipline that both Scott and Bill have mentioned, as well as executing on our regulatory plan. We have the settlement in our Texas coast case. We filed our Minnesota case last week and we expect to file a case in Arkansas in the fourth quarter of this year. So all things are looking very positive right now in the gas business.

Brian, this is Tracy. I would just add that our 2% year-over-year O&M expense growth rate is a sustainable target for us and we're going to work very hard to maintain expenses in that range even though we're growing considerably here. So everything is looking on the up and up for the electric business.

Next question comes from Faisal Khan from Citigroup.

Just a quick question on your ownership position in Enable. Currently it doesn’t look like the general partnership gets [indiscernible] in the current stock price of CenterPoint. I was wondering, how would you think about that general partnership over time? I know the idea is to sort of grow those distributions over time, but if it gives Enable sort of shot at the arm and reduces our cost of equity and makes them some more competitive in the market, would you think about rolling the general partnership and IDR structure into the limited partner?

It's too early to really have those considerations or discussions. We are aways from beginning the IDRs. I believe Enable mentioned there thought there may be some IDR payments as early as the end of next year, which would be very small payments. So you're out into '17 or '18 really before you would have the issue or the consideration of how those IDRs might affect our cost to capital and -- listen we certainly have an ongoing -- very strong ongoing interest in Enable's success, and if appropriate, we would contemplate the right things at the right time, but it's just far too early to consider doing anything differently with the GP and the IDRs.

[Operator Instructions] Our next question is from Charles Fishman from Morningstar Research.

I just had one question. Bill you said that the lower tax rate -- effective tax rate was because of Texas I believe. So I'm assuming that was at the utility, not Enable. could you maybe provide a little more color?

That's correct. That's the income tax rate here in Texas that we recognized a lowering of that, and it went through the second quarter. And then we also had some permanent differences change, which moved to tax rate down to 32% for the quarter. But for the year Charles, it should be at 35%.

Okay. And then would do you say the next year -- you've made some comments about that earlier

Next year and on a forward looking basis, if you are asking what are the provision should be for the accrual tax rate, I think it will be in the range of 36% to 37.5% and if you wanted a point estimate, it was 37%.

Okay. So actually 37% is really pretty consistent with what you've said in the past, correct?

Yes, that's right.

Next question is from Michael Dandurand from Goldman Sachs.

I think, actually most of my questions have been answered already. The only one I wanted to touch on was more housekeeping, just with the cash taxes or on distributions from Enable, has the outlook changed at all there, given the update and guidance from Enable?

Michael, this is Bill. First of all, we look forward to bring at your conference in the next couple of days. So thank you for including us. Look forward to that. We respect to taxes; we are certainly moving away from that more formulaic view to dividends. What we're focused on is our target earnings growth of 4% to 6% through 2018. The dividends will follow that. If you wanted to ask a question about cash taxes, we filled rather a consolidated return at CenterPoint. There are some years, where the utilities cash or tax characteristics might shield income from Enable and there are years where the tax characteristics at Enable might shield the utility. So we don't really look through to any specific operations, cash tax rate.

Understood. I guess, I'm just trying to get a feel for the incoming cash, net of tax from Enable. But maybe we can follow up offline a little bit on that.

Yes, it's might help just to give you a sense of what we think our cash taxes would be. On a consolidated basis we were not a tax payer in 2014, and our cash tax rate, if we do not have bonus depreciation for 2015 will be in a low 30%. If we have bonus depreciation in 2015, its unlikely that we'd be a cash tax payer on a consolidated basis.

Thank you. Thank you everyone for your interest in CenterPoint Energy. We will now conclude our second quarter 2015 earnings call. And have a nice day.