PNM Resources, Inc.
Q3 2013 Earnings Call Transcript

Published: 1 Nov 2013

[Operator:]

Good day, ladies and gentlemen, and welcome to the PNM Resources Third Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the call over to your host for today, Ms. Jimmie Blotter, Investor Relations Manager. You may begin.

[Jimmie Blotter:]

Thank you, Ben, and thank you, everyone, for joining us this morning for the PNM Resources Third Quarter 2013 Earnings Conference Call. Please note that the presentation for this conference call and other supporting documents are available on our website at pnmresources.com. Joining me today are PNM Resources Chairman, President and CEO, Pat Vincent-Collawn; and Chuck Eldred, our CFO; as well as several other members of our executive management team. Before I turn the call over to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995. We caution you that all of the forward-looking statements are based upon current expectations and estimates, and that PNM Resources assumes no obligation to update this information. For a detailed discussion of factors affecting PNM Resources results, please refer to our current and future annual reports on Form 10-K, quarterly reports on Form 10-Q, as well as reports on Form 8-K filed with the SEC. And with that, I will turn the call over to Pat.

[Patricia K. Vincent-Collawn:]

Thank you, Jimmie, and thank you, all, for joining us on this beautiful fall morning to discuss the company's performance during the third quarter. I hope you all had a safe Halloween and got lots of treats in your candy bags. We'll start on Slide 4. The company continued its consistent performance and is on track to meet its financial goals for the year. As a result, we have narrowed our guidance range to a $1.35 to a $1.41. TNMP continues to perform well and is benefiting from the strong Texas economy. In New Mexico, there continue to be indications that the local economy is stabilizing, and PNM saw a slight increase in residential load during the quarter. We are also pleased to say that the company is on course with gaining the necessary approval for the revised state implementation plan related to our coal-fired San Juan Generating Station. So let's go to Slide 5 now and take a closer look at PNM and TNMP and discuss market conditions in New Mexico and Texas. Starting with PNM, in the third quarter, we experienced a decrease in overall load, with total retail energy sales down 1.2% from the same period last year. The decline was primarily driven by decreases in the commercial and industrial classes. Just a quick note about the industrial class, it makes up just 15% of our sales, and the decline was primarily driven by operational changes at a single large customer. We are encouraged that residential load increased 2% during the quarter and overall, appears to be stabilizing. The commercial and industrial classes are a bit more difficult to predict at this time. Reports continued to suggest that Albuquerque, which has stubbornly lagged behind the nation in its economic recovery, is showing signs of stabilizing. The Greater Albuquerque Association of REALTORS reported that in September, single-family detached home sales were up nearly 18% from the year before, the strongest September sales since 2006. Statewide, the numbers were similar. When considered along with other economic indicators such as increased employment and gross receipts or basically sales tax collections, this is a positive sign. We will wait to see if it is reflected in our numbers going forward. Taking a look now at TNMP, we are obviously very pleased by the continued strength of the Texas economy, which continues to have a positive impact on our results. If the Dallas Cowboys would win a few football games, I might even convert to be a Cowboys fan because Texas is doing so well. Both the residential and commercial classes in Texas showed strong load increases in the quarter, 4.6% and 3.7%, respectively. Average use per customer was also up by more than 3%. The Texas unemployment remains well under the national average, and job growth has been consistent. The forecast for Texas economy continues to be strong. Now let's move to Slide 6 for a snapshot of developments concerning our regulatory filings. I'm just going to highlight a few of the filings on Page 6. In terms of the Delta-Person, in June, the commission unanimously approved our purchase of Delta-Person Generating Station. This adds $40 million to rate base on an annualized basis, is expected to contribute $0.02 a share. We expect this to close by the first quarter of 2014. The next filing I want to talk about is the 2014 renewable plan. We filed our 2014 renewable energy plan with the New Mexico commission on July 1. It includes the addition of 50,000 megawatts of wind-generated RECs, the construction of 23 megawatts of company-owned solar that we would put in rate base at a cost of $46.7 million and a 20-year PPA for the output of an existing 100-megawatt wind energy center. We would also purchase some wind RECs in 2015. Our plan would increase our renewable energy rider effective January 1, 2014. We expect the commission will rule on this plan sometime in the fourth quarter. On the FERC side of the house, as we noted last quarter, PNM extended our agreement to provide both energy and power services to the City of Gallup. We extended that agreement through June 30, 2014. That extension included a rate adjustment that increased revenue by $3.1 million during the extension. The City of Gallup issued a request for proposal for a long-term power supply in September. The RFPs are due by November 26, and PNM is in the process of readying its response to that proposal. Over at TNMP, actually, the last day we had our last earnings call, we filed with the Texas Public Utility Commission for a transmission cost of service increase. The commission approved that request very quickly and the new rates went into effect on September 17. This will increase revenues by $2.8 million annually. Now let's go to Slide 7 to review developments with San Juan Generating Station and BART. We cleared a major hurdle with the revised State Implementation Plan or SIP on September 5 when it was unanimously approved by the New Mexico Environmental Improvement Board. The plan is now in the hands of the EPA, and at this point, we anticipate approval sometime in the fourth quarter of 2014. We are moving forward with plans to begin installation of the SNCRs on units 1 and 4 of San Juan Generating Station, and we'll be starting that in the first quarter of 2015. Units 2 and 3 would then be shut down on December 31, 2017. This is the overall time frame for the major steps in the process. Let's move to Slide 8 for a timeline of the other steps the company will be taking to fully implement the plan. While the EPA is considering the revised SIP, the company will be working with the New Mexico commission on the other critical aspects of the plan. This slide shows a simplified timeline of the process. In December of this year, we will make the comprehensive filing with the commission for 3 critical actions

[Charles N. Eldred:]

Thank you, Pat, and good morning to everyone. We appreciate you taking the time today and also look forward to see many of you at EEI in the next week or so. Overall, we're pleased with the third quarter results. We have been executing to our plans, and as a result, we're able to narrow our guidance range for this year. While we have not seen an improvement in the load at PNM, we do believe that the local economy appears to be stabilizing, and we will continue to manage our business well, keeping our costs in line with the revenues. PNM has also been affected by cooler weather this period. TNMP had another good quarter and continues to reap the rewards of the strong Texas economy. Let's review the financial results beginning on Slide 10 of the presentation. Third quarter ongoing results were down $0.05 compared to the third quarter 2012. TNMP was up $0.02, while PNM was down $0.07. Corporate and Other was flat between the periods. The drivers on Slide 11, beginning with PNM's higher PV3 pricing, contributed $0.01 in Q3. As I mentioned last quarter, we are fully hedged for 2013 at an average price of $34. Looking forward to 2014, we're about 90% hedged at an average price of approximately $37. There are a few items offsetting the pickup. First is that contribution that we made to the Navajo Workforce Training Initiative that is tied to the revised SIP. The training initiative is a $1 million program to help offset the Navajo Nation's economic impact from the shutdown of the 2 units at San Juan. This lowered earnings by $0.01 this quarter compared to Q3 2012. Transmission was also down $0.01 this year. This was driven by a number of small items, including a transmission contract that expired and another that reduced our volume earlier this year. The 1.2% decrease in PNM's load for the quarter represented a decrease of $0.02. Weather was also down compared to last year. The EPS impact was $0.04, which was primarily driven by the above-average temperatures in Q3 2012. Q3 2013, PNM's cooling degree days were down 10% compared to the third quarter 2012. Comparing this quarter to normal, we were only down 4%. Moving to TNMP, we were up $0.02. Rate relief from TCOS filings about added $0.01, and higher demand charges from large commercial customers also contributed $0.01. Pat described the continued strength that we are seeing in the Texas economy. Load was up $0.01, as a result. Now turning to Slide 12. We narrowed our guidance range to $1.35 to $1.41 for 2013 from $1.32 to $1.42. New Mexico load continues to be soft. As we've seen since the beginning of the year, for 2013, we expect load to be down about 1% for the year. Although there are signs of the economy picking up locally, we are not seeing that translate to an increase in our load. Palo Verde 3 pricing has added $0.01 to each quarter so far this year, and we expect that trend to continue in Q4. However, Palo Verde 3 is in an outage right now. When APS took the unit down for the planned refueling outage, they identified a valve leak, which extended the outage by additional 2 weeks. The majority of those incremental costs are capital. However, as we've discussed, we're fully hedged to PV3's output this year. The exposure that we have only hedged for the additional outage days is expected to cost us about $0.01 in Q4. Therefore, the hedge price improvement will be offset by the effects on the outage. These items are captured in the new range. We are successfully mitigating these challenges in various ways, including managing our costs. TNMP and Corporate and Other have also performed well, helping to offset the impacts of PNM. It's important to note that some of the improvements at the corporate segment have been because of cost reallocation to PNM. We have updated the segment ranges for 2013 to reflect our current expectations. PNM is now at $1.15 to $1.18, TNMP is expected to be $0.33 to $0.35 and Corporate and Other, a loss of $0.13 to $0.12. Now turning to Slide 13. Although we are not providing 2014 guidance until December, I want to reiterate that we remain committed to achieving our total return objective. We define total return as EPS growth, plus average dividend yield, and we are seeing top quartile amongst our peers at 10% to 13% over the 5-year period of 2012 to 2016. We expect to achieve the earnings growth using these 3 factors. The first of which is rate base growth. This includes our core capital expenditures and our continued use of the TCOS filings at TNMP to get timely recovery on that spend. CapEx related to the revised SIP, which begins to ramp up in 2015, and the possibility of adding some of the Palo Verde 2 leases to rate base in 2016. As I've talked about in our last earnings call, our notice is due in January as to whether we will extend the Unit 2 leases or exercise the purchase option. Since 3 of the 4 Unit 2 leases have renewal options that only extend to 2018, we are seriously considering exercising the purchase options rather than renewing the leases. We'll make the final determination on the notice by January. The second is continue to refine our business to maximize the earnings potential, which we have discussed before. In 2015, we will have a couple of opportunities for that. The first involves the impact of the half-price lease payments with Palo Verde 1 beginning January 15, 2015. This provides some timing flexibility to get us to the next general rate case at PNM. We're also anticipating the reduction of the holding company, 9.25% debt, which matures May 15, 2015. We have had opportunities to buy back some of this debt and have been able to reduce the balance by about $23 million this year. The third lever in achieving our total return goal is dividend growth. We are, again, expecting above industry average increase when the board reviews the dividend next month, which will be comparable to our last 2 increases. After that, we continue to expect above industry average increases while staying within our target payout ratio of 50% to 60% of ongoing earnings during the period of high capital spending. While these 3 growth elements, rate base expansion, earnings improvement and dividend growth, we are confident in our ability to provide a top quartile total return. Just as a reminder, we expect to see earnings growth annually, but the magnitude will vary from year-to-year. Once more, I want to say that we're very pleased with the strong foundation that we have established in our business. 2012 through 2014 are the years where we have increased our focus on earnings and our allowed returns. Looking beyond 2014, we have catalysts for stronger earnings growth. This growth will be back-end-loaded in our total return time frame and will benefit from the drivers I've talked about earlier, as well as rate case timing, which is the final topic to cover. We're considering a number of competing items as we think about filing the next general rate case at PNM. We will balance the timing of capital expenditures and the load situation in New Mexico against the ability to earn our allowed return. Our current thinking is that we would file by the end of 2014, with rates effective at the beginning of 2016. With that, I'll turn the call back over to Pat.

[Patricia K. Vincent-Collawn:]

Thanks, Chuck. As we wrap up the presentation, I want to review our checklist as we move into the fourth quarter of 2013. We've checked off the first 2 items for reasons that we discussed earlier regarding Gallup and the TNMP key cost rates. As we've discussed, we've made significant progress with the BART agreement for San Juan, and we'll be very busy in the coming months as we bring that across the finish line. We continue to focus on maintaining our top quartile reliability and to maximize our power plant availability. As a company, we have been very effective in controlling O&M and capital costs, and that remains a top priority. We will continue executing our plan to achieve top quartile return by 2016. And finally, I look forward to seeing many of you very soon at EEI, as Chuck mentioned earlier. Operator, with that, we'll now start the question-and-answer period.

[Operator:]

[Operator Instructions] Our first question is from the line of Paul Fremont of Jefferies.

[Paul B. Fremont:]

Can you update us on where things stand with the San Juan owners agreement? Have you sort of reached to an agreement with, particularly, the California players in terms of what they plan on doing with their ownership shares?

[Patricia K. Vincent-Collawn:]

Paul, we're still in the process of those negotiations. And with all negotiations, they are confidential. We hope to resolve those soon, but right now, we're still chatting with everybody.

[Paul B. Fremont:]

And do you need -- I guess, do you need to resolve all of that before you actually file your case in December?

[Patricia K. Vincent-Collawn:]

No.

[Paul B. Fremont:]

Okay. And what would be the statutory time frame for a decision in the case that you're going to file in December?

[Patricia K. Vincent-Collawn:]

12 months. And they have -- and I think it's in there, Paul. They have a 3-month extension if they ask for it, but it would be 12 months.

[Paul B. Fremont:]

Okay. So it could be as much as 15 months.

[Patricia K. Vincent-Collawn:]

Yes, sir.

[Paul B. Fremont:]

And if you were to exercise your option to buy the Palo Verde Unit 2 leases, what would be sort of the approximate time frame for there to be a -- I guess, to go through the baseball arbitration in terms of what the value of the plant would be?

[Charles N. Eldred:]

Yes, there's a procedure that's really tied to the terms of the existing lease agreement and there's a 6-month window there, which that negotiation process develops with fair market value on both parties, and negotiating to some agreement of price.

[Paul B. Fremont:]

So it would be roughly the June, July of 2014 that there would be sort of a known price attached to the asset?

[Charles N. Eldred:]

That's right, Paul.

[Operator:]

Our next question comes from the line of Brian Russo of Ladenburg.

[Brian J. Russo:]

You mentioned residential load at PNM Electric was plus 2% in the third quarter of 2013 versus 2012. Do you have a weather normalized stat for the residential sales?

[Patricia K. Vincent-Collawn:]

That is weather normalized.

[Brian J. Russo:]

Okay, great. And your next rate case timing, if you filed it in late '14, what would the test year be?

[Charles N. Eldred:]

Actually, the rates are going into effect January 2016, and the period of time would be 2015 through 2016, 1 year, yes.

[Brian J. Russo:]

So it would be a 2016 test year or...

[Charles N. Eldred:]

'16, '17 would be the -- 2016.

[Patricia K. Vincent-Collawn:]

Yes.

[Brian J. Russo:]

2016 test year.

[Patricia K. Vincent-Collawn:]

That's right.

[Charles N. Eldred:]

That's right.

[Brian J. Russo:]

Okay. And does your strategy of filing that, does that imply that you're going to begin to experience regulatory lag on your ROE from now until then?

[Charles N. Eldred:]

Well, we're managing that with, as we mentioned, aligning revenues that we have with cost controls in place today, another circumstance we continue to work on. So we'll be managing that. Certainly, you would begin to see some regulatory lag as you begin to approach that time frame, but we're managing it to the point of, if we decide to file at that point, it'll be for that reason. If we decide to file slightly earlier than that, then certainly, we'll make a decision [indiscernible] that in order to avoid any kind of material regulatory lag.

[Brian J. Russo:]

Okay. And maybe you just can clarify the PV1 and 2 leases versus your ownership in PV3. When -- it seems like the leases and the purchase options, would that be part of a replacement power scenario tied to San Juan? You know what I'm getting at?

[Charles N. Eldred:]

Yes.

[Brian J. Russo:]

And then PV3 could be rate-based in 2018. I just want to make sure I understand the strategy behind those 3 units.

[Charles N. Eldred:]

Well, a couple of things. One is, first of all, the leases are completely separate, and that will be dealt with as just a normal course of adding the purchase option or purchase of those leases into rates. They will have nothing to do with the replacement power or anything to do with San Juan. And the only element of the San Juan dealing with Palo Verde again, as you know, is the Palo Verde 3, the unregulated 135 megawatts that we have. The dynamics of this will make it interesting because of the value points in the filing that we do in December for BART. We intend to put a valuation on Palo Verde 3. It will be part of that filing. There's a lot of moving pieces and discussing what the components are relative to the BART and replacement power, but uncertainty, Palo Verde 3 and the valuation will be included in that. And then also in January, given the notice that we have processed, that the -- and required, as I mentioned earlier, to go through a fair market analysis for those leases that we'd begin to purchase. So again, there are 2 separate reasons for what we're pursuing, but the valuations will make it even more of an interesting dynamic.

[Brian J. Russo:]

And what's the ratemaking treatment on the -- if few buyout at PV1 and 2 leases? Does that have to be in the context of a rate case or can you make filing with -- like you did with Delta, et cetera?

[Charles N. Eldred:]

Well, it depends if -- we've done it -- certainly done it as we've done it with Delta in the past, if the circumstances, given all of the moving pieces that are occurring now, could very well -- or it gets well into the January 16 rate decision, but we haven't come to that point of exactly where we'll come out with that. But either one is certainly a path for us to consider.

[Operator:]

Our next question comes from the line of Ali Agha of SunTrust.

[Ali Agha:]

First, on the load growth, just to be clear, you talked about some restructuring on one of your industrial customers. I know it's a small part of the load. But was the implication of that was a temporary hit or, Chuck, to update your comments and say, "Look, you're not seeing the pickup in load growth and that's the facts?"

[Patricia K. Vincent-Collawn:]

Yes, on the industrial side, Ali, you're right, it's not a big piece, but industrial customers that did some restructuring, they did kind of hit, to use the overworked term "a new normal". So that does not look like it's coming back anywhere in the near future on that industrial piece.

[Ali Agha:]

I see. Okay. And as we look into next year, can you just remind us, on a normalized basis, what kind of generally load growth do you guys assume for planning purposes?

[Charles N. Eldred:]

At this point, we're going to hold off until guidance so we can get through the fourth quarter and get a better sense of whether or not the residential continues to be a trend moving to some improvement. We also mentioned commercial, and that's showing some improvement in really staying relatively flat and not slight declining. So it's just, at this point, we're not overly optimistic towards thinking about 2014 to have any significant improvements. We're just seeing some slight indications of some movements in the right direction. But we'll be somewhat conservative in our outlook in '14 and how we think about load growth until we get more data and some more quarters behind us.

[Ali Agha:]

And so, Chuck, I mean, as you think about the next rate case filing, as you said, the current preference is late '14 for rates in effect in '16, but what would cause you to accelerate that? I mean, I'm assuming load growth is a key component of that, but are you willing to live with lag next year just to keep your timing right? Or what's you're thinking in terms of what triggers that to happen sooner?

[Charles N. Eldred:]

Well, certainly, load would be a consideration, but it's really just the nature of all the different moving pieces that we have in the business right now, dealing with the [ph] San Juan replacement power, other components that we're thinking about relative to the regulatory filings that we have for it. So if we did move earlier, it wouldn't be probably more than 6 months. So just to give you some sense, it's not a critical inflection on a significant difference in the timing of that decision but maybe a 6-month earlier filing if we felt like we needed to. And also, the timing of the capital was certainly the other component of that.

[Ali Agha:]

Yes. And also just to be clear on the PV2 decision process. So if you decide in January that you're going to buy those leases, I mean, do you need approval from the commission beforehand? I know to put those into rate base, you obviously would need some kind of a rate case mechanism. But is there any risk or concern that commission doesn't agree or are they already supportive of this? Can you just give us a sense of what comes first in terms of the thinking there?

[Charles N. Eldred:]

Yes. There's no required approval at all from the commission. I will say there were some discussions and updates that we had testimony with the commission yesterday. And in those discussions, it was discussed about the Palo Verde leases and the circumstances around the terms and conditions. And I can say that the feedback was encouraging and positive and clearly understanding that we are considering the purchase option on those Unit 2 leases. And our view would be that the response was positive in our thinking of what we're contemplating as we think about this decision.

[Patricia K. Vincent-Collawn:]

We live in a state where a nuclear power is perceived positively in terms of PV3 and the leases. So...

[Ali Agha:]

Okay. So, Pat, you don't need anything to write off or anything in writing from the commission before you take this decision?

[Charles N. Eldred:]

No.

[Patricia K. Vincent-Collawn:]

No.

[Operator:]

[Operator Instructions] Our next question comes from the line of Kit Konolige of BGC.

[Kit Konolige:]

Chuck, you mentioned that -- in your discussion of total return, that if I heard you correctly, that total return could be a little below your target in, say, the near term, near years and then it's back-end-loaded over a 5-year period. Is that correct?

[Charles N. Eldred:]

Yes. With the -- if you kind of think of it in terms of if industry is around 3% to 5%, we're certainly on the solid end of that range in the earlier part of the 5-year period. And then as we begin to see the timing of the capital replacement power, Palo Verde, et cetera, that we have opportunities to put in rates. We would see above industry average in our growth so that it would allow us to achieve that 10% to 13% total return.

[Kit Konolige:]

So what's the industry average growth in your -- that you're using?

[Charles N. Eldred:]

Well, you hear different views of 3% to 5%, 5% to 7%, so I don't know exactly where folks would come out. But if you use 3% to 5%, I said it would be on the top end of that range for the earlier period of time, then we would significantly increase it going forward when we get to the latter period.

[Kit Konolige:]

Okay, fair enough. And that assumes the capital spend, and this kind of growth outlook assumes the BART treatment that you've proposed?

[Charles N. Eldred:]

That's correct.

[Kit Konolige:]

Okay, fair enough. What -- can you tell us anything more about the settlement discussions that you mentioned, other than that you've -- they've occurred in the past? And, I guess, you're saying you hope to have them in the future.

[Patricia K. Vincent-Collawn:]

That's a wonderful summary, Kit.

[Kit Konolige:]

I wrote that out beforehand here.

[Operator:]

Our next question comes from the line of Eli Kraicer of Millennium Partners.

[Chris Shelton:]

It's Chris Shelton. I had a quick question on the -- it looks like there were a couple of minor shifts on the CapEx logs in the Appendix. I just wanted to see what -- get a little more granularity on what was driving some of those.

[Charles N. Eldred:]

There was a slight increase, I think, on the renewable assumption around the peaking for replacement power. I think that was probably -- obviously increased from I think it was like 280 something to 299. So that's essentially the only change that I'm aware of that would be of any significance.

[Chris Shelton:]

Got it. Okay. And then the -- I guess, the -- I'm not sure if it was a convention of more certainty on some of the projects, but it looks like the rate base CAGR was a little different, too. Is that just a product of the BART coming, BART agreement having been moved forward? Or can you talk about that?

[Charles N. Eldred:]

No, it's just a slight adjustment relative to the BART timing and some capital timing.

[Chris Shelton:]

Okay, got it. And then quickly on the -- just to circle back on the PV2 potential. I know everything obviously -- everything is going to depend on what the purchase value is, et cetera. But can you talk a little bit about the rate impact, I guess? I mean, there's the leases. I guess, the lease expense would roll off. How it would look for rates, in general?

[Charles N. Eldred:]

Well, it's not significant relative to the 64 megawatts, but depending on the valuation point. But from a rate standpoint, it wouldn't be material at all, it wouldn't be something to be concerned about. I think as we've seen in the past, our biggest challenge is the fact that we've got all these opportunities and variables to work a nice, clean strategy to get them through the regulatory process, but these are not contentious types of decisions that will be made or just more of the timing of things. But the BART, as you know, is well under the original expectations of cost and customer impacts. So we're working with some good positive momentum and how we would think about all these different variables coming together and, ultimately, trying to work our way into rate increases. And, again, when I say that, to put it in context, we're still in the single digits as far as any kind of combination of these different options of how we think about rate increases.

[Chris Shelton:]

Single-digit rate increases encompassing kind of all these different Palo Verde leases, BART, all that stuff?

[Charles N. Eldred:]

That's right. Yes. Exactly.

[Patricia K. Vincent-Collawn:]

That doesn't include the BART piece because the BART, we said, could be up to 15%, but that's not until 2018. So...

[Chris Shelton:]

And that would include the replacement power, et cetera, I guess?

[Charles N. Eldred:]

That's right. Right.

[Patricia K. Vincent-Collawn:]

Correct.

[Operator:]

Our next question is a follow-up from the line of Ali Agha of SunTrust.

[Ali Agha:]

Pat, just to be clear, the solar project, the 23 megawatts, $47 million or so that you alluded to in your latest renewable plan, is that spending in '14? Are you going to buy a solar plant? You put that in rate base for '14? Can you be clear on that?

[Patricia K. Vincent-Collawn:]

We would build it, and we're actually in the process of building that now.

[Ali Agha:]

Okay. So you would just get the rate treatment for it in '14?

[Patricia K. Vincent-Collawn:]

Yes. It goes in the rate rider. Yes.

[Ali Agha:]

I see. Okay. And then secondly, also, in your total return, you look at the '12 through '17 period when you talk about those numbers, as you alluded to the fact, PV3 and BART, that doesn't kick in until '18. So are you factoring that in or you're not even factoring that in right now?

[Charles N. Eldred:]

No, it's not factored in.

[Ali Agha:]

I see. So this is still '12 through '17?

[Charles N. Eldred:]

That's correct. Yes. It's really -- the '16 is the end period in which we targeted. '12 through '16 is the total return period. So there's opportunities beyond 16 that you're referring to that provide some additional growth in the business.

[Ali Agha:]

Oh yeah. Sorry. So this is still end of '16?

[Charles N. Eldred:]

That's correct. Yes.

[Operator:]

And with no further questions in queue, I'd like to turn the conference back over to Ms. Pat Vincent-Collawn for any closing remarks.

[Patricia K. Vincent-Collawn:]

Thank you, and again, thank all of you for joining us. We look forward to seeing many of you at EEI in the next couple of weeks. So have a wonderful weekend and travel safely. Thank you.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may all disconnect. Have a great rest of your day.