PPL Corporation (PPL) Q4 2020 Earnings Report, Transcript and Summary

Good day and welcome to the PPL Corporation Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded. I would now like to turn the conference over to Andy Ludwig, Vice President, Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone and thank you for joining the PPL conference call on fourth quarter and full-year 2020 financial results. We have provided slides for this presentation and our earnings release issued this morning on the Investors section of our website. Our presentation and earnings release, which we will discuss during today’s call, contain forward-looking statements about future operating results or other future events. Actual results may differ materially from these forward-looking statements. Please refer to the appendix of this presentation and PPL’s SEC filings for a discussion of some - of the factors that could cause actual results to differ from the forward-looking statements. We will also refer to non-GAAP measures, including earnings from ongoing operations and adjusted gross margins on this call. For reconciliations to the comparable GAAP measures, you should refer to the appendix of this presentation. I’ll now turn the call over to Vince Sorgi, PPL President and CEO.

Thank you, Andy, and good morning everyone. We appreciate you joining us for our 2020 year-end earnings call today. With me as usual are Joe Bergstein, our Chief Financial Officer; Greg Dudkin, the Head of our Pennsylvania Utility business; Paul Thompson, the Head of our Kentucky Utility Business; and Phil Swift who heads up our U.K. utility business. Moving to Slide 3. I'll begin this morning with a brief overview of our 2020 performance as we overcame the difficult challenges of COVID-19. I'll also share a few updates on regulatory and ESG matters. Later Joe will provide a more detailed overview of year-end and fourth quarter financial results. I'll then share some closing thoughts on our key focus areas for 2021 and as always we'll leave ample time to answer your questions. Turning to Slide 4. I'm incredibly proud of how people performed in 2020. A year unlike any we've seen in our lifetimes. It was a year that tested our resolve our resilience and our ability to adapt very quickly to dynamic conditions. Importantly we provided electricity and natural gas safely and reliably to more than 10.5 million customers when it mattered the most. This included the hospital workers and the first responders who were on the front line. And it included customers whose homes became offices whose kitchens and bedrooms became classrooms and who are counting on us to deliver without fail. We're extremely honored that our continued operational excellence resulted in further recognition from these very same customers in 2020. In the U.S., we earned three new J.D. Power Awards for customer satisfaction bringing our total to 54 since J.D. Power surveys began. This included topping all large utilities in the east for the ninth straight year for residential customer satisfaction and in all midsize utilities in the Midwest for both residential and business customer satisfaction. In the U.K. at the end of 2020, we again finished with scores of over 9 out of 10 in all four of our DNO and are on track to receive the maximum incentive reward under Ofgem’s Broad Measure of Customer Satisfaction. We also received the U.K.’s Customer Service Excellence Award for the 28th time since 1992. As we focused on our commitment to provide a superior customer experience, we also recognize the need to support our local community and assist customers struggling with COVID-19. With that in mind, we continue to offer payment assistance programs, flexible payment options and referral services to help customers manage their energy bills. Shifting to our financial performance, we achieved financial results that are within our original earnings guidance range despite the challenges of COVID-19. This achievement included overcoming a $0.12 per share unfavorable impact in COVID due primarily to low sales volumes in the U.K. and lower commercial and industrial demand in Kentucky, as well as a $0.05 per share unfavorable impact due to mild weather compared to normal conditions. We were able to offset some of the impact through effective cost management and several other factors without negatively impacting the long-term strength of the business. And as we’ve discussed previously the U.K. regulatory construct provides recovery for any under collected revenues from lower sales volumes, which was a significant portion of the 2020 impact. We also maintained a strong financial position and delivered on our commitment to return capital to shareowners, something PPL has done each quarter for 75 consecutive years. Turning to Slide 5, as we dealt with the challenges of COVID-19 during the year we also remained very focused on the future. Building on the $27 billion we had invested over the prior decade to improve service to our customers, during 2020 we completed more than $3 billion in infrastructure improvements in line with the original expectations we outlined for you at the beginning of the year. The vast majority of this investment nearly 90% was focused on transmission and distribution infrastructure to strengthen grid resilience, incorporate new technology and advance our clean energy strategy. Shifting to a few sustainability highlights, we continue to advance our clean energy strategy in 2020. At the outset of the year we set a more aggressive carbon reduction goal and throughout the remainder of the year, we invested in our networks to enable increased electrification and a large scale additions of distributed energy resources in the future. In Kentucky, we secured regulatory approval for a 100 megawatt solar power purchase agreement to meet increasing customer demand for clean energy solutions. We also continue to expand customer participation in our solar share program to carrying full subscription for two additional phases of solar share construction that will begin this spring. In addition our Safari Energy business also added more than 90 megawatts of solar capacity to its portfolio increasing its own capacity to 110 megawatt. This new capacity is all contracted be a long-term power purchase agreements. And in August we joined a five-year industry initiative to accelerate the development of low carbon energy technology and advance affordable pathways to economy wide decarbonization. We recognize that going even further faster than the goals that we've set to address climate change requires new ideas, technology and systems that can be delivered safely, reliably and affordably. That's why we're partnering with EPRI and GTI on their new low carbon resources Initiative. As part of our sustainability efforts we also remained focused on advancing a culture of diversity equity and inclusion across PPL in supporting meaningful change and progress in the communities we serve. To build on PPL’s prior momentum in this area, the company adopted a new enterprise wide DEI strategy with five supporting DEI commitments. In the wake of the killings of George Floyd, Breonna Taylor and others in 2020 PPL led focused discussions with our employees and in our communities on race and social justice that will continue to guide our efforts moving forward. In addition, we provided initial contributions to support local organizations focused on DEI initiatives and launched a new scholarship program that aims to award a $1 million over the next decade to support minorities and females pursuing careers in engineering, IT, technical and trade roles. As a reflection of PPL’s continuous focus on embracing diversity inclusion and advancing equity for all, we were named a Best Place to Work for LGBTQ equality by the Human Rights Campaign Foundation once again earning a perfect score. Lastly on this slide, I would note that we continue to enhance our ESG disclosures in 2020, demonstrating our ongoing commitment to transparency and to keeping stakeholders informed. This included our disclosures around political spending in area in which the Center for Political Accountability and the Zicklin Center for Business Ethics Research, today PPL their trendsetter ranking on the CPA Zicklin Index. Turning to Slide 6 for some regulatory updates. In November we took steps at our Louisville Gas and Electric and Kentucky utilities businesses to support continued infrastructure investments that benefit our customers. LG&E and KU filed rate requests with the Kentucky Public Service Commission on November 25th seeking approval for a combined revenue increase of about $331 million in electricity and gas base rates. The requested increases will support continued modernization of a grid to strengthen grid resilience as well as upgrades to LG&Es natural gas system to enhance safety and reliability. In addition, we are seeking approval for full deployment of advanced metering infrastructure, faster electric vehicle charging stations, and an updated net metering tariff. If approved by the commission, LG&Es and KU’s requested revenue increases would take effect July 1, 2021. Given the COVID pandemic and in an effort to reduce the near-term impact of the rate adjustment for our customers, we sought to minimize the size of the requested increase and have included in our request for approval of $53 million economic release or credit to help mitigate the impact of the rate adjustment until mid-2022. In addition, we have proposed to implement AMI in a manner which based on current projections will not require an increase in the combined revenue of LG&E and KU in this rate case or in the future as operating cost savings are projected to more than offset the incremental capital cost of the project. Additionally, pending the outcome of the proceeding it's our goal not to request another base rate adjustment for several years. A detailed procedural schedule for the rate case is available in the appendix of today's presentation. In other notable Kentucky updates, LG&E and KU on January 7th issued a request for proposal for generation capacity to meet a potential energy shortfall that may be created by the anticipated retirements of a 1,000 megawatts of coal fired generation during this decade. LG&E and KU’s Mill Creek Unit 1 is expected to retire in 2024, while Mill Creek Unit 2 and EW Brown Unit 3 are expected to be retired by 2028 as they reach the end of their economic useful lives. We've also included in the appendix a slide that details the projected economic lives of our Baseload generation plant. Utilities are seeking 300 megawatts to 900 megawatts of capacity beginning in 2025to 2028. And additionally we're asking for proposals for at least 100 megawatts of battery storage. Proposals are due March 31 and we anticipate making a decision by mid-2021 and potentially filing for regulatory approvals in early 2022. Lastly in the U.K., Ofgem issued its RIIO-ED2 sector specific methodology decision in mid-December. The decision was largely in line with our expectations and underscores the vital role DNOs will play in supporting decarbonization in U.K. to achieve a net zero economy. In January, WPD became the first DNO to issue a draft business plan for RIIO-ED2. That draft plan proposes £6 billion in new investments to support decarbonization digitalization and enhance network utilization. Turning to Slide 7 and the 2021 to 2025 capital plan we've outlined more than $14 billion from 2021 to 2025 to support continued monetization of our transmission and distribution networks and to advance a cleaner energy future. This forecast spending represents a $1 billion of incremental CapEx from 2021 to 2024 compared to our prior plan. Those increases include $400 million in Kentucky to support full deployment of its advanced metering infrastructure $300 million in Pennsylvania for additional transmission investments as well as incremental funding for IT initiatives focused on digital transformation investments in work optimization smart grid technology and the customer experience. And $200 million in the U.K. due to a shift of certain investments from 2020 to 2021 as a result of COVID-19 additional funding for telecommunications projects and updates to our RIIO-ED2 capital plan. At this point, I'll now turn the call over to Joe for a more detailed review of our fourth quarter and year-end financial results. Joe?

Thank you, Vince, and good morning, everyone. I'll begin with a brief overview of our fourth quarter results on Slide 9. PPL delivered fourth quarter 2020 earnings from ongoing operations of $0.59 per share compared to $0.57 per share in the fourth quarter of 2019. Weather in the quarter was about $0.01 unfavorable compared to 2019 as our Kentucky segment experienced slightly milder temperatures. The estimated impact of COVID on our fourth quarter results was about $0.02 per share, $0.01 to the lower U.K. sales volumes and $0.01 driven by lower demand in Kentucky. We continue to experience improvement in this area as C&I demand steadily improves across our service territories. These headwinds were more than offset by positive impacts from returns on additional capital investments lower O&M expenses that are domestic utilities and a higher realized foreign currency exchange rate in the U.K. Overall these results were in line with our expectations. Moving to our full-year 2020 earnings results on Slide 10, we achieved 2020 earnings from ongoing operations of $2.40 per share compared to $2.45 per share a year ago. As Vince mentioned earlier our 2020 financial results reflect an estimated $0.12 unfavorable variance due to COVID-19. During 2020, we also experienced a $0.06 unfavorable variance due to weather compared to 2019 primarily in Kentucky. In terms of dilution for the year we experienced $0.11 per share of dilution year-over-year primarily reflecting the impact of the equity forward settlement in late 2019. Moving to the segment drivers excluding impacts from weather and dilution our U.K. Regulated segment earned $1.33 per share, a $0.01 year-over-year. The decrease in U.K. earnings was primarily due to lower adjusted gross margins driven by lower sales volumes primarily due to the impacts of COVID-19, lower other income due to lower pension income, higher operation and maintenance expense and higher depreciation expense. These decreases were partially offset by higher foreign currency exchange rates compared to the prior period with 2020 average rates of a $1.47 per pound compared to a $1.32 per pound in 2019. In Pennsylvania, we earned $0.65 per share which was $0.07 higher than our results in 2019. Our Pennsylvania results were primarily driven by higher adjusted gross margins primarily resulting from returns on additional capital investments in transmission and lower operation and maintenance expense. These increases were partially offset by higher depreciation expense and other factors that were not individually significant. Turning to our Kentucky segment we earned $0.57 per share in 2020, a $0.03 increase over comparable results one year ago. The increase was primarily due to a higher adjusted gross margins primarily resulting from higher retail rates effective May 1, 2019 and lower operation and maintenance expense. Partially offsetting these items were lower commercial industrial demand revenue primarily due to the impact of COVID-19 and higher depreciation expense. Results of Corporate and Other were $0.03 higher compared to the prior year. Factors driving earnings results at Corporate and Other primarily included lower overall corporate expenses and other factors not individually significant. Turning to Slide 11, we outlined the trends we observed in weather normalized sales for each segment by customer class since the beginning of the pandemic. Overall, lower demand in the C&I sectors continue to be partially offset by higher residential loan in each of our service territories. We also experienced a steady recovery in the C&I space as certain restrictions were eased during the year. In Pennsylvania, residential usage steadily declined following the sharp spike we experienced at the onset of COVID it remains up about 3.5% compared to last year, signaling strong demand from customers still working from home. As for the C&I sector, we saw incremental recovery from the lows experienced in the second quarter and by year end we're tracking less than 3% behind prior year levels. The largest declines remain primarily in the retail trade and services industry, which we expect will remain depressed until restrictions are lifted. In Kentucky, residential usage was up about 70% in Q4 compared to last year consistent with what we experienced in Q3. We continue to experience a moderate recovery in the C&I sectors in Kentucky up substantially from the second quarter. C&I volumes were down 3.5% from last year's usage in Q4 which was an improvement from the 7% decline observed during Q3. Similar to Pennsylvania, the largest declines in the C&I sector continue to be seen in the services industry. However sales to the manufacturing sector returned closer to the 2019 levels in Q4. Finally in the U.K., residential usage also remained higher with volumes being up about 6% compared to last year. Recovery in the U.K. C&I sectors has lagged our domestic jurisdictions overall, but has continued to make a strong comeback down about 9% versus the prior year. A substantial improvement from the second quarter lows of over 20%. Well additional incremental lockdowns were put in place during the fourth quarter. These impacts did not restrict the construction and housing industries and we have not seen a slowdown in operational activity in these sectors. And as a reminder any revenue shortfall in the 2020-2021 regulatory year will be recovered by WPD in the 2022-2023 regulatory year adjusted for inflation. That concludes my prepared remarks and I'll turn the call back over to Vince.

Thank you, Joe. Before I briefly highlight our 2021 strategic priorities, I just want to reiterate how proud I am of what we were able to achieve in 2020 under truly remarkable circumstances. Operationally, we didn't miss a beat delivering very strong results. Financially, we overcame stiff headwinds to achieve our earnings guidance and return the capital to shareowners. Internally, I saw our businesses collaborate like never before as we work to keep each other safe and tackle COVID-19. And at the end of the day I truly believe we made a positive impact on society and that's the common purpose that really unites employees at all levels across PPL. In 2020, we demonstrated PPL’s tremendous resilience and agility. And as I've shared with our employees, I truly believe we will emerge from this pandemic stronger and more united than ever before. With that in mind, our clear focus moving forward is on delivering long-term value for our customers and our shareowners. In 2021, that includes completing the process to sell our U.K. utility business and repositioning PPL as a purely U.S. focused utility company. I'm pleased to report that the process to sell WPD remains on track and we continue to expect to announce the transaction in the first half of this year. As we shared previously, we believe a sale of the U.K. business will simplify our business mix, strengthen our balance sheet and enhance the company's long-term earnings growth rate. In addition, we believe it will give the company greater financial flexibility to invest in sustainable energy solutions. Another top priority of ours this year is as always delivering electricity and natural gas safely, reliably and affordably. No job we do is more important than that. And this year we will remain focused on continuous improvement, innovation, benchmarking and best practice sharing as we seek to once again deliver industry-leading operational performance and provide a superior customer experience. Other notable priorities for 2021 include advancing our clean energy strategy and reducing PPL’s carbon footprint further enhancing the DEI culture I spoke about earlier and building strong communities through philanthropy, volunteerism and customer assistance. In conclusion, as we look to 2021 and beyond, I'm excited about the opportunity we have to reposition PPL for future success, and I'm confident we will continue to deliver long-term value for our customers, our share owners and the communities we serve. With that, operator, let's open the call for questions.

[Operator Instructions] Today's first question comes from Julien Dumoulin-Smith with Bank of America. Please go ahead.

Good morning, team. Thanks so much for the time, a couple of things. First question let me pick up where you just left that conversation off. How do you think about strategic opportunities in terms of the size, right? Realistically we've seen some developments today and otherwise so how do you think about the scale of the transformation that you guys were thinking about in reusing those proceeds, right? Could they exceed the size of those proceeds just to kind of put some perhaps parameters or additional parameters around that and then I got a more detailed follow-up?

Yes Julien on that point I really don’t want to speculate on potential M&A scenarios or hypothetical M&A type scenarios. So just don't think it's appropriate to get into that.

Right, but maybe - I’ll simplify this. It doesn't need to be limited by the use of - use of cash proceeds here right? There is a lot of things you'll look at et cetera.

I mean again I don't want to talk about any specific…

Okay, fair enough.

I was - okay.

Yes sorry. It felt evident to ask you. Secondly, if I can you guys described a number of potential opportunities here tied to developments in Kentucky. I just wanted to clarify. How do you think about ownership of those investments right just the process assumptions et cetera? Can you walk through that a little bit I know that the process is underway, but can you speak to your sense of confidence?

Yes Julien, just to clarify which assets are you referring to…

Just the opportunities that emerge out of the co-retirements in Kentucky?

Yes and I'll ask Paul to maybe comment on kind of what we're thinking there. Certainly the - as we're looking at what's happening at the federal level and with the Biden administration, right it's still early yet in terms of you know anything specific coming out of the Biden administration. But I think it's clear that they intend to make policy addressing climate change right a priority. And so, we will certainly continue to remain engaged with the administration on their goals to advance some of those policies. Obviously rejoining the Paris agreement will certainly lead to more aggressive U.S. carbon reduction commitments either 2030/2035 remains to be seen there. That - the targets that are being discussed there certainly would require advancements in technology to be able to achieve those as it's really not feasible today from our industry to really be net zero by 2035 which is what they're talking about. So we'll continue to discuss these challenges with the administration as we're engaging with EI and every and other industry groups. And we'll continue to do that to support what we think is the most efficient way to accomplish those goals. As the industry has been supportive of the overall goals, we don't quite have agreement on how to get there and the ability of the industry to meet those aggressive targets. But Paul, do you want to talk about maybe how we're kind of thinking about things in Kentucky recognizing that it's pretty early in the game.

Sure. I think I would point out as you may know, but point out that what we will need to be doing as we have in the past is whatever actions we would be proposing that we would need to demonstrate - that it's the lowest most reasonable cost initiative. And so, in that to your question, we will certainly be looking at the bill versus the buy opportunities that we have. And it will be incumbent upon us then to put forward a good case to the public service commission on actions moving forward. So I think in that construct of demonstrating the lowest most reasonable cost that’s the way we'll have to operate and we've done that well in the past. And I expect that to happen again here in the future.

Got it. So in summary - it’s a little early on this update.

Absolutely, as Vince indicated it's the first quarter - end of the first quarter where we'll get responses back as you may have seen our information put out on coal retirements was the latter part of the decade. So yes, we're still early on for sure.

And our next question today comes from Durgesh Chopra with Evercore ISI. Please go ahead. Durgesh, I think your line is muted.

Just - one quick clarification, did the Pennsylvania rate base growth is that lower versus your previous disclosure and if so, why?

Yes, Durgesh in terms of the overall investment in the PA business as we've indicated we are - we have added on a like-for-like basis additional capital in the plan. I think what you might be seeing is the effect of 2021’s capital plan versus 2025’s capital plan. And so we were at $3.2 billion of spend this year and the current plan has about $2.7 billion in 2025. So you'll see a little bit of an impact on the growth rate likely as a result of that. But plan-over-plan as we've talked about we only include known projects in our capital budgets and as we've said historically as we execute the plan we tend to find additional capital and overall including the U.K. we added about a $1 billion of incremental capital plan-over-plan. So specific to your growth question it could be just the larger number dropping off versus the 2025 number coming in.

So I guess essentially it's allocating more capital towards Kentucky and Pennsylvania is a larger base, right. Is that - sort of what I heard, like your starting point in Pennsylvania is a larger base and then - going forward there's higher share of capital towards Kentucky?

Yes, I think that's right.

Okay perfect, thank you. And then you did say there are additional opportunities that you identify as you sort of firm up the plans. So that's clear. Just any color wins on the U.K. sale process. I mean are you still in discussion phases? Is that is that fair to assume here or just any sort of update since the last call we had?

Yes no real updates Durgesh. I would just say that as you can appreciate, this is a very competitive and confidential process. So not really in a position to provide additional details regarding the specific process as I indicated in my opening remarks. The process is continuing to progress as we would have expected and again we continue to expect to announce something in the first half of this year.

And our next question today comes from Steve Fleishman with Wolfe Research. Please go ahead.

Vince, couple questions maybe at least one of them you can answer. Just on the - you first talked about selling the U.K. business you did talk about the idea of - despite just selling it for cash. The potential may be like asset swaps being part of it. Is that still on the table potentially or is that less likely now?

Well I would just - unfortunately I don't think that's what one I may be able to get into a lot of detail on Steve…

Okay.

Just given where we are in the process, I just don't think….

Okay.

It's appropriate at this stage to get into any details certainly on what - potential buyers are bidding yes.

Second question that I think you might be able to answer. So at some point you are going to announce an outcome of this.

Right.

Can you just remind us - expected timing for like how long from announcement to closing to know to actually get the money if you're getting money? My recollection is you've talked about it being pretty fast in the U.K. but can you just maybe give us a little sense of that process after - once you have announced whatever you're announcing?

Yes, it’s certainly quicker in the U.K. than it is in the U.S. We do have a few required approvals that we will need to get as part of this process that we didn’t need to get when we acquired Central Network. So I think I had indicated in the past that we had closed that transaction from announcement to signing in about 30 days. I wouldn’t expect us to be able to close this transaction that quickly, but it will still be within just a few months. It’s not going to be significantly beyond that.

Okay.

We wouldn't expect it to be anyway.

Okay. And then I guess just in thinking about in terms of use of proceeds, I guess, the - you’re going to suddenly have in theory if its cash, a lot of cash to use just is there. Are you willing to just sit on cash for a while if you need to or just how are you thinking about timing of putting money to work?

Yes, so let me just reiterate kind of the four main areas that we’ve talked about in terms of deploying the use of proceeds and then I'll ask Joe maybe to talk about timing. But the first of those which we've been pretty clear about is strengthening the balance sheet and again that would be geared towards targeting a mid-teens FFO to debt metric out of the gate and then you know having our Holdco debt below 30% of our total debt position. The second is really directly supporting future rate based growth whether that's via organic with our current utilities or through other investment opportunities in rate regulated assets here in the U.S. The third is potentially investing in renewables as our tax position could change post sale. We've talked about that as well. So the renewable position could be in a better competitive spot post sale. And then the fourth is really potentially returning capital to our shareholders. But in terms of sitting on the cash, Joe why don’t you talk about kind of how we think about timing of executing those? And again those are - Steve, those are all levers that we can pull. We really won't know which of those and how much of any of those we would actually execute on until we know what the quantum of proceeds are and then ultimately what the use of proceeds will be, but Joe anything you want to add on that?

Yes, I think that's right. The only thing I would add Steve is that we'll have to look at from a timing perspective on the opportunities in each of those areas that Vince highlighted. And then certainly we want to be disciplined and efficient in whichever - which one, every one of those we're pursuing. So, I don't have a perfect answer for you on the time required, but certainly efficiency on our part and as always our disciplined approach to these things will be drivers of that timing.

And our next question today comes from Anthony Crowdell with Mizuho. Please go ahead.

Good morning, Vince. Good morning Joe. If I can just follow-up on maybe Steve’s question. If I think about year from now the 4Q 2021 earnings call slide deck, do you think PPL has fully completed the transition by then or do you think that - the 2022 was a transition year for PPL?

Well, I really don't want to speculate on that at this point Anthony like certainly we will be looking to maximize the use of proceeds to really maximize the shareholder value there, right. And whether that entails something on the buy side here in the U.S. or renewables or efficiently deploying it to the balance sheet that all remains to be seen. So I think it's really hard for us to indicate today what that 12/31/2021 deck is going to look like. But we will probably have a better sense of that when we get closer to execution of the deal. But at this point I think - visibility into that not quite clear.

Great. And I guess just one last follow-up and I apologize if you hit this before. Just I believe you're mentioning is it $400 million of AMI investment in Kentucky. I guess is that included in your CapEx. And I think previously maybe AMI and maybe my jurisdictions wrong was very challenging in Kentucky. Has that been resolved?

Yes, so of the $400 million increase in the capital plan that we have for Kentucky, $325 million of that is for the AMI investment. So yes the AMI is in our updated capital plan. We are taking a slightly different approach to the CPCN for this project. Paul, do you want to maybe just touch upon how we're thinking about deploying AMI?

Sure, first of all I would say that yes a few years ago we were denied the AMI application for CPCN that we put forward with the commission allowing us to and asking us to do some more piloting and then suggesting that we can come back in. We have done all that. We have built what we believe to be a pretty solid business case for providing opportunities and cost benefit to customers. To Vince's point the approach that we're taking on this is. As part of the rate case and the CPCN not having that capital go into the rate base, but rather have a AFUDC treatment so that over time the O&M savings that we're projecting to the customers are effectively paying for that capital. So the basics though of the case that we think - that we are putting forward. We think it's very strong and so we're very hopeful that the commission will rule in the positive on that case.

Ladies and gentlemen, this concludes the question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks.

Great, just want to thank everybody for joining the call today and stay safe out there with this winter weather depending on where you are. Thanks everyone for joining.

And thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may disconnect your lines, and have a wonderful day.