埃克西爾能源 (XEL) 2015 Q1 法說會逐字稿

Good day, and welcome to the Xcel Energy first-quarter 2015 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Paul Johnson, Vice President of Investor Relations. Please go ahead, sir.

Good morning, and welcome to Xcel Energy's 2015 first-quarter earnings release conference call. Joining me today are Ben Fowke, Chairman, President, and Chief Executive Officer; Teresa Madden, Executive Vice President and Chief Financial Officer. In addition, we have other members of the Management Team in the room to answer questions.

This morning, we will review our 2015 first-quarter results, reaffirm earnings guidance for 2015, and update you on recent business and regulatory developments. The slides that accompany today's call are available on our webpage. In addition, we will post a video on our website of Teresa summarizing financial results later this morning.

As a reminder, some of the comments during today's conference call may contain forward-looking information. Significant factors that could cause results to differ from those anticipated are described in our earnings release and our filings with the SEC.

Today's press release refers to both ongoing and GAAP earnings. First-quarter 2015 ongoing earnings were $0.46 per share, which exclude a charge of $0.16 per share following the decision by the Minnesota Commission in the Monticello nuclear prudence review. GAAP earnings for the first quarter were $0.30 per share.

Management believes ongoing earnings, which removes the impact of charges related to the prudence review, provide a more meaningful comparison. As a result, the comments on today's call will focus on the first-quarter ongoing earnings of $0.46 per share. With that, I'll turn the call over to Ben.

Thank you, Paul, and good morning. Today, I'm going to provided a business update, review several recent regulatory outcomes, speak to you about our legislative efforts in Minnesota and Texas, and discuss our recently increased dividend growth objective. Teresa will provide more detail on some of these items.

We are beginning 2005 (sic - "2015") with a solid start. While timing and weather differences led to some variability in the quarter, our earnings remain on track, and we are reaffirming our 2015 guidance range of $2 to $2.15 per share.

In February, we increased our dividend almost 7%. We also raised our annual dividend growth objective to 5% to 7% and established a formal payout target of 60% to 70%. These actions reflect our confidence in the Company's long-term strategic plan, the strength of our balance sheet, and our projected cash flows.

From an operational perspective, we met key milestones in our transmission business, as we energized the final sections on two of our major CapX, 2020 projects, bringing the lines into service on time and on budget. The region will derive meaningful benefits from these valuable assets.

We are also pleased to be named the number one wind provider in the country for the 11th straight year by AWEA. We are pleased to be included in Forbes Magazine of the 100 Most Trustworthy Companies in America, and to be recognized as the Best for Vets Employer.

From a regulatory perspective, we brought three major proceedings to a close. In Colorado, the Commission approved our three-year electric regulatory plan. This constructive multi-year settlement provides rate certainty for our customers and revenue certainty for the Company. This represents the second multi-year plan we have implemented in our Colorado electric business, and we believe that this agreement can serve as a blueprint for our pending natural gas rate case.

Turning to Minnesota, we continue to believe we acted prudently throughout the construction process at our Monticello Nuclear facility. The important takeaway is that our customers and the region will benefit from a safe, reliable, and diverse fuel mix, including nuclear, for many years to come. While we disagree with some of the Commission's findings, and we will need to review the final order, it does represent resolution of an issue that has been an overhang on the Company.

Finally, in our inaugural multi-year rate case in Minnesota, we were encouraged that the Commission generally agreed with the ALJ recommendations in the proceeding and supported the Company's position on many of the key issues. While we would have preferred to avoid a 2016 regulatory filing, and we felt we provided a path to do so, we believe the final result was a reasonable outcome.

However, we continue to believe there is an opportunity for future improvement and streamlining of the regulatory process. We feel that more specific legislation will facilitate this and provide greater predictability for customers and the Company.

In order to achieve the ambitious state and federal policy initiatives that are quickly approaching, it is important that the Company have additional tools at its disposal to meet these evolving requirements. As a result, we've been proactively working with key stakeholders on a multi-year plan regulatory bill currently being considered by the Minnesota Legislature.

Some of the key components of this regulatory compact include expanding to a five-year multi-year plan, allowing for formulaic recovery of capital investments, recovery of O&M expenses based on our electric industry price index, continuation of interim rates while the plan is under consideration, and protections in the event of unforeseen developments. The proposed multi-year plan legislation is contained in the Omnibus House Energy Bill. The State Omnibus Energy Bill does not include the multi-year plan legislation.

The energy bills have passed the floor vote in both the House and the Senate. The bills will now be reconciled in conference committee, and we expect a final bill will include the multi-year plan legislation. Once the committee has reconciled the bill, it will be sent back to the Senate and House for a vote, and while the process remains fluid, we are cautiously optimistic regarding its passage. If successful, we will look to incorporate components of the bill as appropriate in our rate filings in the future.

In Texas, we have worked with various stakeholders on a bill that addresses regulatory lag. The regulatory bill passed out of the House committee earlier this month, and we are waiting for to be scheduled for a vote on the floor. The proposed legislation provides for the inclusion of post-test year rate base additions and supports the implementation of more timely surcharges. However, industrial customers continue to have concerns with the bill, and we are currently working to resolve these issues. We are hopeful that the bill will be passed into law, as it is an important step toward reducing regulatory lag, and would help to facilitate investment in the growing areas.

Late last year, we discussed our plans to focus on incremental growth opportunities in transmission and natural gas assets. Recently, we've been socializing the concept of rate-basing natural gas reserves in Colorado. We are working with stakeholders to see if we can schedule a series of discussions to explore the concept of rate-basing natural gas reserves and how to best take advantage of the current low natural gas price for the benefit of customers and the Company alike.

Finally, I wanted to brief you about an exciting new investment that we are pursuing. Courtenay is a 200-megawatt wind power purchase agreement that NSP-Minnesota signed in 2013. For various reasons, the developer has decided to exit the project, providing us an opportunity to pursue ownership of the wind farm, and to ensure that our customers will benefit from the addition of cost-effective wind generation.

We are seeking regulatory approval in Minnesota and North Dakota to take this project over and eventually place it in rate base. The facility is expected to be in service at the end of 2016 and cost approximately $300 million. The project is not included in our current five-year capital forecast, and we don't anticipate needing to issue any incremental equity to finance it.

We have made significant progress in the first four months of this year, and I look forward to making even more progress in the coming months. With that, I will turn the call over to Teresa.

Thanks Ben, and good morning. Today, we reported ongoing earnings for the first quarter of $0.46 per share, versus $0.52 per share last year. While the quarter was subject to some timing differences and an adverse weather comparison, the results were in line with our expectations.

The most significant driver in the quarter was improved electric margins that resulted from new rates. However, the weather comparison versus 2014 was significant, causing a $0.05-per-share negative variance. Increased O&M and depreciation, along with a higher effective tax rate, were also notable offsets.

Now let me provide an update on sales and the economies in our local service territories. Weather-normalized electric sales increased 0.5% for the quarter, and natural gas sales rose 2.9%. In the first quarter of 2014, we experienced very cold weather. As we all know, the weather-normalization process is not an exact science, and it is possible that our first-quarter 2014 weather-normalized sales may have been somewhat distorted. With that in mind, we continue to be confident in our 2015 electric weather-adjusted sales growth assumption of 1%.

Let me provide a little more detail on sales growth by company. Beginning with NSP-Wisconsin, weather-adjusted retail sales increased 1.7%, due primarily to growth in the oil, gas, and sand mining relating businesses. Electric sales at SPS increased 1.9%, driven by growth in both the residential and C&I classes.

While we are closely monitoring the impact of oil prices on production activity, the Permian Basin has been resilient. PSCo's electric sales increased 0.4%, which was primarily attributable to strengths in the C&I class due to expansions in the healthcare and technology services sectors. Finally, NSP-Minnesota's electric sales decreased 0.5%, as usage declines more than offset new customer additions in both the residential and C&I classes.

Overall, our service territories remain healthy, particularly relative to the rest of the nation. Consolidated unemployment in our regions is 4.2%, well below the national average of 5.6%. The number of jobs in our regions grew 2.5% during the quarter, compared with 2.3 % for the nation.

Focusing on earnings for the quarter, ongoing electric margin increased $40 million. Key drivers included non-fuel riders that increased margin by $34 million, largely reflecting the Clean Air Clean Jobs rider in Colorado which became effective in January 1, 2015; the implementation of final and interim rates increased margin by $23 million; and increased net transmission revenue, which improved margin by $7 million. Offsetting these positive factors was an unfavorable weather comparison year over year of $25 million, as well as a few other less significant items.

It is worth noting that during the first quarter of 2015, we took a conservative approach to revenue recognition. During the quarter, we continued to book revenues at the 2014 interim-rate level, and did not assume that the Minnesota Commission would approve our netting proposal, which would have increased revenues by just over $10 million. If the MPC approves our interim-rate netting proposal, we will record revenue in that period at the higher authorized level, retroactive to January 1, 2015.

When thinking about margin comparisons for the remainder of the year, it is important to remember that as we moved through the balance of 2014, we recorded increasingly larger potential refunds to customers, ending the year with a rate increase consistent with the ALJ recommendation. Due to these timing factors, we expect an improving margin comparison in Minnesota for the remainder of the year.

Margins on the natural gas side of our business decreased by $12 million for the quarter. This is primarily due to the negative weather comparison, which more than offset higher rider revenue and retail sales growth. O&M expenses increased $26 million in the quarter. The higher level is almost entirely driven by the timing of planned outages. We remain confident that we will achieve our annual O&M growth assumption of 0% to 2%.

Depreciation expense increased $27 million for the quarter, due to capital investment and lower amortization of the excess depreciation reserve in Minnesota. Finally, other taxes increased about $12 million, largely driven by higher property taxes in Minnesota and Colorado.

Next, we will provide an update on several regulatory proceedings. Additional details are included in our earnings release. During the quarter, as Ben indicated, we made significant progress with our regulatory agenda, resolving three key proceedings.

Beginning with Minnesota and our multi-year rate filing, we were pleased that the Commission recognize the strength of the Company's argument and largely accepted the recommendation of the ALJ. Based on our interpretation of the Commission's oral deliberations, we estimate a total revenue increase of $168 million, which compares to our revised request of $221 million. The Commission approved a 9.72% ROE, an equity ratio of 52.5%, and a three-year decoupling pilot. We view this as a reasonable outcome and expect the final written order in May.

We also concluded final deliberations in our Monticello prudence review. The Commission approved a full return on $415 million of the project's $748 million total cost, however, allowed recovery of the investment with no return on the remaining $333 million. As a result, we recorded a one-time, pre-tax charge of $129 million during the quarter. We estimate that the 2015 ongoing pre-tax impact of the decision will be approximately $16 million on a total-Company basis.

Finally, in February, we were pleased that the Colorado Commission approved a settlement and our electric rate case. The final decision reflected an overall revenue increase of $53 million in 2015, an ROE of 9.83%, and an equity ratio 56%. In addition, we have implemented forward-looking riders for our Clean Air Clean Jobs and transmission related spending. The agreement covers 2015 through 2017 and continues the productive multi-year regulatory compact that we have been operating under since 2012.

In March the PSCo filed a multi-year natural gas rate case covering 2015 through 2017. We are requesting a 2015 rate increase of about $41 million, and subsequent step increases of $8 million in 2016 and $18 million in 2017. The requested ROE is 10.1% in 2015 and 2016, rising to 10.3% in 2017.

In addition, we filed for a five-year extension of our pipeline system integrity rider that drives revenue increases of $22 million and $21 million in 2016 and 2017. We filed a gas case with principles generally consistent with the recently-settled electric case, which we hope will provide the framework for our first multi-year natural gas rate plan in Colorado.

In our Texas rate case, the schedule had been abated for 30 days in order to allow for settlement discussions. However, we haven't been successful in reaching a settlement; therefore, the procedural schedule to process the case was established on Monday. Regardless, the parties have agreed rates will be effective in mid-June.

Finally, in South Dakota, interim rates of about $16 million went into effect on January 1. We currently are in settlement negotiations with parties, and expect final rates to be effective midyear.

This morning, we are reaffirming our 2015 ongoing earnings guidance range of $2 to $2.15 per share. Our guidance range is based on several key assumptions as described in our earnings release, including constructive outcomes in our regulatory proceedings. Please note that some of the assumptions have changed. For more information, please see our earnings release.

With that, I will wrap up my comments. We are pleased to be making progress with our regulatory agenda. We have gained substantial clarity in recent months and are cautiously optimistic regarding the potential success of our legislative initiatives.

We are reaffirming our 2015 ongoing earnings guidance of $2 to $2.15 per share. We are excited about the Courtenay Wind Farm investment opportunity. We continue to expect 2015 O&M to be flat to up to 2%.

We are well positioned to deliver an attractive long-term value to our shareholders by growing earnings 4% to 6% annually. And finally, we are pleased to raise our dividend growth objective to 5% to 7%. Operator, we will now take questions.

Thank you. We will go first to Ali Agha at SunTrust.

Good morning. First off, just to clarify a little bit on Minnesota. [They're not resale]. So when we factor in the rate case that was just completed, does that make a dent as far as your lag in 2015 is concerned? Do we should be think of an appreciable improvement in earned ROE this year or not versus 2014?

Ali, we're going to be pretty consistent where we've been at, in the mid 8s, maybe a the little bit higher than that, but it will be pretty consistent with where we have been at.

I see. And then from -- just to understand the timing, when would you expect the legislative actions to be completed? And then how does that relate to the timing of when you would make your next rate case filing there?

Unless it goes to extended session, it wraps up in May. And obviously, we have talked about filing a 2016 rate case, Ali, so we will see what actually is passed, and then we will incorporate that into our thoughts going forward. To your former point, I think closing the regulatory gap, this 2016 case will be where you'll start to see that improvement, and that's what we have thought all along.

Just in terms of timing, Ali, we would expect to be filing right around the November 1 timeframe, so that interim rates for 2016 would go into effect at the first of that year.

And then the bigger picture on this lag issue as [we have read]. The goal is a 50-basis-point reduction in lag by 2018. Can you remind us, embedded in the 2015 guidance, what is the total lag in terms of a starting point we should be thinking about?

Ali, right now, our lag is running close to 100%, but we are closing 50, and we expected the trajectory to be lower in the first years and graduating up to the 2018 timeframe, so only modest as an initial start.

Ali, that was 100 basis points.

Oh, I said 100%? Okay.

That would be bad.

Yes, that would be bad. (laughter)

And my last question, I know that you don't have any equity plans over the five-year CapEx cycle, and so when you talk about the earnings CAGR, I believe it is 4% to 6% over the five-year period from the normalized 2014 base, and the rate base CAGR over that five-year period is 4.7%. Am I correct in those numbers?

Maybe, Ali, just to clarify, we do have some equity issuances through our drip in our benefit plans, and that is about $75 million a year. But you are correct about the rate base. If we had Courtenay in, we are probably just slightly under 5% in terms of that. And the growth continues at 4% to 6% in terms of earnings projection.

Okay. Thank you.

We will go next to Greg Gordon at Evercore ISI.

Hi, Greg.

Thanks. Good morning

Hey, Greg.

So the things that are happening in the short run here are the filing for the approval of the wind farm. Do you know what the -- is there a statutory timeframe under which you expect to get a decision from those two jurisdictions?

I don't think there's a statutory timeframe, but there's a practical timeframe. And we would need to get the decision so that we could meet the construction cycle by late summer.

Okay. Late summer? And then the legislative session, you indicated already ends in of May.

And then what do we have to look forward to in terms of milestones with regard to your seeking to potentially rate base gas reserves? And if you were to get a program equal to your aspirations out of the gate, what would we be looking at in terms of size and investment?

I think there's a lot of unknowns around that, Greg, to be frank with you. And like we said, what we are trying to do is set up the discussions in Colorado, focus in on the LDC gas business, give some consensus around that, and then potentially move forward in 2016. The size and all of that would be based upon those dialogs that we hope to have.

Okay. But you are starting with the concept of procuring reserves for retail supply to the LDC business, not procuring reserves for power generation fuel?

Yes

Okay. That is helpful. Thank you

You are welcome Greg.

We will go next to Julien Dumoulin-Smith with UBS.

Hey, Julien.

Good morning.

Hey, Julien.

So perhaps the first quick question, going back to Minnesota legislation. When you think about the time period that you could stay out in implementing, in theory, in this 2016 case, what kind of period are we talking about as best you understand? And perhaps a more relevant question here, if you don't get the legislation by the end of May or what have you, as you think about the 2016 case, is there any potential to have a multi-year stay out under any variety of scenarios that would exclude legislation?

Well, Julien, we had a path to stay out of 2016, but it was going to be based upon how we handled certain depreciation reserves. And so when that opportunity was not taken, it put us in a position, as you know, that we are going to file the 2016 case. Now, we have mitigation tools still available to us. If the legislation passed, we might have more tools, longer timeframes that we can do.

But even if the legislation doesn't pass, we are going to file a multi-year plan in 2016. And when we look at our spend profile and our recovery needs, I think the longer the plan is, the more modulation and mitigation we can use for the benefit of our customers and for clarity for us. So you we've got a pretty solid path to start to close that regulatory lag that has really been pronounced in Minnesota. Legislation will help, but the traditional way to follow rate case, although laborious, also works.

And perhaps -- I know this is very tough to ask, but how do you think about collapsing the rate lag just organically given a smaller rate case prospectively in 2016. How much of the improvement here is simply, again, just another filing with a more modest ask and having some of those mitigation tools, versus having the legislation in hand and leveraging some of those tools that enables you? And what kind of delta are we talking about? And I know that's putting a lot--

It's pretty hard to quantify that I would say. Let me just say that the majority of the ask in 2016, whether we use legislative initiatives or what we have available to use now, is going to be capital driven. So Julien, I think that always helps. Capital is always less controversial than O&M.

The advantage, though, of a longer timeframe is that we have more opportunities to sculpt the capital and the mitigation tools to take advantage of the fact that the pace of investment does start to slow down. And again, what we've talked about before is that we really need to have longer time frames where we're not in front of the regulator in a litigious proceeding trying to get rate relief because there's a lot of policy discussions that we want to have, and frankly, I think our Commission wants to have with us.

But we can't do that right now. So that was the disappointment, really, of having to file a 2016 case is there's a lot going on and it makes a harder to have those dialogs. But the dialogs will happen. So did I answer your question, hopefully?

As best you could. I appreciate it. And then maybe (laughter)--

That means no. (laughter)

A little bit easier. A little bit more palatable. Can you comment around SPS, and just generally speaking, the environment to date in terms of the commodity impact, et cetera? What are you seeing prospectively in terms of capital needs?

At SPS? Is that what you're asking?

Yes, exactly, just given the lower oil price environment.

It really hasn't had much of an impact at all. The Permian Basin is a good place from an economic standpoint. We understand that there's more supply chain initiatives from the developers squeezing out more costs.

But the other thing, and I think it's very important to recognize, is that we had a tremendous backlog. So we've got the majority of the wells that are still running on very expensive diesel and things like that, so there's a lot of backlog. It gives us time to catch up. Ultimately, I think prices will rebound a bit, but I think we are in pretty good shape there.

And the other thing that's happening is, in that area of the country, there's other economic activity as well. So still going pretty strong, and the sales growth expectations down in that region are pretty strong, and we think will continue to be so.

Great. Thank you, guys.

Thanks a lot.

We will go next to Travis Miller with Morningstar.

Good morning. Thank you.

Hey, Travis.

Hi, Travis.

Wondering as you went through the 2014, 2015 rate stuff in Minnesota, were there lessons learned through that whole process that you expect to embed in the 2016? Is there anything you might have asked for before that you won't ask for now? Any adjustments that you will make based on those negotiations, absent the legislation and that whole side of it?

I guess it reaffirmed to us that we need to change the regulatory process. That's why we are seeking the legislation. It doesn't allow us to have the dialogs, Travis, that we mentioned.

It's a new world. Our policymakers want us to do more, and frankly, we are doing more. We filed I think a very transformational resource plan at the end of last year. We are going to move forward and be very aggressive on renewables. We want to make sure we do that with efficiency in mind, using large-scale renewables. It is tough to do that, as I mentioned, in the rate case.

Specifically, we probably self mitigated a little bit as we filed that rate case, recognizing that it was a big ask. And those things we didn't ask for will just resurfaced in 2016, and we will ask for what we need. And as I mentioned, it's capital based. These are investments that I think everybody wants us to make.

So we've got to update the regulatory compact in keeping with the times. And I think that's what the e21 initiative was about, and we are proposing how we implement that in Minnesota

Maybe just to add that, and I think you touched on it, Ben. One thing that was definitely reconfirmed was the tolerance for the customer bill. And the legislation clearly will have -- assuming it goes forward, have parameters that will help us in terms of the longer term to manage through that with the capital investment that Ben mentioned.

Yes, just you need more tools. You need to have different kinds of dialogs, and that's what we would get with legislation. But we can do it the old-fashioned way, too.

Yes.

Just not as efficient.

Okay, great. And then what is your latest thinking on competitive transmission? Any project you are looking at out there? Any -- is that at all part of the growth strategy still?

As you know, we haven't assumed -- what we have in our transmission CapEx, it's state regulated and it's identified. It's not pie in the sky. So we don't have competitive transmission. But opportunities are fewer, as you know, than what I think people were talking about a year ago.

But there are some opportunities. And we are looking at a relatively small opportunity in MISO and potentially some smaller opportunities in SPP, which I think will give us a chance to understand how competitive bidding will work. Relatively small right now. I think as the EPA rules get clarified and both SPP and MISO refine their projects, or refine the needs, we will have more opportunities to bid competitively.

We still think it will be there. It's just delayed bit.

Exactly, Teresa.

Okay. Thanks a lot. I appreciate it.

We will take our next question from Angie Storozynski at Macquarie.

Hello, Angie.

Hi, Angie.

Hello, how are you? I just want to go back again to this Minnesota legislation. We have been following it, so here are a couple of concerns and we have.

First of all, it seems like the legislature is split in Minnesota. So why you feel convinced or hopeful that both the House and the Senate can agree on a version of a bill that will actually include those multi-year rate cases?

And more importantly, so we had this issue in Colorado earlier, that regulators then did necessarily think that the new law is really binding, it's more of a suggestion. So how likely is it that we do get a bill and then that the regulators in Minnesota think that it is still an option for them to pursue or not, and then we may end up in yet another rate case?

Well, a couple of questions that you asked. First of all, as we all know, sausage making and the political process can be messy, and that is what we are in. But what we are being told, and what we understand is, while there is controversy between the House and Senate bill, and it's the difference between Republican versus DFL-controlled and their different interests, the multi-year plan provisions really aren't controversial. So when this thing goes to conference committee, we think it is a very good possibility that the provisions of the multi-year plan remain.

While you can only be cautiously optimistic because it is a political process, and if there were things in the final bill that was passed by both House and Senate that were unappealing to the Governor, you always have risk of veto. So that's the reality there.

In terms of whether it will be viewed by the Commission as an option versus a mandate, I think, one, you would have to look and see how the legislation is finalized. But I also believe that the commission is frustrated with how the process works in Minnesota, too.

So I think you saw that as the Commission was thinking about the opportunity that we said to stay out of 2016. And I'm not sure that they felt they were -- it was quite ready. So with legislation, even if it is an option versus a mandate, I think they would feel much more comfortable with that.

Chris? We have Chris Clark here. I don't if, Chris, you want to add to that?

I would agree with that. I think the Commissioners have been interested in engaging in that dialogue you talked about earlier, Ben, and so I think the legislation will be viewed as tools that help to enable that.

And then maybe it is just my understanding of the House version of the bill is that you would still need to file rate cases according to this bill, right? Maybe it's not as frequently, but the rate cases would still not be avoided?

I think you would file the base year, right? But you would have a much longer runway that you could then use to have more formulaic recovery of your capital spend and your O&M.

How about the ROE resetting?

That is not really addressed, so maybe that would come through if there was a change of circumstance or something like that? But I'm starting to speculate now, Angie.

Okay. Thank you.

We will go next to Paul Ridzon at KeyBanc.

Good morning.

Hi, Paul.

Are you looking at gas reserves for rate base in any other states beside Colorado? Have you started any dialogs yet?

No, we haven't. So we are starting with Colorado. That is the biggest gas use, and we will move forward from there.

Is it something you'll consider?

Sure. Yes.

Oh, sure, we'll consider it. Don't have as much as a gas load, for example in Minnesota. In Texas, I think some of our larger C&I customers probably would not want us to do that. So those are factors we would have to consider, Paul.

Okay. And then Courtenay. What is the status of Courtenay? And is it going to get the PTCs?

Yes. That would be the plan, which is why we are on a tighter construction schedule because it needs to come in service at the end of 2016. But it would be eligible for the PTC credits. And Paul, it is a great project. The levelized cost of it is way below what we could basically acquire natural gas reserves for, so it's kind of an indirect way to hedge gas.

And you said that was 200 megawatts for $300 million of capital?

Yes.

Yes. And just to add to Ben's comment, our target is to have the project done by October of next year, so we do have a little headroom just in terms of the PTC completion requirement ending at the end of 2016. So we do have a schedule we need to follow closely, but we do think we have some headroom.

And where is that farm?

In North Dakota.

North Dakota? Thank you very much.

Thanks, Paul.

(Operator Instructions)

Hearing none, thank you all for participating in our earnings call this morning. Please contact Paul Johnson and the IR Team with any follow-up questions. Thanks, everyone.

Thank you

Thanks.

That does conclude today's conference. Again, thank you for your participation.