DTE Energy Company
Q2 2014 Earnings Call Transcript

Published: 25 Jul 2014

[Operator:]

Good morning, ladies and gentlemen. This is the DTE Energy hosted second-quarter 2014 earnings release. All lines have been muted to prevent any background noise, and this call is being recorded. (Operator Instructions) For opening remarks and introductions, I will now turn the call over to Anastasia Minor. Please go ahead.

[Anastasia Minor:]

Thank you, Doug. Good morning, everyone, and welcome to our second-quarter 2014 earnings call. Before we get started, I would like to remind you to read the Safe Harbor statement on page 2, including the reference to forward-looking statements. Our presentation also includes references to operating earnings, which is a non-GAAP financial measure. Please refer to the reconciliation of GAAP net income to operating earnings provided in the appendix of today's presentation. With us this morning is Peter Oleksiak, our Senior Vice President and CFO; Jeff Jewell, our Vice President and Controller; and Mark Rolling, our Vice President and Treasurer. We also have members of our management team with us to call on during the Q&A session. And with that, I would like to turn it over to Peter to start our call this morning.

[Peter Oleksiak:]

Thanks, Anastasia. And good morning, everyone, and thank you for joining us today. Those of you who have talked to me at any length of time on the road quickly learned that I'm a big Detroit Tiger fan, so I feel compelled with this captured audience and use of air space to give a brief update on my Tigers

[Jeff Jewell:]

Thanks, Peter, and good morning, everyone. I will start on slide 11 and the second-quarter earnings results. For the quarter, DTE Energy's operating earnings were $0.73 per share. And as a reference, our reported earnings were $0.70 per share. You can find the reconciliation of the second-quarter reported to operating earnings on slide 28. For the two utilities, DTE Electric contributed $0.73 and DTE Gas negative $0.02. The non-utility segments combined earned $0.12, with gas storage and pipelines at $0.10; power and industrial projects at $0.07; and Energy Trading at negative $0.05. Corporate and other had a loss of $0.10. Let's move to slide 12 and a summary of the quarter-over-quarter performance by segment. Gross segments' operating earnings were up $27 million or $0.15 per share for the quarter. DTE Electric was favorable $40 million quarter over quarter, driven by the revenue decoupler amortization in 2014 and O&M reinvestment that occurred in 2013 but did not reoccur in 2014. DTE Gas was $12 million lower as the second-quarter earnings profile in 2014 returned to a more normal level, with a seasonal loss of $4 million. Gas storage and pipeline earnings were $2 million above the prior year. This increase was driven by higher pipeline volumes and additional gathering asset growth. This was partially offset by a deferred revenue accounting adjustment. Our power and industrial project segment was up $2 million from 2013. This increase was driven by REF earnings. Our corporate and other segment came in unfavorable by $5 million from last year, primarily due to income taxes. Again, these results in the growth segment provided $27 million of favorable earnings quarter over quarter. At Energy Trading, operating results for the quarter were negative $10 million with economic income of positive $11 million. Year-to-date results for the business, which are in line with our expectations, were negative $2 million for operating results and positive $21 million for economic net income. As we have discussed previously, Energy Trading is strategically pursuing more physical business, which will tend to create accounting timing differences between economic and accounting results. Page 26 of the appendix contains our standard Energy Trading reconciliation page, which shows both economic and accounting performance. I'd like to now turn to slides 13 and 14 and walk through some quarterly details for DTE Electric and then DTE Gas. Starting on slide 13 with DTE Electric

[Mark Rolling:]

Thanks, Jeff. Good morning, everyone. I'm going to begin on slide 17 with a look at our cash flows for the first half of the year. Year-to-date cash from operations is $1.1 billion, which is down a little from 2013. We saw higher weather-related customer payments that were offset by higher purchases of gas, power, and coal that were needed to meet both our current demands as well as rebuilding our inventory levels. Capital spending was higher than last year due to increased investments at the Electric Utility, partially offset by lower capital spending in our non-utility businesses. Overall, DTE's net cash is down year over year, and that's in line with our full-year guidance. Slide 18 lays out our capital investments in a little more detail. The electric utility CapEx is higher, due primarily to increased spending on a refueling outage at our nuclear plant and the acquisition of the Brookfield wind park. CapEx at our non-utility businesses is down slightly year over year, due primarily to GSP. This reflects the completion of the Bluestone lateral build back in 2013 and lower gathering-related spending compared to last year. Let me wrap up on slide 19 with a look at our balance sheet metrics. Our balance sheet remains strong, with both leverage and FFO expected to be within the targeted range for the year. We have adequate liquidity with $1.4 billion of available liquidity at the end of June, and we are taking advantage of the low interest-rate environment and have refinanced over $900 million in long-term debt this year. This will result in nearly $20 million in annualized interest savings. And our plan to issue no equity in 2014 remains unchanged. We do plan to issue between $200 million and $300 million of equity in 2015 and 2016. Now I will turn the discussion back over to Peter.

[Peter Oleksiak:]

Thanks, Mark. To summarize slide 21, we continue to remain on track to achieve our earnings guidance for 2014, with strong results in the first half of the year. We increased our dividend for the fifth consecutive year. Our balance sheet and cash flow metrics remain strong, and our investments in our utility and non-utility business will provide our target of 5% to 6% earnings growth going forward. I'd like to thank you all for listening to our call this morning. And Doug, I like to open it now for any questions that participants may have.

[Operator:]

(Operator Instructions) And our first question comes from Matt Tucker with KeyBanc Capital Markets.

[Matt Tucker:]

First question, on NEXUS – I just wanted to cut to the point here. It sounds like you are saying NEXUS at this point is going to happen, and it's more a matter of figuring out kind of the size. Is that fair?

[Peter Oleksiak:]

Yes. Let me first say that I know there's a lot of interest in this project, and there should be. I'd like to say up front that at this point in the project, we are in confidentiality agreements, so there's not a lot of detail I can disclose – you know, the disclosure would have to be limited. Obviously, no project really is 100% certain until the pipe is in the ground. There are competitors that have emerged in this region, also with northern paths. This really was not completely unexpected, given the amount of gas that needs to get out of the region and the urgency of the producers. Now, we are still very bullish on NEXUS. We think it's a northern-flowing pipe that makes the most sense, since it ties directly into our existing Michigan pipeline infrastructure. And it really minimizes new pipeline build. That makes our pipe very economical and least disruptive on the environmental and regulatory fronts. Because once tied into our Michigan infrastructure, gas can flow into Michigan, Chicago, Ontario. And producers really like that optionality. So I'd really say we are still feeling really bullish, but really nothing is 100% certain till we get the project done.

[Matt Tucker:]

That's fair, and I understand you have partners. I guess earlier you had said you needed to get to at least 0.8 BCF per day of firm commitments to move forward. You are looking to get at least 0.3 BCF of that, I believe, from producers. What's your level of confidence that you are at the least – that 0.8 BCF per day?

[Peter Oleksiak:]

As you said, we said from the start of the project that NEXUS would be a 1 B pipe, and that we would have a certain amount of commitments before we'd go forward. We've had enough commitments to move to this very important step in the process, so we are feeling confident at this point in time. So we will understand through this binding season – you know, in the open season document it did disclose that this pipe is scalable up to 2 BCF. This binding season really looks to determine the final size of the pipe; also, the finalization of the commitments from the producers and whether we are going to go forward. The next step here would be the regulatory filing process.

[Matt Tucker:]

Okay, thanks. I expect some others will have some questions on NEXUS, so I'll move on. I just wanted to ask about – you issued an RFP for generation capacity earlier this summer. Is there any color you can give us on how that went?

[Peter Oleksiak:]

Yes. We issued this RFP back in June. The process and timeline is designed, really, to run to the end of the year. So we are currently reviewing proposals. The whole idea here is that our electric utility has a current short, and also, new generation will be needed longer-term. So we have merchant plants in Michigan, and we are looking to keep that generation here in Michigan if it makes sense from a value perspective with our customers. So it is going very well, and we are currently reviewing proposals.

[Matt Tucker:]

Thanks. And just one last one. The eighth REF unit

[Peter Oleksiak:]

Yes, the eighth unit – it did go in at the first half of the year.

[Anastasia Minor:]

Yes, just this summer.

[Peter Oleksiak:]

Yes, so this summer – Anastasia indicating when it went in. And at this point in time it really did not contribute. It really is in a kind of open ramp-up mode at this point in time, Matt.

[Matt Tucker:]

Okay, thanks a lot, Peter. I'll jump back in the queue.

[Operator:]

And our next question comes from the line of Steven Fleishman with Wolfe Research.

[Steven Fleishman:]

Just first, on the utility

[Peter Oleksiak:]

The way to think about the CapEx in our electric utility is in two time frames. We have the first near-term flat time frame; it's really around the environmental compliance – finalizing that, really, with the max rule. We were estimating about $1.3 billion a year for electric utility. I would say that's still a good assumption around that. We have put out some disclosures recently on that second five-year window, really, the 2019 to 2024; and the range there was 1.3 to 2.0. I would say at this point, looking at the EPA compliance, it's really going to accelerate the retirements for our coal fleet and essentially have additional spending. So I would say we are more towards the upper end of that 2.0 operating year guidance in that second five-year time frame. We are in the process of finalizing our details and plans. Our objective is in the fall to provide you more of a detailed update. But that's probably a good rule of thumb for now.

[Steven Fleishman:]

Okay. And then moving back to NEXUS – and I apologize for maybe being a little repetitive. But maybe you could help us a little bit with the color of from the time you put out the initial unbinding commitment to the announcement that you made this week – you know, we've had some other proposals come out. These commitments that you've gotten, I guess particularly from producers – were these ones that, to the degree that they were going to go with other pipes, they would have left? Or is there a risk that they are optioning several of these and just going to end up picking one of them? Or did you see, like, some pull out because of the competing pipes? Just any kind of color on the dynamics that occurred here?

[Peter Oleksiak:]

And I think I did mention to you where we are at right now in this process. It does make it a bit difficult to give a lot of details around the nuances with the producers. But I do understand why you guys are interested and want to see the details here. We did have enough commitments. And these are real negotiations, talking to producers, to go forward with this important step. That's really what I can say at this point in time. So we will understand. And part of this process at the end of this is finalizing those commitments into agreements, and understanding – is there additional interest in the pipe itself? Which really, then, it would help size up the final size of the pipe.

[Steven Fleishman:]

And then on the size issue, in theory, when you said you are using the current one now, I would think that assuming the pipe is going forward, it's either going to be what you have now or bigger in terms of your capital commitment?

[Peter Oleksiak:]

That would be correct.

[Steven Fleishman:]

Okay. Okay, thank you.

[Operator:]

And our next question is from Dan Eggers with Credit Suisse.

[Matt Davis:]

It's actually Matt Davis. I just had another follow-up question on NEXUS, and if you guys could provide a little more color around how you see the project competing with other projects in the region? And at what size would be the optimal level to compete with other Marcellus and Utica projects?

[Peter Oleksiak:]

Yes, I'll address how we feel our pipe is very competitive. There are competitors, and they have emerged recently in this region. We are really providing a northern-flowing pipe. The gas in the Utica is going to go to multiple places, and a lot of it will go south. Producers are going to want the optionality to go north, and we provide a northern path. And I know other competitors are putting a northern path in place. Our pipe has the least amount of new build needed. We tie strategically right into the Vector Pipeline in our Michigan infrastructure. We think that really provides a distinct advantage to our pipe, because it really does make it very economical and also least disruptive. There's a lot of regulatory approvals that are going to be needed by the other competitors because of a new pipe build. We also think from an environmental perspective ours is the least disruptive as well. Really can't get into the whole details of the economics, but I can say just the fact that we have a lot less new pipe makes our pipe very economical.

[Matt Davis:]

Thank you very much. And then just on the generation needs, can you provide a little bit more color about timing of when you would look to add generation, or if at all, given the shortfall identified by MISO and the possibility of choice going away sometime next year?

[Peter Oleksiak:]

We have indicated that the new generation – the bulk of it will happen post-2019. But we have this RFP out right now; so if we are able to get from our customers generation at a discount to new build, then that's good value, and it keeps merchant generation in the state of Michigan. It will do that. So there may be some timing of new generation happening in this five-year window, and it really would be tied to this RFP. We have other options to satisfy that 2016 shortfall in the MISO region that we are at. But we are looking at this point in time, if we can, to get some new – at least a new merchant plant in part of our portfolio mix. But the bulk of the spend will be close to 2019.

[Matt Davis:]

Can you just provide a little bit more color on what you guys have to – what you were referring to with options for the 2016 shortfall?

[Peter Oleksiak:]

There is purchasing that we can do within MISO – some contracts, PPAs. There's other things that we could do. But we feel at this point in time, given where the market is at, given merchant plants that are in the state of Michigan, with choice – I know there's issues and debates around choice; whether choice is going to – if those customers are going to come back. It makes the best sense for us right now to explore purchasing existing Michigan assets, if they are available and if they are at a good value for our customers.

[Matt Davis:]

Okay, thank you.

[Operator:]

And our next question is from Andy Weisel with Macquarie.

[Andy Weisel:]

My first question is on the Michigan economy. I'm a little bit surprised that it seems like the weather-normalized load growth has pulled back, especially the industrial side a little bit, and especially when compared to your neighbors who reported yesterday. Then, also, on the gas side you mentioned increased uncollectible expense. What are your latest thoughts on the local economy? Is there anything that maybe has slowed down a bit relative to the prior trends? Or any higher-level thoughts?

[Peter Oleksiak:]

I'll talk mainly on the economy, and I will hand it over to Jeff to give some of the details on the load and the uncollectibles. The economy we are seeing continue on very strong in terms of recovery. I know we have been putting out indicators on unemployments; unemployment levels continue to go down. Automotive production continues to be high. Housing starts continue to rise, as well. Customer counts in our residentials are continuing to increase. So we are still seeing the economic indicators that we have seen over the last few years, and those are continuing on. Jeff, maybe you can provide a little color on the load?

[Jeff Jewell:]

Yes, I sure can. Hi, Andy; this is Jeff. So what we are seeing is in the first half of the year some of what we call – probably some weather-related items and also one-time impacts. One, as you know, we had an extremely cold winter. So what we are seeing on the residential side is a lot more conservation from our customers in the first quarter. And we saw that continue into the second quarter in April and May. And also, what we saw in April and May is we did not see any sustained heat. We saw a little bit of heat, but it wasn't like three days in a row kind of a deal that incentivized people to start turning on their air-conditioning load and those types of things. So we are seeing that as a one-time sort of an event. And then on the industrial side what we saw, same thing, is the extreme weather. There just wasn't a lot of car sales that were happening. And so the inventory levels were growing at the autos, and some of the autos were doing some maintenance around doing some outages. They were also doing production, sort of lowering down their production to be able to manage their inventory. There was also some other model changeovers that were happening, too. So going forward for the year, given that, that down a little bit is going to probably flow through the full year. We are looking at about a 0% sort of growth for the full year. But our long-term growth projection – there's still about that 0.5%. So we are not changing off of those. And then your other question, on the gas side – that one's pretty easy. Again, just because the revenue at the gas side was, obviously, because of the winter, was way up on the revenue side. So obviously, the uncollectible expense is going to the greater than what it was last year. So that's, again, just a function of the weather and the higher revenue.

[Andy Weisel:]

Yes, that makes sense. Very helpful. My next question is on the EPA carbon policy. If I heard you right, it sounds like you said you are going to be giving an update on your generation plans longer-term later in the year, so looking forward to that. My question is

[Peter Oleksiak:]

That's a really good question, Andy. And we still believe there will be comprehensive legislation in 2015. And what's going to be interesting is how, with that comprehensive legislation, the state will be still in the process of determining the EPA compliance on the CO2. So there's going to have to be flexibility within that legislation to provide us – to meet those carbon rules. It doesn't make sense to do it all at the same time. They are all essentially interrelated when you're looking at the renewables standard – even the choice, because the utilities need some certainty of build before we go ahead and build, that we believe at all – there will be some comprehensive legislation, but with enough flexibility to meet the EPA standards.

[Andy Weisel:]

Not to get too cute on timing, but any sense of when during the year that might come out?

[Peter Oleksiak:]

My sense is most likely it will be postelection and most likely be the first half of next year.

[Andy Weisel:]

Okay, great. Then, lastly, an obligatory one on NEXUS. When can we expect updates? It sounds like about a month or so till the open season is over. Should we in the financial community expect an update shortly after that? Or would it be more like around EEI or year-end when the regulatory filings come?

[Peter Oleksiak:]

The update really will occur with the FERC filing process. So we have a 30-day – roughly a 30-day open season. After that, if we are proceeding on the project, we will do a FERC filing. In that FERC filing itself, there will be details around the pipe. And I anticipate once we have that FERC filing out there, we will be reaching out to you guys, providing updates.

[Andy Weisel:]

Great. Thank you very much.

[Operator:]

(Operator Instructions) And our next question comes from Julien Dumoulin-Smith from UBS.

[Julien Dumoulin-Smith:]

I wanted to follow up, just to – I will kick off with NEXUS, and then I'll leave it alone. Can you talk a little bit about ownership and participants in the project? It seems a little bit in flux. What are your thoughts about your involvement in the project, giving that up potentially, and how that could impact the project as well?

[Peter Oleksiak:]

That's a good question, Julien. On the ownership front, the original MOU with the original partners did expire. So DTE and Spectra are in the process right now of determining ownership levels with other interested parties, including Enbridge. The finalization of the ownership participation will coincide at the same time with finalization of the volumes and the size of the actual pipe itself. So I would say at this point in time, we are sticking with our prior disclosures of the one-third ownership. But that could change with the finalization of the participation levels of interested parties as well as the size of the pipe.

[Julien Dumoulin-Smith:]

Great. And just from a timing perspective and trying to juxtapose the conversation with NEXUS with that of expanded coal retirements, more gas

[Peter Oleksiak:]

For the – I'm sorry; I was distracted here a little bit. Could you ask the question again?

[Julien Dumoulin-Smith:]

Yes. Just kind of taking the two conversations that have been ongoing here – just NEXUS; the need for incremental gas in the state, given the coal retirements; is this a question of when rather than if? And how do you think about your own plans for more coal retirements in context of expanded pipe needs in the state?

[Peter Oleksiak:]

It is definitely a matter of when. There will be gas needs within the state of Michigan. That's why – and the NEXUS pipe will provide that when it connects into the existing Michigan infrastructure. It will be sourcing Michigan as well as potentially sourcing the Chicago-Ontario market. So we do feel there is a need for this pipe going into Michigan and then existing infrastructure within Michigan. Once NEXUS is built, we are going to need to be doing some expansions on Vector as well as our gas utility system.

[Julien Dumoulin-Smith:]

Excellent. Then going back to the coal retirement side, or moving on to that side, rather

[Peter Oleksiak:]

What we are working through right now – we really are in the process of working through this detail. The EPA has a compliance by 2030, but it also has – is averaging between 2020 and 2030. So how do you do that? What's the timing of that? And that's really where the acceleration is going to come in as they hit those averages. And as you mentioned, we do have some longer-term coal plants – the coal plant, in particular, where we put $2 billion of environmental spend on at our Monroe plant – that's going to be here long after I retire. The other plants are something that we were looking at, whether – what's going to be the timing. You mentioned the Belle River plant, one of our newer plants that will be around quite a while. But in this time frame, we are analyzing as well what we do with that plant as well in this time frame.

[Julien Dumoulin-Smith:]

Perhaps just be more specific there. Does the upper end of that $2 billion range include a full scrubber on Belle River? Is that one of the big CapEx items there?

[Peter Oleksiak:]

We are – that's something right now, actually – what we need to do with Belle River with these EPA standards. We have deployed this dry sorbent injection technology across a number of our generating units, including Belle River. So it's that's one thing we are analyzing right now; the engineering people are analyzing whether we need that scrubber or not, or just continue on with this dry sorbent injection technology.

[Julien Dumoulin-Smith:]

Got you. And so I suppose that will be part of the update later this fall?

[Peter Oleksiak:]

It will.

[Julien Dumoulin-Smith:]

Great. I'll let it be. Thank you very much.

[Operator:]

And our next question is from Mark Barnett with MorningStar.

[Mark Barnett:]

So we have talked a lot about the pipelines and the utility today, which has been great. Thanks for that. Just a couple of smaller questions. Just one housekeeping

[Peter Oleksiak:]

We are getting that number right now. One second, Mark. We can come back with you on that.

[Mark Barnett:]

Okay, no problem. The second question is more of a longer-term question here for the REF units. What's the average, I guess, tenure of those contracts, at least the ones that you have finalized now? And how potentially a little bit down the road, when maybe some investment decisions are made about the lifetime of those plants with some of the new regulations that we are seeing or going to see, how do the contracts treat that possibility?

[Peter Oleksiak:]

These plants are – they are 10-year tax credit projects. So the economics here is really driven by tax credits. We had roughly half of them go into service in 2009. They will actually end in 2020. The other was a 2011 ending in 2022. So right now, what we are planning on is the economics will play out during this time frame. Having said that, as you indicated, there may be some continued use for these facilities from an environmental compliance, but it would be at a much reduced level.

[Mark Barnett:]

Okay, thanks for that.

[Jeff Jewell:]

This is Jeff Jewell. From the plan design, we are about $10 million after-tax savings with respect to 2014. And then there's the asset returns and stuff like that, maybe other $5 million. So we are talking, like, maybe $15 million.

[Mark Barnett:]

Okay, thanks, appreciate it.

[Operator:]

And our next question is from Andy Levi with Avon Capital.

[Andy Levi:]

Basically, all set – but just back on NEXUS, just to make sure I understand what you said about Enbridge

[Peter Oleksiak:]

Really too early at this point to say that. We are in discussions right now with Enbridge around their continued potential ownership interest in the pipe as well as other interested parties. This is all will come to a head within the next 30 days with this open season.

[Andy Levi:]

Okay. But basically, the question is why were they not included in the brochure?

[Peter Oleksiak:]

We are right now the lead – the DT inspector are the lead. So the lead developers are the ones who drive the process and are mentioned in the open season documentation.

[Andy Levi:]

Right. But they were in a previous one. So I'm just wondering why they are not in this one.

[Peter Oleksiak:]

Yes. The MOU did expire. And we are, at this point, the lead on the project. That's really what I can disclose at this point.

[Andy Levi:]

Okay. And again, I guess the CapEx that you are looking at in your – you have your bar chart where you to give earnings for the natural gas segment, for the pipe segment through 2018, I believe it is. How much of that – does that contemplate a third, third, third in the earnings power that you give there? And then you have your, like, white section there – .

[Peter Oleksiak:]

Yes, our disclosure, which I said at this point we probably – we will be sticking with until we understand this open season. It was 1 B pipe at a $1.5 billion spend with a one-third ownership.

[Andy Levi:]

Okay.

[Peter Oleksiak:]

But it's in the schedules as well.

[Andy Levi:]

Got that. And then do you think really by the end of this binding open season in the next four weeks – again, it could be extended – we will kind of know at that point whether it's a go or no go in the time frame that you have set out?

[Peter Oleksiak:]

Yes. The next step would be to have a FERC filing. And at that point in time we will be proceeding into the next important step of this pipeline project.

[Andy Levi:]

But what I'm asking is that this binding open season that you are doing should really determine whether it's a go or no go?

[Peter Oleksiak:]

It will determine the ultimate size of the pipe.

[Andy Levi:]

Of the size of the pipe?

[Peter Oleksiak:]

Yes.

[Andy Levi:]

So is it safe to say that it's almost certainly a go; it's just a matter of size now?

[Peter Oleksiak:]

It will be – in terms of a FERC filing process, there's definitely a high probability that we will be proceeding with the FERC filing. It's really determining now the size of the pipe.

[Andy Levi:]

Okay. So I don't know if you want to put a percent. But like you said, it's a very high probability that this…

[Peter Oleksiak:]

Yes, and I did indicate that I remain very bullish. Our pipe here…

[Andy Levi:]

Right, yes. I saw that on Bloomberg's…

[Peter Oleksiak:]

Yes, and in terms of where we tie into the reduced level of new build needed, for us it makes a lot of sense.

[Andy Levi:]

Okay, that's great. Those were my questions. Thank you very much.

[Operator:]

And we have a follow-up question from Julien Dumoulin-Smith from UBS.

[Julien Dumoulin-Smith:]

I wanted to follow up here. You mentioned needing to – or potentially tapping the bilateral market here for further capacity as you look out. I'd be curious; can you comment at all around some of the other data points we've heard around improvement in MISO capacity pricing, to the extent to which you are willing to comment? Some of the data points out there have supported $2 to $3 a kilowatt month. Any thoughts? Is that consistent, in the ballpark with what you are seeing?

[Peter Oleksiak:]

Julien, I really haven't gotten into that level of detail, to be honest, with the team. When I did talk to the team, there are options that we have. So we don't need to proceed in terms of buying a generating plant here in the state of Michigan. If it doesn't make a lot of sense for our customers, we will not do that; we will proceed with other options. Don't really have the specifics in terms of what we are seeing in the pricing, what those options are going to be. But obviously, it would be something we would determine at the end of the RFP process whether we were going to go to that route or not.

[Julien Dumoulin-Smith:]

Got you. What would be – just the order of magnitude – how much are you thinking about procuring potentially from the market versus any other resource for your own internal planning? Just if you could give us a sense there? And I will leave it there.

[Peter Oleksiak:]

We do have a natural short in the summer time frame that's around 1,000 megawatts that will continue to be needed for us to procure in the summer time frame.

[Julien Dumoulin-Smith:]

Great. And that increases by how much, or to what levels?

[Peter Oleksiak:]

I'm going to say it's roughly 1,000 megawatts. There is changes in terms of load and peak load demands, but it's approximately 1,000 megawatts. We are anticipating that to stay.

[Julien Dumoulin-Smith:]

All right, great. Well, thank you very much for the clarity.

[Operator:]

And this concludes today's question-and-answer session. I like to turn the conference back over for any additional remarks.

[Peter Oleksiak:]

I'd like to thank everybody for joining us today. And then have a great weekend.

[Operator:]

This concludes today's conference. Thank you for your participation.