EVRG - Earnings call transcript Q4 2021

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Operator

Thank you for standing by and welcome to EVRG Inc.'s Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator instructions] I would now like to hand the call over to Lori Wright, Vice President of Investor Relations and Treasurer. Please go ahead.

Lori Wright

Richie. you, Thank and everyone Evergy’s Quarter Fourth Good welcome Call. morning, to joining Thank us for morning. this you will discussion information. Today's forward-looking include Slide two cause and include contain differ with the from additional disclosure in of materially non-GAAP factors our information the on that financial expectations could our future our to some results and SEC measures. filings at the main today year are full along issued slides page releases and our today’s webcast and on quarter the investors.evergy.com. supplemental The with financial of website information for available

full with David results, Officer. Campbell, recently Other quarter be and and highlights, have will President on call cover On of and Vice more information with Officer, trends, the we an now turn of filed are call XXXX Executive fourth objectives. Evergy's available Kirk along Kirk over cases, our the call. and cover portion XXXX President the other to detail Chief today, management us the in year our David. our rate our financial of provide overview the outlook an question-and-answer I will and David regulatory Executive will Missouri priorities. Andrews, during and of Chief Financial and members will legislative sales

David Campbell

to reflect growth strong in to begin of Thanks, part program initial entered range. sustainability share, a representing These earnings X% per relative as billion $X.XX results will We to midpoint. share guidance share this we Kirk earnings X% XXXX to Lori, were this estimate for of able his our comprehensive rate with in share invest $X.XX security. midpoint XXXX. Adjusted good part compared reliability, year. our target of line five deliver per the a We guidance XX% $X.XX infrastructure. in and year compared on our a than involves XXXX. execution remarks. to We grid morning, transformation share $X.XX company’s to objectives year with over plan were the XXXX Slide the equipment per year’s I'll in and critical X. replace morning, per full This $XXX everyone. reported GAAP per a XXXX, $X.XX to drivers increase results of and of improve A X% our discuss Day XXXX or and increase in higher a over $X.XX modernize plan deploying our resiliency and capital million XXXX ageing $X.XX advanced in Investor

enacted to we focus pass on rate to same have time, delivered We the and and advancing XXXX, cases. since our customers. Missouri maintenance levels STP XXXX, total Since both Kansas our a our and competitiveness. our in was COX upcoming also least, our rate we to we securitization reduced overall reflecting cost XXXX wrapped with savings Missouri both us we stakeholders. XX% maintain have total rate in emissions up regulatory XXXX, but targets. our and by regional enabling At reduction legislation In and our last affordability these X.X% XX% And expenses below on long-term operating continue progress key Canada prioritize legislative interactions In were to states. dockets relative emissions reduction XXXX, strong and certainly in not constructive

growth see transition serve ongoing securitization coming managing our company’s as will X, helpful in tool Slide the a you earnings trends. will On recent We that in fleet years. dividend expect the and

Alongside annual year you of payout X% long-term to dividend that annual growth of dividend earnings Evergy these XXXX X% team consistent in rate The full XX% like to of our will the X%. which including driving tracks the I earnings, remains the during first Evergy’s employees execution to This challenges from we year as we line with track forward EPS record another XXXX a our and forefront storm policy. squarely for was everything further winter the company. is growth targeted see XX% look overcoming within to the midpoint $X.XX compound at emphasized have and continued working extreme with advance adjusted past results, of ongoing year, my Uri, weather As growth over this guidance do. attractive to works their execution. the focus would together is thank fellow unprecedented pandemic. and We tracked the of our

over noted the on half. dioxide and XXXX, XX% carbon XX% Slide respectively. by by emission emissions and we’ve a NOx our generation on progress we made reductions significant Since we’ve last reducing half X, emissions As reduced as transitioned and sulfur decade nearly by fleet

gigawatts Our approaching XX renewable generation nearly to over fossil gigawatt is X.X energy last retired years. X.X portfolio and responsibly we’ve the

filed current summarizes base netting last slight by year with and reach which the is Day were plan, electricity add generation XXXX, in Our emissions of in COX XXXX are reflected levels capital by free XXXX with from of in intention presented with long-term of $XXX we nearly carbon XX% XXXX provided the plans renewable a gigawatts in of X nearly to which resource pace X updated what our from roughly zero expenditure X some overall. the on to our nearly to we higher from retired to increase spring to gigawatts over objective goal and On customers shifts reductions million comparative last outlined our half XXXX to came billion totals in five integrated next and sources we a Slide basis, line other in In coal CapEx carbon XXXX reduction XXXX. our decades. XXXX September $XX.X of XXXX. timing net the XXXX Investor years plan and

extreme targeted higher equipment The five weather, by increasing capital customer withstand replacing than to upgrading benefits driving is improving grid, the largest is With expenditure reliability, year and the our security. of the systems is the the and focused transmission the infrastructure and investment of resiliency, towards and plan and customer addition million The on modernizing $XXX XXXX, to ability for distributions. enhancing XXXX aging experience program customers plan. XXXX our rolling portion

lower in As to we and these and a will customers, advance our generation across program $XXX savings. or reduced the lower to and virtuous we a progress the capturing has reduce efficiencies our create grid comprehensive and cost helps cost XX% a Slide us surplus emissions business, work have cost, fleet, X towards savings we on smart enable investments million how use since merger driving which summarizes cost which by serve of technologies also to enabled by XXXX XXXX. transition the

technology leverage are We excellence and investments to efficiently. effectively more on laser-focused we and as operate operational

southwest generation to continues in our of improving in core appears done, developed And flexibility macro plans environment country to savings. strategy. market been Affordability and the elsewhere more renewable of an which operating may generation. We of pressures on we model power purchase levels increasing And capture total are in create targeted across seeing pool also our current in Evergy’s see we by building as regional XXXX geopolitical we our more back and and five see increase plan. in it elements power not brought O&M of trends into the are what majority we of reduction and context. Thus XX% and further fuel those impacts the that a the year as our The of far we costs higher have competitiveness inflation than XXXX jurisdictions. costs targeting the our manage O&M part rate have to to on vast been continue are able are half as we’ve penetration

X.X% to of rates outpacing regional As been at has by an and Slide XX average well able on shown reduce since a level XXXX, inflation. Evergy peers below

year we’ve been and will how four going topic and across the in to slide, forward, each affordable On XXXX plan. able our to these for at our forefront savings XXXX. This maintaining layout stakeholders the jurisdictions of objective priority from we as be our a customers features rates continue deliver to remains five

on by drivers cleaner energy to requests savings that improve IFRS of $XX include lives pleased and which of rate to equity to the rebates enhanced investments, are increased company’s excluding May an billion base better the rates equity, turn annual proposed updated rebates on have Missouri ratio to increase significantly the The reliability update the be to of we – infrastructure I’ll remaining customers. give a a depreciation pass this January. million with left $X.X requested $XX our as a the common Slide WHO excuse transition power ongoing cost our XX.X% and a increased enable Metro, resources, hand able million Let’s that Missouri operating rate These with we filed XX% update. XX, increases we are customer the the primary to fuels, projected including on Starting reviews on side lower pre-taxes. on offset service estimated with return based roughly rate and rate XX, me, XXXX align

West, with $XX savings include case based investments, been million handling on retired Missouri customer more our effectively requested we than drivers power and and We’ve previously the offset Missouri the request to and request rate West increase O&M also roughly for rates, a These infrastructure increase increase similar The on XX.X% the plant. billion Missouri reductions lowered return a and million the equity, a the rate the by includes an rate rate foregone $X.X fuel in partially West associated plant’s revenues a XX% excluding base of on ratio common per rebates equity taxes projected property of as increased XXXX. proposed XX%. year. $XX cost ongoing deferring by of updated savings update. of Moving resulting retirement the Staubli from are and depreciation

on main with case, which summarize, million the these annual pending this return of years, that next offered back impact rate part are elements. and customers reviews relatively by the As believe reduce To Missouri $XX revenues no roughly four typical straightforward to two with we’ve to and we over would earnings. revenues

Missouri investments savings the any infrastructure the benefits grid of policymakers that advance consistent on passing are First, and and stakeholders. objectives of monetization and cost and second,

customers. We that are our benefits investments excited to these deliver Missouri will the about

our not of here. but will on the the procedural Slide schedule timeline Now yet from final the you XX bottom is see estimated

which of increase customers last our represent filed stats filed rate and rate expect which are and of Missouri X.X% testimony testimony which Metro early approved Missouri the September June customers we’ve fuel, finally for as well X.XX the We of in orders West in will hearings both the since excluding we potential in below inflation seen increase bundle November. in July, and cases. rate request If an commission a intervenor for

in Moving update to Slide docket XX, beginning priorities other on provide our predetermination Kansas. legislative with I’ll an regulatory and

in a Later last coal securitization through recoveries megawatts Energy filed chain and year, to improve approve and we and the of more retirement As the temporarily year, suspend incentives resolution reminder, XXX September, we of economics allow supply the tariffs at the addition impact X a the of on the in elimination schedule Center, the time and a the potential to with develop Unit for Lawrence with of solar generation a to clarity pricing availability. initiated procedural to Kansas. last proceeding request Lawrence to of could that solar issues customs tax customer

the to the new developer. The are for of megawatts application X and once we uncertainty filing expect the and are have this Lawrence XXX than rather solar the the those hold, the retirement to the issues Given see and coal, of of definitive cessation elements of unchanged pre-determination of solar. approval keeping plan on agreements addition with we a still withdrawn around plan reached lingering docket file

pursued up our for smooth to XXXX wind highlight to XXXX his overseeing would the in in the ITC in gigawatt Other the our timing the efforts the resources due and a million value commission case project construct penny renewable are the a items his While team the of are expectations West our we that XXXX. the solar tax include securitize does contribute back regulatory less customers impact approval of is the which than new process new earnings earnings for to will meaningful expected Missouri, not costs the In Kirk can this solar come and the incurred recovery to online storm the profile market-based remarks. addition, the to of winter $XXX rate of Uri. the approximately this and may both with defer one evaluating proposals in to awaiting on years. of priorities annual are In have we multiple that structure to our as impact under the was tied Missouri plans timeframe. benefits of and decade. is EPS on time request over XXXX was competitive at during it adjusted impact that in This Evergy the to in monetize parallel, he this farm costs of half of

defer net customers. seeking also are Metro and We to approval return of million Missouri $XX to benefits approximately

the the end of Kansas, the decision reach on a on third and We the commission West Missouri second expect the to by resolution KCC the return $XX in filed $XXX on deferral the in securitization in Kansas month the recommendation plan last approve to or Uri request recovery year. benefits approximately In approximately cost costs quarter million of Metro. Staff Kansas of million our its Central and of of

in roadmap expect in year. generation closely with of long-term with the we our In updated our XXXX, and Missouri the conjunction of emissions of to resource in working targets. our are first transition details we finalize path We providing Kansas XX reduction announcement the fleet parties year this all and integrated an for plans our filed half forward

update been IRP and advances update with plant have unrelated that investments and it by Xst. in was legislative bills our since this issues in wide up Missouri. the as depend bulk accounting policy this July grid improve referred ultimately in whether and will of reliability. on build to legislation and But states good service monetization widely year support. utilizing supporting has XXXX the on legislative this file both We most believe that enjoys PSA. receive a likely attention. or I’ll We’ve legislation XXXX the We passed annual will and to The wrap extend our been focusing to update introduced slide

We are able pursue advance the year. be but existing next working this given also focused the the extension spring provisions an initiative This legislation. currently key with to we stakeholders PSA would to of on PSA is that

property recovery addition control In of we notably the costs taxes. outside are in mechanisms Missouri, pursuing enable of to efficient our

supported our wrap The summarizes Before the tenets over up through value core Evergy to of and and particularly we financial our distinctive Evergy affordability, XX reliability, sustainable of features I’ll strategy Kirk, The the slide which operational customers the on on investments business believe handing given and advance what side focus mix by XX excellence. are stakeholder attractive of it our for hand and covers sustainability locations. Slide side left collaborations, and relentless features right geographic to proposition. page the

our Kirk. for the our effort deliver now about company and call are we to We high I’ll the the required are for excited to opportunities turn sustained committed against performance objectives. over

Kirk Andrews

and good with David, start for morning, on Slide everyone. the results Thanks, quarter I’ll the XX.

of to left shown $X.XX For the compared fourth million quarter to of XXXX, share, of Evergy EPS delivered by per the or chart million or the adjusted from items Fourth quarter on driven per in was adjusted $XX quarter following as right. XXXX. $XX earnings share $X.XX fourth the

by to of expectations as in by weather our end from results original XXXX, majority EPS offset quarter weather normal during share XXXX. was lower we Marketing our approximately did First, previously while quarter of fourth XXXX. was quarter the of COLI impact COLI normalized decrease November into lower Ventures in quarter not prior and the in The XXXX to XXXX. exemption, our fourth weather we to significantly the of we unfavorable of the plan, a quarter, our demand X% be items relative the per a a for in $X.XX. had in credits tax-related weather compared we Stronger well unfavorable received warm across due Evergy to share. contribution which fourth had offset $X.XX $X.XX as of of proceeds delayed began seasonally Power as to $X.XX rate drove negatively $X.XX weather $X.XX favorable approximately the in XXXX, which When included the tax of from the net particularly This impacted in the per see Income drove primarily of a or which as quarter, heating driving businesses income the recovery $X.XX in performance demand increase demand forecasted in December, versus normalized fewer tax tax our the of was fourth expiry of days weather fourth quarter mild the Kansas yield weather. to as resulting certain to led of the compared EPS assumed

from fourth $X.XX the bad two the Finally, higher pulling bars, during our the of due EPS realization fourth during within year. and cost the certain went debt of shown the remaining one final including items the the was to timing QX. items. adjusted to shown SPAC timing was excludes expense due in final Investments, of Ventures bar EPS shifts the forward lower the a quarter was $X.XX a and this of for our the quarter in for of Of expected from as resulting acquisition. of certain phasing which public variance The via mark-to-market cost quarter year adjusted $X.XX full note, quarter impact Evergy result O&M

later expect adjust continue restriction year subject sales a have to the which this are temporary turn related find which this Slide quarter this I’ll We investments on to to next losses monetize results the to XX. investment expires one. and when to such and restriction to elected full you’ll lock-up as gains

For per $XXX to XXXX. per million share, $X.XX or XXXX, compared were share million or earnings $XXX $X.XX in adjusted

and contributed XXXX. XXXX in was XXXX a to assumed about demand $X.XX normal Weather compared the right, the the X.X% original benefited versus following: As the our shown increase $X.XX key warmer year quarter three favorable partially was by XXXX. from and in in drove $X.XX normal first year-over-year plan. the through the slide favorable of weather this which drivers than fourth weather, XX% us higher offset Weather to increased EPS left of include quarters versus normalized

resulted of deferred driven items in offset related of increase. transmission exemption $X.XX Favorable were amortization taxes, Kansas partially higher tax the As expected, income $X.XX impact investment tax by tax lower from excess revenues and by the a higher first income of primarily income credits.

Power bars, combined year-over-year lower shown count As performance a slight year-over-year three EPS three I COLI the stronger Ventures, partially depreciation share the and combined, next higher property finally, and during offset And grey led a quarter pull cost and fourth year-over-year year-over-year taxes, proceeds increase mentioned in from in $X.XX higher. comments, in increase forward $X.XX drive decrease. two Evergy Marketing in to by my years to

While the help guidance to this year-over-year and more drive XXXX from XXXX. our results expect net We outperformance into effect recurring these strong of don’t these earnings areas. items be a us contribution reflects for our typical

Turning XX, customer provide a I’ll the to update and recent trends. Slide brief on sales

you all the slide, left experiencing sales three in increases with increases this see commercial X.X% a On more by year-over-year weather, that robust side in hand by partially led our XXXX aided retail and particular will of increased industrial. in sectors

the City of in and out market right this the residential the solid the growth that continued has original increase of overall more a unemployment the Commercial to to was saw weather Kansas industries. employees and recovery. rates and nearly increased weather, residential strong X.X% Metro also decreased a retail the sales The industries commercial primarily driven strong particular to expectation of adjusting X% and employment commercial rate returned and employees in to which X.X% below slide, Looking The growth industrial national year. assumed highlighted economic customers increased in normalized increase full pre-COVID year-over-year customers side particular as demand returned. both in-person Weather by unemployment accelerated seen Manufacturing, of the X.X% logistics sales respectively office effects largest sensitive in Kansas oil which petrochemical continued of sector, beating X.X% work. Underlying as X.X%. some demand after in least for conditions, the is pace of X%, our by sector. labor a return is XXXX

shortages, quarter back produced economy Overall, City. its experienced pandemic to plant the bounce the jurisdiction all from the Although positioned Kansas ship e-transit pre-pandemic in has in levels. begun of regular in the our been headwinds back and to mentioned van experiencing new towards as last cargo positive I our continue is has we year electric chip plan the well trend a second forward

As in of a in results from XX increase a XX. $X.XX the $X.XX, normalized of beginning forward the impact of with cost is the result, adjusted normal the left and adjusted reaffirmed impact the outperformance as that which businesses, to demand compared on of on into of Evergy side XXXX will weather Starting of we we Slide XXXX, of pulled EPS $X.XX, as X% which part XXXX I bridge Slide XXXX removed again review our our Ventures weather EPS the to expect we to next $X.XX and from net Marketing Power the well our XXXX. $X.XX about

X% forward, earnings to for items adjustment half these in with continue this XXXX a a in XXXX, the guidance weather in more reflects demand. expect reflects observed XXXX. leaving expected About increased normal the include, growth mix the occur this contribution their of midpoint in After lingering we in XXXX nearly Although portion these to had shift load XXXX $X.XX the of contribute past of the businesses going normal to associated year. is retail in year-over-year we normal to realization in our due a adjusting This originally way to COVID due expected represents guidance. again year-over-year XXXX. demand in outperformance this our which demand, is remaining and increase effects overall of to to The returning demand normalized drivers increase

combined, O&M expect transmission as We in improve additional to revenue respectively and infrastructure. make the bill not finally, expiry serve to $X.XX merger-related of investments the impact depreciation expense of higher reflected credits transmission and yet earnings additional to savings contribute and when offset approximately of $X.XX continue from $X.XX rates. And we

drive the increase. $X.XX both year-over-year remaining for and items other the positive While negative

guidance consistent focus our strong Turning growth to as of on next well record of compounded XXXX, midpoint our XXXX based XXXX of results which on track XXXX, original reflect our to We’ve Slide ongoing execution. XX, X% the of in continuing EPS to from our adjusted in to $X.XX long-term the to X% EPS guidance. as is reaffirmed our XXXX rate build annual $X.XX

earlier, plan, efficiencies are we summarize objectives year David a our growth and enable maintaining or overarching guidance As from targeted our CapEx focused achieve exceeded continuing $XX.X to XXXX improve totals consistent XXXX from in X% fleet. XXXX, X% affordability, order original our XXXX on is guidance, balance enhance our reliability to remain mentioned positive our over plan targets the rate these to updated to I’ll multi-year base XXXX. we objective including XXXX to and reaffirmed on the results achieving while five operational our generation billion with which XX. financial from key strong focused sheet Slide us momentum to customer our our strength. our while to XXXX targets Building on our realize and range, driving that These goals financial meet exceed In sustainability on service of advancing transitioning and

utilities last we and to our the years, reliability worked improve Over enhance few invest to hard in service. customer

Our portion achieving our objectives to efficiencies of look of investments outcome This stakeholders. to us cases the benefits driving rate forward operating benefit successful of rates for step request Missouri for in the deliver $XXX year customers. affordable Missouri in to efforts while our the constructive we a those reduce as the million approximately savings a the in allowing of significant next needed back cost the offset all keeping important now merger rate to to us help pass allow customers since in to annual

front, mentioned included we renewable as recently in the withdrawn filing megawatts our the earlier, On have which $XXX addition Kansas, of David of solar. pre-determination

a leading remaining we’ve only issues with for to later definitive to enforcement the resolve application project. working to project filing agreement supply last year. the actively fall, items KCC with initial completed which uncertainty and this with this relate The Since file developer from arising the to the import remain our significant are chain finalize We much and issues global associated delays. new documentation of the customs

of issues, Pay resolving ensuring of on cost remaining Direct while to including these passage schedule, are see for for the We should certainty conserve project customers. the incentives of the customers focused and as improve affordable our BTC solar, And our tax expansion and well. the Kansas benefit for economics ultimately

wind XXXX We we proposal the to and achieve to and in to for in fourth XXX robust gigawatt megawatts saw targeted participation new of launched wind request XXX in XXXX. quarter X of for our a XXXX, process in up Turning to megawatts to select and have customers. order of a best that initial the our proposals when bids our the offer a opportunity projects for shortlisted risk targeted of The the XXX balance group megawatts. provided multiple project which combined select represent of received our price

first continue opportunity a We a are finally, issued on the of introduced and Investor a make that in with owners is path developers to mid-XXXX agreements and to this half believe through proceed due targeting with for XXXX. customers, our diligence negotiating engaging of in shareholders completing definitive progress notification Day, win-win-win there project to on counterparties. we’ve construction PPA buy-ins And we since made potential concept and the to

potential tax reform proposed refresh strategy PTC, While does there of and even being XXX% a we saw the see passage. federal this tax viability potential is if believe by the enhanced we for renewable as reform of not this opportunity

back currently involved With active that, David. this We to in with are call discussions executing of with the hand one buy-in counterparties I’ll the least at multiple objective year.

David Campbell

Thank you, Kirk.

on your for call, up we’d today to to like time and questions. the So, those we open it appreciate

Operator

of Shar first from of [Operator the Pourreza line question Our comes Instructions] Guggenheim.

open. is line Your

Shar Pourreza

Hey, guys. morning, good

David Campbell

Shar. morning, Good

Shar Pourreza

have the conversation? to get your efforts bit was others for a has It’s hounding road. Any paddy it in really been a used lawmakers a we just seems Republic obviously actually guess, just to sort could noisier There Kansas even KCC. little there? noisier any One pivot for maybe you saw – on some cap off from committee little demoted like in the hostel color both because I and David, of on are somewhat been Morning. of weeks bit We recent been and the conversations price we recently to. an more legislation KCC. than

David Campbell

question. good it’s Shar,

flat the I balanced active session, presentation Central conversation, in gave years. the dialogue There and I KCC’s a last that. feature a why rates to active. years over we’ve I for is been are And to of was a there and highlighted which have committee able that but in Kansas reductions the competitiveness one our lively rate Kansas, you in from appreciate the Look, ten describe legislative are been that as ten staff us inputs in think senate is all is would deliver we sides. example We think an part declining in that see how committees, of there and improving it rate always over

rate the passed overwhelming you in securitization last of recall both of and how now and course, majorities below well with it’s year will was houses. inflation certainly So noted legislation

So, our the are the key of certainly stakeholders in focused on opinions know of rate are opinions important we is. some a same how We stake. as we that constructive a competitiveness. – our focused sickles we variety on variety There the priorities and are country. as others around and in that are renewable regional But have around we it’s overall in think very dialogue stay reflected very a and

Shar Pourreza

sort an process? the Kirk, incremental? just on update plan interact does Got any that’s just remind or it. is with for Thank buy-ins it that maybe just CapEx for buy-in, last just of or opportunity in IRP how And you the the that. maybe – And us

Kirk Andrews

Sure, sure.

that if is, second that those forecast up flexing question you are we our answer know capital included I’ll expenditure So, of would be first, buys part in the will.

we our, within resource avail five scope and back which beyond a obviously makes megawatts. end for through our of that at we have serve ourselves number resource and process overall buy-ins replacing if deliver shift in the So an this be terms IRP, underpin to our right? near-term simply sense. is loads, for PPA year plan PPAs that perspective will, a of In as the extension that owned of already the you would our those be the It’s would impact, that on we repowering the in the how of it that support renewable that really same potential the around the of that the ability existing least

Shar Pourreza

No, it. guys. helpful. it. Got clear I that’s appreciate Very quarter. no, cut Thanks

David Campbell

Thanks, Shar.

Operator

you. Thank

question comes Chopra Evercore Durgesh ISI. from Our next of

open. is line Your

Durgesh Chopra

Hey, my on converted to the in about of you I’ve basically approvals line a buyout a is you terms like like? good Thank thinking of ultimately need sort look up taking am of morning, understand opportunity, does right, regulatory basically to team. I course, question. just And do time it, get to Kirk, following PPA that PPA the then, rate correctly? it for and what base, accretive for this

Kirk Andrews

buy-in least PPA why we negotiation. a currently for in two discussions Well, actively feel the as year. targeting potential timeline Obviously, this is I’ve as said, those indicated one party with in comfortable involved are a which multiple who I it’s at we counterparties of occurred

that. get closure to got on to obviously we’ve So

In correct. describe you terms of the speaking, think it the regulatory way is process, directionally I

is, associated We attractive important customer of that an will, at through basically buy in if step. to the price, a and are so the and first i.e. benefit most customer, with the step that pass you PPA taking PPA with impact can converting be rate investment for capital. that focus the rates of Ultimately that base on being overall the the that’s savings, if provides that we target capital

albeit case context. would pass all through, line in right. terms Combining We’d the in it’s names through an through a pursue processes, how and increase a Missouri. well gets similar just would within in an investment time Right, actually it base based an rate of rather capital In extension ordinary rate be it of that with savings, different through would adjudicated, investment. that in if Kansas, that the was or we’d really powering, go pre-determination be rate any of in overall go those that

blend about extend approach if type a will. think and you almost that I

Durgesh Chopra

Kirk makes through for sense. of if cases and future essentially, earnings accretion explaining Thank ton so rate that, from That you will. investment going the you basis the and comes maybe rate

of about shifting beyond you Thank very inflation target are gears, XXXX execution Are about a hurdles sort chain supply you you how can that’s savings and are that for maybe Just how front, constraints. your achieve you talk O&M you. those to and been pressures, the for sort impressive thinking of tackling just on those?

David Campbell

that a thus the dynamic. far obviously, and in macro to that’s continues question be So, good environment,

to confident uplift work XXXX to $X.XX from our O&M. has capital in able manage XXXX, In we on we’ve cost It Kirk manage may the that attentive as highly an to despite have it. continue O&M Thus you it’s to pressures as building are walked to far side. – And overall are well. been everyone. we through can on those the does the inflationary as we side that XXXX some one the we’ve on able So, and plan seen impact you the in been also impact waterfall some

have we this some So savings year. cost

from of impact – impact our also it’s going are in in unregulated we outperformance year. We some XXXX. see But modest, and ongoing effort drive part cost have had year into we uplift XXXX, last the should our next that the outperformance business an unusual going that’s O&M to but some in XXXX.

how mode already our place have savings them and the So those year the of year this years. execution teams in to achieve we have, plan and the be in identified have we part in as of in that bulk and five we upcoming we’ll back of half are going

but to got Chief is the on effort, this Kevin in effort we our been sustained and our it’s Bryant to record a how That’s behalf, year across do track program it’s got to take coordinating take whole our a So company that Officer the company, know comprehensive going has great execution. Operating same it.

tools compliance and acknowledge make certainly the happen. the it have to to we want but don’t that place we in So,

Durgesh Chopra

guys. my taking it. Got for the you questions. appreciate I Thank time

David Campbell

Thank you.

Operator

you. Thank

Michael Goldman from Lapides Sachs. go ahead. comes question of next Please Our

Michael Lapides

of been able line to the Session anything buy-ins anything end strong hasn’t loads. Hey to question guys. try the CFA any doesn’t of PPA talk year. build do as in across can congrats this the finish before well wanted I at Thank mid-terms. happen to like Congress something the for you get as own to a both Lame-Duck obviously look transfer about and the taking year, it my to

renewable happen safe to the thinking could what themselves new be about you thinking forward for capture your pulling who maybe about do developers of all the think level of versus would plants Harbor repowering or this about curious, solar. Just – building harboring benefit some that that be? Harbor year what or that year years The Safe through Safe provision the two PPP reason next because ITP year got benefit it last toward they’ve ago would

Kirk Andrews

same back ultimately But gives better provisions safe we of passed, – mindful a that hopeful context of we we to context us standpoint. outlay are from thought and flexibility. it. we component Sure, cautious least greater that those make do us context that of and the get lot about ourselves negotiated. harbor. the the that of PPA something ultimately, to obviously distraction it’s capital That But having the harbor current sight We’d are and certainly we’d chaos, in doing of certainly to of of around obviously good safe of obviously also option time, question around certainly is at. environment. be current repowering at line the of but mindful are be that political in that, certainly the in buy-in obviously ultimately would a certainty buy-ins reasonably looking we and availing that that repowerings ability that’s At about a but that if that safe harbor our There of or get require

David Campbell

respect add spending. the perspective at the bring this shift, solar the it as of the of plan, capital – impacts We also as some a the rational lower well our affordability. on the wind emissions. of And a IRP, think from in renewable in track safe lower overall are the capital factors win-win, integrated level why is typically do to consideration to overall is some sequence we of and cost plan expenditure around rate with Mike, multiyear from, the David, was But harbor. for the and going I’ll We as are to there resource because program is part of at and to with look look we so, we relative

of category factors all the are So to new balancing sensitive various those truly development them. and we

as we have a and that’s little market those this Kirk different, we in responsible do we’ll that Of see. PPA course, year buy-ins the bit what repowerings be The are and an set the going so we existing is to accomplish dynamic a for of described IRP and and update of it’s set those, opportunities for with course, look that. wins. new counterparties you to initial for certainly all of can basically sooner But have resources, that’s that what are the and counterparties. it’s for we’ll issue but are complicated with subject obviously, we They’ll

to can, repowering the others the do But with wind but you really PPAs those constraints about harbor the relevant safe of do side. and made counterparties seek we as the talking So, within many point we’ll will is as the that are what for us. on

Michael Lapides

given for you And the Got you asset when would does just if asset the of and spends work, the you in capital the then about meaning it how rate buy-in do we rates remind and road, and the the then, repower repowering, us if it. can down think first, the get the repower the you how making how that bought rates? acquisition

David Campbell

the PPA. makes lens affordability can Well, Obviously, for of of can with years in first an we to single to extend tandem, And single my sense would the of on investment. with for repowering. need all the that the a and so both them I capital us a with If through that. a PPA was be first a that right. supplemented run. through. combined we that mean the by to a customer, repowering obviously do a required be bifurcation could contract to savings counterparty a considerations, of both comment in that of by cleaner the and bit of that things A being that’s initiative, we order. combined result be and and sort example, is in replaces That especially be That us combined. because a substantiate would both, two elements in negotiation affordability a greater sense, and It of the investment capital as Buy-in can this owner potential counterparty pass of there bill repowering investment say, kind the rate counterparty end a to to you’ve capital again will the certainty which those the forms, of pass But of two do There is the there would in buy-in opportunities relative why to it’s that path of later capital could right. of investments challenging really here do through negotiating existing view existing are that’s and to the is and viewed expect of through our of negotiating be that that seem And in remaining be repowering. think PPA prudency got are PPA long of that to sort with what the I overall the our transfer customers. the really asset, go those would little possibility blend one base costs only two substantiate it’s again, more individually, almost capital the the the when buy those

separately. adjudicated separately then Here is we’d the savings that, the and that will be around repowering approach

Michael Lapides

finally, you rate But then, or can your Kansas in. you between you them me me, Missouri can rule the thought put get track remind I can And a as had in it well? it. or on – Got cases wider rates where can you have remind to you do

David Campbell

Missouri Not a is if understand what I on your tracker the side question there.

Michael Lapides

Got it.

it? get just to So ERC have to you wait the next for

David Campbell

That’s Yes. Correct. right.

Michael Lapides

Thanks appreciated. guys. Much

David Campbell

take Yes, add on your the pre-determinations. to Michael, want again, could – you as that I

into we’ve the as for you and treated So will six rate how the a case abbreviated you do get a weather XXXX. following know upcoming case rate an be scheduled and in sense rate Kansas, you months case XXXX got a can rate for case

case it you rate it do treated couple one and will if complete. pre-determinations down and the general there get an abbreviated the nearly you comfort be in case are starting then with you So either filing at rate can how different go or that at to can pathway

Michael Lapides

David. it. Thank Got you,

guys. [Indiscernible] to Looking

David Campbell

you. Thank

Operator

Thank you.

of Julien from comes Bank question America. Dumoulin-Smith with next Our

please. Your question

Julien Dumoulin-Smith

good too Perhaps, you thanks down, you’ve want Excellent. on can few What’s year. a the I I that But opportunity. that I we pin to of speak order for morning, sure about at megawatts that? one are hammer just, to talking the say am just Hey, you here? got don’t buy-in magnitude time. guys least not much team you contracts listen this of if curious

David Campbell

Julien. sure, Yes,

of First focusing X.XX part already or than us the and that about of that Investor PTCs presentation for megawatts approaching XXX expiry Day. either of about total that It’s those that all, spot. in sure are I our are more PPAs about expiring as we of had at sweet of we subset little that’s gigawatts think the on where and kind

particular that think XXX those are goal. one currently of our about. least really getting at of One on good executed of I in megawatts objective the category. we would rule So around term, the probably say, counterparties focusing would near this in year, our which to thumb is a

Julien Dumoulin-Smith

Right. you Effectively establishing to can work. make a two framework if it whatever for how or that that around one, scale up to

David Campbell

that’s a to think characterize it. fair I way

Kirk Andrews

– of that’s level some that us. base as it’s we some But least longer now it’s long pipeline pipeline, for is pipeline term view that at near Yes, term. PPA to term and

Julien Dumoulin-Smith

meeting. call I Yes, mean, I we’ve what Admittedly, Absolutely. through I if a that appreciate turns a And last it? to shareholder late know that, you down. this that to can drove then, that. XX% to saw I if that’s larger change speak it call by been related, deal can I of specific week have of

David Campbell

that call that our a kind was an ability we to for meeting. just Sure, felt that have approving the [Indiscernible] process shareholder of

would governance to enhancement ability evaluating that are a our be we that that practice. call meeting. So, create We to saw we felt an overall –

But as lot So, But peer to offer we companies where of additional of where that. the don’t a wanted other work the or we add that companies looked companies capability still at an threshold for those. to shareholder overall in I and view – of category proposal. our our ESG would policies on continue family the trying that that of put of approaches I to evaluation as approve

Julien Dumoulin-Smith

I session. this Got here? question tough any to have, embrace – context how know it. support the would law you provide much positioning but if alluded increase tier a you proposed X% that curiously to cap I does Kansas your could mean, I gap ask, the earlier, the mean, rate of

David Campbell

going it’s not broad out. it that has We to think think We support. it don’t do that giving

that don’t seen states, discussions career think a my got in get proposals think some that all but get now we support. had it’s of even seen every lots offered. it’s are I discussions the out large I’ve don’t and committee. but we would So legislative over that

Julien Dumoulin-Smith

for thanks that. Excellent, closing

David Campbell

You bet.

Julien Dumoulin-Smith

a Have day. great

David Campbell

Thank you.

Operator

you. Thank

question from Nicholas next Campanella Our Credit ahead. of go comes Suisse. Please

Nicholas Campanella

us you solar and taking billion looking far Hey, tax Can the was the know taking that that how question. roughly in and good you wait that loaded, does more to on outlined you megawatts renewable the the impacts. about just talked of $X have just overall program clarity out that pricing reflects about you in on a for supply CapEx today to you chain back-end translates morning. XXX have kind pressures comments incentives think of for but Thanks my are approach of light are CapEx this help the kind this slides see I so here? supply or curious fairly capital pricing seeing. I it’s you chain and and Thanks. of

David Campbell

over start I’ll and Kirk. hand then So, it to

to the unique file in So, certainty I got that particular place we and that will advantage in benefits pretty that’s part most that’s working how we structure because agreement why and would of effectively of characterize IPC the take have level decided the a withdraw and and once really to of we the and our docket those counterparty and with and in and base speaking certainty. solar is that we market of that are project currently are it’s

chain the deals, the XXXX. of particular because structure of really XXXX mentioned. minimal earnings seeking in point in certainty it’s importance affordability are because we that contributor related to that a of and we to But So and supply the issues the it’s of

both Our and able in way. pursue wind end years, additions a in be more the that in slated XXXX we XXXX we’ll believe to got we’ve of traditional

pretty some those time We went there light chain little the and pressure. latest in that further those bids. are robust process view our a in in out obviously seen But we’ve So, through. RFP supply is of reflect got some we what

It’s wildcard. expectation. to a expectation ongoing as but macroeconomic an that’s pretty dynamic, that we got. situation continues our Kirk? It’s reflects our that be best So

Kirk Andrews

supply on issues. add I’d to it solar thing XXX that only the as Yes, of the some those project, David around megawatt agree unique I characterized chain that’s

there of I think what what have some when to Coming still scope it the in existing, and filing, withhold around or I well, mentioned was are lingering do this to initial of China board as labor a of orders of there kind like around going certain not and there mentioned, course going I tariffs. whether my holding up extension comes might bit. to terms uncertainty that were And pre-determination about of release out products remarks. from look in around, administration provisions are extend was little the things customs and which they our these concerns reduction,

clarity get So And two think particular project. this that. those wanted examples are to I uncertainty. best the more that's of in solar the unique We to some on

their least the clarity in wanted attentions terms We've around what well. the as seen counterparty around to are ministration Our give of tariffs. obviously Biden the

a do solar us this dominated backdrop gives in first toward to in do evolution with our we're And So dominated that focused important strategy to affordability. prudent thought PPA own us primarily been very a at do an renewables better eye on strategy, of we it an because for was to the step we least so so side, from what's to that. very moving next

cost too years I mentioned We not, reason structural our plan our perspective, we in didn't the project clarity of contributor for that and the to wanted tax it is to sake in want some from as it it of unique I done. And David a do customers. to fast for of the this certainty move the it. getting particular nature the major his and in So of of remarks, schedule negotiating indicated, a due as array about, but the with said, of benefit David think, early aspects

of unique So some it flexibility little issues gives a the greater to near-term. in through bit us those work

David Campbell

in guidance, X% In rate even contribution Yeah, given plan is maybe of less ahead and XXXX, to earnings describe I'll new the total from renewables or in or go ranges a than the our it. growth XXXX. questions, target our – we've corollary just

drive XXXX. So continue even it's it portion, make But watch. and a able doing factor customers be to still in a relatively benefits we'll for so. happen in our it's We're we'll to optimistic modest

Nicholas Campanella

helpful. Got it. appreciate Super clear. Yeah, Really that. very that's

to Just costs update on customers, savings going the to base to plan get IRP this how trying tipping your But a we're more fuel comments there's the done just already job going and guys terms July. you're further you're have the in inflation and thinking filing I'm fossil the fleet translate to the accelerate be to an great a an where of just you higher argument kind And about of and about some of kind today. also obviously, curious closures? point to that, Thanks. into if kind of in of

David Campbell

bet. You

of happy been it's the that space, other issue Inflation is we've across hope to in see but electric certainly lots So We going it's issue. parts inflation yeah, a an there’s energy still We intersection of manage broader able sector. to the better be temporary. points. than were

Integrated do be in update beyond the and we fleet the our take same pace of we'll sequencing. of our approach tried Resource to terms the and generation In transition, in Plan, year and implications thoughtful for terms our this

New emissions relative in profile. renewables do features of costs attractive relative some very or terms offer

chain had which effects the on issues, it's the given Now, in supply have that to very pricing. hard some knock-on tell near-term,

of guess, costs, runs to pacing into to incremental – of Washington. be would course, of happen But incentives sequencing update, and benefits some for not go what's additional going I to would in terms momentum in acceleration, lower you're is a there our because that the features, plan terms the we, drive similar in you same than same, as rather for who and the able So around customers. in knows all renewables, see going of benefits again, may some we through our an achieve acceleration

to bounces costs, Washington, So there on if into against think there fossil make are have sure contributor. rushing our are the And wind that's cold of something can't pace that that some in fleet is, have very weather very jurisdiction, but the and the near-term wait an low other was you same this Yesterday, raising depend factors the was and we'll important I time, dynamic nuclear reliability to it was uncertain in we things. the measured of and approach. fleet and a

between free from last and think we nuclear year, customers So sources provide that we can we the was over have as manage half of electricity time a we wind. our nearly

on to lowering got broader program. point, while happen been that but to to emissions reliability, record. I a So paced it's balance drive a overnight. been with your lowering that We've won't going track to that we – think or focusing think we're But on there's And a liability, while to costs entering great way forward. be and we've transition. able in be It's maintaining do got the going

Nicholas Campanella

without just CapEx helpful. buyout CapEx plan. And your ability if can raise model, just more equity the That’s if you, more one hearing capital into additional And putting the capital? I'm think I the just, to right, as PPA about what's upside opportunities we are to growth

Kirk Andrews

good So question. it's

from not have answer context the unlimited targeted enough capital buy-in within number to plan. – of we've question standpoint. One being to the in of to we flexibility. least need plan targeting for is done our degree new at times, our think capital that least the our a as we without the – of expenditures fund objectives, primary we're PPA internal some one We an the able have in said at ability get do of of it's five-year our generated to near-term Julian's I equity. earlier, context my and Obviously, have flexibility, equity there But

least magnitude also certainly it's five-year order significant flexibility of the near-term plan. that. at perspective, to from So we've perspective. on would a not But planning But of do It but earnings additive, doing from our only unlimited. got be of capital enough not in those, a obviously, we're not an

Nicholas Campanella

appreciate time today. you. Really the Thank

Kirk Andrews

You bet.

David Campbell

you. Thank

Operator

Thank you.

Miller Our next from question comes Travis Morningstar. of

Your open. line is

Travis Miller

you. Good morning. Thank

David Campbell

Good morning.

Travis Miller

What program Missouri and regulatory right outcome of poorly by How Kansas full you holistically activity of then near-term might at it, things those are essentially of up. things CapEx kind outcomes could you look here wondering go that about billion-plus in if upsize going think have impact $XX on coming your downsizing. you now, And CapEx that regulatory well, about if was then plan? the and you terms the in thinking sensitivity? go there I that thoughts

David Campbell

thoughtful for I framing a think we try program. customers to in be multi-year makes sense that the drives and plan and capital is expenditure benefits

it both So on and a rate we've chance that the and be we into this actually, had went similar program of dockets – in year you've set preview year. a that underway very of Missouri investments are In based the early last in reviews review pretty the are that as of straightforward, other to it's we infrastructure STP words, Kansas. toggle on expect not got these that part to

think in us little we're competitiveness. utilities. growth very a of in a with level be help we our robust we lot our rate because of which program very Kansas. on But look the similar peer I that XXXX legislation in a what affordability and is of actually think in regional have that reflected benefits at still overall the than further expect they're rate impacts will consistent will overall terms program. We Missouri enacted policy. base drive public rate We has in our and will lower focused

in the – the is we're our Missouri. again, the to light be driving reacting savings And straightforward it market. as primary will cost at described these the rate I reviews will a in the can of as look what's be rate in the benefits our to lens customers terms for expectation always fact benefits offering that year-to-year just that the we the But pretty of to reacting and So of lot rate case, in case. and opposed the deliver will that –

a in offset to of able reductions potential and very lot any increases we're sizable So costs. the – by

beneficial. we've we've robust just we We've We've overall believe sense projects do, set got So in we We've of makes net-net, decades our our infrastructure, got of rate but got a we equipment. think could on runway a program program. of trajectory. calibrated those, confidence pretty aging our customers backlog will what for even be additional that in old overall replacing got

Travis Miller

That makes the other my great. Okay, sense. had time. so – answered question, The appreciate you

David Campbell

Thank you.

Operator

Thank you.

Our comes Associates. from next Patterson Glenrock of question Paul

is line Your open.

Paul Patterson

Hey, good morning, guys.

Kirk Andrews

Paul. Hi,

David Campbell

Good morning.

Paul Patterson

It the but in that telemarketing, but contribution me, I if wasn’t XXXX? fair apologize for ventures missed I XXXX power the what's the expectation this, for I’m sorry. the – to for

Kirk Andrews

contribution power – and XXXX – Kirk. is earnings probably every I'm our about say combined, overall So The marketing going it's from to $X.XX cents. to in event

Paul Patterson

me said again, but I mean, at And for this it Okay. sales is clear sorry, – COVID, what's I What sounds sales for far still sort expectation point? mean, XXXX, I'm it COVID about recovery. was responding of you you how to do – longer-term, to you're the And like X%. non-COVID growth wasn't then, your also growth

Kirk Andrews

Sure, you bet.

the So that $X.XX, almost recovery that's from and COVID, just in continued I year-over-year half behind behind growth that $X.XX what's about year-over-year characterized demand growth of that. About is the X% sort the XXXX. which And other expected it's all half that. we would think of of occur in normal to originally organic of have ongoing if about to growth, you want way

So, XX really growth load the of we or long-term points, a call of that perceive. X.X% kind it, X% that basis is

Paul Patterson

legislation? to X.X%, rate in the a the the the does total Missouri is the it's of PSC legislation, the If flexibility X% piece that, with X% I go the under PISA of my what PISA finally, And legislation what life proposed piece realize PISA a give understanding just to fuel, cover would current be without setup, the back not. – legislation a or the case, would on the versus to little Okay. just or current bit that is or cap of then the vis-à-vis it under current have could flavor and us as the

David Campbell

Sure.

applicable commission PISA inclusive can Commission can utilities additional so off affairs start legislation, to is to and you and to in with to I'll public astray. XXXX. grant efforts, where apply broadly, operate it can under legislative So, But the and X% our five and XXXX. me Chuck current runs current go through The up years, I correct us, we've continue got so noted, up he the the And it fuel. as leads Caisley who the capita, to an of legislation,

cap, but that investments related to proposed to narrows Now, expand PISA to the and legislation it apply lowers extend been the just it to activities has the and PISA.

tied actual And have PISA asking the sunset lower be So the – and a provision. also to to investments you're legislation. that under it's a cap not – little legislation proposed making for the treated to cap a more does

So we'd continue.

where think policy, my advanced with mentioned and and successfully. an was So were – are as legislation passed, it's the – objectives the consistent it in it's with behind we stakeholders first engaging makes we he first was good I remarks, that the

new can just without as discussed, you extend, something ask could legislation, year. request passes, continue And a with even of something year, dialogue the all and we're year. the is of oxygen next the accomplish whether we initiative room as to good sort we factors it it's take advancing. legislative is we'll busy we day, the having to may we're it then so not the And a noted you've And but stakeholders, this next having and continue – session. public in commission other If end service discussions, I'll at be it's can make good that

Paul Patterson

Okay.

for recovery? Are Let accumulating everything, guess, deferred mean? in here? deferred Or with in – there significant there are this projecting outlook deferrals? levels are expenses ask setup? a current the way. that terms the you seeing recovery potentially? any I cost there of significant it fuel in Is Or fuel we're under big what's Just the for a of me significant fuel seeing amount that prices is does increase or recovery, outlook other of How the are you

David Campbell

for seen have some by deferrals. us. jurisdiction in increase we varies It Yeah,

So in our metro significant Kansas, of is to and amount the generation relative both Missouri which has load. jurisdiction, most

benefits not particularly that the seen So we're to Metro. There fleet, Central, significant is actually Kansas sizable baseload cost pressures, year. we've in also a Uri and of sizable in a from deferrals Metro as some winter half were got back deposition. of a wind In able result the we've return jurisdiction storm where fleet.

than be $XX million some expense power in think, this had purchase and was that XXXX, deferrals XXXX. we've In seeking higher in about year. to we'll it was fuel So recover our I it total,

in XXXX Now and we revenue XXXX. actually collected less than

the higher has load, a clause. more West as is in be that, is deferral a we for to than is is recovery bit is jurisdiction little fuel then it that that exposure West, but our than the And So in normal that we'll Missouri so monogeneration under Missouri its seeking course, – less a prices. do market

of a the recovered costs So in see again, in a back those recovery did deferrals West. year, the some half file Missouri period. then any twice over we in year fuel for are and of We XX-month increases

So we to made related December a that. West Missouri filing in in

natural two deferral did higher see some energy other of jurisdictions of increase lower, the generation have gas elements to of our we is relative that again, to you relative see the relatively in those complex amounts, both amounts So but three other jurisdictions. amounts

Paul Patterson

Okay, thanks appreciate. so much. I

David Campbell

bet. you. Thank You

Operator

At Campbell closing this back and you. David remarks. to for CEO, President like call I'd to turn over Sir? time, the Thank

David Campbell

is all as day. joining morning, a appreciate day thank and a today's great last Great, you Thanks, concludes Operator participating. earnings you this the you. Thank this for season. have of This of us We long conference call. particularly

You may now disconnect.

Evergy (EVRG) 25 Feb 222021 Q4 Earnings call transcript