Ladies and gentlemen, thank you for standing by, and welcome to the Algonquin Power and Utilities Corporation 20 24th Quarter and Full Year Earnings Webcasting Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. And 1 on your telephone. Please be advised that today's conference is being recorded.
I would now like to hand the conference over to our speaker today, Amelia Tsang, Vice President, Investor Relations. Thank you. Please go ahead.
Good morning, everyone. Thanks for joining us this morning for our 2020 Q4 year end earnings conference call. My name is Amelia Singh, and I'm the Vice President of Investor Relations at Algonquin Power and Utilities. Presenting on the call today are Arun Dansgara, our President and CEO and Arthur Kasprzak, our Chief Financial Officer. Also joining us this morning for the question and answer part of the call will be Jess Norman, our Chief Development Officer and Johnny Johnston,
our
Chief Operating Officer. To accompany earnings call today. We have a supplemental webcast presentation available on our website algonquinpowerandutilities on. Our financial statements and management discussion and analysis are also available on the website as well as on SEDAR and EDGAR. Before continuing the call, we would like to remind you that our discussion during the call will include certain forward looking information, including but not limited to our expectations regarding future earnings and capital expenditures and the expected impact and outcomes of the recent severe winter storms in Texas and the Central U.
S. At the end of the call, I will read a notice regarding both forward looking information and non GAAP financial measures. Please also refer to our most recent MD and A filed on SEDAR and EDGAR and available on our website for additional important information on these items. On our call this morning, Arun will provide an overview of our Q4 and full year 2020 performance. Arthur will follow with the financial results and then Arun will conclude with an update on our strategic plan for the business.
We will then open the lines for questions. I ask that you restrict your questions to 2 and then re queue if you have any additional questions to allow others the opportunity to participate. And with that, I'll turn it over to Arun.
Thank you, Amelia, and a very good morning to those who've been able to join us on this call and online. Given that this is our year end earnings call, I want to provide some highlights and speak to performance, both financial and operational for 2020. Firstly, on financials. I'm pleased to report steady year over year growth in our key financial metrics. 2020 adjusted EBITDA of $869,500,000 increased 4% year over year and our 2020 adjusted net earnings per share of $0.64 compares to $0.63 reported last year.
There were 3 particular events: COVID, weather in the central region and delayed closing of Delco that impacted our results. Despite these, Management was able to pull a number of levers, including cost savings to continue our growth trajectory. We exited the year with $13,200,000,000 in assets, a 21% increase over last year. Secondly, in terms of shareholder value creation, we continue to generate consistent outstanding returns as proven by our record on delivering total shareholder returns. In 2020, the company delivered total shareholder returns of 21.5 percent on the New York Stock Exchange compared to the 22.7% for the utility index and 15.3% for the S and PTSX CAF Utilities Index.
Last year, we reported annual dividends per share of $0.61 which represents a 10% annual increase for the 10th consecutive year in a row. Thirdly, on operations. The company undertook many successful growth initiatives and achieved numerous milestones in 2020. We continue to focus our efforts on Algonquin's 3 strategic pillars: growth, operational excellence and sustainability. For those of you who may have participated at our Virtual Investor Day in December, We've discussed this at length.
We operate through 2 businesses, regulated and Renewables. What is unique about us are our multiple levers of growth that support Our 2 businesses and which gives us high confidence in delivering outstanding returns. One lever of growth is acquisitions And we completed 2 utility acquisitions in 2020, Essar and Ascendant. With the addition of these 2 utilities, Algonquin now has over 1,000,000 customer connections within our regulated footprint. Additionally, both acquisitions are expected to provide opportunities for future growth.
With New York American Water, we submitted our regulatory application to the New York PSC last year. We are currently going through the settlement process and the year end date is scheduled for mid May. We continue to expect this transaction to close in 2021. On the renewable energy business, The company made its largest renewable energy acquisition, acquiring a 51% ownership interest in a portfolio of 3 operating coastal wind facilities with a combined generating capacity of 6 21 megawatts in South Coastal Texas. These 3 wind facilities have already achieved commercial operations.
The acquisition of a 51% interest in a 4240 Megawatt South Texas Coastal Facility is expected to occur in the first half of twenty twenty one once the facility reaches commercial operations. We continue to prove out our C and I growth lever as Algonquin remains very well positioned in the C and I space where imported long term customers are supporting renewables growth as they are looking to achieve their own sustainability goals. As further proof of concept, we signed a framework of renewables with Chevron last year for the potential development of over 500 megawatts of renewable energy facilities. This has been an area of focus for us and we are working hard to progress that portfolio and expand our customer base. 2020 also marked the company's largest construction program in our history, with approximately team 100 Megawatts of Renewable Energy Projects Under Construction.
To put that in context, These new projects approximately doubled the amount of our overall renewables portfolio. Within our renewables business, 2 of our projects, the Great Bay 2 solar facility located in Southern Maryland and the Sugar Creek Wind Facility located in Illinois, both achieved full commercial operations last year. Furthermore, 2 more projects are nearing completion with more than half of Alta Vista Solar's 80 megawatts successfully placed in service with a power purchase agreement with Facebook and the remaining megawatts are expected to be completed by the Q2 of this year. Our 4 92 Megawatt Maverick Creek Wind Facility in Texas completed commissioning on 111 of the 127 turbines and our long term power purchase agreements with General Mills and Timberlake. Maverick was recently recognized by the American Clean Power Association as the 4th largest single phase Wind Project in U.
S. History. An important lever of growth on the regulated side As we transition to lower carbon energy is our Greening of Fleet initiatives. We continue to progress well on our Midwest Greening initiative with the development and construction of 3 wind farms for a total 600 megawatt capacity. As we work to generate and deliver more cost effective, diverse and sustainable energy options to our customers and communities.
The 150 Megawatt North 4 Grids Wind Facility has achieved full commercial operation, while the 300 Megawatt Neosho Ridge and 150 Megawatt Kings Point Facilities are anticipated to be placed in service prior to the end of this month. Moving on now to operational excellence. In a mission critical industry like ours, Safety is always an area of focus. And so I'm pleased that we have just passed The impressive milestone of an entire year without a single lost time injury. I'm very proud of our employees and management for continuing to stay focused on safety first even while we had to transition into a very different work environment given COVID-nineteen and the priority of keeping our employees and communities safe from the pandemic.
The importance of reliably providing the essential services of electricity, water and natural gas to our customers has become even more apparent during the COVID-nineteen pandemic. Our diversified asset base and our emergency preparedness highlighted our resilient business model, which has meant that our essential services to customers have not been impacted. And financially, As a proof point of how resilient our business model is, the pandemic had a relatively low impact of $0.02 in adjusted net EPS for 2020. With the onset of the pandemic, We focused on cost contentment strategy without sacrificing safety and reliability. In the first half of twenty twenty, we announced we are targeting $15,000,000 of savings for the full year and I'm pleased that we were able to significantly beat that delivering $24,000,000 in savings for the year.
2020 marked the 1st full year of contribution from New Brunswick Gas and St. Lawrence Gas. The The integration of these two utilities into the Algonquin Liberty family has gone well as growing the business organically in these two facilities is a key initiative. As with all our previously acquired utilities, we We are pleased to share earnings among our utilities with the aim of driving consistent improvement in our key performance metrics that drives value for our customers and investors. And finally, We remain firmly committed to sustainability through the inclusion of environmental, social and governance values in our broader corporate strategy and day to day operations.
I want to provide a few highlights from 2020. In March, the closure of our Ashbury coal generation facility in Missouri will allow us to reduce annual Carbon dioxide emissions by 905,000 metric tons. In the latter part of 2020, We increased our disclosures around sustainability by releasing our first ever climate change assessment report in response to guidelines established by the Financial Stability Board's Task Force on Climate Related Financial Disclosures, TCFD. We also released our 2020 Sustainability Report, which not only outlined our progress on our ESC goals, but provided higher level of disclosure details around our 9 priority issues. And in 2021, you'll see us adding additional ESC linked goals to our compensation program metrics.
Overall, I'm
pleased with the progress we've made in 2020 Given COVID-nineteen and all its challenges and I'm confident we will continue to benefit from our strong, resilient and Diversified Business Model in 2021. Before turning to Arthur, I want to comment on storm Uri and the biggest extreme weather event which occurred last month. 1st and foremost, our thoughts are the many people whose lives have been disrupted by the extreme weather events. Since the events began, our teams have worked tirelessly under very challenging conditions to keep our customers and communities safe and to maintain our system reliability and resiliency. I would like to thank our dedicated employees for their teamwork and continual commitment to our customers.
In our renewables business, We currently have a total of approximately 2,550 Megawatts of wind, Solar and Hydro Projects in Operation, including our 51% interest in 3 South Texas Coastal Wind Facilities. In accordance with our strategy, our portfolio of assets is very diversified across 46 facilities, 15 states and provinces and 7 ISOs. We believe this diversified portfolio will continue to be a major advantage in the face of climate change. In Texas, we have a diversified operating portfolio of approximately 965 Megawatts across 5 locations, 2 inland and 3 coastal. This provides the wind resource diversification outlined during our 2020 Investor Day.
The Texas portfolio also benefits from offtake diversification. Maverick Creek, 4 92 Megawatts and our 51% interest in the East Raymont 200 Megawatts facility, both operate under long term unit contingent Power Purchase Agreements. On the remaining Texas assets in operation, we are hedged using long term fixed financial swaps with a total combined hedge position of approximately 120 megawatts. We saw no material impact at the coastal winter assets, while store pooling did have a major impact on our and answer. In total, our estimated exposure remains what we announced earlier in our press release of $45,000,000 to $55,000,000 before potential mitigating impacts.
We have asserted force majeure at our center facility given the large scale market failures and extreme weather events. Storm Uri was very unusual in the level of impact across a very large geography And temperatures fell to 6 degrees Fahrenheit near our Cenex facility, lower by 9 degrees compared to the lowest ever recorded temperature in the last 100 years. Since there may be a dispute and possibly litigation, we do not intend to speculate today on our legal position. There are also ongoing discussions regarding potential Texas government or regulatory intervention, including questions on the $9,000 a megawatt hour pricing. And this could be another mitigation to our estimated $45,000,000 to $55,000,000 exposure.
In our regulated business, which comprises approximately 70% of our portfolio. We are diversified by modality and operate in 16 jurisdictions. Despite the extreme weather conditions, the regulated service group's electric and gas operations performed well during a sustained period of increased consumption. We did encounter some weather issues in our central region and in accordance with instructions from the SPP, We did some limited load shedding. The utilities did incur incremental commodity costs during a period of record pricing and elevated consumption.
The incremental commodity costs incurred by the company are expected to be substantially recovered from customers over an extended period. We do not expect any material financial impact to our regulated business. With that, I'll pass it over to Arthur, who will speak to our Q4 and full year 2020 financial results as well as the financial impact of the Midwest XG weather event. Arthur? Thank you, Arun,
and good morning, everyone. As Arun mentioned earlier, in 2020, Algonquin has again shown its ability to accretively grow earnings through its stable regulated services and long term contracted renewable power businesses. Our 4th quarter 2020 consolidated adjusted EBITDA was $253,100,000 which is up approximately 10% from the $230,400,000 we reported in the previous year. The regulated services group delivered $161,800,000 in operating profit in the current quarter, which compares to $159,400,000 in the same quarter last year. The increase primarily reflects the implementation of new rates and the contribution from Assal and Belco, which both closed in the quarter.
This was partially offset by decreased customer consumption primarily on our central utilities due to warmer than usual weather. The Renewable Energy Group reported 4th quarter divisional operating profit of 102,900,000 which compares to $85,900,000 in the same quarter last year. The increase represents generally higher production across our renewables fleet during the quarter. Our Q4 adjusted net earnings per share came in at $0.21 which compares to $0.20 reported last year. Our results were positively impacted by cost savings implemented during the quarter, a solid performance from our generation facilities and the contribution of the Sal and the Delta acquisitions.
They were partially offset by the unfavorable weather in the central region as mentioned earlier. For the full year, adjusted net EPS came in at $0.64 and compares to $0.63 recorded in the prior year. 2020 results included a full year contribution from New Brunswick Gas and the St. Lawrence Gas Systems, which were recorded late last year as well as the implementation of new rates at our Calpico and Granite State Electric Distribution Systems. The results were negatively impacted by decreased consumption resulting from the COVID-nineteen pandemic as well as significantly unfavorable weather experienced by the Central region in early 2020.
The delay in the closing of Delco also weighed negatively on our results as compared to our expectations for the year. Despite these challenges, the year over year growth in adjusted net EPS demonstrates the stability and resilience of our business model. Now I'd like to provide a few more financial updates from the quarter. First, on the COVID-nineteen pandemic and its financial impacts. We have seen the impacts of the pandemic and consumption patterns continue to ease as the economy reopens.
The The impact to the regulated services group's divisional operating profit was less than $1,000,000 in Q4 with full year COVID-nineteen impact coming in at $14,700,000 or $0.02 in adjusted net EPS. As reported previously, in the Q2, we began implementing cost containment strategies in response to the demand decreases caused by the pandemic. I'm pleased to report that in the Q4, we were able to achieve expense reductions of approximately $6,000,000 which brings the full year cost savings to 24,000,000 I'm also pleased to report that all of the reductions were made without compromising on safety, security and reliability The services we provide to our customers. About onethree of these reductions occurred naturally to reduce travel and other similar expenses. A third was related to timing and a final third is related to ongoing savings we're able to drive in our business and has been factored into our 2021 earnings expectations.
Before turning things over back to Arun, I'd like to provide a brief update on our 2021 guidance. In 2021, our results are expected to benefit from the addition of approximately 1400 megawatts of new renewable generation capacity completed late last year or early in the first half of this year. In addition, we expect to benefit from the 1st full year of operations of Delco, Accel and the Texas Coastal Wind Portfolio. Factoring in these benefits, in total, we expect our 2021 adjusted net earnings per share to be in the range of $0.71 to $0.76 which is consistent with what we communicated at our Investor Day last December. As Rubin mentioned earlier, last month, Our operations were impacted by extreme winter storm conditions experienced in Texas and parts of the Central U.
S. The most significantly impacted facility was the Senesman facility, which has a financial hedge in place that imposes an obligation to deliver energy. Because of the unusual market disruption related to the extreme weather events, that facility was required to purchase Power for an extended period of time on exceptionally inflated pricing to cover the production shortfalls under its hedge. This is expected to result in a $0.06 negative impact to 2021 basic net earnings per share, which is calculated before any potential recoveries. We view this market disruption on the Senate facilities as unusual and not representative of the ongoing operating performance of this company.
And those have excluded its impacts from the 2021 adjusted net earnings per share expectations discussed earlier. With that, I'll now hand it back over to Arun to outline our growth plans.
Thank you, Arthur. Before we close out our prepared comments this morning, I want to give an update on our growth initiatives and Capital Plan. At our December Investor Day, we updated our 5 year capital investment program, which projects $9,400,000,000 from 'twenty one through the end of 2025 to be spent across our 2 business groups with the emphasis on regulated services. We have identified projects that make up the entire $9,400,000,000 with most of them under construction or in advanced development. This core $9,400,000,000 does not include Any further M and A beyond previously announced transactions or any success from our 3.4 gigawatt pipeline of Greenfield Opportunities.
Over the last year, we have bolstered our internal resources and software tooling to focus even more on greenfield development opportunities that are originated by us. For many of these opportunities, We already have site control and are in the interconnection queue and we will work to bring this into in 202023 beyond. Before we open the lines for the question and answer period, We remain very excited about Algonquin's businesses and prospects. With society and economies working hard To minimize carbon emissions and many countries coalescing around a net zero carbon by 2,050 goal, Algonquin's regulated and renewables businesses are well positioned to contribute to and benefit from this decarbonization transition. Our 3 strategic pillars of operational excellence, growth and sustainability will be a key foundation As we continue to build the business and bring long term value to our shareholders, we remain well positioned to continue to execute on our growth strategies while pursuing our sustainability goals, guided by maximizing operational excellence on behalf of our stakeholders, including investors, employees and customers.
With that, I will turn the call over to the operator for any questions from those on the line.
We'll pause for just a moment to compile the Q and A roster. Your first question comes from the line of Rupert Merer from National Bank. Your line is open.
Good morning, everyone. Good morning, Rupert. So So
if I could start with the Texas weather event. You discussed the incremental commodity costs of the regulated utility business in the Midwest. What's the scale of that incremental cost? And can you talk us through how this will manifest itself in the financial results? Do You booked higher costs in revenues here.
Are we going to see an accrual on receivables? Can you just tell us how we should be looking at that, please?
Sure. Sure. So the total cost is expected to be in the neighborhood of around just over $200,000,000 Primarily all of those costs are expected to be passed through to our customers, although the timing over the pass through is obviously Object to discussions with our regulators. We do expect to set up regulatory assets with respect to those commodity costs.
Okay. All right. Very good. Thank you. And then looking at the Texas event and as well as all of The growth you have on tap right now, can you give us some thoughts on the balance sheet strength today, your liquidity position and capital needs for the remainder of the year to fund your construction.
Sure, Rupert. So we have a very strong liquidity position. As We've got regular about $1,500,000,000 of committed credit facilities, and we've also, Call it beefed up our liquidity position with another $1,600,000,000 of term facilities. So right now we're sitting at about $2,800,000,000 Available liquidity to us, which certainly is sufficient to fund our ongoing capital plans. But honestly, we plan to also be in the capital markets this year raising some funding.
Very good.
I'll leave it there. Thank you.
Thank you, Rupert.
Your next question comes from the line of Sean Steuart from TD Securities. Your line is open.
Thank you. Good morning. A couple of questions. I see that subsequent to year end you sold a 32% stake of SL down pretty shortly after acquiring it. Can you give us some of the rationale, especially as it looks like you sold it at a little bit of a discount to the initial purchase price.
Sure, Sean. Good morning. So look, While we are very, very comfortable with Chile as a country risk and a business risk, This was our first major investment in Chile. And If you look at the structure of SL, it had a strong local partner initially And through the tendering process, they tendered their shares. We always believed that as a first transaction, Strategically, it was very important for us to have a good strong local partner who could help us with all kinds of things locally.
And so, Toyesca was a very natural choice. We have known them for a while And they not only know the local energy and water sector very well, they also own 50% of another water utility in Chile. So they were a very, very natural partner for us. So it was really a Strategy that we had in place long before the final acquisition of Esau took place. And no, it was not at a discount.
Okay. Just like a modest one in our math, but maybe I'll follow-up on that. Second question, Page 22 of the MD and A goes through some of the variances and the quarterly results for the regulated segment. There was an other bucket of $9,900,000 that goes through Several items. I'm wondering, Arthur or Arun, if you can go through some of those elements specifically and help us clarify that figure and the impact on the results.
Sure, I'll try to take a stab at that. And it really is a bunch of items in there. One of the things is we honestly, as you're aware of, Contracted services at some of our utilities, and that revenue tends to be a little bit more choppy. So it's just a matter of, I guess timing compared to last year of that revenue. I'm referring to our Fort Benning facility as an example.
We also have our Stiles utility that we actually ended up recognizing. So there's some interest in last year that's been Sure. This year, that was just a matter of a comparative. We also had just lower AFUDC Capitalization this year compared to last year. So it's a bunch of things all put together.
Okay. Thanks for that Arthur. That's all I have for now. Thank you.
Thank you, Sean.
Your next question comes from the line of Julien Dumoulin Smith from Bank of America. Your line is open. [SPEAKER JULIEN DUMOULIN SMITH:]
Hey, good morning, team. Thanks for the time and the Fraternity. Good morning, Juneteenth. Hey, thank you so much. Listen, a couple of different questions for you guys.
Maybe to start higher level, Can you elaborate a little bit more on ITC, PTC Extension here? Just how are you thinking about the impact to your business? I mean, obviously, you guys have this accelerating opportunity, a number of different counterparties, Chevron for instance. Just can you elaborate a little bit on how you think about the cadence of the opportunity here?
Hey, Julien. It's Jeff. And I just wanted
if you could reiterate the very beginning of that question on the ITC, PTC opportunities just to make sure
Just with the extensions here,
I mean, does this provide a greater sort of 5 year view on what you think you can do? I know this is out of cycle with your typical December update, but I'm just curious with given that we've got these extensions of late.
Yes. I think well, there's a couple of things. We are very I'm keen about the Biden administration and where they're going to take things and what extensions will go above and beyond what we've already seen. And obviously, The ability to improve some of the economics within our $9,400,000,000 pipeline to the extent that they're able to qualify for incremental PTC, ITC. The most significant is the ITC extension allowing projects They come online a little bit later on the solar side.
And so we do see upside in the $9,400,000,000 pipeline On the timing of some of those projects and the ability to bring more projects, which aren't yet secured, but obviously we're always looking the ability to bring more projects in that will take advantage of that full ITC.
Also to add to that, Julien, where it should really help us is on our 3,400 Megawatt Greenfield pipeline With the extension of the ITCs and the PTCs, obviously, the economics on those projects will be even better than what we had projected before. And again, as a reminder, that 3,400 Megawatt Greenfield pipeline is above and beyond our $9,400,000,000 5 year capital plan.
Yes, understood. And then if I can go back in on some of the details here, I just want to understand the New York American Water piece of this, just can you talk about the confidence in getting that closed here? I mean, I know there's lots Talk in the state, difficult to discern exactly what's going to transpire there. And on the Texas front, just force majeure, anything specific we should be watching there and what you're assuming in
that $0.06 I just want to make sure
I understand what the $0.06 assumes on outcomes there. Sorry, just like the little piggy.
Sure. Julien, let me start with the New York American Water, right. So as you know, there is a lot that has been very in the And I'm not going to repeat that, but our conversations and discussions with the Commission has continued. The hearings are set for mid May. As you know, Governor Cuomo has come out of the bill and one of the elements of that bill is to look at potential municipalization.
We Obviously, welcome that opportunity to have a public dialogue around the benefits and not of municipalization versus private for participation. And we are still confident that, that acquisition will close in 2021. Just as context, I should point out, we disclosed St. Lawrence Gas in New York State And that was an approximately 18 month process. So because of our presence in 16 different jurisdictions, we have a pretty good view of how long different regulatory processes take.
And so we believe that we'll be in that Your second question was I I believe around Texas and force majeure. Our announcement was a full $45,000,000 to 55 $5,000,000 impact before any potential mitigation, right? And so we have already issued a force majeure notice. I believe we obviously remain confident in our in the provisions under which we issued that. Obviously, there's a because it's good to get into dispute or litigation situation.
I don't want to comment more on that. The other potential litigation is as you're well aware, Julian, there's a lot of Discussing going on at the Texas legislature, at the PUC there around the merits and not about the $9,000 a megawatt hour pricing and whether there's a possibility of part or all of that being rescinded. We see that as another potential mitigation because by and large from every commentary out there, there was a large scale market So there are some of those are some of those mitigations we're thinking about, but that is not included in the $45,000,000 to $55,000,000 number we gave in our release.
Thank you so much.
We really appreciate it.
Thanks, Julien.
Your next question comes from the line of David Quezada from Raymond James. Your line is open.
Thank you. Good morning, everyone. Just my first question here, just as it relates to your wind Build out in the Midwest, as that customer savings plan, I guess, completes over the next year or
so here. I'm wondering what your thoughts
are on the potential for future renewables in the rate base there in the Midwest. And I guess maybe even how storage could
play a role there as well?
Hey, David. Good morning. So let me answer the first So in terms of the 600 megawatt wind projects, In fact, one of them is already online, North Fork and the 2 others, Neosho and Kings Point, They're scheduled to come online in fact by the end of this month. So they're clearly very, very advanced in terms of being in operations. We do believe that there's more opportunities out there in terms of substituting wind or solar for other forms of thermal generation.
But I'll turn it over for more context.
Yes. So good morning, it's Johnny Dunston. So as part of our Ongoing review of our IRP plans as part
of our
central organization. We're always looking ahead What opportunities we have to make sure that we've got the right generation to meet our load. Within our plans at the moment, we have another 50 megawatts of solar We put into place and then 20 megawatts of more sort of solar and storage on a sort of more of a community type basin. And then we continue to review that analysis each year as we go forward. Clearly, we've still got a number of other aging
And David, as you know, I mean, greening the fleet is A very key lever that we have where we believe we have unique expertise, especially with our experience around tax equity. As you know, in Calcutta as well, we've added a number of solar generation into that rate base. We are excited about potential opportunities in Bermuda as well because that certainly is all Thermal Generation. So this is something that we are continuously evaluating and you obviously continue to hear more from us on our Greening the Fleet initiative.
That's great color. Thank you very much. Maybe just one more from me. I guess In Europe, you've started to, looks like under some opportunities in Spain and then I guess a few renewable opportunities in Colombia as well. Just curious how you see the outlook and the development of projects progressing through Aegis.
Just any comments that you could provide there on the momentum you're seeing in those markets?
Sure. So I do want to give context first, Right. So we are, by and large, a North American Energy and Water Company, right? And Some years ago, when we acquired our business in Atlantica, we also felt the need for a development entity that will go after non regulated international business. So the scope of Aegis is just that, non regulated and international.
And the 2 markets that we have Been targeting our Spain and Colombia because we believe that from a country risk, business risk, Potential opportunities and our own position in those markets, we believe that we have advantages in those markets. As you saw, we have in fact dropped down a couple of those assets in Colombia already into Atlantica. We are Progressing well on a number of those solar opportunities in Spain as well. And we'll Update you as we make more progress. The other thing I do want to remind you is that none of those projects are Part of our $9,400,000,000 capital plan, so they would be above and beyond.
Perfect. I appreciate that. Thank you. I'll get back in the queue.
Thank you, David.
Your next question comes from the line of Rob Hope from Scotiabank. Your line is open.
Good morning everyone. Two follow-up questions for me. The first is just on the 2021 capital outlook. The renewable energy at 1.4 to 1.75 It's pretty robust there and over half of or around half of the 5 year total spend.
Is that just Kind
of timing of all the investments or are you baking in some of your, we'll call it, Lower probability or earlier life stage investments there? Or is that really just kind of cleaning up the rest of Maverick, Sugar Creek and Blue Hills?
Hey, Rob. Good morning. So let me try and answer your question, right? So when we were at Investor Day And we showed you that $9,400,000,000 capital plan. We also showed that Really a large portion of that is what we do foresee that already locked and loaded because as you know, In 2020, that was our largest construction year in our history.
We had around 1600 megawatts of wind and solar project That was coming into operation. So basically, when you look at it that way, right, I mean Sugar Creek, for example, That has now recently come online. Our acquisition of our Texas postal wind facility, which is a fairly which is in fact the largest Acquisition on our renewable side, that happened earlier this year. North Fork Ridge came online. And we have some large projects that are also coming online fairly shortly, including on the regulated side, you've got Kings Point and Neosho.
And then on the renewable side, you've got Maverick and Alta Vista also coming in line. So it's just that a large portion of that 1600 megawatt construction is really coming in line in the first quarter and in this Q2. And so that's what accounts for a lot of a portion of that capital investment plan happening early in 2021.
All right. That's great color. Appreciate that. And then just as a
follow-up, at the Investor Day, you did say that 2021, you could be looking at mandatory equity instruments to fund the capital plan. Is that still the case? And does the Texas will weigh on your credit metrics a little bit here, but should we assume that The equity in the plan that you outlined in December is pretty front end loaded here.
It's Arthur. Yes. I mean, I think you can assume what we laid out at Investor Day holds with respect to our funding plans. And to Your question about mandatory, yes, it's a product that we still are looking at. And I mean, as we think about where probably the Redundance of refinancing would be probably through mandatories, but again, we're still evaluating.
Excellent. Thank you.
Thank you, Rob.
Your next question comes from the line of Mark Jarvi from CIBC Capital Markets. Your line is open.
Thanks. Good morning, everyone. Good morning, everyone. Yes.
Yes. I'll follow-up on the last question, Arthur, for you. And just in terms of some of that pressure from Higher commodity costs and the Texas losses potentially. Have you guys spoken to the Wingman chiefs in terms of how they would look through this or deal with this in terms
of any case that FFO to debt?
And Does that push you to maybe reengage on the ATM earlier now?
Yes. Good morning, Mark. Yes. No, we obviously have spoken to the rating agencies, and it's still early days. As you know, we're not the only company that's obviously Going through this, I think the rating agencies are still evaluating.
Obviously, this is transitionary, but it does weigh down on The credit metrics from the top line. So I mean, we view our capital plan more and more on a long term basis anyway. So I wouldn't look at this As necessarily impacting our capital budget significantly. Okay.
And then in the 4th quarter, the O and M costs on the utilities had a real material step up year over year and also from the prior quarter. I appreciate that SL and Bellco have come into the fold now. Can you maybe break it down in terms of how much of the higher O and M comes from the new assets that have been added in this quarter and then other factors that might have played into higher OpEx for the utility segment?
Yes. I don't have the exact breakdown for you, but I would say Majority of it is due to the new acquisitions. I mean, I can just give maybe anecdotally when you think about seasonality, A utility like Telco will earn about 70% of its earnings will come in the Late spring to, call it, early fall months, right? So it is really seasonally shaped here. And from that perspective, you may see a bit of an impact
Sorry, so you're saying that maybe top line revenues for Belco are a little lower, but the fixed operating costs are Fairly still flat across the quarters.
That's right.
Yes. Okay. I'll leave it there. Thank you.
Thank you, Martin.
Your next question comes from the line of Nelson Ng from RBC. Your line is open.
Great, thanks. Good morning everyone. The first question relates to all the development projects you have on the go. So big picture, How much do you spend or expense on development costs? I know some of your Canadian peers spend anywhere from like 20 to $100,000,000 But I'm just wondering where you guys kind of fall within the range?
And then secondly, how does that Costs get embedded, is it within your is it at the corporate level or is it in the renewable energy level or I know some of it's in Aegis. But can you just give a bit more color on that?
Sure. Maybe I'll it's Jeff Nelson and I'll take the first question and Arthur can take the second question. But generally speaking, at Investor Day, we did indicate that we would be ramping up our spend on new renewables and unveiled the 3,400 Megawatt Early Stage Greenfield Pipeline. I believe at that time we indicated that there would be about a $0.02 drag on EPS as a result of those activities. And so that accounts for the
Okay. So $0.02 per year in general That's
what we should expect. That's the incremental cost with respect to all the Greenfield developments that we're looking at. And with respect to your question around how development costs get booked through, I mean, obviously, we would Once the project reach a certain feasibility, it starts becoming capitalized on our books, but the early stage projects Our understanding through Aegis, through that development platform. And again, once they reach a specific threshold, those costs are That will be the first talk to Algonquin and hopefully folks.
So AAGES does the U. S. Developments as well as international? I guess it's all done within Aegis?
It's all done within 1 combined development shop. That's the most kind of me. We call it Aegis, maybe Aegis is not the right word for it, but it's really our one combined development shop Those costs just get reimbursed through our results once they actually do
Okay, got it. And then my second question relates to weather. So Q4 weather was warmer than usual and that was a negative impact. Q1, I guess if you exclude The extreme weather was probably colder than usual. So would that help your utility earnings in Q1?
I guess aside from the fact that you had to pay a lot for commodities, but can you just give some color as to Like Q4 was warmer and those negative. So Q1 was colder, but obviously commodity prices are also a lot higher. So what would be the net impact excluding the obviously excluding the Senate Wind facility.
Yes. Good morning, Nelson. This is Johnny. I think it's fair to say that so far, 2021 has been a bit of a kind of year so far On the weather front, and actually, if you look at the start of the year, January, it was actually a much warmer Winter than we were expecting. I think it's better to say that February has been a bit colder.
We're interested to see where March plays out. So in some ways, I would say probably all things considered, it's almost a wash at the moment. And so not a huge, I think, movement either up
Thanks Nelson.
Your next question comes from the line of Ben Pham from BMO. Your line is open.
Hi, thanks. Good morning. I wanted to follow-up on some of the questions on the impact on your credit ratings from the Midwest And I understand you're normalizing for earnings per share like you shared, but clearly there's going to be some sort of a cash flow impact. So I'm wondering really with your conversations with the credit rating agencies that $50,000,000 do you get the sense that They're going to capitalize that in your balance sheet or are they going to flow through your FFO or is it just going to complete ignore it and normalize it out of their credit metric Technology.
Hey, Ben, it's Arthur. It's early days. Like I said, we're probably Only one of the few players that I got that are working through this. But I mean, I just leave it at that to say, I mean, we target tough cushion in our metrics for especially things like this. No, we're not concerned about being able to absorb it.
Okay. So it just sounds like SMT hasn't
They have not decided. We had early discussions with them. I mean, they went back and just say, well, how is this going to impact Credit metrics, full transparency in terms of obviously, this will have a full impact, but at full impact is absolutely Transitionary. So I guess I'll leave it at that and I'm sure we'll be watching it closely over the next few weeks here. I'm sure they'll take a position.
Okay. I mean, they can be more prospective looking than anything. Maybe I can subject terms to your 2020 guidance and I just want to make sure I unpack or maybe you guys can unpack And that's the drivers. On the headwinds, you mentioned the COVID-nineteen impact $0.02 There's full average resource conditions and then some of the acquisitions were delayed. But then on the other side, you've really got a surface cost savings and the tax benefit, which I think you said is about $0.05 or so.
So it sounds like it's A wash on both sides. So when you look at your mix versus beginning of the year $0.05 I mean what else
I think you've got to I just don't think it was a full on watch. I mean, the big impact It was COVID, it was weather, but also obviously the delay in the acquisition. As I mentioned earlier, There's a pretty significant seasonality that transpires with our Bellco utility. We've closed it, call it, probably the worst time you can close it during the year, but that's certainly weighing on our results. Okay.
All right. Thank you very much. Thanks, Matt.
Your next question comes from the line of Richard Sunderland from JP JPMorgan. Your line is open.
Hi. Thanks for taking my questions here. Just wanted to circle back to the incremental commodity As you outlined at the start of the Q and A, the $200,000,000 are you able to break that down by jurisdiction and utility?
Yes. So pretty much the majority of that's through our Empire Utility in Central, most of our other utilities are on the coast and really didn't get hit so far. It's our biggest utility by some way. So it's a mixture of increased natural gas costs for running our gas generation fleet And then some incremental costs on the electricity side to serve our load.
Okay. Got it. And then thinking around recovery at a higher level, could you run through maybe some offsets to the cost here? And Are you simply thinking about amortization period or are there other considerations in terms of The recovery dynamics, I'm thinking in 2 parts kind of the Asbury plant recovery could So, I know you've thrown out some kind of different levers there, but just curious how you see the path forward to recovering.
Yes. So certainly, in terms of these gas and electricity prices, we have a established process through our fuel and purchase power adjustment tools or FAC. We file that twice a year On a 6 monthly basis. And in the normal course of business, as you file that, you then have a 6 month recovery period That follows that. Because of the material nature of these incremental costs we filed With the commission, an AAO, an accounting order that will allow us to put those costs on The balance sheet and then have a conversation with the commission around actually what's the right period of time for us to recover those costs In a way that makes sense for us.
The business, but importantly, makes sense for our customers. You could imagine this would have a material rate shop, Really not the best time for that. And so we still have those conversations with the commission. But in terms of sort of The process of prudent recovery of those is well established and approved and documented
Got it. And just one last one, if I could. Just any dates or timing to watch in terms of those conversations with the commission?
So it should be between now April. So our fuel adjustment filing is due on the 1st April. So we'll be having those
Got it. Thank you for the color.
Thanks, Andrew.
Your final question today comes from the line of Najeeb Bedouin from IA Capital Markets. Your line is open.
Hi, good morning. Just wanted to go back To M and A for a second. I guess in a worst case scenario where the New York Water acquisition doesn't go through, just wondering if you can About your pipeline of acquisitions today and how quickly you can take that capital and reinvest it somewhere else.
Sure. So, Najee, as you know, historically, we've been a fairly Transaction oriented company, so we have done what something in the range of 20 transactions over the last 20 years or so. We because of that experience and because of our track record of being able to close our transactions, We're always in the mix in terms of discussions around these transactions, Whether it be in the apartment realm or not, so That's something that we cannot actually pinpoint as to exactly when those And that's why as a matter of course, we only include on our 5 year capital plan. The M and A transaction that we've already announced that may not So that's why New York American Water is the only one on a 5 year trajectory. To your point, In a worst case, New York American Water doesn't close, we will be able to do another transaction.
I mean, over we just started our 5 year plan and obviously, we've got 4 years, 10 months more to go. So I would be highly confident in our ability to do more M and A transactions.
I appreciate that timing is difficult, but it sounds like you're confident that you can find other opportunities fairly quickly. I guess another question is, are there any updates to the Empire rate case, either the appeal process or just any updates we should be aware of on the new rate case that you expect to file?
I don't think any material update The fuel process is ongoing. It could take up to a year for that to come through, and we're preparing to
Okay. And just one last question On the Chevron framework agreement, just any updates or I guess next steps that you're looking to achieve that's here with Sharvon.
Sure. So, Navi, as a reminder, I mean, we announced that there was some time in the middle of 2020. And so what we have done since that time is we have in fact done some joint procurement work to make sure we have a safe harbor equipment with us. We have also filed 4 interconnection queue applications. So those are well underway.
And we are working through in terms of contractual structures and starting detailed engineering and design on those projects. So we are making good progress. We're happy with the pace of progress we're making. And so the question is, when will we actually be able to announce something that starts construction, we're hopeful sometime this year.
Okay. That's great detail. Thank you.
Thank you, Nigel.
That concludes our Q and A today. I now turn back to management for closing remarks.
Thank you very much, and thank you for taking the time on our call today. With that, please stay on the line for our disclaimer.
Our discussion during this call contains certain forward looking information, including but not limited to our expectations regarding future earnings and capital expenditures, future commercial dates and the impacts and outcomes of the recent severe winter storms in Texas and the Central U. S. This forward looking information is based on certain assumptions, including those described in our most recent MD and A filed on SEDAR and EDGAR and available on our website and is subject to risks and uncertainties that could cause actual results to differ materially from historical results or results anticipated by the forward looking information. Forward looking information provided during this call speaks only as of the date of this call and is based on the plans, beliefs, estimates, projections, expectations, opinions and assumptions of management as of today's date. There can be no assurance that forward looking information will prove to be accurate and you should not place undue reliance on forward looking information.
We disclaim any obligation to update any forward looking information or to explain any material difference between subsequent actual events and such forward looking information, except as required by applicable law. In addition, during the course of this call, we may have referred to certain non GAAP financial measures, including but not limited to adjusted net earnings, adjusted net earnings per share or adjusted net EPS, adjusted EBITDA, adjusted funds from operations and divisional operating profit. There is no standardized measure of such non GAAP financial metrics and consequently AQM's method of calculating these measures may differ from the message used by other companies and therefore they may not be comparable to similar measures presented by other companies. For more information about both forward looking information and non GAAP financial measures, including a reconciliation of non GAAP measures To the corresponding GAAP measures, please refer to our most recent MD and A filed on SEDAR in Canada or EDGAR in the United States and available on our Web That concludes the conference call.
Thank you everybody for joining today. That concludes your conference call. You may now disconnect.