Dream Finders Homes Q4 2021 Earnings Call Transcript

Quartr
Provided by Quartr
February 10, 2022

There are 11 speakers on the call.

Operator

Good day, and welcome to the Duke Energy Fourth Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jack Sullivan, Vice President of Investor Relations. Please go ahead.

Speaker 1

Thank you, Samira. Good morning, everyone, and welcome to Duke Energy's 4th quarter 2021 earnings review and business update. Leading our call today is Lynn Good, Chair, President and Chief Executive Officer along with Steve Young, Executive Vice President and CFO. Today's discussion will include the use of non GAAP financial measures and forward looking information within the meaning of securities laws. Actual results may be different than forward looking statements and those factors are outlined herein and disclosed in Duke Energy's SEC filings.

Speaker 1

A reconciliation of non GAAP financial measures can be found in today's materials and on dukeenergy.com. Please note the appendix for today's presentation includes supplemental information and additional disclosures. And so with that, let's turn the call over to Lynn.

Speaker 2

Jack, thank you, and good morning, everyone. During our call this morning, we're pleased to share our 2021 results and our outlook for 2022 and beyond, including progress on our clean energy transition. The 4th quarter capped off a strong finish to a very productive 2021, where we made great progress against our strategic and financial goals. As a result, today, we announced 2021 adjusted earnings per share of 5.2 putting us above the midpoint of our updated guidance range. We also announced our 2022 guidance range of $530,000,000 to $560,000,000 with a midpoint of $545,000,000 extending our 5% to 7% earnings growth rate through 2026, at the midpoint of our original 2021 guidance range.

Speaker 2

Our clean energy strategy requires significant investment and we're now budgeting $63,000,000,000 in CapEx Over the next 5 years, 80% of which represents investments toward our clean energy transition. This growing investment base in constructive and Thriving jurisdictions give us confidence in our ability to earn within our 5% to 7% earnings guidance range throughout the next 5 years and in the top half of the range as our plan progresses. Steve will go into more details on our 2021 results and our updated 5 year financial plan. But before I turn the call over to him, I'd like to highlight some of the important strategic work underway. 2021 was a transformative year for our company and in each of our three regions, we made meaningful progress and we enter 2022 on strong footing.

Speaker 2

In North Carolina, leaders came together to pass House Bill 951. This landmark bipartisan legislation defines the state's clean energy Transition and work is underway to implement it. The North Carolina Utilities Commission is developing rules on the performance based rate making provisions in the legislation. We're confident the commission will adopt a balanced set of rules that provides flexibility to implement performance based rates in a way that achieves policy goals and aligns with customer interests. We expect an order later this week.

Speaker 2

The North Carolina Commission is also developing rules related to the securitization of 50% of subcritical coal plants upon their early retirements. We've proposed a set of rules consistent with the North Carolina storm securitization bonds we issued last fall. Those bonds will save customers approximately 35% or $300,000,000 over the next 20 years. We expect an order on securitization by mid April. We plan to file our carbon plan in May after gathering stakeholder input over the next several months.

Speaker 2

HB951 provides a framework to reach 70% carbon reduction by 2,030 and the carbon plan will be a road map to achieve this objective. The plan we submit will have multiple portfolios that weigh the cost and benefits, including reliability and affordability of various resource types. We will also evaluate with stakeholders and our regulators the full range of potential risks and opportunities related to new clean energy technologies. We expect an order on the carbon plan by the end of this year. In Indiana, we submitted an IRP in December after extensive stakeholder engagement.

Speaker 2

As the largest Generator, in the state of Indiana, we are retiring more coal and adding more renewables than any other Indiana utility. Our preferred scenario reduces carbon emissions from our Indiana fleet by 63% by 2,030 and 88% by 2,040 compared to 2,005 levels. It adds over 7 gigawatts of renewables over the 20 year horizon and accelerates the retirement of coal generation with a targeted exit from coal by 2,035. This plan also includes natural gas and a prudent amount of market purchases for past the and energy requirements. As is the case in all jurisdictions, we expect a robust review of all planned resource additions to achieve the environmental, reliability and affordability goals of the state.

Speaker 2

We will issue a request for proposal for new generation later this month. And following the RFP process, we will file CPCNs with the Indiana Commission later this year. In Florida, we received approval of the $1,000,000,000 Clean Energy Connection Solar Program, which calls for 7.50 Megawatts over the next 3 years. We'll begin the 1st year of that program in 2022, along with completing the final solar projects under the SOBRA writer. To date, we put approximately 600 megawatts of solar generation in service in Florida with another 150 megawatts currently under construction.

Speaker 2

Let me close by putting our progress and our plans for the future in the context of our climate strategy. Given the scale of our company, we're leading the industry's most ambitious clean energy transformation. This demands active engagement with regulators, Policymakers, customers and stakeholders to make the vision a reality. It requires candid discussions about the appropriate energy policy for each state, recognizing the unique differences of existing resources, customer bases and policy objectives. It also requires a focus on keeping customer bills affordable, a critical variable as we pursue this transformation.

Speaker 2

We continue to make progress and are strongly positioned to achieve our clean energy vision. Slide 6 captures our progress and the work underway. Let me share a few important highlights. We're executing the largest planned coal fleet retirement in our industry targeting energy from coal to represent less than 5% by 2,030 and full exit by 2,035. Embedded within Duke Energy is a top 10 U.

Speaker 2

S. Renewable energy company. We now own, operate or purchase more than 10,000 Megawatts of Solar and Wind Energy. We plan to reach 16,000 Megawatts by 2025,000 Megawatts by 2,030. We've reduced our carbon emissions by 44% from 2,005 levels and we're on track to exceed 50% by 2,030 and net 0 by 2,050.

Speaker 2

We're actively engaged with policymakers and advocating for and piloting new clean energy technologies necessary to meet our net zero goal. We're also stepping back and evaluating our climate goals more broadly as we engage with our shareholders and discuss the growing importance for Scope 2 and 3 emissions. And just yesterday, we announced we're expanding our net zero goals to now include Scope 2 and certain Scope 3 emissions, such as upstream emissions related to procurement of fossil resources and downstream emissions from our natural gas customers' consumption. These initiatives will be a key focus area for our management team and across the entire company in 2022 and beyond. We look forward to sharing more details about what it will take and the ways we're building upon our success to advance our long term business strategy at our next ESG Day planned for October 4.

Speaker 2

I encourage you to join us for this interactive live streamed event. We accomplished a great deal in 2021. We delivered on our commitments while also strategically positioning the company for the future, Derisking investments, simplifying our business and modernizing our regulatory frameworks. We have a clear vision to meet the needs of our customers and communities while remaining a strong steward of the environment. We believe this strategy will deliver strong, consistent and enduring benefits to our customers, Communities and Investors.

Speaker 2

And with that, let me turn the call over to Steve.

Speaker 3

Thanks, Lynn, and good morning, everyone. 2021 marked a year of strong growth in our core businesses. As shown on Slide 7, our full year adjusted earnings per share was $5.24 above the midpoint of our revised guidance range. In the Electric segment, we benefited from 2% volume growth, The full year impact of constructive rate case outcomes in North Carolina and Indiana, increases in Florida from their previous multi year rate plan and solar installations and continued rider investment in the Midwest. Additionally, we met our goal of delivering $200,000,000 in sustainable cost savings in 2021.

Speaker 3

In our gas LDC business, we saw higher results from Piedmont rate cases in North Carolina and Tennessee and contributions from customer growth and rider mechanisms. Results from commercial were lower due to fewer growth investments compared to 2020 and the impact of winter storm Yuri in February 2021. Turning to Slide 8, we are introducing our 5.30 $5.60 to $5.60 guidance range in 2022. For Electric Utilities and Infrastructure, we expect growth due to Expansion in our robust service areas and earnings on infrastructure investments. Specifically, in Florida, we began the 1st year of our new multi year rate plan, coupled with the benefits of strong customer growth.

Speaker 3

In the Carolinas, we will see earnings growth from new customers, grid investments and wholesale revenues. In the Midwest, we continue to benefit from the steady investment in T and D Infrastructure. Our Gas Utilities and Infrastructure segment Is expected to benefit in 2022 from customer additions and Integrity Management Investments as well as base rate increases following settlements approved in North Carolina and Kentucky. In commercial renewables, we expect fewer projects in 2022 as we ramp up Deployment of renewable assets in Florida and the Carolinas and provide breathing room to work through supply chain challenges. As such, the timing of some commercial renewables projects will shift within the 5 year plan.

Speaker 3

Finally, we The other segment to be unfavorable, primarily due to higher interest expense as we grow our energy investment base. Turning to slide 9. Let me touch on electric volumes and economic trends. Consistent with our updated guidance on our Q3 earnings call, We achieved 2% growth for total retail volumes. This includes residential load growth of 0.7%, helped by the continuation of remote work and strong customer growth of 1.6%.

Speaker 3

In fact, 3 of the states we serve were among the top 5 states for net population migration in 2021, strong evidence of our attractive growth profile. Since the pandemic began, approximately 200,000 new customers have moved into our service areas, boosting the need for energy infrastructure. Commercial and industrial sales rebounded nicely due to increased demand for goods across many sectors. We expect continued expansion in 2022 and project load growth to increase approximately 1.5% in 2022. After 2022, we expect longer term growth to moderate to flat to 0.5% per year.

Speaker 3

As I mentioned before, we delivered on our O and M target for 2021. On Slide 10, you will see the work we've undertaken to lower our cost structure and bolster our potential growth. Duke Energy is a leader in the industry when it comes to cost mitigation, driven by digital capabilities, data analytics and reskilling our workforce. Since 2016, we have not just absorbed inflation, but we have removed approximately $400,000,000 of O and M, Creating value for our customers and our shareholders. For every dollar of O and M we eliminate, we can invest about $7 of capital without increasing cost to customers.

Speaker 3

Our $400,000,000 in savings over the past 5 years has created headroom for approximately $3,000,000,000 worth of capital projects with no incremental bill impacts. Looking forward, we expect to hold O and M flat throughout our plans. We believe there are significant opportunities across the enterprise to further improve efficiencies, which could lower the O and M trajectory as we advance our fleet transition strategy, Replacing coal assets with less O and M intensive forms of generation is a perfect example of this and the investments we are making are designed to lower our cost structure while maintaining high standards of safety and reliability. Our size and scale remain key differentiators as we work to mitigate supply chain over the next decade with $63,000,000,000 to occur over the next 5 years. This represents a $4,000,000,000 increase over our previous 5 year capital plan and strengthens our rate base growth to 6.5% to 7%.

Speaker 3

Approximately $52,000,000,000 or over 80 percent of our capital plan throughout 2026 will fund investments in our fleet transition and grid modernization. This will improve reliability and resiliency as we add more renewables to the system and extend the life of our carbon free nuclear fleet to better serve our growing customer base. As coal was phased out from our generation profile, It will be replaced with 0 carbon resources and prudent investments in cleaner natural gas. We formed strategic partnerships to study the long term potential of hydrogen co firing and storage including a pilot program we launched this year, where we believe our natural gas units are well positioned to take advantage of Hydrogen Technology as it evolves. Turning to Slide 12, our sizable capital plan, high growth service territories, Proven capability to control costs and constructive regulatory frameworks give us confidence in our ability to consistently grow earnings at 5% to 7% and potential to earn at the top half of the range in the back half of the plan.

Speaker 3

Moving to Slide 13, our ability to execute our robust Capital program is underpinned by a healthy balance sheet and we remain committed to our current credit ratings. In September 2021, we received $1,000,000,000 in cash proceeds upon closing the first tranche of our minority interest sale of our Indiana utility. The second closing will occur by January 2023 and will result in another cash infusion of $1,000,000,000 This combined $2,000,000,000 of proceeds provide good support to our credit metrics. We closed out to 2021 in line with our and we have constructed a plan that achieves 5% to 7% earnings growth through 2026, while maintaining our current credit profile. Our current plan does not contemplate any additional common equity through 2026, but we will monitor a variety of things that may influence for future needs, including the pace and size of our capital deployment, future regulatory outcomes and the potential for supportive tax policy.

Speaker 3

To the extent that becomes a need for additional equity, we will evaluate all options and pursue the ones that finance our growth in the most efficient manner and support our earnings growth trajectory. Before we open it up for questions, let me close with Slide 14. Our focus On the future, sound investment strategy and demonstrated dexterity offer a strong long term growth proposition. And our commitment to the dividend remains unchanged. We understand how important it is to our shareholders and that's why 2022 will mark the 96th Consecutive year of paying a quarterly cash dividend.

Speaker 3

We intend to keep growing the dividend, balancing our desire to offer investors A strong 65% to 75% payout ratio with our need to fund our capital plan. 2021 was exceptionally productive and we have a strong momentum as we begin 2022. We look forward to updating you on our progress throughout the year. With that, we'll open the line for your questions.

Operator

Thank you. And we'll take our first question from Shahriar Pourreza with Guggenheim Partners. Please go ahead.

Speaker 4

Hi, guys. It's Jameson Ward on for Shar. How are you?

Speaker 2

We're good. Jameson, welcome.

Speaker 4

Thank you. Good morning and thank you for taking my question. Lynn, at a high level, We were wondering how should we think about the carbon plan that you'll be filing in May versus what will become the final version in the order required by December 31. Who's going to be weighing in on it or contributing to it? And as a follow-up, How will it differ from, say, a traditional IRP?

Speaker 2

Well, Jameson, thank you for that question. And the work is already underway to develop the plan. We had our 1st stakeholder meeting just a week or so ago, and there are additional meetings planned. And I would share with you that it will be a review of the full range of existing and potential resources to achieve the objective. We envision putting forward multiple scenarios as we did in the 2020 IRP so that we have a good discussion of weighing Costs and benefits of the various resource types.

Speaker 2

And it's also going to have good discussion about Reliability and affordability coupled with environmental achievement. So I would expect it to be somewhat similar in concept of what we produced in 2020, Jameson, because it will be a variety of portfolios, but as always well informed by our stakeholders and directed toward achieving what the legislature has set out for us, which is 70% carbon by reduction by 2,030.

Speaker 4

Got it. Got it. Thank you for that. And second question we had here was, Under the items to monitor on Slide 12, you mentioned supply chain constraints. At EEI back in November, The takeaway that people seem to have from meetings with both Duke and echoed by other large utilities was that you weren't really seeing much impact At that time from supply chain constraints, what's changed since EEI?

Speaker 4

And just another follow-up on that, How much of these supply chain constraints are specifically related to renewables? And then for the nonrenewable portion,

Speaker 5

what does that consist of?

Speaker 2

Yes. It's a good question because it's a dynamic area. And I would say generally that the scope and scale of our company has positioned us really well on supply We've done a very good job of expanding our horizon to look at demand, leveraging long term contracts, So we have not seen an impact on the majority, if significantly of the capital plans that we have in place. But we have experienced some Impact from solar panels and you'll see us, we talked a little bit about this in the Q3 call evaluating what it might mean. So we're pushing Some projects in commercial renewables in particular to 2023, we've been able to achieve all of our dates of regulated renewables, however.

Speaker 2

So I would leave you with the fact that it's a dynamic area. There are areas where lead times are increasing, but we feel well positioned given the scale of the company and the approach that we're taking to manage what our customers require.

Speaker 4

Got it. Thank you very much for that and I appreciate you taking the time. I'll hop back in the queue. Thank you.

Operator

And we'll take our next question from Julien Dumoulin Smith with Bank of America, please go ahead.

Speaker 6

Hey, good morning. Thank you so much. Hi, Drew. Good morning. Hey, Thank you.

Speaker 6

So maybe if I can, I mean, maybe the first question is perhaps 2 part? First, 'twenty two guidance, You have a lot of interesting tailwinds here. O and M, load growth, book accelerating, obviously, disappointing on the renewables, but that seems to be pervasive. Can you talk about maybe latitude within this guidance range? Certainly considering that accelerating load growth really is a meaningful driver.

Speaker 6

And then secondly, just related to that, and I suspect this is perhaps part of the reason for the guidance range. Can you talk about your confidence on the ability to cut $100,000,000 in Costs with the backdrop of inflation admittedly elsewhere in the sector.

Speaker 2

Yes. So I'll take a shot and I'm sure Steve will have something to add. Julien, I believe what we put forward for 2022 is a very strong growth story. It's built Florida, the Carolinas, Midwest, gas rate cases, load growth, O and M cost management, all the things that you referenced. I also believe that the increase in capital that we've put forward should give you confidence that we're going to keep going and have the investment portfolio to drive 5% to 7 In 2022 though, I also think it's important to recognize we have some foundational work underway in the Carolinas.

Speaker 2

Legislation was a hallmark in 2021, but we're in the regulatory process in 2022. We're waiting for guidance on the performance based ratemaking. We're waiting for guidance on securitization. We have a carbon plan to file. And so that will be additional important work in 2022 that will set us up for the future.

Speaker 2

In terms of inflation, we are seeing labor inflation is the one thing I would point to. And if you look at our trajectory, we're Recommending flat, we will go at it as hard as we can, but we will also make sure we have the talent and capability from our line workers to our software engineers to do what this business requires in our customers' demand. So I feel like we've taken all of these variables together and not only put together a strong plan for 2022, but also a strong plan for 2023 and beyond. Steve, how would you add?

Speaker 3

I might add a couple of things on the cost side. We took $200,000,000 out sustainable as we had Promised and we've delivered on that. We've got 2,000 less employees at Duke Energy than we did a year ago. We retired 5 coal units and that takes out some O and M there. But we're going to keep moving forward.

Speaker 3

Our scope and scale allows us to do this. We've completely redone our real estate footprint and taken advantage of COVID immediately on the real estate We're going to continue to drive out efficiencies and utilize technology to displace the need for other costs. And we've had success for the past 5 years of doing that, of driving O and M down. We put flat O and M into our trajectory in response to what is inflation there. But we're going to continue to hammer away at it and we've got the tools to do that.

Speaker 3

We'll see where that goes, but out of respect for The trends we see on cost, we've flattened it out. We're going to be driving hard at it, Julien.

Speaker 2

And I think when you step back and look at guidance, Maybe just one comment on guidance, Julien. We feel like it's a very strong growth story. You may remember that we reset the 5% to 7% for the first time off of 515. We believe this is a very strong start. And as you know, we'll be working hard not only to hit these numbers, but if Circumstances are such we can exceed them, we'll do that.

Speaker 2

But we believe this is a compelling growth story.

Speaker 6

I hear you loud and clear on that last comment. In fact, if I can ask you this a little bit in reverse, I mean, clearly, you're hitting these 'twenty two numbers considering commercial renewables being a little lower and some of that being delayed, does that actually conversely mean that 'twenty three and 'twenty four could actually be Sort of a bumper crop year with respect to some of the renewable contributions, especially relative to your historic $200,000,000 to $250,000,000 guidance?

Speaker 2

Julien, we are evaluating capital allocation on renewables. In Steve's comments, you might Have noticed we said as we ramp up further investment in the Carolinas and in Florida around renewables. So we will make the right decision on where we invest The renewable capital, I think the planning assumption of $2,000,000 to $2,500,000,000 is still reasonable for commercial, but know that we're also going to be adding a lot of renewables in those regulated businesses.

Speaker 6

Understood. Excellent. I'll leave it there. All the best.

Speaker 5

Speak to you soon.

Speaker 2

Thank you, Chuck. Thank you.

Operator

And we'll take our next question from Stephen Byrd with Morgan Stanley. Please go ahead.

Speaker 7

Hi, good morning.

Speaker 2

Hi, Stephen. Good morning.

Speaker 7

Good morning. I was interested in your latest thinking in terms of Some form of federal clean energy legislation. I know there's been a lot of dialogue. You all have been very involved, I know, in dialogue So just curious your latest take on the prospects for passage at the federal level?

Speaker 2

Steven, it's hard to handicap, Because we don't have a vehicle yet, there are a variety of other topics being discussed within that construct of what the administration would like to move. But it is our conviction that the clean energy tax provisions would be very helpful, not only to Support the transformation that's underway at Duke, but throughout the industry and also allow us to lower the price of that transformation. For a regulated company, those tax incentives have a direct impact on our price to customers. So we are strong advocates for it. We actually believe that nuclear is a great recognition of that resource.

Speaker 2

Some of the modernization around solar to introduce PTCs, the opportunity to have direct All of these things we believe could be helpful in this transformation that we're pursuing so aggressively.

Speaker 7

That's helpful. Thank you. And then I just wanted to follow-up on a couple of questions on renewable supply chain. I wanted to drill in on solar A little bit more. Wondered if you could provide anything specific in terms of just the rough magnitude of cost increases you're seeing?

Speaker 7

And also, If you could speak to just physical availability of panels in 2022 and the outlook there. Just curious for a little more color there.

Speaker 2

Yes. And you know, Stephen, I would point to availability as the first and most gating item because of some of the around trade and other things, there has been an issue around availability and certain suppliers have said we can't meet the timeframe. And as a result of that, you then begin looking for alternatives and those alternatives can be more expensive. So we have made Decision to push some of our projects into 2023. We're very confident in our projects that we have identified for 2023 that we have appropriate Supply and are ready to go.

Speaker 2

But that's what I would share with you. The gating issue has been availability. And then as you pursue alternatives, price can become an issue.

Speaker 7

That's helpful. And maybe just following up on that and then I'll pass it to someone else. Just on the magnitude of push back of projects In terms of sort of gigawatts, what sort of rough magnitude are you thinking that you want to push into 23?

Speaker 2

Stephen, as I look at what we have put forward as guidance, we're at $150,000,000 for the commercial business. We had been targeting $2,000,000 to $2,500,000 So I would think about a couple of projects that are being pushed from 2022 to 2023.

Speaker 3

So you might be in the neighborhood of 400 megawatts or 500 megawatts something of that nature. And then we'll look at again 23 as we approach it to see what makes sense based on the projects that are there and the returns As we move forward, but I'd still think around the $200,000,000 to $250,000,000 as The reasonable planning assumption for what we'll do.

Speaker 2

And Stephen, a moment ago, I also noted we were able to complete all of the regulated renewable projects and have secured supply for them for 2022. So we're doing some balancing here and believe that the net result of all of this puts us in a strong position to achieve our objectives.

Speaker 7

That's very clear and very helpful. Thank you.

Speaker 2

Thank you.

Operator

We'll take our next question from Steve Fleishman with Wolfe Research. Please go ahead.

Speaker 2

Good morning, Steve.

Speaker 8

Hi, good morning. Hi, Lynn. Just can you just confirm whether you're still expecting to get the multi year rate plan The proposal out today. The performance based rate making and just what are the key items that we should be watching in that?

Speaker 2

Yes. And we expected this week, I guess, we're sitting here on Thursday, Steve, it could come out today. I think 10th was the plan, but we are expecting it. And we'll get something out from Investor Relations when that rulemaking appears.

Speaker 8

Okay. So just see what it has to say.

Speaker 2

Yes. We're stuck in constructive rulemaking.

Speaker 8

Great. And then in terms of When you kind of reference both in the upside drivers for the long term plan and I think Steve's comments on Things that could lead you to look at equity needs, the tax policy. Could you just kind of give a little more sense on what you're referring to there? Is it that if we get Favorable renewables tax policy, you might invest a lot more capital and thus with that also have some equity needs Or is it something beyond that?

Speaker 2

Steve, it's actually reverse of that.

Speaker 8

Okay.

Speaker 2

Because if we get Constructive tax policy, think about direct pay, think about nuclear PTC. That is very favorable from a cash flow standpoint. And that gives us an opportunity to consider potentially additional capital. But you should think about that as an infusion of cash into the plan in a way that could be quite helpful.

Speaker 8

Makes sense. So then when you talk about tax policy as something that May I have equity needs? Is that more the corporate tax changes?

Speaker 2

Yes. There's the linkage of tax policy and equity needs It's not as you're thinking about it, Steve. We included that to say that could be a reason to reduce the need for equity even beyond 26 depending on what is happening. So there are positives and negatives in that.

Speaker 3

Yes. We were looking at cash flow changes as well as Capital changes and the tax policy is very beneficial from a tax standpoint.

Speaker 8

Okay. I thought those were things that would only Create equity needs not the ones that were on. That's why it didn't make sense to me. Okay. Great.

Speaker 8

Thank

Speaker 2

you. I'm glad we had a

Speaker 8

chance

Operator

to clear that off.

Speaker 2

Thank you. Yes. And we'll

Operator

take our next Question from Jonathan Arnold with Vertical Research. Please go ahead.

Speaker 9

Good morning, guys.

Speaker 2

Hi, Jonathan.

Speaker 9

Hi. Good morning. Quick one, Jon. Last quarter, you were talking about 2% to 2.5% sales growth for the full year. And it felt like you were Yes.

Speaker 9

I'm sounding more confident towards the upper end perhaps and came in at 2%. And then looking at the Release, if I'm reading it correctly, you actually had weather normal sales go down in the 4th quarter and industrial tick off about 5%. So Just can you give us a little color on what was behind that? I wasn't necessarily expecting to see a down 4th quarter in industrial, yes, quite yet.

Speaker 3

Well, I think, when you're looking at, AVA for the quarter, The Q4 of the previous year was starting to pick up quite a bit. So there's some comparative things there. I think as we move forward, what we're really projecting here is that we're going to catch up by the end of 2022 to where we would have Then prior to COVID hitting when you just take 2019 and extrapolate out. So I wouldn't look at any one particular quarter comparison to another quarter as you could have Shutdowns at certain industries and that nature that might impact the stats. But looking broadly across it, what we see Is return by the end of 2022 to where we were at prior to COVID and then we've got pretty flattish load growth We feel good about 2022 growth across the board.

Speaker 3

We've added a lot of customers as we alluded to. And customer Moving into the area, that will drive commercial, education, health care, retail, that picks up. And then when we look across our industrial base and talk to our industrial customers, we've got such a diverse Body of industrial customers. No one customer SIC code is greater than 10%. We see them optimistic about further growth in 2022.

Speaker 3

So I think about that a bit more than just a quarter versus quarter examination.

Speaker 9

Can I just ask you, can you talk a little bit about how The pathways to sort of integrating North and South Carolina around the carbon plan given some of the recent developments Yes, in the South and I guess you were trying to pull have a joint proceeding, but that looks like it may not happen now? So just what's the how do we bring this Forward on a fuel track maybe.

Speaker 2

Sure. And Jonathan, North and South Carolina have found a way over decades to work together and have developed a joint electric system that delivers affordable and reliable power, but they've also benefited from infrastructure investment in both states. It has 6 nuclear power plants, 3 in North Carolina, 3 in South Carolina. So we are optimistic that we'll be able to develop resource plans that meet the needs of both states. They're of course different, but both are interested in clean energy, clean energy transition, renewables, etcetera.

Speaker 2

The joint hearing that we Suggested and worked toward was an innovative idea. We thought it would be an opportunity for the states to engage, but it's not the only way. And as we think about the future and the number of proceedings that will unfold over the next several years with resource additions and potential retirements, There will be plenty of opportunity for the states to work together in a way that makes sense for their policies. We'd also expect South Carolina to be at the table in the stakeholder meetings over the course of 2022. I know they are not only interested in what it means for customers around affordability and resiliency, but also what it means in terms of investment.

Speaker 2

And I think there is a lot here for both states, and we're anxious to work towards something that makes sense for everyone.

Speaker 9

Okay. What would be the next data points in South Carolina?

Speaker 2

Jonathan, I would I'm not going to point to a specific milestone, But rather say that we will update you on the stakeholder engagements. We'll update you on the Carbon plan as that gets finalized, to the extent there are filings that we might make in South Carolina, we'll of course give updates on that. So you can expect this to unfold not only over the course of 2022, but into 2023 as well. And South Carolina will be at the table every step of the way.

Speaker 9

Thank you, Ed.

Speaker 2

Thank you.

Operator

And we'll take our next Question from Durgesh Chopra with Everco ISI India. Please go ahead.

Speaker 5

Hey, good morning. Thank you for taking my question. Good morning. Good morning, Lynn. Just can I clarify in terms of O and M Savings Target for 2022?

Speaker 5

I heard you say the $200,000,000 in savings in 2021. What is embedded in the 2022 guidance? Is it flat O and M 2022 to 2021 or are we modeling Decreases further from the 2021 levels.

Speaker 3

We've assumed flat O and M in 2022 compared to 20 21, the $200,000,000 was taken out in 2021 and it's sustainable, so it will be in there. But we're assuming it's flat in 2022 and throughout our plan. But what I would point to is we have a strong track record of finding O and M savings across our footprint And none of that has stopped. And we've got inflationary issues that everybody's heard about. So we've flattened it out, but we're certainly Continuing to drive to find the opportunities to utilize capital technology to take out variable O and M and that goes on every day.

Speaker 5

Got it. Thank you, Steve. And then just in terms of your comment, the Potentially high growth rate in the back half of the plan, the upper half of the 5% to 7%. Is that driven by You getting regulatory approvals, perhaps even stronger than expected customer load. What gives you Sort of what would drive that higher growth rate in the upper half, in the back half of the plan?

Speaker 2

I would think about the work that's underway in 2022, Durgesh, around the Carolinas. So we have Legislation has been passed, but we have regulatory proceedings underway to set the course on the performance based rate making and on the plan. That of course will begin to be executed in 2023 2024. So there's going to be a sort of back half approach around the Capital and the regulatory modernization in the Carolinas. And then further in Indiana, the IRP was filed in December.

Speaker 2

We're anticipating RFPs and potentially CPCNs to be filed in 2022 that would begin the execution of the next Phase of the transition in Indiana as well. So those are a couple of things that I would point to that Are important as you think about the end of this 5 year plan, but the remaining years in this decade.

Speaker 5

All right. Thank you so much. Appreciate the color.

Speaker 2

Thank you.

Operator

I will take our next question from Jeremy Tonet with JPMorgan. Please go ahead.

Speaker 5

Hi, good morning.

Speaker 2

Hi, Jared. Good morning.

Speaker 10

I just want to touch on financing a bit more if I could here. And just wondering if you could provide a bit more color On the 2022 hybrid security funding, what kind of what could that look like? What type of size could that part be? And then separately looking forward, we've talked about the robust Capital opportunities that you've highlighted throughout the call. How should we think about equity needs over the course of the 5 year plan and beyond?

Speaker 10

And I know you talked in the script about alternatives and just looking for a little bit more color what the alternatives could be. Could The other DI type transactions or maybe monetizing commercial renewables, just trying to see what possibilities are out there?

Speaker 3

A couple of things there. When we look at our financing plan, I don't have any specifics on what Hybrid security might look like, but we always consider those. There are times where those can certainly make sense when the value they can bring and the price makes sense So we'll always allude to that as a possibility there, but nothing specific on that front. When you think about the 5 year plan, we've put together a plan here that we do not believe we need any incremental equity beyond the $1,000,000,000 of the second tranche of the GIC deal that will be coming in within the next 12 months. We think we've got regulatory constructs in place across our jurisdiction that are very efficient, And we have regulatory plans to make those investments through those regulatory constructs.

Speaker 3

We've also got a great ability to control cost. We've shown that and that helps the bottom line metrics as well. So, no equity financing plans through the plan. Now as we move through the decade, for the circumstances that Lynn had described, we could see needs coming at us. We'll utilize the most efficient form of raising equity and we've shown great ability to do that through traditional methods, through non traditional through monetization of businesses.

Speaker 3

We'll look at all of that. We're well aware of our portfolio's value. It's good to have that optionality.

Speaker 10

Got it. That's helpful there. And then kind of pivoting here, you talk about Carbon capture hydrogen nuclear. Just wondering how far are these technologies from being widely adopted in your view And are these items that can drive upside to the 10 year outlook or are they kind of longer dated? And then specifically with CCUS, just wondering what stakeholder Views are like there and what discussions have been like with the regulators on CCUS in your jurisdiction?

Speaker 2

No, I think this is an important discussion to progress in this decade. And so the awareness Around hydrogen, the awareness around advanced nuclear, the awareness around what might be possible on CCUS It is something that is a part of our conversations with all of our regulators. And you begin to see even offshore wind Part of the conversation with regulators. It's a mature technology in Europe, but relatively new in the U. S.

Speaker 2

And the good news is we believe we have Runway with existing technologies to achieve the majority of our aspirations around clean energy transition over the next 5 years or so. And so you're getting into the 2030s when those technologies would be more important to get to net 0 in the next tranche of carbon reduction. And so I think time will tell on whether they get to commercial scale. We began to see some demonstration projects like an advanced nuclear in the 20 28 timeframe. But I would also point to the amount of money that's in the infrastructure bill to really pilot and develop and get These technologies to scale, so it's possible it occurs even more rapidly.

Speaker 2

But we will be thoughtful working with stakeholders and our regulators before we Begin introducing any of these technologies so that we have a common view of what we would like to achieve and invest in to meet our goals.

Speaker 10

Got it. That's helpful. I'll leave it there. Thank you very much.

Speaker 2

All right. Thank you.

Operator

And our next question comes from James Malacker with BMO Capital Markets. Please go ahead.

Speaker 5

Good morning, everybody. Good morning.

Speaker 3

Hi, Jim.

Speaker 10

Thanks for the time. And I didn't want to really kind of beat a dead horse, but just regarding the acceleration of your growth rate into the upper half of the 5% to 7%, Maybe Lynn or Steve, should we think about this in the context of the current 2022 to 2026 plan? Or as you look Farther out into the kind of 2,030 timeframe given your capital plan shows some significant acceleration in that kind of 20 27 through 30 timeframe.

Speaker 2

In the back half of this 5 year plan, Jim, but certainly continuing, in the back part of the decade.

Speaker 3

Okay. Great.

Speaker 2

Thank you

Speaker 4

so much for that clarification.

Speaker 2

Thank you.

Speaker 3

Thank you.

Operator

And that concludes today's question and answer session. At this time, I'll turn the conference over to Lynn Good, Chair, President and CEO, for any additional remarks.

Speaker 2

Thank you, and thanks, everyone, for joining. I know these calls in February are always full of information, Not only what we have achieved, but where we're going. And so we're available, to answer any follow on questions and look forward to talking with many of you in the weeks to come.

Operator

And this concludes today's call. Thank you for your participation. You may now disconnect.

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