Avangrid Inc (AGR) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to AVANGRID's 4Q 2020 Earnings Conference Call. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Patricia Cosgel, Vice President, Investor Relations. Thank you. Please go ahead.

Thank you, Julianne, and good morning to everyone. Thank you for joining us today to discuss AVANGRID's Fourth Quarter 2020 Earnings Results. Presenting on the call today are Dennis Arriola, our Chief Executive Officer; and Doug Stuver, our Senior Vice President and Chief Financial Officer. Also joining us today for the question-and-answer part of the call will be Bob Kump, Deputy Chief Executive Officer and President of AVANGRID; Alejandro de Hoz, President and Chief Executive Officer of Avangrid Renewables; and Tony Marone, President and Chief Executive Officer of Avangrid Networks.

Note that some of us will be together for the call today, keeping our social distancing, while others will be joining us remotely. If you do not have a copy of our press release or presentation for today's call, they are available on our website at www.avangrid.com. During today's call, we will make various forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 based on current expectations and assumptions, which are subject to risks and uncertainties.

Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in AVANGRID's earnings news release in the comments made during this conference call in the Risk Factors section of the accompanying presentation or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, avangrid.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of non-GAAP financial measures to the closest GAAP financial measures.

I will now turn the call over to Dennis.

Well, thanks, Patricia, and good morning, everyone. We appreciate you joining us for the call. There's no doubt that 2020 was a challenging year for everyone as we work to address COVID and adapt our personal lives to this strange new reality. I want to start this year-end call by thanking our employees across the country, nearly 7,000 strong, for your unwavering commitment to safely serving our customers and for looking out after each other. Thank you for making a difference every day.

Since I joined AVANGRID in July, we've been focused on driving alignment, accountability and execution to create long-term value. At our Investor Day in November, we shared our new plans and strategy for the future. We discussed the need to set reasonable and achievable goals and the importance of delivering on our commitments. And over the last several months, we focused on the details, the fundamental blocking and tackling that helps make a good company great. And while we still have a long way to go, I'm really pleased with our direction.

We recognize that 1 quarter doesn't make a trend, but our results in Q4 2020 and for the full year relative to the guidance we provided at our Investor Day is encouraging. And needless to say, I'm excited about our current position and of our prospects going forward. We truly believe we're in the right place at the right time in this energy transition. We're in the sweet spot, clean and connected. Our Networks business, representing over 80% of AVANGRID's earnings, is focused on serving our customers and getting better every day. We'll be larger and more diversified once we complete our merger with PNM Resources.

Our Renewables platform is strong, and we're leading the new offshore wind industry. We're seeing strong tailwinds from a clear focus on clean energy in all directions from consumers, from government, from corporations and from the investment community. Over the next 5 years, we'll invest over $20 billion, more than $12 billion in Networks and over $8 billion in Renewables. Networks will continue to be the predominant earnings driver in our business model. And the PNM merger and our organic investment opportunities will provide AVANGRID with significant opportunities for predictable growth resulting in the 6% to 8% EPS CAGR from 2020 to 2025 that we provided on Investor Day last November 5. We'll get all this done while maintaining a strong balance sheet and a reliable dividend. And with the unwavering support of the IBERDROLA Group, AVANGRID is uniquely positioned to become a leading sustainable energy company in the U.S.

Now 2020 was a year of transition and an inflection point for the future at AVANGRID. For 2020, net income was $581 million or $1.88 per share, and our adjusted net income was $625 million or $2.02 per share, which exceeds the guidance we affirmed on November 5. In addition, we invested $3 billion to drive future growth in Networks and Renewables. In Networks, we successfully sold our New York rate cases, and our New England Clean Energy Connect project completed all major permitting and started construction last month. In Renewables, we signed new PPAs for approximately 750 megawatts and installed approximately 620 megawatts of new wind and 370 megawatts of repowered projects, bringing our total generation capacity to 8.5 gigawatts.

We also made significant progress on our 3 offshore wind projects, and we're in the final approval stages for our Vineyard Wind 1 project. Across the board, we've demonstrated leadership as a company driven by our purpose to serve our customers and society. And just yesterday, AVANGRID was recognized by Ethisphere as one of the World's Most Ethical Companies in 2021 for the third year in a row. We were also named one of America's most JUST companies on the Annual Forbes JUST 100 list. These accolades are a tribute to all of our employees at AVANGRID.

Reinforcing our commitment to ESG+F, we've set several bold targets for our company, including carbon neutrality by 2035. And in regards to our PNM Resources merger, key filings have been completed with federal -- several federal approvals already received. In 2021, we're focused on several key objectives that will build on our accomplishments in 2020. First and foremost, safety and reliability are at the heart of AVANGRID's core values. We'll continue to safely and reliably serve our customers, while managing the ongoing impacts of the pandemic, making the health and safety of our employees, our customers and our communities our utmost focus.

We plan to successfully close the PNM merger in the second half of this year, further strengthening our regulated profile and our geographic diversity. In Networks, we're laser-focused on delivering more predictable earnings going forward and earning our authorized ROEs at all our utilities. We expect to invest about $2 billion this year, growing our rate base to approximately $11.4 billion.

In addition, we'll continue to advance our major clean energy projects like NECEC and Vineyard Wind 1. In Renewables, we continue to improve our operating performance and target the delivery of about 690 megawatts of new wind and solar projects in 2021, with a total investment of close to $1 billion in Renewables this year. Lastly, we are affirming our guidance for 2021 EPS and adjusted EPS of $2.15 to $2.35. And I'll remind you that this guidance assumes that we close the PNM Resources merger, along with the required financing at year-end.

Now with the Biden administration in place, we see strong prioritization of clean energy policy going forward. Our strategy positions AVANGRID to fully leverage this momentum for the long-term benefit of our customers, employees, communities, shareholders and the environment. The administration has outlined a target to decarbonize the power sector by 2035 and reach net 0 economy wide by 2050, backed initially by several climate focused executive orders and a proposed $2 trillion investment in clean energy over the next 5 years.

For us, this translates into an acceleration of renewables deployment, grid enhancements and transmission projects to support growing demand for clean energy. It also provides for additional EVs and charging infrastructure as well as investments in energy efficiency and battery storage. We'll also see advancements in green hydrogen to enable cost parity with gray hydrogen by 2030. And this is an area we're looking at seriously as we think about future growth opportunities.

The IBERDROLA Group has already taken a leading position in Europe with significant investment and exciting projects in green hydrogen, and we plan to leverage on their learning curve to identify opportunities for AVANGRID here in the United States. Now we're also aligned on a state level. We expect state policy will continue to drive strong demand for renewables and incentives as states work to reach their individual climate and environmental goals.

In Networks, we're executing on our strategy, which is designed around 3 growth drivers, first, our Road to Authorized ROE, which means earning at least the approved regulatory ROE at each of our utilities. We'll do this through the implementation of our rate plans, improving reliability and resiliency and enhancing operational efficiency and customer satisfaction. Secondly, by investing in transmission, such as NECEC and other opportunities, to enable the clean energy transition. And thirdly, by the addition of PNM Resources.

This merger increases AVANGRID's share of regulated earnings to over 85%, with opportunities to add new clean energy as PNM phases out its existing coal generation. We expect rate base, including PNM, to grow roughly 14% annually from 2020 to 2025 to almost $21 billion. Now as we've discussed previously, our Road to Authorized ROE is a data-driven plan focused on accountability, efficiency, continuous improvement and alignment to our rate cases. By the end of 2021, we will be positioned to earn our allowed ROEs at all of our regulated utilities.

In New York, we secured a 3-year rate plan with a make-whole provision back to April 2020. With the approval in November, we had time to ensure our plan more fully consider the impacts of COVID-19 and allowed us to provide needed relief for customers. The plan, which covers nearly half of AVANGRID's rate base, works with an 8.8% ROE with a 48% equity layer. It provides for critical investments in infrastructure and reliability, enhanced vegetation management, increased allowances for staging and storm cost recovery and incremental workforce in key areas to support our crews in the field.

The investments amount to about $1 billion per year, driving economic recovery and job creation in our service territory. In May, we continue to meet or exceed our service quality metrics on a 12-month rolling basis. We expect to file to remove the 100 basis points downward adjustment by September, which, if approved, would increase CMP's allowed ROE to 9.25%. Lastly, we're taking steps to improve operations, efficiency and customer satisfaction at all our utilities.

Transmission is another exciting growth area for AVANGRID. The IEA estimates over $44 billion a year is needed in North America through 2040. And AVANGRID's experience at successfully executing large and complex projects positions us to help address this challenge and turn it into an opportunity. Now once complete in 2023, our $1 billion New England Clean Energy Connect, or NECEC, will be the largest onshore clean energy project in New England.

Through NECEC, we're removing the equivalent of 700,000 cars from the road and bringing clean energy jobs and economic benefits to the New England region. With all major permitting complete, the first poles have been raised and construction work is underway. Hundreds of Mainers are already employed by NECEC and its subcontractors and recent polling shows support for this clean super highway is growing. Now we're confident in our ability to deliver this project, as we previously did for our $1.4 billion Maine Power Reliability project, which helped upgrade CMP's transmission system in 2015.

And while we recognize there is a vocal minority in the state that is basically against any infrastructure development anywhere, we remain confident that NECEC will be completed and will provide affordable clean energy and substantial economic benefits, including jobs, to the people of Maine. Now we're also looking at potential new transmission opportunities. Recently, we announced a new proposal for New York, the Excelsior Connect. It's a 1,310-megawatt underground high-voltage DC line that would link upstate New York with New York City.

We've opened a solicitation for renewable developers to bid for transmission service with the aim of participating in New York's Tier 4 RFP, which seeks at least 1,500 megawatts. Now this is a New York solution for a New York opportunity. And this early stage opportunity is not currently in our long-term plan, so it's another example of potential future value creation. And so far, we're seeing strong interest from renewable developers that want access to the transmission.

Now let's turn to our merger with PNM Resources. We're very pleased that the PNM Resources shareholders overwhelmingly approved the transaction earlier this year. We've submitted all necessary filings at the federal level as well as with New Mexico and Texas regulators. And so far, our key approvals are progressing according to our plan. We've received the Hart Scott Rodino clearance as well as clearance from the Committee on Foreign Investment, or CFIUS. We expect to receive FERC and FCC approval by March, and the Nuclear Regulatory Commission approval is expected by June. At the state level, we expect the approval of the Public Utility Commission of Texas in May or June and from New Mexico in the second half of the year.

Now before we continue, I want to recognize and thank our Networks' CEO, Tony Marone, who is retiring this month after an outstanding 33 years with the company. Tony has played a key role on our leadership team over the years, and he will be missed, but we know his contributions will continue to have an impact for years to come. Thank you, Tony. We also look forward to welcoming Catherine Stempien to the AVANGRID family, when she joined just in mid-March as the new CEO of Networks.

Now turning to Renewables. Our 21-gigawatt pipeline of projects and leadership in offshore wind will drive significant growth opportunities and supported by favorable energy policy and strong demand. Our pipeline is more diversified than ever, with roughly 60% solar, approximately 20% offshore wind and the other 20% onshore wind. Overall, we're going to grow our capacity nearly 70% by 2025, with significant growth driven by offshore wind.

In 2020, we installed approximately 620 megawatts of new wind and completed 370 megawatts of repowering projects. Additionally, we executed about 180 megawatts of PPAs and long-term hedges, which will help improve the contracted percentage of our overall portfolio. This year, we're positioned for increased profitability with a strong lineup of new assets and our continued execution of PPAs. We've got close to 700 megawatts expected to come online in 2021, waited for the first time for solar, and we continue to secure PPAs to support our future growth. In total, we've signed PPAs for nearly 560 megawatts with COD in 2022, including a new PPA for 187 megawatts for Bakeoven Solar II.

Now I'd also like to address the extraordinary events that have taken place in Texas this past week. AVANGRID has approximately 1,250 megawatts of winds located in Texas and 100 megawatts of firm delivery obligations. In the early days of the weather event, our operations, like most others in the area, were impacted for a short period of time. Through this event, we've been focused on safety, operational excellence and proactive risk management in order to meet our limited fixed obligations. Our clean generation met all firm delivery obligations, and we were able to deliver our excess energy to the grid to help get Texas back on its feet. Our thoughts remain with the many Texans who have been affected as well as with our employees who have continued to work hard under the difficult conditions.

With offshore wind, we're at the forefront of an industry that is on the rise. Our superior offshore wind investments are positioned to deliver growth and financial results beginning in 2024 and 2025. In addition to our strong offshore team, our affiliation with IBERDROLA provides us a deep bench of offshore wind expertise to leverage. Now to date, we have 1.6-gigawatt of fully contracted projects, made up of our 800-megawatt Vineyard Wind 1 and our 804-megawatt Park City Wind, both shared 50-50 with our partner, CIP.

At our wholly-owned Kitty Hawk site, we expect the first phase to deliver up to 1-gigawatt of power beginning in 2026. The recent changes to the ITC are also positive for AVANGRID and our customers. For Vineyard Wind, the full 30% ITC will generate additional value for the project. And with BOEM's focus on completing the final approval process, we're one step closer to placing turbines in the water at the nation's first utility scale offshore wind farm. We expect to make our final investment decision in the second half of this year, begin generation in '23 and reach full commercial operation in '24.

For Park City, we submitted our commercial operations plan or our COP to BOEM in the second half of 2020. We also executed long-term PPAs with the Connecticut utilities and will negotiate how to share the benefits of the enhanced ITC. We expect Park City will come online in 2025. For Kitty Hawk, we've submitted our COP to BOEM for the first phase of the project, which we expect to come online in 2026. Including Phase 1 of Kitty Hawk, we have approximately 6 gigawatts available to bid in the future solicitations, of which AVANGRID owns outright 4.2 gigawatts. As a point of comparison and to help understand the value of these lease areas and based on the pricing of the latest offshore auction in Scotland, our 4-gigawatt share could be valued somewhere between $1.5 billion and $2 billion.

And this year, we expect 2 auctions in Rhode Island and Massachusetts, followed by New York in 2022 and Connecticut in 2023. We expect to participate in most, if not all, of these auctions, but we're going to continue to be disciplined in our bidding approach. As I think about AVANGRID's offshore business, I really believe it's an undervalued growth opportunity. Offshore wind is coming to the U.S. in a big way, and AVANGRID is extremely well positioned to lead this attractive market.

Now I want to talk about our approach to sustainability, something that has been part of our DNA for a long, long time. It's important to highlight that sustainability at AVANGRID is not just about the E in ESG. It's leadership in each of these areas that will drive our success and help us become the leading sustainable energy company in the U.S. As the third largest renewables developer in the U.S., our dedication to the environment is clear.

In 2020, our emissions intensity fell by 30%, making AVANGRID 7x less intensive than the utility average. Social investment is a key part of our purpose as well to create healthier, more sustainable communities every day. And through the Avangrid Foundation, our primary charitable entity, we provided over $4 million in grant funding in 2020 to address COVID-19, to combat racial injustice and much, much more. We've signed both the Paradigm for Parity and the CEO Action for Diversity and Inclusion pledges. And a commitment to strong ethical governance drives how we operate our business at every level.

With this balance of the 3 areas of ESG, complemented by a sharp focus on financial results, we'll drive performance and execution to create sustainable long-term value for all our stakeholders. Our goals over the next 5 and 10 years include further reductions to our emissions intensity, including carbon neutrality by 2035, enhancing our supplier sustainability and diversity programs, implementing a robust employee volunteer program and minimizing the environmental impact of our fleet and facilities.

Now at AVANGRID, we believe leaders set bold goals and then deliver on them. But it's also important to measure and compare yourself to your peers. And as you can see on this Slide 18, we don't just talk about being a clean energy company at AVANGRID. We deliver. Renewables currently make up 90% of our own generation portfolio compared with just under 40% for comparable peers and only a quarter industry-wide. We're a leader in renewables, and the commitments we've made will continue to expand that leadership position.

Now before I turn it over to Doug, I want to bring things back full circle to the big picture. I'm excited about the future here at AVANGRID. Our current platform of businesses and our merger with PNM position AVANGRID for strong and predictable growth over the next 5 years. Over 85% of our business mix is expected to be regulated, and we'll invest approximately $20 billion in total through 2025. We're committed to clean generation and have identified long-term profitable offshore wind and transmission opportunities as well as a large pipeline of onshore renewable opportunities that will support the 6% to 8% adjusted EPS CAGR through 2025 we discussed at our Investor Day in November.

And while we have plenty of organic growth opportunities, we also have a successful track record in M&A., first, with the acquisition of UIL and now with PNM Resources underway. These transactions create scale, they add regulated revenue and geographic diversity and provide stability that enables future renewables growth. We'll also continue to focus on maintaining an attractive, reliable dividend yield and solid investment-grade credit ratings. All these ingredients are vital to becoming the leading sustainable energy company in the U.S. Is this a bold aspiration? Yes, it is. Is it achievable? Absolutely. And I look forward to sharing our progress with you on future calls.

Now I'll hand it over to Doug to discuss the financial results.

Thank you, Dennis. Good morning, everyone, and thank you for joining us today. Let's turn to the financial highlights for 2020. AVANGRID reported fourth quarter 2020 GAAP EPS of $0.54 per share and adjusted EPS of $0.62 per share. For the full year 2020, AVANGRID reported GAAP EPS of $1.88 per share and adjusted EPS of $2.02 per share, which is above the $1.90 to $2 per share guidance range we affirmed at our November 5 Investor Day.

Overall, our 2020 results in comparison to 2019 reflect the strong growth and contributions of our core Networks business. In the fourth quarter, we received regulatory approval for our New York company's multiyear rate plan, representing a very important step on the road to earning our authorized returns in Networks. For 2020, Networks rate agreements provided $0.34 of higher earnings per share, with New York delivering $0.22 of this in the fourth quarter through our make-whole back to April '17 and $0.28 overall for the year. In 2020, we received regulatory approval for a transmission revenue decoupling in Maine that reduces our risk from fluctuations in customer volumes. This produced a positive $0.06 benefit for the quarter and year.

In the Renewables business, you'll recall that we had a large asset sale in the fourth quarter of 2019 that delivered approximately $0.32 of adjusted EPS. In the fourth quarter of this year, we completed the sale of a majority interest in the Tatanka wind farm, allowing us to recycle approximately $240 million in capital and produced a $0.04 positive EPS impact. Excluding the effects of asset sales, Renewables full year 2020 adjusted EPS results are up approximately 14%, made possible from the benefits of adding almost 1,000 megawatts of new capacity in 2019 and the first part of 2020. Wind production and pricing, net of operating costs and depreciation, contributed $0.04 of higher earnings per share in the fourth quarter and $0.09 for the full year.

In our corporate segment, higher interest costs and income taxes negatively impacted the quarter and annual results by approximately negative $0.04 and negative $0.12, respectively. Higher interest costs resulted from the issuance of $1.5 billion in green bonds over 2019 and 2020 and income taxes increased primarily due to the prior year favorable discrete items. Looking forward to 2021, we are affirming our EPS and adjusted EPS outlook of $2.15 to $2.35 per share, reflecting net income and adjusted net income of $665 million to $727 million. In Networks, we expect rate base growth of approximately $500 million or 5%, along with a full year of new rates for our New York companies and CMP and a new rate year for CNG.

We also benefit from AFUDC income related to NECEC starting construction in January of 2021. These advancements position Networks to earn its authorized returns in 2022 and significantly close the gap in 2021. In our Renewables business, we expect to benefit from nearly 1-gigawatt of new projects and repowerings that occurred in 2020, and we will be bringing another 690 megawatts of wind and solar projects online in 2021. We also expect to reach an important milestone in 2021 for our offshore business, with the start of construction of Vineyard Wind 1, the first large-scale offshore wind farm in the U.S. During 2021, we expect to fund approximately $70 million for our 50% share of investments in this project. With our offshore wind business, I'd also like to emphasize some additional points. First, we're confident that our projects will earn solid double-digit levered return.

We have strong partners in CIP and IBERDROLA with track records of constructing offshore projects on time and on budget and with a practice of establishing and maintaining conservative assumptions. Our projects are in attractive lease areas with relatively short transmission lines to our landing points, and we benefit from existing port infrastructure. We also benefit from the new 30% offshore wind investment tax credit, which is applicable to each of our projects. You'll recall that with Vineyard Wind, we originally assumed a mix of 24% and 18% ITC for the project. In the case of Park City, we did not assume ITC in our original pricing. And with this extended tax benefit, we expect to share in between the projects and our customers. And then finally, we have the opportunity for meaningful economies of scale in procurement and operations due to the timing of our 2 projects and the contiguous lease areas.

Now moving on to financing plans and liquidity. Our strong balance sheet, predominantly regulated business mix and solid investment-grade credit ratings provide us with excellent flexibility to finance our organic growth and the PNM Resources merger. In late 2020, we entered into a very attractive $3 billion intercompany financing arrangement with IBERDROLA, which significantly enhanced our liquidity position and provided a low-cost source of funds. We used these funds to pay down commercial paper borrowings and fund CapEx. This loan, along with the funding commitment letter for the PNM Resources merger and IBERDROLA's announced intent to participate at its 81.5% share in the 2021 equity offering, demonstrate IBERDROLA's strong commitment to AVANGRID and support for the merger transaction.

In 2021, we continue to be focused on maintaining a strong balance sheet and solid investment-grade credit ratings. In support of this, we plan to issue approximately $4 billion in equity in 2021, which will strengthen our balance sheet and improve our share liquidity. Of this amount, $3.6 billion is attributed to our merger with PNM Resources and $400 million will finance the attractive investments in our plan that contributes to the 6% to 8% EPS growth we outlined on our Investor Day last fall. We do not expect to issue any additional equity through 2022. We also expect to enter into long-term debt financing in the form of green bonds or sustainability-linked bonds for our holdco financing needs and tax equity financing for our renewables projects. While not included in our plan, we will opportunistically consider value-added capital recycling as another funding lever.

We have ample additional liquidity available through our $2 billion commercial paper program, supported by a $2.5 billion sustainability-linked revolving credit facility and an additional $500 million bank credit facility, plus a $500 million credit facility available from IBERDROLA. We have ambitious and achievable plans to become the leading sustainable energy company in the U.S. Our focus now is on executing those plans to drive value. This includes investing nearly $3 billion in our Networks and Renewable businesses (technical difficulty) closing on a $4.3 billion merger in the second half of this year and continuing to deliver solid and reliable dividend.

Slide 24 provides an overview of our investment-grade credit ratings and our dividend policy. We recognize that our robust growth program and the important commitments we've made to provide relief to our customers during this pandemic through moratoriums and waivers of late payment and other fees will temporarily affect us. However, with the strong support of IBERDROLA and our financing plans, we remain committed to maintaining solid investment-grade credit rating. We have a strong networks footprint. And with the addition of PNM, we will increase and diversify our regulated businesses, further strengthening our credit profile. Over the next 5 years with over $12 billion of our $20 billion of investments in our Networks companies, we will further improve safety, reliability and predictability.

We are communicating with our rating agencies about these plans. In addition, we remind you that S&P ties our rating to IBERDROLA's, and S&P just reaffirmed that rating of BBB+ and widened the FF loaded debt threshold from 18% to 20% to 17% to 20%. This was done in recognition of the resiliency shown during COVID and with accelerated growth considering them as an energy transition champion. Our dividend policy remains unchanged, targeting a payout of 65% to 75% that we will grow into as our earnings increase over time. Our Board recently declared a quarterly dividend of $0.44 per share, payable on April 1.

With that, thank you for joining us for today's fourth quarter 2020 earnings call. I'd like to close by saying we're looking forward to adding PNM to our family later this year and continuing to deliver sustainable growth and value creation by investing in a smarter and cleaner energy future.

I will now hand the call back to our operator, Julianne, for questions, followed by brief closing remarks from Dennis.

(Operator Instructions) Your first question will come from David Arcaro from Morgan Stanley.

I was wondering if you could talk to, Doug, thoughts on equity needs post 2022 through the rest of the plan?

Let me touch on that, David. I mean, I think as you'll remember, we provided some information at our Investors Day that laid out our expected sources and uses of funds from 2020 to 2025. And this did include the funding of the merger with PNM. And as Doug just touched on in his formal remarks that we will be planning to issue up to $4 billion in equity this year in association with the PNM merger and the expected CapEx, and that will happen by the end of the year. So with this capital raise -- I want to just be really clear. We do not anticipate any additional equity needs through the end of 2022. And that capital raise is consistent with the 2022 financial outlook we provided to you in November.

Now when you think about beyond 2022 and through 2025, we've got a lot of different levers available to us to raise the necessary non-debt capital to fund our growth program and to maintain our strong balance sheet, including asset recycling, hybrid securities, we can raise equity, asset securitizations and actually potentially monetizing some of our larger projects, if it makes sense. So the 6% to 8% EPS CAGR growth through 2025 that we provided in November took into account the different levers available to us, and we looked at it under different market conditions. And we estimate that we would most likely raise approximately $2 billion in additional capital through those levers or a combination of them to help fund our growth from 2023 through 2025. Now needless to say, with the 30% ITC applicable to Vineyard Wind 1, our confidence level on the 6% to 8% EPS growth through 2025 is even stronger. So hopefully, that answers your question.

Yes. Great. That's super helpful color. I appreciate that. And just a question on Texas. I was wondering if there was any quantification you might be able to provide in terms of -- it sounds like you may have had a gain, but with your very strong operational performance in the state in the weather event. And I was wondering if there was any quantification you might be able to provide. And is that embedded in the 2021 guidance at this point?

I think what I would tell you is, first of all, we're really proud of our folks down in Texas. They had to not just work hard to get the -- our turbines running again but they were living there and their families were impacted by it as well. So they did a great job to get the generating -- generation operating as quickly as possible. And I think as we said in our statement, we were able to meet our limited fixed obligations and then provide the excess energy back into the market to help the people of Texas. At this point, we're not going to be providing more details on the financial impact. But what I will tell you is it was positive because we did have excess energy. And although it's still early in the year, I guess, what I would tell you is, it really adds to the confidence we have in our -- in the guidance that we just affirmed of $2.15 to $2.35 for 2021.

Your next question comes from Insoo Kim from Goldman Sachs.

My first question is on -- in Maine with the NECEC, definitely appreciate the start of the construction that you guys had. It seems like more recently, there's been a second round of the citizens initiative against the project. And more recently, the Secretary of the State approved those signatures to proceed. So given now we're talking about round 2 of what we experienced just last year and how that ended up, how do you see this one? How it's laid out different or the same as the past? And whether you think that it presents a real threat to the project?

Yes. Insoo, let me start, and then I'll pass it over to Bob, and he can provide some more color. I don't think that there's any energy infrastructure project underway in the United States that doesn't have some opposition. I think it's very clear that with this -- the Biden administration, there's the realization. We need more transmission in this country to be able to get the clean energy to the load center, so that people can use it. And as we think about NECEC, it's that type of project that truly is going to provide clean energy into the New England area. It's going to provide jobs, it's an economic stimulus, and it's something that as we've been pulling more and more people they are understanding the benefits to Maine and to the region. So are we surprised by the referendum? I'd say no. It's just going to be additional work that we've got to continue to educate people and including the legislators on the importance of this transmission line, but we remain confident. But Bob, you may want to share some more on that.

Yes, sure. So a couple of things particular to the referendum. First, we believe that, that referendum is really bad public policy. Because it could have unintended consequences for other clean energy projects in Maine that will need transmission. And as Dennis said, secondly, I wouldn't draw conclusions from the number of signatures that the opponents collected. Remember that this is the second one. They learned from the first one. They knew who their supporters were and were able to be really more efficient in terms of collecting signatures. I'd also point out that the fossil fuel interests, that are really behind this effort to impact NECEC, paid $1.5 million to 350 individuals at $35 an hour to get these signatures. So as Dennis said, it's not a surprise to us that they got the signatures.

What's more important, I think, is where is consumer sentiment. And if you look at recent polling that has been done, the opposition is in the minority, and we have continued to see improvements in support for the project over the past year. And we think that, that sentiment and that view of NECEC will continue as we begin to construct the line and demonstrate the jobs that are being created for Mainers and the economic benefits the project would bring to Maine. I think Dennis mentioned, we have right now about 275 Mainers employed, and that's really just the start.

So again, as Dennis said, I don't expect the opposition to end. It's going to be there probably until the project goes commercial operation. But the reality is, we've been successful in defeating every challenge that the opposition has put in front of us. It's really indicative of all of the work that's been done by the agencies, both state and federal, in issuing the permits and the quality of those permits that were issued. So the bottom line, the project's aligned with the Biden administration's goals. The Governor continues to strongly support the project.

In fact, just yesterday in her state of the budget, she referenced the benefits of NECEC twice. As we've talked, the project is fully permitted. And people are clearly aware of 2 things and realizing 2 things: one, the need for transmission to bring renewables to market; and two, who's really behind the opposition to this project. So again, we're really excited about having started construction and being able to show Mainers and, for that matter, all of New England, the benefits the project will bring, whether it's monies for low-income consumers, jobs, EV infrastructure. We've committed to heat pumps, broadband, property taxes, you name it. This is the largest, as Dennis mentioned, clean energy project in New England. And we're looking forward to bringing this online in the second quarter of '23.

The other thing -- and so this is Dennis. That was interesting about the governor's comments yesterday. This is also going to provide access to additional Internet and telecommunication systems for people throughout the state. So there are a lot of really different benefits to this. And again, part of our job is to make sure that we're clearly articulating what those benefits are and to move forward.

Got it. That's really good color. My second question is on offshore wind, just more broadly. There's been, I think, increasing concerns just on a global scale with the entrance of one of the oil majors, and investors worry that for developers, you guys and IBERDROLA, that the increased competition could drive returns lower. So understanding that you guys will be very, I guess, disciplined on the return profiles. I don't know if you're willing to share what type of returns you're willing to accept going forward for future projects? Or just more broadly, how do you think from a competitive standpoint what type of edge you may have versus some of the other parties that could help you guys?

Sure. Let me start, and I'll ask Alejandro to jump in and provide some color as well. I mean, look, I think there's no doubt that with the entrance of some of the larger energy companies that have not traditionally been involved in the clean energy space, I think, if anything, what it does is it just clarifies that this -- the offshore wind industry is for real. And it's a place where companies can put a lot of capital to work. So look, competition is good. It's good for consumers. It's good for us. It makes us sharpen our pencils. But we're going to continue to be very disciplined in the bids that we make. We actually think that given our experience and IBERDROLA's experience, we're the type of company that some of these other major energy companies would want to partner with. So we don't see it really as a negative as long as we continue to focus on making sure that we maintain our financial discipline.

And the other thing I would say is it's really going to be important going forward that we are not just a power provider here, but that we provide energy and economic solutions. And I think with the lease areas that we have and the work that we've been doing, especially in the New England, New York area as well down in the South, that's what -- how we're going to differentiate ourselves. It's not just going to be about providing cheap energy. It's got to be competitive energy, but it also has to do with what can we do to build jobs? What can we do to bring more manufacturing to that area? I think that's one of the things that differentiates AVANGRID in our experience, and I think it will help differentiate us as we go forward. But Alejandro, do you want to add to that?

Thank you, Dennis. I mean, not much to add to everything you said. I would just say that, well, in the U.S., the demand we are seeing -- that it's really high for the next years. The number of competitors is not a huge item. There are not many, many companies that can really engage into this kind of infrastructure projects. And then we have a track record, as Dennis was saying. We have some experience in construction and operation that gives us clearly a competitive advantage. So I think that while being disciplined, as Dennis said, we will continue to have many opportunities to grow.

And Insoo, given that we can see who's on the call, and we may have some competition, we're not going to get into returns.

Your next question comes from Neil Kalton from Wells Fargo Securities.

Kitty Hawk, I wanted to start there. So did I hear you right that the thought is that this could be COD by as early as 2026? And if so, what do we need to kind of get there, right? I think it's still -- there's no off-takers yet or it's not real crystal clear how that's going to proceed. So just thoughts on that to start.

Sure. Let me start, and then Alejandro can jump in. I think one of the things that we've learned is with Vineyard Wind 1, we've been the guinea pig, if you will, with bone. So our expectation is that as we continue to go forward with Park City and with Kitty Hawk, the experience that we have and the comfort, hopefully, that BOEM has with our process is going to help us as we go forward with our other projects, including Kitty Hawk. But Alejandro, could you jump in?

Yes, sure. So I mean, it is clear that we need a go-to-market for that project to construct it and make it operational. But what we have seen is those are things that can evolve very, very quickly. You have seen how much has happened in the region in 2020. We are developing the project as quickly as we can to be ready so that it does not become the critical path once we find the route to market. And then in terms of route to market, well, you know the objectives of Virginia. You know that North Carolina is showing high interest in offshore wind as well. So we really want to be ready very, very quickly. And 2026, if the timing of an offtake works as we expect, it's not unrealistic.

Got it. And then my second question, I apologize if I missed this. But on the Excelsior project, is there anything sort of -- is that a pretty clear from a right-of-way standpoint? Are there any considerations just having lived through New England to Maine line, other projects? I mean, is there anything that we need to be concerned about in terms of the siding there?

Look, let me start, and I'll ask Tony to jump in. I think whenever you're working on a transmission project, there are challenges. They're not easy. The team has been working on this one for a while, looking at the most efficient and effective way from where we think we can receive energy from a renewable developer to get it all the way down to New York. And I'd say that this project is beyond just a concept. It's just got a lot of details behind it. But Tony, if you want to jump in.

Yes, sure, Dennis. Thank you. And the right-of-way is certainly one of many challenges that we've got to overcome here, but we feel really good about the project and the pathway that we've chosen and our competitiveness in this. And as Dennis said earlier, it's not just about price. It's also about the flexibility of the assets that you're providing and economic development benefits as well. So we feel really motivated about the package that we're putting together and bids are due on May 12 of this year, and we plan to be presenting very competitive proposal.

And look, I think it's been very public. The governor would like to get more renewable power from the Northern part of the state down to the city. And we're really excited about the response we've got so far based upon the announcement that we've made on the solicitation. Developers see this as a high priority project for them to be able to get their power down. So it's early. It's not in our plan. So again, it's upside, but it's something that we're really excited about.

We also think it won't -- what differentiates us here is this is a New York solution, an all New York solution.

Yes.

Okay. So -- and one last quick question on this, the follow-up. Do you have any wind sites in Northern New York that could be on this line?

Yes. So there's a number of wind farms in Adirondack and Southern Adirondack. Hardscrabble comes to mind. It's just North of Utica. Maple Ridge, there's a couple more up close to the border, North of the Adirondack Park that presumptively, along with many, many other wind farms would have access to this line.

Okay. Got it. I mean, so it would be existing wind farms? Or would it be new projects that you guys could do?

It could be a combination of both. That's really what the RFP that we just put out is to solicit from generators who would want to tap into the line. One other thing I'll just mention, Neil. This is -- I think I saw someone ask this question in a research note when we announced it. This is something we've been working on for a long time. We called it something different back 4, 5 years ago, called Connect New York. So it's a very similar concept -- this new project. So there's a lot of work that has been done over the years that puts us kind of a more advanced stage than many might think relative to having just announced it.

Your next question comes from Julien Dumoulin-Smith from Bank of America.

So if I can, I'll start with a couple small points here. Probably I missed them. The ITC benefits, you guys flagged them earlier here, obviously, a positive. Can we talk a little bit about how much of the ITC is flowing in, adding to your confidence on earnings? And I know you don't traditionally necessarily talk about the offshore economics in earnings terms per se. But if you can elaborate, however, you can? And then related to that, if you don't mind. COVID impacts going into '21, is there an ongoing impact there (technical difficulty) the quarter?

Let me start with the easy one. On the COVID impacts, we did provide some information in our appendix that gives some sensitivities or assumptions on what we think. I mean, obviously, we don't have the crystal ball there, but we do know what's going on right now. So you've got some information there that I think will help you understand how we think about it. On the second question...

Yes, Julien, this is Doug. Related to ITC, as you know, we have the Vineyard and Park City projects. With Vineyard, we had originally assumed 24% ITC for the first half of that project and 18% for the second half. Now when we're in a 30% ITC environment, that's obvious upside relative to our original economics. In the case of Park City, when we bid that project, we didn't really have an anticipation of qualifying for ITC, given the time frame that it was scheduled to go in service. So now with the expansion of ITC at 30% out through the date of this project, that would be ITC benefits that were not planned. We do expect, though, with that project, to have to share ITC benefits with the customers. So there will be some allocation between the project and customers on that particular item.

The other thing I'd say, Julien, given that we expect Park City and -- excuse me, Vineyard and Park City to come online in '24 and '25, that's right at the tail end of our -- the 5-year plan that we have. I guess it gives us additional confidence in the 6% to 8% CAGR growth that we provided in November. So at this point in time, we're not going to quantify exactly what that is. But it is a positive in both projects, more so in Vineyard, and we'll see the benefits of those in '24 and '25 and beyond.

Right. Got it. Okay. So -- and just to clear on the COVID. You haven't provided -- I see the appendix here. You haven't provided a total estimated impact in '21, that's because it's unclear, right?

Yes. At this point in time, we haven't. I mean, look, every state is moving quicker on certain things. If you look at here in Connecticut, the governor just announced that vaccines are going to be available by age group, including starting on March 1, people that are 55 and older, which I belong to that group, can now start making appointments to get their vaccines. New York is in a slightly different situation, although things seem to be improving a little bit more there. So we have not included a specific number. But as we have more information and as the year goes by, we'll provide updates.

So one final clarification. On the balance sheet, I think I heard you clearly, but I want to make sure I heard this right. So the financing plan through '25 hasn't changed. You're just providing clarity on '21. What's the total amount to come to market here? I know that there is a piece that isn't necessarily marketing, per se. What's the total amount that you would be coming forward with here, if you can clarify that? And also just to firm that this does not impact the total? I think it was like the 47% of financing needed through '25. I think that's the way you guys have shared that before.

Let's break it up into 2 pieces. First of all, again, in 2021, we're assuming related to the merger and additional CapEx needs that we'll be issuing up to $4 billion in equity by the end of the year. And that was part of our -- I think we had the $3.6 billion originally in our plan. But the $4 billion works still within the range that we've given -- with the outlook that we gave in 2022 in November. And then if you look at the next piece, what do we need beyond 2023 through 2025? What I said in my -- what I answered in one of the questions here is that's still 2.5, 3 years away. But based upon the plan and the sensitivities that we've done, a large portion of our overall needs are going to be financed by debt and by tax equity.

However, we'll probably need somewhere close to $2 billion in additional capital or proceeds. And we're looking to do those in the most beneficial way that we can, whether it's through recycling existing assets, hybrid securities. It could include equity. It could include asset securitizations. Or in some of the major projects we're talking about, we could decide to monetize a piece of that to a minority player, if it makes sense. So there's a lot of different options that we have. But because I know that you've been interested in this and others have, we wanted to be very clear that those sources or those levers that we have would probably add up to about $2 billion. And that is included in -- the sensitivity around that $2 billion is included in that 6% to 8% CAGR growth for EPS and adjusted EPS through 2025.

Your next question comes from Michael Sullivan from Wolfe Research.

I just wanted to follow-up on what's going on in Connecticut. I think one of your old cases at UIL was reopened related to COVID. And just what your expectations are there? And if this turns into a more traditional rate case? Or if there were plans for that at all, just the thinking on the Connecticut regulatory?

Sure. Let me start, and I'll ask Tony to jump in. I think one of the things -- we've continued to work closely with the regulators and the other intervenors to make sure that we understand what their sensitivities are related to COVID and the impact that it's had on customer bills and everything. So we want to be part of the solution here, and I think that we have been. But Tony, if you want to add to that?

Yes. So there's a few dockets that are underway. And certainly, with respect to COVID and uncollectibles and when we start collections and so forth, we've been fully engaged with all the parties there, PURA, DEEP and others, to make sure that whatever solution we put forward makes sense for ratepayers. And so we've been following that. There's nothing right now with respect to any significant change associated with that, but we maintain to follow whatever the guidance from PURA is as far as that goes. Connecticut was one of the first states that allowed for spending up regulatory assets related to COVID-related costs. And so we're happy about that, and they continue to monitor that. So we provide data on a regular basis. And we look forward to getting beyond this, so that we get back to business as normal for our customers and all our employees.

Okay. And just to clarify, though. Outside of this, was there a plan to file a UI rate case in the near future?

So UI is outside of its rate plan right now. Last time rates were increased for UI was January of '19. So we're evaluating that. UI has done reasonably well, and it's earning us a lot of return. And so we're happy about that. But as we look forward, there certainly will be a point in time where UI will need to go in for new rates. But at this point, we're still considering and evaluating that.

Okay. Great. And then shifting over to the Vineyard Wind process. I know you all said you're expecting resolution from BOEM in the first half of the year. Have they put out a specific schedule or any dates for milestones since you resumed the permitting process there?

They have not put out a specific schedule or calendar. Our team is continuing to work very closely with their staff to get them the information that they need. And -- but they have not. But we're optimistic based upon all the work that had been done prior to us temporarily pausing our application that they're moving forward. And I think that with the new BOEM Director being very familiar with wind and this being, I think, the trophy, marquee project for the Biden administration to say that they are totally supportive of wind, we're optimistic that this is going to happen sooner than later.

Your next question comes from Richard Sunderland from JPMorgan.

Maybe a quick clarification upfront. The up to $4 billion equity in 2021, that's -- IBERDROLA intends to participate in the entirety at their pro rata ownership. Is that correct?

Yes. They have communicated to us that they would like to maintain their current ownership interest, 81.5%. So it's our expectation based upon what they (technical difficulty) participate on a pro rata basis.

Okay. Got it. And then starting off at a higher level here, the sort of earned ROE improvement you're contemplating. I'm curious if you have any insight into the main process following the expected, I think, September filing. And I guess, for '22 specifically, if you expect to earn your authorized ROE on a networks-wide basis or at each individual utility?

Look, I think there's a couple of things there. Let's start with the second half of the question. Our plan is to be in a position including with Maine, to be able to earn our authorized at all utilities in 2022. We just got the New York rate case here in November. The outcome, I think, was a really strong one for us and for our customers and allows us to do a lot of things that we can do more of now that -- like vegetation management that increase the reliability and the resiliency that helps us to avoid penalties. So we think that in New York, for example, as the year goes through, we have the opportunity to at least earn our authorized ROE.

In the case of Maine, as you mentioned, we're doing very well with the 4 metrics that we have to in order to be able to file an application to get the 100 basis point adjust -- downward adjustment lifted. We haven't made a decision yet how early we may file that, but it's something that we -- obviously, we want to do as soon as it makes sense. And we're continuing to work closely with the commission. They're following our results as well as they should. But I think that, overall, we want to be in a position in 2022 to be able to at least earn our authorized ROEs at all of our utilities.

Great. I appreciate the color there. And then just one final one for me, if I could. You saw the earnings restatement. Just curious if you have any color there or sort of the work to improve internal controls?

Sure. Let me just clarify. It was not an earnings restatement. These were items from 2019 that the management and our outside auditors felt were 2019 items that should be reflected in the 2019 financial statements. And so we both agreed to make that adjustment. But there is a -- as you know, there's a difference between a restatement and an adjustment to a prior period. And in the case of the controls that we've had some challenges in the past, I think that we're continuing to make progress to improve the overall system of controls of the company. It can always be stronger, but that's something that we're focused on, and we're dedicating the resources to continue to have stronger controls going forward. I mean, Doug, I don't know if you have anything else.

No, I think that's right, Dennis. Just to clarify, this is technically called a revision, not a restatement. And so it simply means we're revising the numbers in our filings for 2019 to reflect the changes that Dennis highlighted. These are mainly tax items, and we have made tremendous progress in tax with improving our processes and controls. And I would say this is really more a function of those enhanced processes and controls identifying this type of item and positioning us well going forward.

Your next question comes from Sophie Karp from KeyBanc.

It's actually Sangita for Sophie. A couple things. One is, there seems to be a package of bills moving through the New York legislature dealing with COVID disconnects and penalties on storm outages. And I was wondering if you could elaborate a little bit on what you think if the disconnects get extended to the end of 2021, what that means for your guidance? And then I'll ask you a follow-up on the discount for storm outages.

Sure. I think in New York, we're watching and monitoring it very closely. I think that there are new bills that are being considered in their legislature. There are discussions about continuing to extend the moratorium on turnoffs and what might happen with past due bills and everything. So at this point in time, it would be truly speculation from us to say what's going to happen there. I think from an earnings perspective, we don't expect it to have any major impact there. If anything, it's more of a cash flow impact. But I think one of the things that we're continuing to do is look at different vehicles that we might be able to employ to be able to collect some of that cash sooner than later and yet not have an overall impact in the short term on customers.

Okay. And if there's any color you can provide on the proposal to impose rate discounts when the service disconnect or allowing the PSC to remove restrictions for penalties?

Again, it's a new bill that's been introduced. I don't think it's been fully debated. I think that there's recognition that you want to make sure that there's a level playing field and that reasonable judgment is included in any decisions that the utilities make. So again, we're continuing to follow this. We have strong opinions, as I think other utilities do, not just in New York, but throughout the country. The renewable standard is one that is very common and allows companies like ours and other utilities to make long-term investments and be using sound business practices given the situations they're dealing with.

That's very helpful. And if I can move on to Texas. I understand that your turbines performed better than some of the others. But I just wanted to find out, if -- are your turbines that are inland weatherized? Is that why they performed better? Or do you have plans to weatherize them?

I'll ask Alejandro to jump in. But I think part of the reason why is most of our turbines are actually the Southern part of Texas. So I think just geographically, where they were located, some of the cold weather lifted sooner than it did in other parts of Texas. But Alejandro, if you want to add anything there?

Yes, sure, Dennis. So yes, what you said is totally true. I mean we have -- as you know, most of our assets in Texas are in the Southeast. And obviously, they were less affected by cold than assets, say, further in the North. In terms of weatherizing the turbines, the answer to that is they are weatherized but for the Texas weather, which is more towards high temperature than the low temperatures. And just to make it clear. This is a choice you have to either decide whether you want them to be optimized for a warmer weather or a colder weather. So obviously, we optimized those turbines for warmer weather, and therefore, that's why we have suffered and the whole industry these difficulties they are facing.

Your next question comes from Angie Storozynski from Seaport.

So just I have to talk about Texas because I feel like I've been writing about it so much. I mean, you guys have pretty much told us how much money you made, right? You said 7% of wind power output during the cold snap, and we know what the wind power output was, right? So it's -- I'm just making sure that it's not as simple as that.

Well, I don't know that we've said how much money we've made. What we're trying to illustrate is that when you look at the wind capacity that we have, as it operates ordinarily, we were able to do better than we ordinarily would or at least given what we represent as far as the capacity of the overall market. And that's what enabled us to provide additional energy to the grid and to the customers of Texas. But I'm not sure that -- I think it would be very difficult to take that excess above our traditional capacity and try to ascertain what the financial implications are. Because, as you know, the price or the cost of -- or the price of the power changes on an hourly basis. So without knowing what was going on an hour-to-hour basis, I don't know how anybody would come up with that.

Yes. This is Doug. I'd just add too that portions of that generation are under power purchase agreement, and they would not have been selling into that high price market. We would have been collecting the price that was negotiated under the power purchase agreement.

But Angie, I think the important part for us is, we got these -- we got our wind farms up and running as quickly as we could. We served our fixed or limited fixed obligations and we provided excess power. And it gives us additional confidence that our $2.15 to $2.35 is very achievable.

Yes. Actually, speaking of that guidance, I mean, you're not providing us with the breakdown -- segmental breakdown. But again, even heavily haircutting performance of your assets and accounting for the PPAs and the firm contract in Texas, the year-over-year comp for Renewables is really easy. Then you have a number of assets that came online through the year in 2020. Again, you have some benefit in Texas. I mean, likely, for once I struggle with how conservative this guidance is. And I understand that you're trying to set it as such. But again, it would have probably helped if you showed a segmental breakdown, a segmental breakdown.

Well, Angie, first of all, nothing is easy in this business. You know that. But look, we did provide in our appendix some breakdown of what we expect from -- on a quarterly basis from both Networks and from Renewables. And I think you've got a pretty good sense as we talk about before we add on PNM at the end of the year, the Networks represents roughly 80% of the overall earnings contribution for AVANGRID. So even though we haven't provided the specific range by business grouping, I think you've got a pretty good sense there.

Okay. And the last question is on this NECEC referendum. So I understand that you're optimistic that the project is supported. But this referendum will take place in November. You are building the project as we speak. So what happens if the referendum goes against you in November? Yes. I mean, what happens with the spending?

Yes, Angie, it's Bob. Look, we're not going to get into hypotheticals on what happens. But at this point, as I mentioned earlier, we're seeing consumer sentiment strengthen around this project. People are understanding who's really behind this and the motives behind that in terms of the fossil fuel interest and they're concerned about losing money on their P&L as this energy comes on. So we are 100% focused on delivering the project on the schedule we have right now and ensuring that Maine and New England gets the benefits from this project that we expect.

The other thing, as far as the way that the referendum is structured, it's not specifically against NECEC, but it looks at transmission as a whole. And what it does is it brings into the judgment of the legislature on what they think should happen going forward. So it's not an automatic if the referendum does pass that, that stops the project. The legislator has to get involved there. And as Bob said, with the polling that we've been seeing from people and the support of the governor, we remain optimistic that people are going to continue to understand the benefit this brings, not just from a clean energy standpoint, but from an economic standpoint and job standpoint as well.

No, that's great. And then lastly, this up to $4 billion in equity. So is it $4 billion? Or is there a way to shave off some of that equity, especially associated with PNM? I mean, you haven't really, at least by my count, fully committed to the financing structure of that acquisition. So is there still some wiggle room?

Well, what we said originally was that we were aiming for roughly $3.6 billion in equity and roughly $700 million in debt. And I don't think we've deviated from that. So the $4 billion in equity, again, takes care of the merger, but also provides some additional funding to support the CapEx. And also, quite honestly, given some of the cash delays we've had from COVID in some of the states supports our balance sheet from that perspective.

Our last question today will come from Michael Gaugler from Janney Montgomery Scott.

I'll start off with so many wind projects coming online over the next several years, wondering if you've got any concerns about equipment or labor availability when you need it.

Michael, it's a great question. With the growth in Renewables, especially onshore, it's important to connect yourself with reputable and serious construction companies and contractors. And we're fortunate that given the scale of business that we do, being the third largest Renewables operator and developer in the country, we've got those relationships. But it is tight. And Alejandro, you may want to touch on that.

Thank you, Dennis. Yes. No, I agree with what you mentioned. It is true that 2020, as you know, has seen a huge increase in capacity construction, both in wind and solar. So it is a tight market. That is undoubtful. But here is where our experience and our track record and our relation with the supply chain placed in. We are trying to anticipate for these coming years our -- closing our contracts with suppliers to be able to not be caught in this market where, as you say, it's tight because of the level of development that we're seeing.

Okay. And then last one. And granted, look, it's certainly early days, but just wondering if you see any opportunities in ERCOT for new investment post the storm impacts?

Look, I think that we like the state of Texas. I think that when we complete the merger with PNM, we'll have a utility there, PNMP. We think it's a very constructive regulatory, business-friendly environment. You've seen a lot of companies moving to Texas because the governor and then the legislature and the regulatory bodies are very welcoming there. And if the opportunity presents itself, we'd like to continue to expand in Texas. We think it's a good market. Obviously, what happened here, this recent weather event, nobody would have wished on anyone. The people in Texas are smart. They will figure out the best way to go forward, and we want to be a major part of that solution going forward.

This will conclude today's question-and-answer session. I would like to turn the call back over to Dennis Arriola for closing remarks.

Well, I want to thank everybody for listening to our call. We know that it's a busy time of year. There's a lot of other calls going on. But I really hope that our excitement about the future is coming across. AVANGRID is truly in the sweet spot of the energy transition. And now it's time for our team to execute and to deliver by driving growth in our regulated and renewable businesses, by investing in a cleaner energy future and being a thought and innovation leader supported by a strong financial profile. Our ESG+F framework is what will drive our strategy and asset allocation decisions over the coming years. This is the new AVANGRID. We aspire to be the leading sustainable energy company in the U.S., and we're up to the challenge, and we appreciate your support. If you have any other questions, please follow-up with Patricia or Michelle. Stay safe, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.