Welcome to the Eversource Energy Second Quarter 2018 Earnings Conference Call. My name is Paulette, and I will be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Please note that this conference is being recorded.
I will now turn the call over to Jeffrey Kotkin, Vice President for Investor Relations. You may begin.
Thank you, Paulette. Good morning and thank you for joining us. I'm Jeff Kotkin, Eversource Energy's Vice President for Investor Relations. During this call, we'll be referencing slides that we posted last night on our website. And as you can see on Slide 1, some of the statements made during this investor call may be forward looking as defined within the meaning of the Safe Harbor provisions of the U.
S. Private Securities Litigation Reform Act of 1995. These forward looking statements are based on management's current expectations and are subject to risks and uncertainty, which may cause the actual results to differ materially from forecasts and projections. Some of these factors are set forth in the news release issued yesterday. Additional information about the various that may cause actual results to differ can be found in our annual report on Form 10 ks for the year ended December 31, 2017, and on Form 10 Q for the 3 months ended March 31, 2018.
Additionally, our explanation of how and why we use certain non GAAP measures is contained within our news release and the slides we posted last night and in our most recent 10 ks. Speaking today will Phil Lembo, our Executive Vice President and CFO. Joining us by phone for Q and A is Lee Olivier, our Executive Vice President for Enterprise Energy Strategy and Business Development. Also joining us today are Jay Booth, our VP and Controller and John Moreira, our VP of Financial Planning and Analysis. Now I will turn to Slide 2 and turn over the call to Phil.
Thank you, Jeff. And this morning, I'll summarize our Q2 year to date results, recap recent regulatory proceedings, discuss our updated capital plan and affirm our long term growth rate. So overall, we're very pleased with results through the 1st 6 months of the year. Our media results are consistent with our expectations and we continue to target full year EPS of between $3.20 $3.30 a share. We made good progress on a number of our initiatives in our regulated businesses that will enhance service to customers and support our 5 to 7% long term EPS growth rate.
I'll provide more specifics on those initiatives shortly, but I'll start with Slide 2 and a review of our financial results. We earned $0.76 per share in the Q2 of 2018 compared to $0.72 in the Q2 last year. Our electric distribution business earned $0.32 per share in the Q2 of 2018 compared with earnings of $0.38 per share in the same quarter of 2017. And just a reminder that historically we reflected both distribution and our Public Service of New Hampshire generation in this electric distribution segment. So year to year comparisons will be impacted by the divestiture of these assets in January.
So the quarter the decline was expected and primarily due to lower electric distribution margins. I'll talk about that in a minute as well as the lower generation earnings in New Hampshire generating assets. Also had some higher property tax expenses in the quarter. Together, those factors more than offset the benefits of distribution rate adjustments in Connecticut and Massachusetts. The lower distribution margins in Eastern Massachusetts primarily reflect the timing of revenues through NSTAR Electric's new decoupling mechanism that was approved in the recent rate proceeding.
This mechanism is more reflective of a seasonal usage pattern than NSTAR Electric's former loss based revenue recovery mechanism, which was reflected ratably over the years. So the new mechanism is more seasonal, the old mechanism was ratable over the year. As a result, compared with past years, we'll see higher revenues in the peak usage quarters. In other words, really the 3rd quarter and lower revenues in the other quarters. So simply put, the electric distribution segment is impacted by the generating asset sale and timing of the new decoupling mechanism, both as expected.
Our electric transmission business earned $0.35 per share in the Q2 of 2018 compared to $0.30 per share in 2017. Improved results were due largely to increased level of investment in our transmission facilities. Our natural gas business earned $0.02 per share in the Q2 of 2018 compared to about a penny to $0.02 a share in the same period of 2017. Improved results were due primarily to much colder weather in the month of April resulting in increased heating related sales of Yankee Gas which is not yet decoupled. Our new Aquarium Water Company subsidiary earned $0.02 per share in the Q2 consistent with our expectations.
And finally, the parent and other segment earned $0.05 per share in the Q2 of 2018 compared with $0.03 in the Q2 of 2017 and earnings in both years benefited from investments we've made in certain renewable energy facilities that we've discussed in the past, the impact of which is recorded in the Q2 of each year. Turning to year to date results, we earned 1 point 6 $1 per share in the first half of twenty eighteen compared to $1.54 in the first half of twenty seventeen. Our electric distribution business earned $0.65 per share in the first half of twenty eighteen compared with $0.74 per share in the same period last year. Again, lower results were primarily due to our New Hampshire generation divestiture as well as the timing of decoupling revenues versus the previous loss based revenue methodology. Our electric transmission business earned $0.69 per share in the first half of twenty eighteen compared with earnings of $0.60 in the same period of 2017.
This was also due to a higher level of investment in our transmission facilities. Natural Gas segment are $0.20 per share in the first half of twenty eighteen versus $0.17 in 2017. The primary driver were higher sales resulting from colder weather in the months of January April. Firm natural gas sales were up about 6.5%, 6.6% year to date compared with the same period in 2017. Our water distribution business earned $0.03 per share and our parent and other earned $0.04 per share in the 1st 6 months of the year.
I should note that the most profitable quarter for Aquarion is typically the Q3 since water usage peaks during the summer time period. From results, I'll turn to Slide 3 and some recent regulatory developments. Regulatory decisions for our core business have been constructive and supportive of our utilities capital plans designed to meet the ever increasing expectations of our customers. We've increased the rate of infrastructure investment to modernize our electric grid, enhance electric reliability, accelerated the replacement of old and natural gas and water distribution pipes and increased investments to meet our state's environmental and clean energy goals. On May 1, Connecticut Light and Power's new 3 year rate plan took effect with an initial distribution rate adjustment of about $64,000,000 Two smaller increases will follow in May of 2019 May 1, 2020.
In addition, the base rate adjustments for CL and P regulators approved the capital tracker for investments in our system above a base amount of $270,000,000
per year.
And these investments are aimed at making the grid more resilient such as smart switches, enhanced tree trimming, upgrades to our poles and their integrity and substation security. And these total about $75,000,000 a year. Recovery of these costs associated with these investments will go through the reconciliation mechanism. Currently, a pure responsive process for identifying top priorities for grid modernization is underway and we expect to file a separate grid modernization plan before the end of this year. We have not yet reflected any potential Connecticut grid mod investments in our distribution capital forecast.
I believe though our proposal could be meaningful as we work to enhance grid automation and two way communications with our customers about real time grid conditions as well as consider investment in electric vehicle infrastructure and battery storage. Shortly after we wrapped up our CLMP rate review in Connecticut this spring, we filed our 1st Yankee gas rate case in about 8 years. Hearings in the case are scheduled to begin this month with a draft decision due on November 14 and a final decision on December 5. The new rates would take effect in January of 2019. The rate application includes a proposal for revenue decoupling which we expect PURA to implement.
Santianke Gas is the only one of the Connecticut utilities without a decoupling rate structure. We've also proposed to increase capital expenditures, particularly investments related to replacement of our cast iron and unprotected steel pipe. The acceleration of these important capital projects will provide great service reliability and safety as well as continuing to improve the performance of leak prone infrastructure. Fuel leaks are good for the environment and will help to lower O and M costs ultimately benefiting customers. In our rate application, we highlighted the significant improvement in key performance metrics over the past 4 years with no increase in base distribution rates.
This includes a 45% reduction in Class II leaks since 2014. Additionally, Yankee Gas' actual non fuel O and M in 20 17 was 3% lower than it was 7 years earlier in 2010, another excellent story for customers. Turning from Connecticut to Massachusetts, we continue to move forward with our resiliency investments at NSTAR Electric. This past spring, the DPU approved $133,000,000 of additional grid modernization investments for NSTAR Electric over the next 3 years. This is in addition to the $100,000,000 authorized by the DPU in 2017 for 2 battery storage initiatives and initial electric vehicle infrastructure.
As a result, we'll be investing a total of $233,000,000 in grid mod projects which will be recovered through a capital cost recovery mechanism. In addition, the DPU instructed NSTAR Electric to file a 3 year rate plan for continued grid modernization efforts for the years 2021 through 2023. We expect to file that plan sometime in 2020. Turning to Slide 4, I just want to pause a minute to discuss our capital forecast. Every year at this time, we commence for updating our long term operating and capital plan.
This effort concludes at the end of the year with the subsequent year's operating plan, the earnings guidance that we provide to you in February, as well as the long term capital investment forecast we include in our 10 ks. Since we published our most recent forecast, we've seen continued focus by state energy policymakers to enhance the electric grid, accelerate the replacement of aging infrastructure and construct facilities to meet the growing customer needs. We will provide you with a full update again in February, but at this time we believe that our capital expenditures in the next 3 years and that's the period 2019 through 2021 will increase by a total of $600,000,000 This brings our total core business CapEx to $7,100,000,000 from the previous estimate of $6,500,000,000 This incremental capital will be split between $300,000,000 for electric transmission, dollars 200,000,000 for electric distribution and $100,000,000 for natural gas distribution infrastructure investments all to benefit our customers. The primary driver of this increased level of expenditure will be investments in resiliency and reliability that will allow us to continue to enhance our customers' experience. And as I said, this $600,000,000 of expected increase in CapEx does not include any potential initiatives that may emerge from the grid mod reviews in Connecticut or Massachusetts.
For electric operations, we need to accelerate resiliency investments and this was underscored by the very harsh March May weather we referenced in our news release. To be more specific, on the electric transmission system, we now plan to accelerate the upgrades of aging wooden transmission structures and expect to replace thousands of them with new steel poles over the next several years. We're also focused on upgrades to certain substation equipment. On the electric distribution side, we're seeing additional customer growth in the immediate Boston and Cambridge area which is resulting in the need to upgrade several key substations to accommodate this ever increasing demand. On the natural gas side, most of the additional spending is at NSTAR Gas as we accelerate the replacement of leak prone bare steel, cast iron and unprotected coated steel pipe, which account for about 33% of our mains.
We are now also planning additional upgrades at our for our customers during extended coal spells like the one our region experienced this past winter. At this time, we're not anticipating incremental investments in our Water segment beyond what we disclosed in February. And Slide 5 shows that our current forecast envisions average annual rate base growth for Aquarion of greater than 7% through 2021 compared with about 3% during the periods prior to our acquisition. And this estimate is only from organic growth projects. Turning to Slide 6, so relating to that relates to our CapEx revisions, these investments, the $600,000,000 combined with our normal strong cost management focus will continue to benefit customers through improved reliability and service.
We are confident that we'll be able to achieve our long term earnings growth around the midpoint of the 5% to 7% growth rate and that's without the Northern Pass, Access Northeast or offshore wind projects or without any share repurchases for that matter. To be clear assuming we're successful and we execute our current capital plan continue to manage our O and M costs where we've always excelled we're confident we can grow earnings around the middle of our 5% to 7% projected EPS growth rate even without the large projects. And I should add that our forecast does not assume that any of our states move forward with wide spread advanced metering technology, which provide customers greater information for managing their energy consumption and which could involve substantial capital investment. In our grid modernization decision earlier in the year, Massachusetts said regulators said that the advanced metering technology was not yet timely for implementation, but they did express a commitment to reviewing advanced metering as a means to meet grid modernization objectives and intend to kick off this project to evaluate the next steps for cost effective deployment. Additionally, Connecticut regulators are considering advanced metering component in their grid modernization review I mentioned earlier.
As we've done in the past, we'll provide you with a new year by year capital investment forecast when we report year end results in February. We're confident in our ability to operate, maintain and invest in our core business to provide a reliable, responsive, cost effective and technologically advanced service that our nearly 4,000,000 customers expect and deserve from us. So that concludes my remarks. As Jeff mentioned, Lee is off-site this morning, but joining for the Q and A. And now I'll turn the call back to Jeff.
And I'll turn the call back to Paulette just to remind you how to enter questions.
Thank you. We will now begin the question and answer session.
Thank you, Paulette. Our first question this morning is from Shahriar Pourreza, Guggenheim. Good morning, Shahriar. Hey, guys. Good morning.
Morning.
So just a couple of questions on CapEx here. So obviously, somewhat of a fairly healthy jump in CapEx. Just as far as we think about recognition, should we assume this spend was sort of incremental to plan or this or more sort of a pull forward of spend?
No, this is incremental to plan chart. As I said, we identified a lot of this just as a result of the harsh winter and the storms that occurred in the region over the 1st part of the year that really highlighted the need for incremental investment in our infrastructure.
Got it. And then obviously, you've displayed a very strong level of confidence in sort of your growth trajectory without these binary risky projects, right? Is there any reason why we shouldn't assume sort of that same level
confidence.
Okay, got it. And then just lastly on sort of the grid mod, you guys sort of you're in the midpoint of your range as we think about your base spend. Is sort of as you think about grid mod, assuming a fair outcome or sort of a base outcome, is that enough to get you sort of to a top end of your range? Or will that sort of clearly still support the mid point and so?
Yes. Well, it's difficult to speculate because those proceedings are just in Connecticut sort of just beginning, there's a smaller docket in or another docket in New Hampshire. They're all sort of at the beginning phase and beyond our current grid mod in Massachusetts. As I said, we're filing another 3 year plan, but that's not going to be for another year. So it really it would be difficult to speculate how much or what kinds of initiatives we would be expected to focus on.
So I need a little bit more clarity before being able to put you in a point in the range.
Got it. Got it. And then just on buybacks, just obviously given the higher capital outlook today and sort of incremental upside we're going to likely see around grid mod, are buybacks sort of off the table at this
point? Well, as I said, the growth rate, the confidence we have in the mid range of that growth does not assume any share repurchases.
Got it. Thanks guys. Congrats and good change in messaging for sure. Thanks.
Thanks, Next question is from Angie Storozynski from Macquarie. Good morning, Angie.
Good morning, guys. Thank you. So okay, so two questions. So the updated growth plan that could look strong. And so in the context of that, could you comment on how should we think about your continued interest in water M and A?
And also separately, what happens with those bulky projects like Northern Pass, like offshore wind? Should we assume that you will continue to work on these or are these basically now completely canceled? Thank you.
Yes. On the second point, there's certainly activities that are going on, on the projects in terms of either citing or analysis to position us for success in the future. But as I said, there's nothing in the existing forecast period for significant investments or projects in that time period. In terms of water, again, we are interested in pursuing the Connecticut water transaction. We feel that we have a superior and compelling proposal that benefits customers, communities, shareholders, employees.
It's really highly complementary and it's locally situated. It's in a territory of familiarity with us in terms of the region. We feel that the transaction will be accretive in the year, in the 1st year of any kind of transaction. So that's the transaction that we are interested in at this time.
Okay. So the I mean, that transaction still has to be EPS accretive in the first full year after the closing, right? So this is basically the that's the flexibility as far as any potential higher offers for Connecticut Water that it has to be accretive?
That is correct. We believe our proposal is a full and fair proposal and it would have to be accretive in the 1st year.
And lastly on Aquarion, So the 7% rate base growth is actually already pretty healthy. But when, if at all, can we expect any updates to your growth plan for that business?
I would expect that we would that would be pulled into our normal operating and capital plan update. And if there is any change or an update, we'll provide you that information in February when we give our full update.
Great. Thank you.
Thanks, Angie. Next question is from Mike Weinstein from Credit Suisse. Mike, good
morning. Hi. It's actually Heng for Mike.
Hi. How are you?
I'm good. Thanks for taking the question. Just wanted to see if there's any updates on the FERC ROE complaint at this point given the recent commissioner departure?
Unfortunately, there is no update at this time. Really, we're in the same situation that we were at the end of the Q1.
Okay. And so can you remind us on the in Connecticut work, now you mentioned a couple of filings, it was the second half of this year and these are all recovered through the riders mechanism.
Yes. A few things that I mentioned that's going on in the regulatory arena in Connecticut as we filed for new rates at our Yankee Gas subsidiary first time in 7 years. So that process is going on. I also discussed in Connecticut that there is a grid modernization. So this has been initiated by the Connecticut regulator to look at what types of activities in terms of resiliency and other clean energy objectives could be implemented in the state and that process will be ongoing through this year and possibly ending this year or early next.
Right. Thank you very much.
All right. Thanks for the question. Next question is from Praful Mehta from Citi. Praful, good morning.
Good morning. Hi, guys.
Hi.
Hi. So thanks for the clarity on the CapEx. It was really helpful to see the organic kind of CapEx plan. And really just a question on that, which is, is this a real change of heart in terms of how you pursue growth or look at growth, given the difficulty you've had with the larger projects, is that the what we should expect now as the new normal? The majority of your growth would be driven off of these kind of more stable internal kind of driven projects and then you have the potential for bigger projects, but that's outside your 5% to 7%.
Is that how we should think about it longer term as well?
Yes. I think our focus has always been on providing outstanding service to our customers and running, operating, growing our core business. And the strategic projects sort of related relate to energy policies that exist from time to time in the various states. But our core growth, our focus has been and will be on our core business running that successfully and providing great service.
Got you. Fair enough. That's helpful. And I guess in the context of those kind of strategic initiatives on the offshore wind side, As of now, you've not had the RFPs kind of going your way. Where do you see the gap from your perspective in terms of the offshore wind RFPs?
And what do you think it takes? And do you actually see this as a big opportunity, as an upside opportunity for your growth story longer term or how do you kind of see that offshore wind playing out?
Lee, do you want to answer that?
Yes. In terms of offshore wind, we see the potential over the next 7, 8 years for probably somewhere between 5 1000 to 7000 megawatts of additional offshore wind between New England and New York. We see the long term offshore wind becoming a major component of the bulk power inside of New England. So you've got in Massachusetts, you have additional 800 megawatts of authorization that will likely come into an RFP early next year. We will participate in that.
You've got a bill in the messages of legislature that would authorize another 1600 megawatts of offshore wind. And so we see the potential for offshore wind to be large. Yesterday, there was a kind of a 0 carbon RFP that was issued. In Connecticut, the RFP has the authorization for 12 terawatts of clean energy. So it could be Class 1 energy, but also could be existing nuclear and hydro.
So we see that as a potential opportunity for offshore with a bid into as well as in New York, they have authorized essentially 2,400 megawatts of offshore wind. That's kind of a specific RFP to offshore wind and probably the first 800 megawatts will come up in late this year or early 2019. So we do see offshore wind as a great potential investment. Clearly, we were not successful inside of the Massachusetts RFP. I believe we put in a very compelling bid with the world's premier builder of offshore wind.
We have told you very consistently, we would not dilute the earnings of the company and wind for the sake of winning. We put in a compelling bid with returns that were consistent with the current returns we have in transmission and that was risk adjusted. Now clearly others took a different view of that, perhaps took more risk and lower returns, but that's we're not in this thing to win for the sake of winning. We're in to win for providing shareholder value as well as the certainty around signing on with a company like Orsted and Eversource to get this win built on time and on budget and delivered to customers.
That's super helpful. Thanks so much guys.
All right. Thanks Praful. Next question is from Paul Patterson from Glenrock. Good morning, Paul.
Good morning. Good morning, Paul. Can you hear me?
Yes.
So, and I apologize if I missed this crazy morning, but the Massachusetts legislation that I think passed yesterday.
Yes. The
net metering, I think that was taken out wasn't taken out, excuse me, well, the provision was left in that sort of took out how the DPU treat. Could you go over that a little bit and just how you see it impacting you?
Yes. I think Paul to be honest, I think they finished the session at about 1 o'clock this morning. So some of the information is filtering out today. But I think the overall assessment is that what came out of the legislature is kind of neutral. I think there's nothing in it that is really problematic or from that standpoint there's some increases in RPS provisions.
But some of the other details, I think we'd still have to kind of go through line by line to assess what's in there.
Okay. And then over the just if you could just sort of update the sort of weather normalized numbers for the first half of this year and over what you project them for being for the 2019 through 2021 period?
Well, before I answer that, I will say that most of our subsidiaries now fall decoupled. So weather and other
are you there, Paul?
Yes, I'm here.
Okay. Most of our subsidiaries are now decoupled. And as I mentioned earlier, Yankee Gas when it emerges from the current rate proceeding that is it's and will be decoupled. So really Public Service of New Hampshire would be the only subsidiary that is out there that's not decoupled. So weather impacts are less and less on us.
So for 2019 to answer your last question first, I would expect minimal impact because essentially we'll have fully decoupled rates across our companies. Specifically to answer your question, we had for weather normalized sales on the electric business for the quarter were down about 1.5% and same year to date For gas, weather normalized sales were up just over 10% and 8.3% year to date.
Okay. And then, so when we're talking about the forward outlook, I understand that you guys are decoupled mostly. But I guess I'm just sort of wondering in general when we're looking at this sort of full demand picture and enter rate base growth etcetera. I'm just sort of trying to get a sense as to I mean, I realize that a lot of this has nothing to do with demand growth. It's got to do with grid modernization, etcetera.
But I'm just trying to get a sense as to what you see sort of just underlying fundamentals in terms of electric demand are over the next 3 years. Do you guys have that?
Yes. I think that I'll start by saying we're the number one utility in the U. S, number 1 rated for energy efficiency programs. And really, our energy efficiency efforts have really removed a lot of the energy demand and peak demand from the system. So our programs are very effective helping customers lower their energy costs including lower demand.
In terms of general outlook, we see sort of sales being flat in our region over that over the next few years. The Boston area, you've probably been into the city, see all the cranes. And so we expect pockets. I think the best way to look at it as when I talked about our capital plan, there's pockets of growth that require investment. So it may not be that the overall system growth is there, but certain areas of the city are growing significantly and require investment.
So I think it's more on a pocketed basis, Paul, that we see the big growth. But overall, it's probably flat over the next 2 to 3 years. Okay.
Thanks a lot.
Okay. Thank you, Paul. Next question is from Andy Levi from ExodusPoint. Good morning, Andy.
Hey, good morning. I think I'm all set, but just to make sure that I understand. So you're basically saying that you're firmly in the 6% growth range. Is that correct?
Yes, in the middle of the 5% to 7%, correct.
Right, right. So basically 6%. And just to understand whether it's the pole replacement or AMI or some other CapEx opportunities that's what would get you above the 6%?
Well, there's a lot of factors obviously. One of them is control of costs, right. O and M is a driver of moving in the range one way or the other. Constructive regulatory decisions is another factor that may move you in the range one way or the other. And more CapEx is another factor.
So there's probably a few factors Andy that could move you around in the range a bit. But certainly, if there's incremental CapEx that comes out of the grid modernization dockets that I alluded to that could enhance that number. Correct.
Any follow-up, Andy? I'm sorry,
I muted myself. That's good.
I'm sure a lot of people
Which is not a bad thing. My wife would be happy about that. But thank you very much. Okay.
Thank you, Andy. All right.
Thanks, Andy. Next question is from Joe Ju from Avon Capital. Joe?
Hey, good morning. Congratulations on a good quarter and updated growth plan. Actually my offshore wind question has been answered. Well, thank you, Praful.
Okay. Great. Thank you.
Since I get you here, just a follow-up on Andy's question. Just to clarify, on your long term EPS guidance, the $5,000,000 to $7,000,000 based on 2017 actual or midpoint of 2018
guidance? No, dollars 17,000,000
dollars 17,000,000 actual. Okay, great. Thank you very much.
All right. Thanks, Joe. Next question is from Julien Dumoulin Smith.
So just wanted to follow-up. In terms of the 6% that you guys are talking about, how do you think about the earned ROEs across the subsidiaries maybe from today through that forecast period just or versus the baseline year? I just want to understand how much of that is capital versus ROE improvements and piecing it out. And then secondly, just to go back an earlier question on the grid mod side of the equation, for Connecticut. Can you give us a sense of the magnitude of the capital contemplated in maybe the low and high points?
I know it's early on. I know it's difficult to comment earlier, but maybe just follow-up on that.
Yes. In terms of the ROE as you know we've just come from 2 very constructive rate reviews in Connecticut and in Massachusetts for the electric business. So those I contemplate that we'll be earning at those allowed returns and in Massachusetts at Instar Electric and at CL and P. We are in for rate review at Yankee Gas. We're below we're earning below our allowed return there that's creating the need to go in.
And as I said, it's been 7 years plus since we've been in for new rates there, so probably not a surprise. So I see that we could have some uplift there to get to a new allowed return level. And same in New Hampshire, we haven't been in for rates in New Hampshire. And as you know, we've divested of our generating assets there and we've kind of a little different business model in New Hampshire. So we now are in a position to move into New Hampshire for a rate review and expect to do that later this year.
And again, it's another one of the subsidiaries that's under earning its allowed return. So I think there's some ROE uplift from those 2 subsidiaries. The others are off of recent rate reviews and expect to be earning at or they're allowed rate of return of ROE levels. In terms of grid mod as I said it really is hard to say it could be a few 100,000,000 it could be more than that depending on the extent to which the regulator wants to advance EV infrastructure or storage technologies. So it depends on sort of what the basket of initiatives would look like that would advance what the state is looking for.
But I'd say it would be a few $100,000,000 anyway.
And maybe just to clarify the timing on the grid mod here in Connecticut relative to your usual planning process. I mean, should we be interpreting this mid year update as pretty much a draft version of the 4Q update? So perhaps barring a meaningful update in grid mod Connecticut, it should be largely similar or I don't want to put words in your mouth here either?
No, I don't think you should look at it like that at all. I think that what we've been trying to do over many years is that as new information becomes available to us and we identify just at the beginning stages of and we still have another several months in our operating plan review to go. So I would say that likely you will see other items included in that by the time we get to February.
Got it. And just sorry to just clarify, clean up a little bit on Angie's question earlier on the water side. Just to clarify real quickly, your commitment to a cash and equity deal, does there need to be stock component here ultimately? And B, just to go back to make sure I heard this right, it needs to be accretive in the 1st full year, whatever the composition is of leverage and I suppose share for share exchange?
To answer your second part of your question, absolutely. We have and we continue to have a disciplined approach to looking at transactions. I could highlight the previous deals that we've done in terms of Aquarion or the NSTAR and U deal or previous deals all accretive in the first year and that would be the focus. The shareholder can elect cash or other. I mean it's sort of an election in the offer to the Connecticut Water at this stage.
And you're committed to keeping that election open?
That's the proposal that's on the table, yes.
Okay. All right. Excellent. Well, thank you all very much for the time.
Thank you. Thanks, Julian. We don't have any more questions this morning, so we want to thank you very much for joining us. Good luck with the other calls this morning. If you have any follow-up questions, feel free to send me an email or give me a call.
Take care. Bye bye.
Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.