TransAlta Corp (TAC) 2009 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the 2009 fourth quarter results and year end conference call. I would now like to introduce Jennifer Pierce, Vice President of Investor Relations and Communications. Please go ahead.

Thank you Patrick, and good morning everyone. Welcome to TransAlta's fourth quarter and year end 2009 conference call. With me this morning are Steve Snyder, our President and CEO, Brian Burden, our Chief Financial Officer, Dawn Farrell, Chief Operating Office, Ken Stickland, Chief Legal Officer, and Frank Hawkins, our Vice President and Treasurer. Earlier this morning, we released our fourth quarter and full year results. We hope you have had a chance to review them. Additional operating information will be posted on our website after this call.

All information provided during this call is subject to the forward-looking statement qualification, which is detailed in today's news release and incorporated in full for purposes of our call. The amounts referenced in this review are in Canadian currency, unless otherwise stated. In addition, the non-GAAP terminology used in this call including comparable earnings, operating income, and gross margin is reconciled starting on page 23 of the extended news release. Per share figures for the fourth quarter of 2009 are based on an average of 211 million shares outstanding, compared to 198 million shares in the fourth quarter of 2008. For the full year, per share figures are based on 201 million shares outstanding, compared to 199 million in 2008. Please note financial information has been rounded to the nearest whole number.

On this morning's call, Steve will provide an overview of operating results for the quarter and full year. Brian will provide details on our cash flow, capital allocation and balance sheet items, and before going to questions and answers, Steve will provide commentary on what investors can expect in 2010. Steve?

Thank you, Jennifer, and good morning everyone. Overall our fourth quarter results reflect the continued improvements and steady progress that we are making with our Alberta coal operations. As a result of these improvements, plus the ongoing strong performance of the rest of our fleet, our fourth quarter 2009 comparable earnings per share were CAD0.40, the same as last year. While we had lower planned and unplanned outages at our Alberta coal plants, and lower unplanned outages at Genesee 3, these gains were offset by lower hydro volumes, lower energy trading gross margins, and the continuing poor market conditions, in terms of both demand and price.

Our fourth quarter 2009 net earnings per share were CAD0.37, compared to CAD0.47 over the same period in 2008. Net earnings were lower in the quarter due to the write-down of mining development costs at Centralia in 2009, and a CAD15 million tax recovery in 2008. Looking at the full year, comparable earnings were CAD0.90 per share, compared to CAD1.46 per share achieved in '08. Full year net earnings were CAD0.90, compared to CAD1.18 in 2008.

While this was a disappointing year financially for the Company, the revised maintenance plans we implemented during the year are delivering the higher availability we expected, and have put us in a sound operational position coming into 2010. Fleet availability for the fourth quarter was 87%, up from 86.2% a year ago. Our natural gas fleet achieved 95% availability, and our renewable fleet continued to perform very well, averaging approximately 97%. Overall fleet availability was impacted by the planned outage at Sundance 5, and higher unplanned outages at Sun 4, one of our Centralia units, and at our Wab 4 unit. The latter remains on course to be decommissioned at the end of this quarter. Our team there is doing a terrific job of running the plant during this challenging period.

For the full year, fleet availability was 85.1%, down from 85.8% in '08, primarily due to the higher planned and unplanned outages at Alberta Thermal, and higher unplanned outages at one of our Centralia units. As we reflect back on 2009, our financial results were below our expectations. The TransAlta team is fully focused on improving that performance in 2010.

But we also had some key significant successes in 2009. We made excellent progress on our key strategic imperatives. We improved the returns of our Sarnia facility by recontracting it out to the end of 2025. We enhanced our renewable portfolio by acquiring Canadian Hydro, and completing construction of our Blue Trail wind farm. These added over 750 megawatts to our portfolio, and grew our renewables from 15% to 22%.

We achieved government funding commitment for over CAD770 million to proceed with North America's largest carbon capture and storage project, Project Pioneer. And finally, we have realigned our major maintenance plans on a unit by unit basis, to best reflect each unit's operating parameters, and the markets in which they participate. These changes should benefit us directly in 2010 and in the long-term.

Now before I highlight what to expect in 2010, let me turn the call over to Brian Burden.

Thank you, Steve. This morning I will cover our cash flow performance both in the quarter and for the year, our operations maintenance and administration expenses, an update to our sustaining the growth CapEx spend for both 2009 and 2010, and an update on our liquidity and financial metrics.

Cash flow from operations in the fourth quarter was CAD246 million, compared to CAD428 million a year ago. While we had higher cash earnings in the quarter, our changes in working capital were less favorable than they were last year. For the full year we achieved cash flow from operations of CAD580 million, down from the CAD1 billion achieved last year. Cash flow was lower in 2009 due to overall lower cash earnings, unfavorable changes in working capital, and one less PPA payment receipt, which in 2008 accounted for an additional CAD116 million.

As we look forward to 2010 we expect cash flow from operations to be in the CAD850 million to CAD950 million range, driven by higher cash earnings, including the acquisition impact of Canadian Hydro. Our operations maintenance and administrations costs for the quarter decreased CAD21 million compared to last year as a result of less planned maintenance activities in the quarter, lower compensation costs, and also due to targeted cost savings. For the full year, our M&A costs were CAD30 million higher than last year due exclusively to the increase in planned major maintenance.

Turning to our capital spend in 2009. During the fourth quarter our total sustaining capital spend was CAD98 million, bringing the total for the year to CAD380 million, which is directly in-line with our target for the year. Our growth CapEx spend in the fourth quarter was CAD132 million, for a total of CAD510 million spent in the year. Included in the growth capital in the fourth quarter was an accrual of CAD18 million related to our Kent Hills expansion that we announced in January. This brings our total capital expenditure for the year to just under CAD900 million.

As we move into 2010 our sustaining capital spend will be in the range of CAD295 million to CAD340 million, an increase from invested that relates primarily to the acquisition of Canadian Hydro. The breakdown of this spend can be found on page 23 of the extended news release. As it relates to major maintenance, the overall spend is now in the CAD200 million to CAD225 million range, and the quarterly split for the major maintenance spend is expected to be, quarter one 30%, with approximately 500 gigawatts of lost production. Quarter two 40%, and approximately 1,050 gigawatt-hours lost. Quarter three 20%, approximately 300 gigawatt-hours lost. And quarter four 10%, with approximately 300 gigawatt-hours lost.

On growth CapEx for 2010 the total expenditure is now estimated to be in the range of CAD460 million to CAD520 million, up from the CAD360 million to CAD450 million that we presented at Investor Day, and the difference relates to CAD80 million to CAD85 million for the Kent Hills expansion that we announced in January, and an additional CAD20 million for Bone Creek. TransAlta's overall cost for the project is CAD48 million, and from a return perspective on an incremental basis Bone Creek meets our hurdle expectations. The breakdown of our capital growth spend for 2010 can be found on page 22 of the extended news release.

Looking at our balance sheet strength, as always we continue to focus on maintaining our investment grade status. As we stated at Investor Day, with the acquisition of Canadian Hydro, our ratios will be tighter this year, but we expect to have greater flexibility to improve these in 2011 and 2012. At December 31st, our ratios were as follows. Cash flow to interest coverage was 4.9 times. Our range here is 4 to 5 times. Our cash flow to debt was 20.1%. Our range here is 20% to 25%. And our debt to total capital was 56.1%, with a range of 55% to 60%.

We continue to maintain ample liquidity through the CAD2.1 billion we have in committed credit facilities, and as of December 31 we had CAD700 million still available to us. In 2009, we raised considerable debt and equity capital in both Canada and the US, primarily to fund the Canadian Hydro acquisition. The markets were very receptive to the new issues, reinforcing our financial strategy of maintaining a strong balance sheet and investment grade ratings.

With that, I will turn the call back over to Steve.

Thank you, Brian. As we look forward to 2010, we will continue to drive our base operations to increase availability and improve financial performance. We have come in for the year operationally stronger than where we were a year ago. We are confident in being able to achieve our goal of 90% overall fleet availability.

With regards to our core markets, we are still facing some very trying economic times. Natural gas and power markets have yet to show any clear signs of recovery, In Alberta, forward prices for 2010 and 2011 remain depressed, and are currently trading in the CAD45 to CAD50 per megawatt-hour range. While we expect demand in the province to grow by around 2% per year over the same period, heat rates in the province remain well below historical trends. In the Pacific Northwest, forward prices for 2010 and 2011 are also in the $45 to $50 per megawatt-hour range. Here we expect demand to grow by approximately 1% in each of 2010 and 2011. A full recovery will take some time. Strengthening in both these markets will depend on the recovery in natural gas prices as well as the economy. Our plans are based on that not occurring until 2011.

It is prudent for us to plan on the basis that any economic recovery will take longer than many might hope for. This requires us to remain disciplined with our cost structure. For 2010, we expect to hold our operations maintenance and administration costs flat compared to 2009. And while there is lower major maintenance in 2010, we do have additional OM&A costs as a result of the Canadian Hydro acquisition.

As it relates to coal costs, in Alberta we expect costs to increase 5% to 10%, due to higher depreciation costs related to mine capital investments, as well as higher diesel costs. In Centralia, there is no change expected. We will continue to manage these costs prudently, as we continue to realign our cost structure to the current economic environment. We will also continue to follow our ladder contracting strategy. These actions will better provide for earnings and cash flow growth and stability, while keeping our options open and flexible.

Our contracting strategy is based on the principle of maintaining our low to moderate risk profile. We will continue to contract to our targeted levels each year, while retaining some flexibility with the timing of our contracts, and amount we contract in each of our core markets. Currently for 2010 we are 89% contracted, and in 2011 we are 83% contracted. Our contract pricing in each of these years is above the current forward market. In Alberta, our average contract price for 2010 is in the CAD60 to CAD65 range, and in the CAD65 to CAD70 range for 2011. In the Pacific Northwest for both 2010 and 2011, we are contracted in the $55 to $60, US dollar range.

Now that said, our open length is slightly higher this year, and the spot prices we can capture are probably lower than they have been for many years. Year-to-date prices in Alberta have averaged only CAD44 per megawatt-hour. The Pacific Northwest has also been about $44. Price volatility in Alberta has also been much lower, due to higher availability from our fleet. And separately, we are seeing strong El Nino conditions. This has the seasonal impact of reducing wind supply compared to previous years.

Let me shift our focus now to talk about the emerging environmental policies, and how TransAlta is responding and adapting. Although the current tough economy may delay some of the proposed target implementations, it is likely that will result only in a pause, and not a substantive change in direction. Our plans are built on the premises that the market will demand greater use of non-fossil and lower-emitting fossil fuels, as well as the development and application of cost-effective technologies that substantially reduce carbon emissions.

TransAlta is very well-positioned and prepared for this new era of generation. We have a strong existing renewable base, excellent renewable resources to develop, and skilled and proven teams in place to build and operate them. We have expertise in and opportunities for growing our combined cycle natural gas facilities. This could include transitioning select coal facilities to natural gas fuel. We are a leader in developing and understanding carbon capture and storage technologies through Project Pioneer. Our front end engineering and design work is underway, and we are proactively working with officials in Washington State, to develop plans to reduce Centralia's CO2 emissions by at least 50% by 2025.

We also recognize the large degree of uncertainty that currently exists with regard to technologies, emission targets and mechanisms, as well as natural gas prices. For these reasons, our plans are multi-year in nature, incorporate multiple decision points, and have multiple built-in off ramps, that allow us to adapt to the changing landscape of an environmental policy before committing any large capital outlays. All of this work is well underway and will ensure we can profitably adapt to any future market conditions.

To conclude today's conference call, I want to just touch on how we will continue to drive our growth strategy and green our portfolio. As we have shown, our growth strategy is sound. In 2009, we invested over CAD2 billion in growth projects. With commercial operations of our Sundance 5 upgrade and our Blue Trail wind farm, in addition to the acquisition of Canadian Hydro, we grew our portfolio by over 800 megawatts. Last month we announced an expansion to our Kent Hills wind farm of an additional 54 megawatts, supported by a long-term contract.

We remain very cost competitive with our wind business. This expansion was built for only CAD1,850 per kilowatt, versus a Canadian average of over CAD2,100. Once complete in quarter four of this year, we will have over 2,000 megawatts of renewable capacity in operation, substantially outpacing any other publicly traded renewable provider in Canada. And based on bringing our current projects under construction into service by 2012, almost 25% of our portfolio will be green, and contribute approximately 30% of our EBITDA.

In 2010, we will continue to demonstrate our solid growth track record by delivering our projects on time and on budget, and by executing on new opportunities that meet or exceed our 10% hurdle rate. Our focus on driving our base operations, repositioning coal for the future, and greening our portfolio, are how we will deliver shareholder value. With that, I will turn the call back over to Jennifer for our question and answer section.

Thank you, Steve and thank you Brian. So that we may rotate through callers, as you know our practice is to take one question and one follow-up from each caller, before moving down the queue. We shall answer questions from the investment community first and then open the call to the media. We shall then respond to individual investors. So please identify yourself when asking a question. I remind you that we do not provide guidance, and that we shall answer your model-related questions offline after the call. Patrick, we are happy to take questions now.

Thank you, we will now take questions from investors and analysts. (Operator Instructions). We have a question from Sam Kanes from Scotia Capital. Please go ahead.

Good morning. Just for clarity with respect to your power purchase agreements you cited power purchase agreement demand was down in isolation in your reconciliation of your generation. The way I understand it, and please correct me if I am wrong, if you are available, and your buyer under a power purchase agreement does not want to take that power due to weak markets or weak pricing or whatever, you are kept whole are you not, with respect to being available at that point in time?

Basically, Sam, as you said this has come up previously. It doesn't impact us on our margin and our revenue. As you say, it is just that we are not called on at that time. So we obviously show it in production because we have got lower production, but it doesn't impact our profitability.

With respect to that, you also cited the California market there is some material change in rules that has kind of reduced your opportunities within the COD business. Can you just briefly explain what they are and are they permanent?

I will ask Dawn Farrell, who heads up our trading operations to respond to that, Sam.

I think, Sam, what has happened in the California market is that the market has gone to a pool, similar to Alberta, as opposed to all of a bilateral market, and what that has done is it's reduced the volatility between the various regions and tended to reduce the opportunity for moving power around in the region and making margin. So what the traders have to do is determine if there are other strategies for making money this year and next year.

So it does appear to be permanent, Sam, and we will adjust to suit that, and hopefully we will do better in 2010.

Okay. Thank you.

Thank you. The next question is from Bob Hastings from Canaccord. Please go ahead.

In terms of Wab 4 it's coming off at the end of March, how does that trail down? Does it just turn off automatically one day, or it is tailing off through the month?

Basically it just goes until midnight and then you stop putting coal in it, simple as that. It is naturally trailing off Bob a bit just because we're not putting any money into it, so availability will be a result of whatever it can get out. But it is performing remarkably well for a plant that age, with not a lot of money put into it the last few years. It will still be running at midnight, they'll flip the switch, and we will have a party.

Canadian Hydro, can you give us an update on retention of people there, how that has been, and also if you have encountered any surprises as yet? There is always something when you take over a large corporation.

Bob, Steve here. Let me stay up front, the process of integration has gone to this point very well. We have a new organizational design. All the people have been moved from their old offices into our offices, and are at their desks and working, and that part has gone very well. In terms of retention, that has also gone well. The very senior team, the top four or five people, all as you are aware had change of control contracts, which we expected they would execute on, and they did. And so they have left, but the bulk of the rest of the team is here, and working well. I think to be honest, we won't know the full impact for probably a full year, but the early signs are all very good. We have no unexpected surprises now. We did have a chance to do some due diligence obviously, and ups and downs, but net/net tracking as we planned.

Okay. And no surprises?

No surprises at this point and we will just keep working them, and they have the same issues any development program has, you get some pluses and some minuses, but net/net as expected.

Okay, thank you.

Thank you, the next question is from Matthew Akman from Macquarie, please go ahead.

Thank you. I had a couple of questions on operating costs. I think, Brian, you said that operating costs would be sort of flat year-over-year. Can you just maybe detail a little bit, how much less will you be expensing relative to planned maintenance on the coal plants? And I guess what you are saying is that the reduction in that is essentially being offset one for one for the operating costs of the KHD assets?

Yes, that is basically it. It is round about CAD30 million, so we have got about a CAD30 million reduction in planned maintenance, and then we have got around about the same amount, probably CAD20 million, CAD25 million on extra cost in Canadian Hydro, and then basically the rest of the costs are broadly flat, Matthew.

For the past few years we have seen an overall escalation in coal costs in Alberta, and again you are guiding to higher in 2010. That is supposed to flow through the PPA contract by way of indices, and I am just wondering whether you are seeing the higher revenues that are supposed to be associated with higher costs in things like diesel inputs?

Yes, we do see some flow-throughs but we do have in this year obviously, we have the K3 drag line that comes on, which has increased depreciation that comes through there, and as you know, part of it because we are partly merchant doesn't get covered up, and also diesel costs as you know have moved up quite a bit in the last year, although we did hedge quite a bit of that. So it's really some of the K3 depreciation coming through, and some of the investments we've come through, plus a bit of the diesel cost. And then as you say, a lot of the general cost escalation are covered through the PPA. So that is our best view. Obviously, as you know, we try and recover what we can through the PPA mechanisms, but as we look at that at this stage, the 5% to 10% is our best call at this point.

And they do lag by about a year or so. So we play a bit of catch up on that.

Okay.

Yes, that is true.

Okay, thanks, guys.

Thank you. The next question is from Michael McGowan from BMO Capital Markets. Please go ahead.

Hello, good morning. I didn't see it in the earnings release, but could you talk about the contribution or the earnings reduction caused by the Canadian Hydro acquisition in the fourth quarter?

The impact of Canadian Hydro in the fourth quarter is immaterial. Obviously it was only for a couple of months, and therefore it was less than CAD0.01, so it was immaterial to our results in the fourth quarter.

Okay. And have you gone through all of Canadian Hydro's growth projects at this point, and if so, could you highlight potentially which ones you are focusing on building out over the next few years?

We are in the process of going through them all. We have done the first pass, we are going through now the second layer of detail. I think net/net we are seeing what we expected to see, in terms of how we valued that. Remember, we put some value on their development stream, not a whole bunch. The real value here was in their operating assets, and in the tax pools and other things like that, and in synergies. Now I would say we are working particularly to focus on the longer term hydro projects, and they will take some time, but right now they all seem to be what we expected.

So then was your outlook significantly -- near term growth outlook for say between 2010 and 2012, on what was economic, quite different than theirs?

Well, I think we had different assumptions on markets and everything. Having said that, we knew their portfolio, we knew ours, and now we are just blending those two together to suit today's market conditions, so that is the simple process we are going through.

We will just select the best projects with the better returns and what fits our strategy as we go forward, and Dawn's development team is doing that constantly.

I think we will state again on our capital allocation process, any project we do has to meet our hurdle rate, and we will do it against a low risk profile, which means generally we need a high percentage to be contracted, and we will pace them to ensure we have a strong balance sheet, and so we are going through that priority process right now. The good news is the more projects we have the better chance we have of heading projects that hit our priority rate, and we then manage the timing better.

Okay, thank you.

Thank you. The next question is from Robert Kwan from RBC Capital Markets, please go ahead.

Good morning. If I could just ask about the hedging policy. Steve, you talked about adhering to the good discipline of the laddered strategy, but it sounds like you left the door open a little bit to some tactical deviations. So based on what you are seeing in the forward market right now, is this one of those times where we might see you not hedge as much power as you go out for two or three years?

I think basically we have said that we are going to be consistent, and stick to our ladder strategy. I think what you have seen us talk about, is we do give parameters that we are given by the Board, to be able to time when we do that and look for any peaks or troughs, but we do believe that this is the best thing to stick to the ladder strategy. We did lots of analysis on being fully open and different variances, and we do believe that the ladder strategy is the best way to go.

Okay.

I think the market is what I said in my comments, it is pretty uncertain right now. We will have a tendency in the short-term where we see some opportunities, to probably lock in prices versus leave it open in the short-term as opposed where two years ago, we might have been more open, if we saw rising prices we would have a tendency to leave them open, if we see prices sort of flat or even down, then we will have a tendency when we see opportunities to take advantage of them.

By looking at the --

And I am talking one or two years.

So your feeling is that the forward curve might actually be above where you think power prices are going to be?

The forward curve keeps adjusting, and so if we see where it is adjusted up for a short period of time, overall we will think it is going to be a not very aggressive forward curve. So in the short term where we see spikes for whatever reason, we will probably say that is a good price, and lock in a bit of that volume if we can.

Just my other question is with the low power price environment, and therefore a little bit of pressure on the cash flow, just what are your thoughts with respect to the pace of new project development?

I think as we have always done, you know, we look at our capital allocation and we look at A) what we can afford within our balance sheet. We look at whether projects, we could raise equity for them, or have other means. Canadian Hydro was a good example. And as you look at greenfield, if you have greenfield great projects that are long-term contracted, then we could as we move forward look at whether we want to raise equity, or whatever. I think if something was merchant on greenfield obviously you would want to cover that within your own balance sheet. We will keep looking at that balance, but obviously we are going to make sure we maintain investment grade. If that means we have to grow a little bit slower we will do. But we would like to continue to grow the megawatts, because we think that is the best way to draw earnings over the long period. We will look to manage that, but obviously always within our investment grade.

Great. Thanks, Steve, thanks, Brian.

Thank you. The next question is from Andrew Kuske from Credit Suisse. Please go ahead.

Good morning, just a question as it relates to your contracted position in 2011, I believe Steve you mentioned 83% of your portfolio is going be contracted in Alberta specific in 2011. Is any of Keephills 3, your portion of Keephills 3 in that number?

It is all included. Yes, when we do our outlook for the next five years, we include all of our merchant assets coming on, and that would include our thoughts on Keephills 3.

We tend to, as you know in Alberta particularly, we tend to look at this as a portfolio basis anyway, as opposed to as specific assets.

When you think about the prices that you've contracted Keephills 3 at, that is sufficient against your hurdle rates that you've targeted?

I think as we have looked at K3, I think we have said this previously, and as Steve said, the market curves keep moving, we still see that as a very attractive project, and therefore and obviously we are so far along we are going to complete K3, and then move forward on it.

If you look at all the power groups going forward, K3 exceeds all of our hurdle rates, Andrew.

And then if I may just ask one final question just on synergies with Canadian Hydro, I know it wasn't really a huge part of the acquisition, but if you could just give us an update on any synergies that you expect to see, anything that you have already achieved, and how that will unfold in the next year or so?

As we said, it is quite small, but we do believe we will make the G&A synergies that we said we would make. As you know, a lot of these are related to, you had two public companies, now you have got one. That type of savings, and some people savings. Obviously as we work through, there may be some further synergies we find in the operations side, but the teams will work through that, and make sure we have got that best economic value as we move forward.

I think Andrew, simply put, I think we said that we estimated around CAD10 million, and the simple answer is we've basically achieved that.

That is helpful, thank you very much.

Thank you. For the analysts, (Operator Instructions). There are no further questions registered at this time. Now for the media, (Operator Instructions). We have a question from Pam Russell from Platts. Please go ahead.

I was just, the negotiations on the Centralia plant seem to have been going on for quite a long time, and I was just trying to get an update on what the status was on that, and what the next step was on that agreement to reduce carbon emissions?

Well, it's Steve here, Pam. I would not characterize them as having gone for a long time. It was really the past year that we have sat down with them and they sorted out what some of the targets are. We have agreed to a plan that says during 2010 we will work with them to see what that plan may be, and that plan would then have to go to the state legislature in the 2011 period for formalization, ratification, and potential changes. So I think it is a complex issue, it will take time, and I think it is going actually quite well, and quite speedily given that complexity. So I would say right now it is on track. But it will take 2010 and 2011 to sort all of that out probably.

Thank you. So that is a 50% reduction by 2025?

That is their target. There are a lot of things at play here, it is not just a target. The state is interested in preserving jobs in the area. They need to ensure system stability in the area, and they are concerned obviously about costs of power in the area given the tough economic times. And all of those are going to be taken into account, and of course from our side, our prime interest is ensured that we not only help our customers, but that our shareholders get a fair return in any changes. I think all that can be accomplished. It will take the full two year period to do that I believe.

Okay. And just as a follow-up, have you been getting any pressure with the Northwest Conservation and Power Plan, and their mention of shutting down coal plants to reduce carbon emissions, as well as the changes with the Boardman plant, that they are talking about shutting down earlier than originally, and there seems to be a lot of pressure on shutting down Boardman. What kind of pressure have you gotten from environmental groups, or state or other agencies, on possibly shutting down, or have you in the discussions with shutting down Centralia?

Certainly some of the environmental groups like Sierra Club and others, have goals to effectively in their opinion, that coal should be shut down and quickly. Not everyone agrees with them obviously, and that is why we have the process that we are doing. Our own view of it is that on the environment is that we don't have necessarily a dissimilar goal. We think we should be working hard to reduce our emissions. We do think though there is time to do that, and we do have multiple stakeholders we have to take into the consideration. Our shareholders, customers, and system stability. We think in that whole mix of things we will find an answer where everyone feels it is the correct answer. It will just take us some time to get there, because it is a complex situation.

Thank you very much.

Thank you. (Operator Instructions). There are no further questions registered at this time. I would like to turn the meeting back over to Ms. Pierce.

Great. Thank you, Patrick. I am wondering if we want to give the investment community a final opportunity if they had any final questions up to the media?

(Operator Instructions). There are no questions at this time.

Great. Thank you, Patrick. And thank you to all that participated on our call this morning. Obviously Jess and I are available to answer any further questions that you may have. Thank you, and have a good day.

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.