Good day, and welcome to the 4th Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Faiza Khan. Please go ahead.
Good morning, and welcome to Sempra Energy's Q4 2019 earnings call. A live webcast of this teleconference and slide presentation is available on our website under the Investors section. Here in San Diego are several members of our management team, including Jeff Martin, Chairman and Chief Executive Officer Dennis Arriola, Executive Vice President and Group President George Balisic, President and Chief Legal Officer Trevor Mychajluk, Executive Vice President and Chief Financial Officer and Peter Wall, Vice President, Controller and Chief Accounting Officer. Before starting, I'd like to remind everyone that we'll be discussing forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today.
The factors that could cause our actual results to differ materially are discussed in the company's most recent 10 ks filed with the SEC. It's important to note that all of our earnings per share amounts in our presentation are shown on a diluted basis and that we'll be discussing certain non GAAP financial measures. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. I'd also like to mention that the forward looking statements contained in this presentation speak only as of today, February 27, 2020, and the company does not assume any obligation to update or revise any of these forward looking statements in the future. With that, please turn to Slide 4, and let me hand the call over to Jeff.
Thanks a lot, Faiza, and thank you all for joining us today. In 2018, we laid out a strategic plan known as Vision 2022, which centered on our goal of becoming North America's premier energy infrastructure company. Over the past few years, we've made significant progress towards that goal. Notably, we've sharpened our focus on the most attractive growth markets right here in North America, simplified our business model and strengthened our balance sheet. We've executed on this strategy by divesting non core assets and reinvesting the proceeds into higher growth markets, namely California, Texas, Mexico and the liquefied natural gas export market.
These markets now enable us to focus on the delivery of cleaner and more secure forms of energy to consumers right here in North America as well as abroad. In addition, within the energy value chain, we're focused on transmission and distribution investments that provide attractive risk adjusted returns and offer higher value for our stakeholders. This improved focus and capital discipline is paying dividends and our full year 2019 financial results are a direct reflection of these efforts. Earlier this morning, we reported full year 2019 adjusted earnings of $6.78 per share, the highest in our company's history. I'll also point out that these strong 2019 financial results put us above our full year 2019 adjusted EPS guidance range and highlight our company's continued execution of our mission to become North America's premier energy infrastructure company.
In line with this positive momentum, we're affirming our 2020 adjusted EPS guidance range and issuing our 2021 EPS guidance range. Additionally, our Board of Directors recently approved an 8% increase to our annualized dividend. On average, we've grown our dividend by over 10% annually for the last decade, which is one of the highest dividend growth rates in the utility industry. And to be clear, this represents our continued commitment to returning value to our shareholders. Please turn to the next slide, where I'll provide an update on our strategic business review.
As you'll recall, we continue to review each of our businesses with a view toward continuing to optimize our capital allocation. This includes taking steps to integrate our overarching strategy, not just financially, but also operationally with a focus on people, priorities and culture, all viewed through the lens of keeping our employees and communities safe. Based on our ongoing business review, we believe our sharpened geographic focus, favorable position in energy value chain and high performance culture combined to offer unique visibility into our overall growth profile. Moreover, the continued execution of our strategy offers the opportunity to have a smaller geographic footprint focused right here in North America with a bigger impact. Please turn to the next slide, while I recap some of our notable accomplishments from 2019.
In 2019, our company realized significant operational, financial, regulatory and legislative progress. I won't discuss everything that's referenced on the slide, but I did want to highlight a few key takeaways. Let's start with our California utilities. In 2019, we circled 3 opportunities that we thought could improve our California businesses. 1st, securing critical wildfire legislation 2nd, completing the 2019 GRC and third, advancing our 2020 cost of capital filings.
I'm happy to report that we reached constructive outcomes on each of these three items. At SDG and E specifically, I wanted to highlight that we also announced the FireSafe 3.0 program. This forward looking initiative is a continuation of SDG and E's industry leading wildfire mitigation program that has been built over the last decade. We are very excited about this initiative, which demonstrates our ability to innovate and improve how we deliver safe and reliable energy to our customers. In addition, we continue to work with the state and others to help them mitigate the risk of wildfires all across California.
Turning to our Texas utilities, ENCORE completed its acquisition of InfraREIT and rolled out a new 5 year capital plan of approximately $11,900,000,000 This plan reflects the continued growth that's occurring across Encore service territory. Moving on to our LNG business. In 2019, we made progress on Cameron LNG putting Train 1 into service and starting production at Train 2. We also continue to advance commercial discussions with potential partners and off takers for our LNG development projects, most notably signing an HOA with Aramco Services Company for our proposed Port Arthur LNG project. We look forward to providing you with an updated view on the global LNG market as well as our 4 development projects at our upcoming Investor Day in March.
Lastly, at Sempra Mexico, we announced contractual agreements with Mexico CFE and established a constructive relationship with the new administration. Additionally, we placed the marine pipeline into service, increasing Mexico's capacity to import affordable and reliable U. S. Natural gas, which is displacing oil fired electric generation and fueling their economy. This is yet again another example of how we're helping to enable the energy transition in every market we serve.
We look forward to completing other projects in our investment pipeline to further increase energy accessibility and reliability for the people of Mexico. Next, please turn to Slide 7, and I'll turn the call over to Trevor, who will review our business updates and financial results.
Thanks, Jeff. Let me start off by reviewing some key developments in our businesses so far this year. As Jeff mentioned earlier, last year we received a final decision on our California utilities GRC filings for the period 2019 through 2021. And in mid January, the CPUC approved an extension of the GRC cycle As a transitional step to migrate the utilities to a staggered 4 year GRC period, the decision directs SDG and E and SoCal Gas to request 2 additional years. This results in a one time 5 year GRC cycle covering the years 2019 through 2023.
STG and E and SoCalGas will soon file petitions for modification to adjust their 2019 GRC decision for this extension. Subsequent to 2023, SDG and E and SoCalGas will revert to the new 4 year GRC cycle. We believe the extension of the GRC cycle is a very constructive development. This decision increases the utility's visibility into the future and should benefit all stakeholders as we implement a robust capital program around safety and reliability. Additionally, SDG and E recently received CPUC approval for its Line 1600 pipeline project.
Work on this project has started and will be completed in phases ending in 2024. This safety and reliability related project involves testing and replacing high consequence pipeline infrastructure that was originally constructed in 1949. The Line 1600 project is included in our base capital plan. Both the GRC outcome and this investment further demonstrate the state's ongoing commitment to the safety and reliability of the gas and electric systems. SDG and E also filed its Wild Fire Mitigation Plan in early February.
This filing exemplifies the company's continued commitment to safety and reliability. Over the past decade, SDG and E has established itself as an industry leader in wildfire risk mitigation and plans to continue innovating and utilizing cutting edge technologies to keep our customers and communities safe. Moving to Texas. We recently acquired Hunt's 1% indirect interest in TTi. This brings our total indirect interest in Encore to 80.45%.
We continue to be impressed by the rapid growth in Encore service territory and the overall macro and business environment. We look forward to Encore providing additional updates on their business and the growth they are seeing at our Investor Day in March. Shifting to Sempra LNG. Cameron LNG recently completed refinancing $3,000,000,000 of its over $7,000,000,000 project level debt, resulting in improved near term cash flows and an overall increase in the project's net present value. Additionally, we recently achieved substantial completion for Train 2 and expect the start of commercial operation in the coming days.
I'll highlight that Cameron LNG facility is approximately 99% complete and the progress to date gives us confidence in the project timeline. At our proposed Port Arthur LNG project, we recently signed an interim project participation agreement with Aramco Services Company, which is another great step forward for the project. We continue to engage in commercial discussions with other potential customers and partners and are targeting a final investment decision in the Q3 of 2020. For our proposed ECA LNG Phase 1 project, we have selected Technip FMC as our EPC contractor and expect to sign a lump sum turnkey EPC contract in the coming days. Notably, we continue to expect a final investment decision later this quarter.
Lastly, we continue to advance the sales of our South American businesses and expect to close the divestitures within the next 4 to 8 weeks. Please turn to the next slide and I'll review our financial results. Earlier this morning, we reported Q4 2019 GAAP earnings of $447,000,000 or $1.55 per share. This compares to Q4 2018 GAAP earnings of $864,000,000 or $3.03 per share. On an adjusted basis, Q4 2019 earnings were $447,000,000 or $1.55 per share.
This compares to our Q4 2018 adjusted earnings of $431,000,000 or $1.56 per share. Full year 2019 GAAP earnings were $2,055,000,000 or $7.29 per share. This compares to 2018 GAAP earnings of $924,000,000 or $3.42 per share. On an adjusted basis, full year 2019 earnings were $1,911,000,000 or $6.78 per share. This compares favorably to our full year 2018 adjusted earnings of $1,503,000,000 or $5.57 per share.
Please turn to Slide 9. I'll reiterate that our full year 2019 adjusted earnings are the strongest in the history of our company. Year over year, our adjusted earnings and adjusted earnings per share grew by 27% 22% respectively. The variance in full year 2019 adjusted earnings when compared to last year was affected by the following key items: $287,000,000 of higher earnings at the California utilities from higher CPUC base operating margin authorized in 2019, predominantly driven by the timing of the GRC final decision and its corresponding impact on earnings recognition versus timing of spend. $157,000,000 of higher equity earnings at the Sempra Texas Utility segment due to a full year of earnings from Oncor, Oncor's acquisition of InfraREIT and higher revenues due to rate updates to reflect increases in invested transmission capital, offset by higher operating costs.
Dollars $69,000,000 at SoCalGas and SDG and E respectively, related to the January 2019 CPUC decision allocating certain accumulated deferred income tax balances to shareholders. This benefit was included in our 2019 adjusted guidance. And $36,000,000 of higher equity earnings at Sempra LNG from Cameron LNG Train 1 commencing commercial operations in August of 2019. These items were offset by $92,000,000 of lower earnings at Sempra Renewables related to the assets sold in December of 2018 April of 2019. $19,000,000 of lower equity earnings at Sempra LNG due to the write off of unamortized debt issue costs and associated fees to Cameron LNG's debt refinancing and $10,000,000 at SDG and E from the amortization of its wildfire fund assets.
While we're not adjusting out the earnings impact of the annual wildfire amortization, we anticipate an impact to earnings of approximately $21,000,000 per year on a go forward basis. Please turn to the next slide. As most of you are aware, this March, we will be hosting our 2020 Investor Day at our headquarters here in San Diego. We're excited to provide you with an update on our business, which will include a review of our strategic vision, a discussion of our more focused portfolio, an update on each operating company and greater visibility into our long term financial plan. Please turn to the next slide, where I'll provide a brief preview of our investor day that highlights our robust capital plan and visibility into our future earnings growth.
Given the 2019 GRC at our California utilities, the updated Encore capital plan and recent feedback we've received from many of you, we wanted to preview some of the highlights of our upcoming Investor Day. First, our 5 year capital plan has increased from $25,000,000,000 to approximately $32,000,000,000 the highest in our company's history. This capital plan is predominantly driven by our 3 U. S. Utilities.
2nd, given the robust capital plan, we project an approximately 9% rate based CAGR, resulting in a projected combined rate base of over $50,000,000,000 by 2024. And lastly, we plan to fund this robust capital program with a portion of the proceeds from the sale of our South American businesses, cash flows from operations and other sources. We will evaluate potential sources of financing based on the timing of our investments as well as a view towards maintaining a strong balance sheet. This really is an exciting time for our company and we look forward to sharing more details about our businesses and the overarching strategy at our Investor Day. Please turn to the last slide.
In summary, 2019 was another excellent year for our company, both operationally and financially. The 8% increase through our dividend, affirmation of full year 2020 adjusted EPS guidance, which includes the sale of South America and the issuance of our full year 2021 EPS guidance of $7.50 to $8.10 is a continuation of this positive momentum. As we shift our focus to the next several years, we remain committed to executing our financial plan, strengthening our balance sheet and maximizing value for all of our stakeholders. Our priority continues to be positioning our company for sustained growth while connecting people to the cleaner and more affordable energy they need to power their lives. With that, we'll conclude our prepared remarks and stop to take your questions.
Thank We'll take our first question from Julien Dumoulin Smith from Bank of America.
Hey, good morning team.
Hey, Julien. How are you doing?
Hey, great. Thank you. Congratulations. So, maybe truly impressive. Maybe to turn it back to you on this financing and listen, I bet every question you're going to get here is going to be somewhat of an ask around this Analyst Day.
But when you think about the financing around this plan, the $32,000,000,000 plus some of the conversations out of the agencies, how do you think about that alongside also this FID with ECA, etcetera? I mean, there's so many different moving pieces here. Again, it's a leading indicator as why you're having an ALC to begin with, but at least initially, how are you thinking about dealing with the questions on the rating along with the yet higher CapEx and along with funding a successful FID on LNG?
Thank you for that question. I think the key takeaway, Julian, is that we've got a lot of options to fund our expected growth. I would start with the expected sale of proceeds in South America. Those two transactions continue to go well. We expect to close Chile next month.
Peru could close next month, but it may slip into April. And by all indications, we're in good shape on both of those. We expect to use those proceeds, which we talked about in our prepared remarks, of roughly 4,550,000,000 dollars to $4,850,000,000 and those are after tax numbers to repay debt and also fund growth. We've targeted debt to cap by year end of 50% and that's consistent with the commitments we made to the rating agencies back when we did the ENCORE deal. Also the thing we're pretty excited about is Phase 1 of Cameron continues to go quite well.
We're actually expecting to have commercial operations on Train 2 in a couple of days. And when all three trains are online, we expect to have $400,000,000 to $450,000,000 of earnings from that project and more importantly, about $12,000,000,000 of after debt service cash over the project life. And I think to your larger point, as you've seen us do in the past, particularly in 2018 2019, we will always evaluate all available sources of financing with a view toward financing our growth as efficiently as possible and maintaining a strong balance sheet.
That makes sense. And Jeff, while I have you, if I could, a quick follow-up here. When you think about strategic options here, obviously, you're very focused on execution at the core businesses. But you alluded to potential strategic opportunities a few calls ago. You guys executed on what is a pretty small piece here with the Oncor uptick.
Any latest thoughts about expansion in Texas in a bigger, more holistic sense? Take it or leave it.
Well, I appreciate you asking that. We don't obviously communicate anything around mergers or acquisitions. But I can say this, we have laid out a pretty important campaign to Inter Texas. Obviously, that started the Encore transaction. It led to the InfraREIT transaction.
We continue to develop relationships, which we think are important in Texas for execution. And you may have seen we opened a Houston office and made that announcement in the last month or 2. And that's where we're going to have a center of excellence, both for a Sempra Energy office as well as the office, some of our engineering and construction folks who will be supporting Cameron, Cameron expansion in Port Arthur. And obviously, Jillian, Port Arthur is a priority to us. So just as a market opportunity, Texas is a top priority for our company and we look forward to continuing to execute in a straight line there.
Well, I'll turn it over. Thank you very much. Look forward to seeing you guys.
Appreciate it, Julien.
Thank you. Our next question is from Greg Gordon from Evercore ISI. Your line is open. Please go ahead.
Thanks. Good morning. Hey, Greg. So looking, just going all the way back to the Analyst Day disclosures and looking at the expected rate base, the CapEx and rate base numbers, you've obviously had a significant increase in both. It looks to me and I just wanted to confirm that this is correct that looking at 2022 rate base from Analyst Day, which was 41,500,000,000 dollars in Analyst Day from SDG and E, SoCal Gas and the Texas utilities.
It's now 10% higher, that's $45,700,000,000 in 'twenty two. Am I reading that correctly that through a combination of the acquiring Sharyland, the increase in the Texas opportunity plus the rate case outcome that you're looking at a 10% higher rate base in 2022 than you were looking at in March of last year? I think that's correct for 2022. And I think it's also a change of about $7,000,000,000 across the 5 year period as a comparison. And look, I think Julian tried to ask this question.
Maybe it was a bit too broadly presented to you. So I'll try again in a little bit more of a narrow perspective. Before we think about any other growth opportunities associated with the large capital expenditures you might need for ECA or Port Arthur or Cameron expansion, If all we were looking at was the funding of this growth opportunity in the utility businesses. Did you just articulate that you thought you could do that organically? Or did I misread that and you're going to give us the equity needs at Analyst Day?
I think you should expect that I guess to give you a lot more detail at the Analyst Day. But I think if you think about how we've executed in the past, we've tried to be very, very efficient in terms of how we've accessed lowest cost forms of capital. Clearly, we're looking at our growth through the lens of maintaining a strong balance sheet. And I think, obviously, we don't want to forecast capital market activities, but we feel very good about the options in front of us. And look, we have a great problem here, right?
We've got a great big capital program. We have better visibility. In fact, we were having conversations in the last few days that we've taken a lot of risk off the table with SB 1054, having both rate cases get finished in California was a big deal. And now this is the first time ever, we all have a 3 year rate case in California, Greg. You're looking at 5 year numbers that we're discussing on the phone, and we have a 5 year rate case.
And we still got to make some petitions for modifications there. So I think we're in a position where we have unique visibility into the earnings power of the company and how much of it will be driven by rate base. In this capital program that we're discussing, it's about 88% geared toward U. S.-based utilities. So we feel very good about it.
One more question before I hop off. My sense is that some of the reason why the stock is performing less well than it probably would if just all you were telling people was how great the utility story has evolved is because of trepidation over the growth opportunity in LNG, given the contraction we're seeing in global economic activity because of coronavirus. What can you tell us about how that's affecting your negotiations? Because at this point, I think people are just presuming that FID on Port Arthur at a minimum is off the table for the foreseeable future given market conditions? I appreciate you asking that question.
I would start by going back, Greg, and talking just briefly about our strategy. We're very focused on our long term investments. As you've just been talking about, we do that through our California and Texas utilities. And outside of our utilities, obviously, we're focused on long term contracts with good counterparties. Today, there are any investments in our portfolio, 0, where we're allocating dollars to things which are exposed to commodity driven businesses or based on short term fundamentals.
So as you turn to LNG, we have a deal in the marketplace, right? I mean, there's a lot of people out there today that believe that the LNG marketplace will grow at 4% or 5%. We're talking with some counterparties that think it will grow at a 10% CAGR across the next decade. And our view is by the middle of the decade, there'll be a shortage in available capacity to meet LNG demand. So even though growth rates vary, people have different views on it.
As you know, that's what creates the market. And we think we're probably best positioned. When you think about the backdrop in North America, this is the market that has the lowest price natural gas, it has the lowest price volatility. It's got certainty of supply and execution in deep capital markets. And you take that backdrop, Greg, and you overlay it with 4 of our 5 projects, our brownfield, which creates a cost advantage, and we've got access both to the West Coast and the Gulf Coast, our confidence level in LNG remains the same, right?
It's a long term focus. We expect to take FID on ECA in the next 30 to 45 days. Port Arthur remains on track, we believe, to take FID in the Q3. We have teams on the ground today in Saudi Arabia. We have folks in Western Europe.
Our conversations remain focused on long term opportunities. And maybe as one final data point, Phase 1 of our execution program from Cameron to Port Arthur to ECO 1 calls for 24,000,000 tons per annum. We have 21 signed up for 20 year contracts. So we're working on the last 12% currently and we remain optimistic. Thank you.
Very detailed answer. Have a great day. Thank you, Greg. Appreciate it.
Now we take our next question from Steve Fleissman from Warfie Research. Please go ahead. Your line is open.
Yes. Thank you. Just maybe one follow-up. I would assume that the whatever your varied financing plans are would already be incorporated in the 2021 guidance range that you provided for the first time? What I would say is we've we laid out our capital program for 5 years for you, which is kind of front running the analyst conference.
We would expect to fully provide details on each of the business unit guidance going forward. And we're going to source financings as we think is necessary to meet that growth, Steve. Okay. Okay. But it would have I don't know what it's going to be, but I assume it would be in there already?
Yes.
The rate base is in there, so then the financing? Okay. Right. Thanks. And then just with respect to you mentioned very confident on closing the South America sales.
My recollection is there's like very little there's no real way to get out of those agreements. So I just wanted to reconfirm your confidence there in closings shortly. Yes. And just to clarify on your first question, the answer was yes, just so we're clear. We've laid out guidance ranges that we're prepared to execute on relative to all the financing options that we'll look at.
On the South American question, those are progressing quite well. I've got Dennis Areola here, who is point person for our South American businesses. And maybe Dennis, you could provide some details about our confidence level in closing those 2 deals.
Sure. Thanks, Steve, for the question. Things are going well. Obviously, at the end of the year and in January, it slowed down a little bit because of the holiday season, but we're progressing well with the antitrust bodies, both in Chile and Peru, and we're experiencing really good cooperation from each of the buyers. They're working through their transition plans from people, from financing, from systems and everything.
So everything is going is on track, as Jeff said, to close over the next 4 to 8 weeks, so we're excited about it.
Okay, great. Thank you. Thanks a lot, Steve.
And now we take our next question from Michael Lapides from Goldman Sachs. My apologies. Please go ahead. Your line is open.
Hi, thanks everybody. Appreciate you all taking my question. I'm looking at the capital plan slide. I actually want to ask questions about the smaller wedges in there. Can you give a little detail about what specifically is in the $2,400,000,000 in the LNG bucket and the $2,000,000,000 in Mexico?
Sure.
I would just start by giving you a little bit of coverage and then Trevor can address that. But we'll give you full detail, Michael, as we get closer to analyst conference, including, by the way, business unit level earnings ranges. But Trevor, do you want to speak to the capital side?
Yes, sure. Michael, so predominantly in LNG, what you've got there is the cost for ECA mid scale. So that's the large uplift there. And in Mexico, that's predominantly associated with the build out of their remaining projects around their fuel storage terminals and other projects like that.
Got it. And is the ECA number, is that 100% or is that your pro rata share?
That's our pro rata share.
Okay.
So it's 100% of the on the LNG side, it's 100% of the CapEx associated with ECA. And then for Mexico, because it's consolidated, it's also 100%. So you have to take the minority interest out of there.
Got it. And also just thinking of sources of cash, you have the opportunity to I don't want to call it recapitalize, but refinance the debt structure at Cameron 1, 2, 3. And for many companies, tax deferrals or low cash tax payments tend to be a source of cash. Can you just talk a little bit about that, Trevor, just where you stand maybe in the kind of the debt restructuring or recapitalization at Cameron 1 through 3 and about how big of a cash taxpayer you expect to be?
Yes, sure. No problem at all. So as we mentioned on the prepared comments, we did refinance, call it, just under half of the existing debt at $3,000,000,000 and we took a little bit of a charge in 2019 associated with that. That really stretched out the tenor of the debt to about 15 years. And that's why we're saying it improved the economics because it's improving the front end cash flow on the project.
With regards to the NOLs, roughly, we still are in an NOL position through about 2024 and that will kind of roll off over a 4 or 5 year period.
Got it. Thank you, guys. Much appreciated. And we'll obviously see you all in late March.
Thank you, Michael.
Thank you. And now we take our next question from Ryan Levine from Citi. Your line is open. Please go ahead.
Hi. I wanted to ask one on Encore. I mean, given the slowdown in commodity prices and potential slowdown in activity in the Permian and Texas, can you speak to how insulated the CapEx outlook is within your plan and if there is any opportunity to reduce some of those spending?
Thanks a lot, Ryan. Things are going very well for Encore. We've got $11,900,000,000 in the capital plan. In fact, we're forecasting continued electricity growth, particularly on the west end of their system, about an incremental 40% between now and 2022. So there's a lot of growth taking place both in the Dallas, Fort Worth area as well as West Texas.
So we don't see any slowdown at all. In fact, we're continuing to be strained to meet all the capital needs for growth in that service territory.
If the Kamaia price outlook were to continue to be under pressure, is there any capital that's tied to E and P activity that could be curtailed maybe in the longer duration spending?
Well, we would always follow that, particularly in West Texas. A lot of that growth line is also coming from the fact that we've got about 95,000 megawatts of wind and solar and other generation in the interconnection queue for ERCOT. A lot of that solar particularly is in West Texas. So a lot of that is a transmission build out that's unrelated to the E and P activity.
Okay. And then in terms of the South America sale, is there any delay that's associated with the coronavirus in terms of the timing of closing of the transaction? Or is it purely working through some of the remaining tax issues or other final closing proceedings?
Yes. I think we feel confident to be very clear that both of those transactions are in good shape. We expect to close Chile as early as the middle of next month and that Peru will follow a few weeks thereafter. So I think we're in good shape on both of those transactions.
Okay. Thank you.
Appreciate it.
And now we take our next question from Paul Peterson from Glendrock Associates. Please go ahead. Your line is open.
Hey, good morning. Good morning, Paul.
Just to follow-up on a few things here. With respect to coronavirus, I know you guys are have long been avoiding commodity risk and what have you. But has there been any change given what's going on in terms of potential your valuation of counterparty risk or anything you see out there as a result of what we're seeing?
I mean, obviously, I think you're asking about the virus generally impacts some of the markets we're focused on or our LNG business, and we haven't seen any sign. And obviously, as you would expect, we're thoughtful about where people travel. We've instituted programs inside the company to sure we're thoughtful about protecting our employees. But in terms of conversation with counterparties, remember, we have a long term view about supply and demand in the middle part of the decade and we're really dealing with people, Paul, that have a shared view of the potential infrastructure shortage. So the virus issue hasn't really impacted our negotiations with the customers we're talking to.
Okay. And then, when you just read base growth, I realize that
you guys have different jurisdictions
and different things driving the levels and what have you. But I'm just wondering if you could give us a sense as to sort of the range of rate impact that you might be seeing because some of it might be socialized differently and also you also are taking I think efforts to lower costs and what have you. How should we think about the rate impact?
I think it's a really good question. Obviously, we're benefiting from a decade long low in commodity prices, which is helpful on the bill. That would start in Texas and you may recall that Encore today has the lowest rates for their services in the state of Texas and they are forecasting they will still have the lowest rates in the State of Texas when they complete their record capital program, which I referenced earlier at 11,900,000,000 dollars When you turn to California, I think the thing we feel good about from our rate case was, it was really tension around the ramp process and making sure that capital is being allocated specifically around safety and reliability. So as we think about the bill impact at SoCal Gas, SoCal Gas bill is in the low $30 range. It's a very, very affordable service from a gas company.
There's probably more pressure on the electricity side across the state. The good news is, I always refer folks to this, is even though the rates have gone higher, the bill impacts are relatively subdued because we have a pretty modest climate. So even at SDG and E today, including subsidies for low income housing and others, it's about $100 on the bill. And both of those are lower than the national average. So we feel good about the capital program as a way of reducing risk in the operating environment and we feel good that we're benefiting from low commodity prices and obviously a large pool of customers if that gets spread across.
Okay. Thanks a lot.
Appreciate it, Paul.
It appears there are no further questions at this time. And now I'd like to turn the call back to Mr. Jeff Martin for any additional or closing remarks.
Thanks a lot. I'd just like to express our gratitude for folks who joined the call today. We certainly look forward to seeing all of you in San Diego at our Investor Day that will be on March 24. If you have any follow-up questions, please do not hesitate to contact the IR team. We wish each of you a good day.
Thank you.
This concludes today's call. Thank you for your participation. You may now