Campbell Soup Q4 2021 Earnings Call Transcript

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Provided by Quartr
February 25, 2022

There are 18 speakers on the call.

Operator

Good day, and welcome to the Sempra 4th Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Nelly Molina. Please go ahead.

Speaker 1

Turn the call over to Samra's Q4 2021 earnings call. A live webcast of this teleconference and a slide presentation is available on our website under the Investors section. We have turn the call over to several members of our management team with us today, including Jess Martin, Chairman and Chief Executive Officer Trevor Michalik, Executive Vice President and Chief to our financial Officer, Lisa LaRocque Alexander, Senior Vice President, Corporate Affairs and Chief Sustainability Officer turn the call over to Justin Bird, Chief Executive Officer of Sempra Infrastructure Faisal Khan, Chief Financial Officer of Sempra Infrastructure turn the call over to Alan Nye, Chief Executive Officer of Encore Kevin Sagara, Executive Vice President and Group President and Peter Wall, turn the call over to our Senior Vice President, Controller and Chief Accounting Officer. Before starting, I'd like to remind everyone that we'll be discussing forward looking turn the call over to the operator and discuss the financial results. Actual results may differ materially from those discuss in the company's most recent 10 ks filed with the SEC.

Speaker 1

All of the earnings per share amounts in our presentation are turn the call over to the operator to discuss the financial results. Please refer to the presentation and slides that accompany this call for turn the call over to the operator for a reconciliation to GAAP measures. We also encourage you to review our annual report on Form 10 ks for the year ended December 31, 2021. Turn the call over

Speaker 2

to the operator.

Speaker 3

I'd also like to mention

Speaker 1

that the forward looking statements contained in this presentation speak only as of today, February 25, 2022, turn the call over to Jeff. And it's important to note that the company does not assume any obligation to update or revise any of these forward looking statements in the future. With that, turn the call over to Jeff.

Speaker 4

Thank you, Nellie, and thank you all for joining us today. In In 2021, we delivered another year of strong performance. We'll discuss some of the operating highlights in a moment. But on the financial side, We invested over $7,000,000,000 in Critical Energy Infrastructure, a record amount for our company and we delivered full year 2021 adjusted earnings per share of $8.43 well above our increased adjusted EPS guidance range of turn the

Speaker 2

call over

Speaker 4

to Kevin. Thank you. Thank you. Our next question comes from the line of Together with the portfolio of investment opportunities across all three of our growth platforms gives us a lot of confidence in the future. Today, we're announcing approval by our Board of Directors of an increased annualized dividend of $4.58 per share, turn the call over to our shareholders, record 5 year capital plan of $36,000,000,000 And the issuance of our full year 2023 EPS guidance range.

Speaker 4

And finally, we're announcing turn the call over to the operator for questions. Thank you. Thank you.

Speaker 2

Thank you. Thank you. Thank you. Thank you. Thank you.

Speaker 4

Thank you. Our next question comes from the line of Next, I'd like to highlight a few of our accomplishments. From a strategic standpoint, we've made great progress over the last 4 years turn the call over to Bob. In updating our portfolio with 3 goals in mind. 1st, prioritizing markets with strong fundamentals and constructive regulation.

Speaker 4

2nd, simplifying our business model to improve execution and third, building scale financial strength present a high performing culture to deliver improved financial results. 2021 was another key milestone in that journey. We've completed a series of transactions to form Sempra Infrastructure, a simplified growth platform with scale and portfolio synergies, all while turn the call over to the operator for questions. Thank you. Thank you.

Speaker 4

Thank you. Thank you. Thank you. Our next question comes from the line of Furthermore, these transactions highlight the underlying market value of this business and demonstrate Sempra's continued ability to source lower cost of capital and recycle it into organic growth at our utilities. Moving on, we continue to advance our capital plan in 2021 deploying over $7,000,000,000 With a continued focus on supporting the strong growth at our utilities.

Speaker 4

From a safety standpoint, we had record employee safety results at Sempra California and Sempra Infrastructure also had a great year, advancing construction at ECA LNG Phase 1 on time and on budget turn the call over to our call over to

Speaker 2

our call. With over 1,000,000 hours work without

Speaker 4

a lost time injury. Taken together, these accomplishments and the quality of execution we're seeing across our businesses Our teams are strategically positioned in highly attractive and contiguous markets in North America, where we serve 1 of the largest utility consumer bases in the United States. Turn the call over to Steve. Each of

Speaker 5

these growth platforms have both scale

Speaker 4

and a leadership position in our core markets and that is central to our strategic execution. Turn the call over to the operator.

Speaker 2

Please turn to the next slide.

Speaker 4

Our growth platforms benefit from 3 main competitive advantages: size and scale in attractive markets, turn the call over to the operator for questions. Lower risk and strong recurring cash flows associated with T and D investments and positive growth trends centered on the expansion of energy networks to support cleaner forms of energy, improved safety and reliability and the continued integration of North American Energy Markets. Turn the call over to our operator. Our 3 platforms combined for nearly 300,000 miles of transmission and distribution lines, all in key markets in North America, while serving nearly turn the call over to our shareholders. These integrated growth platforms generated approximately $2,600,000,000 in 2021 full year adjusted earnings turn the call over to Steve.

Speaker 6

Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve.

Speaker 4

Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve.

Speaker 4

Thank you, Steve. Thank you, Steve. Thank you, Steve. Thank you, Steve. Good morning, everyone.

Speaker 4

Our projected growth of 6% to 8% is supported by strong continued investment at Sempra California to support safety, reliability and the state's ambitious energy transition goals, investment in our Texas utilities to support strong economic growth turn the call over to the operator. And a significant interconnection queue loaded with renewables and disciplined investments at Sempra Infrastructure for fully contracted assets turn the call over to Steve. And potential upside to projected growth from projects we currently have in development. Finally, I think it's worth noting that the vast majority of our assets have some form of inflation protections built into them either through regulatory constructs Strategic focus on T and D infrastructure, the lower risk section of the energy value chain. We believe we produced our exposure to many of the traditional risk in the energy space, Whether it's commodity exposure, extreme weather, retail credit or stranded generation investments.

Speaker 4

Turn Lisa Alexander to update you on our progress. Please turn to the next slide.

Speaker 7

Thanks, Jeff.

Speaker 2

Turn the call over to Bob.

Speaker 7

For 2 decades, Sempra has been on a sustained path to decarbonize our business operations and the markets we serve. Innovation and new turn the call over to Steve. Thank you. Thank you. Our next question comes from the line of turn the call over to our speakers.

Speaker 7

This past year, we summarized our aspirations in each of these areas as part of Sempra's Energy Transition Action Plan turn the call over to Steve. And I'm pleased to update you that we're making great progress. Here are a few examples. In California, SDG and E completed its inaugural issuance of turn the call over to the operator for questions. Thank you, operator.

Speaker 7

Thank you, operator. Thank you, operator. Thank you. Thank you. Our next question comes from the line of turn the call over to our operator for questions.

Speaker 7

Moving to Texas, Encore is doing an excellent job connecting customers to cleaner, turn the call over to our operator for questions. Thank you. Thank you. Our next question comes from the line of Chris with turn the call over to Eric. In addition to progress on its operations, Encore has also entered into a new $2,000,000,000 revolving credit facility with turn the call over to our operator for questions.

Speaker 7

And lastly, at Sempra Infrastructure, the newly consolidated platform is advancing turn the call over to our operator for questions. The company recently filed an amendment with FERC to incorporate electric drives at our proposed Cameron LNG Phase 2 project, which could help reduce facility emissions by up to 40%, while continuing to help turn the call over to the operator to discuss the turn the call over to the operator for the Q1 of 2019 to power primarily LNG facilities. Across our industry, companies are adjusting their business models to meet customer demands turn to increasingly cleaner sources of energy. At Sempra, we think these trends play to the strength of our company and effectively create a turn the call over to Trevor to provide business and financial updates.

Speaker 8

Thanks, Lisa. To begin, we've had several positive developments at our operating companies. In the 3rd quarter, turn the call over to Steve. SDG and E filed an application with the CPUC to assess its cost of capital for 2022 as a result of the extraordinary event of the COVID-nineteen pandemic. Turn the call over to Eric.

Speaker 8

In December, the CPUC issued a scoping memo with a final decision expected later this year. Also the CPUC authorized the memorandum account effective January 1, 2022 to track any differences in revenue requirements resulting from the interim cost of capital decision expected later this year. Additionally, the CPUC is working through the implementation of a renewable natural gas turn the call over to Chairman Standard. We're excited about this development and view it as a significant step forward in advancing the future of cleaner fuels here in California. Lastly, SoCalGas recently announced a bold new vision to develop a proposed green hydrogen infrastructure system to serve the Los Angeles Basin turn the call over to Angela's Link.

Speaker 8

As contemplated, this project would be the nation's largest green hydrogen infrastructure system turn the call over to the operator. And we deliver green hydrogen to the country's largest manufacturing hub to help decarbonize electric generation, turn the call over to

Speaker 2

our operator. Industrial processes, heavy duty trucking and

Speaker 8

other sectors that are challenging to fully electrify. Shifting to Texas. Oncor set a company record for the number of new and active requests received for transmission interconnections in 2021, Demonstrating the rapid growth in Texas and continuing opportunities for Encore to grow its system. Encore service territory continue to grow as well With Encore connecting approximately 70,000 additional premises in 2021. At Sempra Infrastructure, We signed 2 MOUs to advance our unique capability of delivering LNG into both the Atlantic and Pacific Basins.

Speaker 8

Turn the call over to the operator. The first with Entergy that Lisa discussed earlier and the second an MOU with CFB to jointly develop Vista Pacifico LNG turn the call over to the operator to discuss the financial results. Please turn to the next slide, where I'd like to go into additional detail on an update relating to Tempur infrastructure. Here the key takeaway is that we're making progress on our announced sale of an additional 10% interest in the business to Adia. This transaction, which is subject to customary closing conditions and 3rd party and regulatory approvals, valued Sempra turn the call over to the operator for questions.

Speaker 8

Thank you. Thank you. Our next question comes from the line of Chris Turnure with KeyBanc Capital. Please go ahead. Thank you.

Speaker 8

Thank you. Our next question comes from the line of Chris Turnure with KeyBanc Capital. Please go ahead. Thank you. Thank you.

Speaker 2

Our next question comes from the

Speaker 8

line of Chris Turnure with KeyBanc Capital. We expect to use the proceeds to fund utility capital, execute share repurchases and continue supporting improvements in the balance sheet. Please turn to the next slide where I'll review the financial results. Earlier this morning, we recorded Q4 2021 GAAP earnings of turn the call over to the operator for the Q4 2020 GAAP earnings of $414,000,000 turn the call over to our operator for questions.

Speaker 2

Thank you.

Speaker 8

Thank you. Our next question comes from the line of turn the call over to our Q4 2020 earnings of $668,000,000 turn the call over to the operator for questions. Full year 2021 GAAP earnings were $1,254,000,000 turn the call over to our operator for Q4.01 per share. This compares to 2020 GAAP earnings of $3,774,000,000 turn the call over to our financial results or $8.43 per share. This compares favorably to our previous full year 2020 adjusted earnings turn the call over to the operator to review the financial results of the call over to the operator.

Speaker 8

Please turn to the next slide. The variance in full year 2021 adjusted earnings compared to the prior year was affected by the following key items: turn the call over to the operator for questions. $78,000,000 of lower earnings due to the sales of our Peruvian and Chilean utilities in April June of 2020 respectively turn the call over to the operator for questions. $126,000,000 of lower earnings from a CPUC decision in 2020 that resulted in the release of regulatory liabilities at Sempra California related to prior year's forecasting differences that are not subject to tracking turn the call over to the operator for questions. Thank you.

Speaker 8

This was offset by $216,000,000 turn the call over to the operator for questions. Due to higher earnings from Cameron LNG JV, primarily due to Phase 1 achieving full commercial operations in August of 2020 turn the call over to our operator for questions. And asset and supply optimization primarily driven by changes in natural gas prices and higher volumes. Dollars 139,000,000 of lower losses at parent and other, primarily due to the lower preferred dividends from the mandatory conversion of preferred stock and lower net interest expense $52,000,000 of higher CPUC base operating margin net of operating expenses at SDG and E and SoCalGas $44,000,000 charge in 2020 for amounts to be refunded to customers related to the energy efficiency program at SDG and E turn the call over to the operator. $37,000,000 of higher earnings at Sempra Texas Utilities, primarily due to increased revenues from rate updates to reflect increases in invested capital and customer growth.

Speaker 8

Please turn to the next slide. We continue to see robust opportunities to invest in our utilities and infrastructure businesses, resulting in a $36,000,000,000 5 year capital plan, turn the call over to Kevin. The largest in our history and notably a $4,000,000,000 increase over the prior plan we announced last year. This plan is anchored by $33,000,000,000 of utility investments, representing nearly 94% of the total capital plan. For SDG and E and SoCalGas, safety and reliability continue to be at the forefront of our planned expenditures.

Speaker 8

This is important. Turn the call over to our operator. Our investments in California centered around the state's regulatory priorities including wildfire safety and the integrity and safety of our gas infrastructure along with technology investments. Additionally, at Oncor, The capital plan addresses the strong organic growth. For example, the population of Texas increased more than any other state in 2021, continue the need for further investments to support this growing demand.

Speaker 8

Please turn to the next slide. Turn the call over to Steve. These capital investments in top tier markets in North America are driving tremendous growth in our projected rate base. In 2017, we had $14,000,000,000 of rate base at the California utilities. And through adding our interest in Encore as well as organic growth to grow it even further to $62,000,000,000 by 2026.

Speaker 8

Just as importantly, we expect to support this Strong projected growth without issuing common equity. Notably, over the next 5 years, turn the call over to Eric. Our rate base mix is not expected to change materially with approximately 70% of total rate base dedicated to electric infrastructure, Which reflects how well positioned we are to continue supporting strong trends in electrification in our core utility markets. Turn the call over to the operator. Please turn to the next slide where I'll provide additional details on the opportunities we have to efficiently fund our growing rate base.

Speaker 8

Turn the call over to Eric. As we think about our financing strategy, we have multiple opportunities to efficiently fund the expansive growth that we're experiencing at our utilities. Over the past few years, you've seen us rotate capital to fund utility growth, while also strengthening the balance sheet finishing 2021 in a strong position With 47% total debt to capitalization and 18% FFO to debt. Looking forward, Our financial plan is underpinned by a portfolio of strong operating cash flows that are backed by regulated returns or long term contracts. Our robust utility capital plan is further supported by cash generated from Sempra Infrastructure, where projected cash distributions to Sempra combined with Proceeds from the sales to KKR and Adia are expected to provide over $7,000,000,000 from 2021 through 2026.

Speaker 8

Turn the call over to the operator. Turning to the dividend. We continue to target a payout ratio of approximately 50% to 60%, which allows us to discuss our financial results. In addition to the dividend, we see opportunistic share repurchases turn the call over to our operator. As a way to efficiently return capital to shareholders from time to time.

Speaker 8

We remain focused on delivering shareholder value. Turn the call over to Eric. And through this efficient financing strategy, we expect to deliver strong EPS and dividend growth without issuing external common equity. Please turn to the next slide where I'll discuss our near term EPS guidance ranges and projected long term EPS growth rate. Turn the call over to Eric.

Speaker 8

We're reaffirming our 2022 EPS guidance range of $8.10 to $8.70 per share And we're introducing our 2023 EPS guidance range of $8.60 to $9.20 per share. The aforementioned guidance includes plans to continue returning capital to our owners in the form of $1,000,000,000 of share repurchases. Turn the call over to Eric. This would be in addition to the $500,000,000 of share repurchases we recently completed. Now let me talk about our longer term growth.

Speaker 8

Our historical execution combined with the growth opportunities in front of us give us confidence in providing a long term EPS growth rate turn the call over to the operator to discuss our financial results. Thank you. Thank you. Our next question comes from the line of our financial results. Please go ahead.

Speaker 8

Thank you. Thank you. Our next question comes from the line of This 6% to 8% growth is driven by our 5 year capital plan and continued operational excellence across our businesses. It is anchored by an 8.5% projected rate base growth at our utilities and only includes projects currently in construction at Sempra Infrastructure. Turn the call over to the operator.

Speaker 8

Importantly, we see opportunities to outperform this projected growth rate through incremental investments across our 3 platforms. A few examples would include additional spending on energy storage, wildfire mitigation, electric vehicle infrastructure and related make ready work turn the call over to Eric. And pipeline safety and reliability in California further economic growth driving transmission and distribution expansion in Texas turn the call over to the operator. And lastly, executing on incremental LNG and other development projects at Sempra Infrastructure that are currently outside the plan. Please turn to the next slide, where I'll highlight our historical execution.

Speaker 8

This slide is a good depiction of how we've turn the call over to our financial projections. Please turn to the next slide. Let me summarize our investment proposition. We've invested time and energy in building a high performing infrastructure company disciplined financial execution and dedication to consistently returning value to our shareholders in the form of dividends and opportunistic share repurchases. Turn the call over to Bob.

Speaker 2

Bottom line, we're excited about

Speaker 8

the future of Sempra and the critical role that our infrastructure will play in supporting future economic growth turn the call over

Speaker 2

to the operator to

Speaker 8

begin the presentation. Please turn to the last slide. Over the last 4 years, we've continued to update our portfolio with a view towards turn the call over to the operator. Prioritizing markets with strong fundamentals and constructive regulation and simplifying our business model to improve execution turn the call over to our operator for questions. And building scale, financial strength and a high performing culture to deliver improved financial results.

Speaker 8

With the benefit of those strategic efforts, turn the call over to Kevin. It allowed us to end 2021 in a strong position. And looking forward, we have 3 integrated platforms with improved visibility to future growth. Turn the call over to the operator.

Operator

Thank you. Turn the call over to Mr. Turn the call over to the operator. And we'll take our first question from Shahriar Pourreza turn the call over to Guggenheim Partners. Please go ahead.

Speaker 9

Hey, guys. Good morning, Shar.

Speaker 10

Good morning.

Speaker 11

So really comprehensive update, Jeff and Trevor. But I just starting off, as we look at your 6% to 8% growth profile. We get a pretty good sense of the utility growth. But as we think about maybe drilling down a bit further And bifurcating the growth, can you just elaborate a little bit more on the drivers of SiP? Any color on the cadence of growth there turn the call over to the operator.

Speaker 11

As ECA Phase 1 moves to completion in 2024, do you see a more level earnings contribution from Renewables and Energy Networks?

Speaker 12

Turn the call over to Eric.

Speaker 4

Thank you for that question. And certainly, I think you're making a very interesting point. You can tell that 94% of our

Speaker 2

turn the call back

Speaker 9

to the call from the

Speaker 4

end of 2017, which was about $14,000,000,000 to roughly $41,000,000,000 today. So that remains an ongoing priority. The capital that is in the plan today for Sempra Infrastructure is fairly conservatively projected. As you know Shar, our convention Really is to focus on projects where we have already taken FID and they're in construction. And I might refer you to slide 34, Where it outlines a basket of incremental opportunities that we certainly think could be quite positive for the company.

Speaker 4

There's about $5,200,000,000 to $5,700,000,000 of incremental opportunities. I think part of that informs our view that our projections are fairly conservative.

Speaker 11

And then just a follow-up on that one is tallying up today's disclosures, when you look at the utility growth, the contribution turn the call back to the operator for questions. What's really embedded in that 6% lower end?

Speaker 2

Turn the call back over

Speaker 4

to Eric. Well, I think you're making the point that is it possible that our projections are conservative? And I think that If you look at our track record over the last 10 to 20 years, we've produced earnings per share growth of about 7% or 8%. And we always have assumptions you have to account for future rate cases. You've got to account for execution of your capital plan In a positive economic environment, but I think that we have a clear visibility based upon a similar attrition mechanism for the forward rate cases, turn the call back to the operator for questions.

Speaker 4

The visibility we have in Texas and a fairly conservative approach that we've taken at Sempra Infrastructure that we have a Fair amount of confidence in that 6% to 8% range. And to your point, I think if we execute quite effectively that could prove conservative.

Speaker 11

Got it. Perfect. And then just really quick lastly for me, Jeff, this is super helpful. It's just as we're thinking about the incremental opportunities SIT, I mean, you're calling up to $9,000,000,000 right? I just want to confirm as you guys are looking at incremental LNG And other opportunities, you don't see any need to raise equity kind of over the trajectory just given sort of the opportunities to flex that balance sheet or maybe pursue more sales on the private side.

Speaker 11

Is that fair?

Speaker 4

Yes. It's completely fair. And I think Trevor made this point in his remarks, Shar, which was we finished the year with an 18% FFO to debt. Turn the call over to our financials. Our debt to total capitalization is around 47%.

Speaker 4

And not only do we not expect to issue parent equity to support a record capital program, We've got a line of sight to do another $1,000,000,000 of share repurchase this year through 2023.

Speaker 13

Turn the call

Speaker 2

back to the operator.

Speaker 11

Terrific. Thank you very much guys. Congrats on this messaging. It's a big change. Thank you.

Speaker 4

Thanks a lot. Thanks a lot, Shar.

Operator

Turn the call back over to Jeremy Tonet with JPMorgan. Please go ahead.

Speaker 14

Hi, Hi, good morning. It's actually Rich Sunderland on for Jeremy. Thanks for taking my questions.

Speaker 4

Hi, Rich.

Speaker 14

Maybe circling back to return of capital, I just want to parse the slide and dig into a little More of that $11,000,000,000 versus the $1,000,000,000 buyback to $23,000,000 It seems like if you take the $1,000,000,000 plus the math around the dividend, there's still incremental room within that $11,000,000,000 figure. Is that the case? And is that tapped for either return or reinvestment? Just How to think about the waterfall of opportunities within that?

Speaker 4

Yes. There's obviously a variety of puts and takes in there. I think you're on to something which is it does include dividends and it includes share repurchases. And one of the things you might be missing is it also includes distribution to our equity partners at

Speaker 14

Got it. That's helpful. Just real quick on that front, the timing of the repurchases To 2023, I think you referenced opportunistically at one point. So is that the approach you're taking? Or are you looking for something programmatic at some point as well?

Speaker 4

I would say that historically when we think about returning capital to our investors, we certainly like to privilege the dividend, which today is about 3 point turn to 3.3 percent yield and we supplement that opportunistically from time to time by buying back shares. In this case, It will be programmatic. We have an opportunity. We're making a commitment to do a $1,000,000,000 share repurchase before the end of 2023.

Speaker 14

Turn the call over to Eric. Understood. Thank you. And then just circling up with LNG. Cameron expansion, are you still targeting FID this year?

Speaker 14

And could you maybe just speak to the contracting environment more broadly across the portfolio?

Speaker 4

Yes. Let me do this. I know this will be a topic of interest to a lot of our callers today. I'll provide a little bit of some macro background and I'll pass it to Justin to provide a more clear view of the development portfolio and turn the call back over to Mark. Let me just start by saying that we're really in uncharted territories I think in the global energy markets.

Speaker 4

Just yesterday, we saw Brent Crude pass turn the call back to the operator. It's $105 a barrel hasn't passed $100 since 2014. Natural gas futures in Europe were over $40 Roughly 8 or more times what you're seeing in the United States for a similar amount of natural gas. And even When you look at storage levels Rich in Europe, the 5 year average today, they're about 25% below the 5 year average heading into the spring. So It is a really challenging environment in Europe.

Speaker 4

This is calling on a lot of different nations to step forward and make sure that we can provide more energy security. But if there's one takeaway turn the call over to Eric. And we're seeing this in all of our conversations. That conversation around security of supply and security of market is becoming more important. Turn the call back to the operator.

Speaker 4

People today and all these developing and OECD nations, they want to make sure that they can enter into contracts where there's a rule of law. And I think over In the next mid term and long term, you're going to see the United States really flex its muscle in the LNG space and we're seeing this in a lot of our conversations. So Justin, Perhaps we could talk about the development pipeline and some of your contract negotiations.

Speaker 9

Great. Thank you, Rich and thank you, Jeff. So I think as Jeff mentioned, given the robustness of the LNG market and what we view as our privileged turn the

Speaker 2

call back over to the operator. In the

Speaker 9

Pacific Gulf Pacific and Gulf Coast locations, I think you're seeing 2 things. 1, we're seeing a dramatic turn the call over

Speaker 2

to Chris in

Speaker 9

the market interest for our facilities and 2, I think you're seeing heightened confidence in our ability to execute on our development projects. Turn the call over to Chris. First, speaking of Cameron, we're making great progress on the expansion project at Cameron. Given the timing of the filing of the amendment to the FERC permit, we're now targeting FID in the first portion of 2023. We're also making great progress on Vista.

Speaker 9

We are actively marketing about 10,000,000 tons per annum of offtake And we are seeing extremely high levels of interest. So make no mistake, we're working with our partners and customers to get them supply as soon as possible. I wish we could give them more now, but as many of you know, the projects take time to develop, permit and build. Turn the call over to Chris. Also, we've made great progress in the last 24 months on Cameron.

Speaker 9

We reached full COD turn the call over to John.

Speaker 2

In 2020, hit record production

Speaker 9

last quarter and we're working with our customers and partners to accelerate the bottlenecking of the Phase 1. We took FID on ECA in November of 2020. As Trevor mentioned, the project is on time, on budget and being done safely. We expect first LNG there towards the end of 2024 and you should expect us to optimize volumes out of Echo once we reach full production. So to really sum it up, Rich, we're focused on delivering LNG to our customers under long term 20 year contracts.

Speaker 9

LNG demand is growing about 5% to 10% per year and you should expect us to grow with the market or better. Turn the call over to our shareholders by making disciplined investments And our LNG infrastructure.

Speaker 14

Great. Thank you for the commentary there.

Speaker 10

Thank you.

Operator

Turn the call over to the operator. We'll take our next question from Durgesh Chopra with Evercore ISI. Please go ahead.

Speaker 2

Turn the call over to Eric.

Speaker 15

Hey, good morning team. Thank you for taking my question. Jeff, big picture, where do you see sort of The regulated versus non regulated earnings mix evolving here from 2022 to 2026 In light of like the majority of the increase in CapEx is dedicated towards utilities. How are you thinking about that? Any updated thoughts there?

Speaker 15

Or how should we think about that business mix evolving over time?

Speaker 4

Yes. One of the things I was excited about for today's call was one of the slides that showed that at the end of 2017, our U. S. Utility rate base was $14,000,000,000 Today, it's $41,000,000,000 And by the end of the 5 year period that you're addressing, it's going to be $62,000,000,000 We have a fair amount of confidence to be able to grow that size of rate base. That's a 4.4 times growth over that 9 year period of time.

Speaker 4

And I think what that really reflects is the benefit of over the last 4 years our Cowfer recycling program and our focus on these T and D marketplaces where if you're in the If you're in the right markets with good regulation, you can continue to produce higher recurring cash flows and grow your business faster than your peers. Turn the call back over to Steve. We certainly think that one of the arguments that comes through in our materials is the important role that Sempra Infrastructure plays in supporting that growth. So If you go back to the December time frame of 2020, the market was valuing the EONOVA business and LNG business at about $9,000,000,000 We have a slide here today that shows our ability to basically extract roughly $7,000,000,000 out of that business to support the type of growth you're seeing in our utilities. So I think turn My conclusion would be, we have 3 very strong platforms that are very capable of growing.

Speaker 4

Each of them have turn the call back to the call. And I think we've got this thing teed up to deliver really good results in the years ahead.

Speaker 15

Got it. That's helpful, Jeff. Thank you. Just one quick clarification. On the MOUs At Cameron LNG and the Vista Pacifico, that would be sort of the additional CapEx there.

Speaker 15

Are you do you what's kind of the balance sheet room? Do you need equity for that additional CapEx? Or you think you can absorb that within In the context of upside of the CapEx plan.

Speaker 4

Right. Justin talked about this opportunity that we're working on for 10,000,000 tons per annum of new capacity. Turn the call over to Anthony. They have a self funded business model today where they can resource third party equity at the project level. They can also call on their equity partners.

Speaker 4

And one of the things that's really exciting about the Sempra Infrastructure transaction was we set that business up with an investment grade balance sheet and a mandate that they self fund their business And when they can return capital to the parent to support our share repurchases and our dividend program and our growth in our utilities, they can do that. So I think one of the things that Trevor oftentimes says turn the call over to Steve. That business produces a flywheel of cash and that has been very instrumental to Sempra's success in growing its utility platform And we'll look to them to help finance their growth on the LNG side.

Speaker 15

Got it. Thank you so much guys. Appreciate the update today.

Speaker 4

Turn the

Speaker 2

call over to Steve Fleishman.

Operator

Our next question comes from Steve Fleishman with Wolfe Research. Please go ahead.

Speaker 10

Good Good morning, Steve.

Speaker 11

Yes. Hey, hi. I guess, good afternoon here. The just a follow-up on LNG and specifically Cameron, if you do get to FID in first half of 23, when would Cameron likely be online expansion?

Speaker 9

So in terms of the additional train, it would roughly be 4 years After that, I think the other thing to remember about the Cameron project as a whole, as I mentioned, we're looking to accelerate the debottlenecking, which we think can produce an incremental 1,000,000 tons per annum and we would expect That to come online prior to the full second train or sorry the full additional train at Phase 2.

Speaker 4

So the way to think about it Steve would be Fully online by 2027, which is about a 48 month period of time. Justin is making a great point. We're looking to have access to additional volumes from debottlenecking Probably within our 5 year plan period.

Speaker 11

Okay. And that would be incremental to the plan, The debottlenecking upside?

Speaker 4

That's correct. That's something we're following very closely. It's important.

Speaker 11

Okay. That's great. And then, Jeff, Obviously, you've got a new long term growth rate out. The stock's been doing better this year. And that's great.

Speaker 11

And so but I'd be curious,

Speaker 6

if you were to what would make you

Speaker 11

Consider changing the structure of Sempra, I. E, breaking off SIP or selling more SIP? What are the things that could change the way it is or you're likely given the way this is kind of all coming together just to kind of continue the path you laid out today.

Speaker 4

Well, I'll give you a couple of comments Steve and I mentioned some of this earlier in the call. But I think turn the call over to Steve. Today's call really is a culmination of what we've been talking about in terms of our strategy and the value of being focused on turn our earnings per share over that 4 year period at about 11% rate and fund these record capital plans while returning capital to shareholders. So We've got a pretty virtuous model going for us right now. One of the things I would ask you to think about is, we have a very rigorous strategy discuss with our Board.

Speaker 4

We met earlier this week. Strategy is discussed at every single regular meeting of the Sempra Board turn the call back to our shareholders. And I think you can tell from the last 3 or 4 years, we're not going to be bashful. If we see an opportunity to unlock the balance sheet and buy back more shares or adjust our dividend policy, we're going to do that. I think right now the key takeaway from this call is, we have a record capital campaign.

Speaker 4

We've gone from 2017 when I was the CFO of having a $16,000,000,000 5 year plan Steve. It's $20,000,000,000 higher in over a 4 year period of time. So our number one opportunity is to make sure that we're funding as a first priority what we think is a very attractive capital program And continue to look for opportunities to unlock value and I think we've demonstrated a willingness to do that.

Speaker 11

Great. Just last question on the balance sheet. Appreciate the FFO to debt metric turn the line. Just have the have you gotten any comment from the rating agencies on the updated plan and

Speaker 4

Thank you, Steve. I'll pass that to Trevor for commentary.

Speaker 8

Thanks, Jeff. Yes, Steve, we have Go on and highlighted the plan with the rating agencies and gotten some of their feedback. We will do it in a bigger way turn In subsequent weeks here, but they understand where we are on things. And again, we feel very good about the 18% FFO to debt that we ended the year at and continue to strengthen the balance sheet. That is a priority of mine and continue to fund the CapEx plan.

Speaker 4

I would also mention Steve, we've talked about strengthening the balance sheet probably every year for the last 4 years. I think you're seeing that benefit. So you think about the high watermark in the Q2 of 2018 when we finished the completion of the Encore acquisition, Our debt to capitalization was about 57%. So we've really thickened our equity layer. And today at the end of the year of 2021, it was 47% right.

Speaker 4

So You're seeing us fortress the balance sheet with a view towards supporting more growth for our shareholders and the return of capital in the form of both dividends and share repurchases.

Speaker 11

Great, great. Thank you for the thorough update. Thank you.

Speaker 10

Thank you, Steve.

Speaker 2

Turn the call over to questions.

Operator

We'll take our next question from Michael Lapides with Goldman Sachs. Please go ahead.

Speaker 5

Hi, Michael. Hey, Jeff. Congrats on a good end of year call and a great start to 2022. Lots of exciting things going on. Curious, a couple of questions on the core utilities.

Speaker 5

One of which is that if I look at your rate base and your net income guidance, your net turn the

Speaker 2

call back to the line of Kevin.

Speaker 5

Your net income growth rates at the California utilities are kind of mid single digit ish I think I just invented a word digit ish. Mid single digit for 2022 and 2023, The rate base growth is double digit both of those years from 2022 and 2023. And then at Encore, It's kind of the opposite. The net income growth is low double digits since 2022, but the rate base growth turn the call over to you. Okay.

Speaker 5

Thank you. Can you just remind us what's driving the big spread between rate base growth and net income growth, albeit it's a little different in California turn the call back.

Speaker 9

Yes. Let me just start

Speaker 4

with a little bit of context. I think one of the things we're excited about and you've seen us Dedicated our focus to improve the quality and scale of our U. S. Utilities that's reflected in our rate base numbers Michael. But California rate base projections are clipping along at about a 9% CAGR.

Speaker 4

And in Alan's organization, Encore is growing at roughly 8%. And On average, you put those 2 together and they're growing about 8.5%. And I'll take your point, but you would expect earnings to roughly over long periods of time to reflect that type Rate based CAGR. In California, you recall that we're going into a rate case cycle. That 1st year where rates are in effect, You usually see a large step up and it's that portion of the rate new rate base that's coming into that cycle.

Speaker 4

And at Texas, you have a little bit of a lag In terms of how the mechanisms work. But I think the larger point you're making is you don't have visibility to year 3 or 4 or 5 from a growth standpoint. But that differentiation you're seeing should basically come together closer to the overall rate base growth over the 5 year period.

Speaker 5

Got it. Okay. And then this is a busy regulatory year. I mean, you've got to file rate cases in California and I think you have to file in Is there any scenario where probably more so on the Texas side, you could get an incremental 1 year delay? There are a bunch of other utilities In for Deep Texas and others filing in Texas this year.

Speaker 5

Do you have do you feel you have the need to file in Texas? Or is this a filing that you're kind of required

Speaker 4

Yes. Let me make a couple of contextual comments and I'll pass it to my partner Al and I here in just a second. But Remember here in California, we're going to file our cases later this year both for SDG and E and SoCalGas. Those cases will flow into 2023 with the view that those rates will be effective on January 1, 2024. In Texas, Alan is prepare his team for his rate case filing.

Speaker 4

But Alan, I'll let you speak to how you're preparing for that case, how you think about the timing of that case relative to some of Michael's comments?

Speaker 2

Turn the call over to Eric.

Speaker 16

Sure, Jeff. Thanks, Michael. Yes, just initially, let me say, when we extended our rate case deadline filing Last year, we got a deadline set of on or before June 1 this year. So right now, We're required to make the filing on it before June 1. I tell you, probably looking at call it mid May for a filing.

Speaker 16

We're putting together what we think is a very strong case. We have obviously Very aware of what other utilities have done there recently and what the outcomes have been. But I feel strongly and I said it before, rate Cases are very company specific, very fact specific. They relate in large way to the way you run your company over time, your relationships with your constituents in the PUC and we feel very good about all those connections and the history of how we perform with these rate So I'm not going to front run my lawyers and my experts, my witnesses and I can't really get into what we think we're going to file. Obviously, ROE and cap structure are always big in these cases and that will be a focus of our cases as well.

Speaker 16

And then just the only other thing I would add, and I think somebody said in the opening comments, I think everyone is aware, we do have the lowest rates of any IOU in Texas. And if you're going in for a rate case, that's a good place to be. So all in all, right now we're looking at mid May. We don't think there's going to be another extension. There's obviously a lot going on at the commission right now, but we feel good about where we are and that's our current plans.

Speaker 5

Got it. Thank you, Alan. Thanks, Jeff.

Speaker 4

Thank you, Michael.

Operator

We'll take our next question from the line of Liam Neesh with Citi. Please go ahead.

Speaker 10

Hi, everybody.

Speaker 4

Hi, Ryan.

Speaker 10

Hey. What's included in

Speaker 3

the $1,000,000,000 to

Speaker 10

$1,100,000,000 of Energy Network turn the call over to the financial project and how is the contracting and development environment today in light of the commodity and political backdrop turn the call back to

Speaker 4

the line of David. Thank you, Ryan, for that question. You recall that we announced a recent MOU with CFE. And one of the things that the country is trying to address is, as they went through their reforms from 2013, they have essentially overbuilt their pipeline network at the time With a view toward building a lot more natural gas fired generation to replace a lot of their oil fired plants or their older plants, turn the call over to Eric. Some of that pipeline capacity is unused.

Speaker 4

So one of the things that's important in that MOU is that our partnership turn the call over to CFE. With CFE is designed to basically utilize some of their pipeline system to support the Vista Pacifico project, Which reduces the cost that they're bearing for that capacity. And secondly, there's a workaround planned, where they've agreed to help us Put the Sonora pipeline back into service and that will involve additional capital. And We've got opportunities here particularly in Baja. One of the things that Tanya always reminds us of is Baja California and Baja Sur It's literally disconnected from a gas and electrical standpoint from Mainland Mexico.

Speaker 4

So this situation where San Diego Gas Electric sits

Speaker 2

turn the call over to Eric. And this North

Speaker 4

Baja position that we picked up in terms of our power position in renewables as well as our pipeline position, we think there will be continued opportunities there And in the future for pipelines to be built to support growth in Baja.

Speaker 2

Turn the call over

Speaker 10

to the operator. Thank you for that. And then in terms of your guidance, what are the components of the parent cost reduction

Speaker 4

So I will tell you that we're managing a number of things. The biggest obvious Issue in our parent cost is how we manage our overall interest cost. And the second thing and we talked about that in the prepared remarks about some of our preferred Equity going away year over year, but we also have been managing down our overall SG and A for the parent. I don't know if Trevor if you want to add any additional remarks on our parent calls year over year.

Speaker 8

Yes. No, Jeff, I think you pretty much touched on it. The higher parent losses were primarily due to less interest savings driven by a Our capital

Speaker 10

plan. Okay. And then last question for me. In terms of battery outlook, recognizing the recent Regulatory filing. Do you see any upside to the spending in California?

Speaker 10

And are you looking at any electric batteries turn the call

Speaker 2

back over

Speaker 4

to Alex. Yes. We definitely have a Volta project very much adjacent to TDM in Mexico. You may remember that when TDM was built back in the 2000 period, they had plans for a second combined cycle plant to be built adjacent to TDM. That project has now been dedicated to batteries and Justin's team is evaluating a 500 Megawatt battery project out of that location.

Speaker 4

I'll turn it over to Kevin. We actually are quite bullish on batteries here at San Diego Gas and Electric. And maybe Kevin you can kind of contextualize that opportunity for the utility.

Speaker 2

Turn the call over to Eric.

Speaker 17

Yes. Thank you. Hey, Ryan. So we were happy to see the PUC approved turn the

Speaker 9

call over to Eric. Earlier this month, our advice letter around 3 new energy

Speaker 17

storage projects that totaled about 160 megawatts, that's about $300,000,000 $380,000,000 capital investment. There were 3 different projects there all lithium ion. I I think we're going to see more and more of this. We're seeing with the Cal ASO study that came out, there's a big need for turn A lot more resources like this and I think we're going to see a tremendous amount of energy storage still to get built and we'll get our fair share of that like we did here.

Speaker 10

Thank you.

Operator

Turn the conference over to our next question from Julien Dumoulin Smith with Bank of America. Please go ahead.

Speaker 6

Hi Julien.

Speaker 10

Turn the call over to Steve. Hey, good morning to you and congratulations on the continued results. Thanks. Absolutely.

Speaker 4

Just with With respect to Ryan's

Speaker 15

last question, maybe I'll start with

Speaker 3

the strategic one here. As you think about the central infrastructure side, you all have done a lot in the gas phase. You're also obviously located in California principally. Renewable natural gas as mentioned in your comments here, how do you think about turn the call back over to Paul to discuss the question and answer session.

Speaker 2

I'll turn the call over to Eric.

Speaker 4

Well, I'll give you a couple of thoughts and maybe Kevin you can follow me. But I think one of the things and I actually had the opportunity to follow Edison's call yesterday too that you're seeing is there is no longer a conversation about whether there's going to be a clean energy transition, Julian. Turn the call back over to the operator. The conversation now is about how fast it can happen and what the different mix of technologies and fuels will be. And I think in California, One of the areas that we're fairly prideful about our leadership position is we see a marketplace here where there is a big and growing role for electrification turn the call back to the call.

Speaker 4

In the form of green kilowatts, but there's also a big role for green molecules. So I think this decision you saw yesterday very much validates The adjacencies in the existing value of SoCalGas' system, they just completed 4% of their core deliveries last year from renewable natural gas And this new mandate will up that number to about 12.5% by 2,030. And that ruling came after SoCalGas had already committed to get to 20% by 2,030. So I think the role of renewable natural gas, our recent announcement around the Angeles Leaf for hydrogen, turn the call back over to Steve. These are going to be big opportunities.

Speaker 4

And I think our footprint to your point is going to give us a lot of opportunities turn both on the regulated and unregulated side. And Kevin, you've long been a leader in our innovation at the company. Maybe you could provide some color around how you're thinking about renewable natural gas and hydrogen.

Speaker 17

Yes. I think we've spoken about this before too, Julian, which is just around this idea that clean molecules have a big role to play in this energy transition. And I think obviously, You saw what we announced with Angelie's link. We got some favorable feedback from various stakeholders around the state Around that project and you see this decision by the CPUC authorizing this renewable natural gas standard For the utilities, which is kind of an acknowledgment that, hey, the gas company's infrastructure are going to have a big role to play

Speaker 2

turn the call back to the call. And this clean energy transition within the

Speaker 17

state, helping the state reach its aggressive decarbonization goals. So we view this as all kind of like a positive step and it's demonstrating that turn the call over to Steve. There is a role in the state for clean fuels along with a lot of electrification.

Speaker 11

Got it. Excellent, guys. I'm curious to

Speaker 3

see when it becomes more material. Maybe if I can just on numbers here. As you think about this new CAGR that you've all laid out, can you talk a little bit about the fungibility between buybacks and use of deployment to turn the call back to the operator. Just in share repurchase versus say going to an LNG FID or the debottlenecking, obviously there's several different scenarios that could play out here. Turn the call over to the operator.

Speaker 3

Can you talk about how maybe capital going into an LNG FID could potentially effectively delay some of that earnings recognition into 27, It would ultimately be accretive to your CAGR as best I understand it. So maybe what's assumed in the form of Biomac? And then ultimately, What is that incremental opportunity if you can kind of define it relative to the CAGR?

Speaker 4

Well, let me take a shot at it. And if I don't answer it accurately, please come back and we'll Make sure I get a more fulsome answer, but I would start with the fact that you've seen our capital program grow from about $16,000,000,000 over 5 years in 2017,000,000,000 to $36,000,000,000 So the cornerstone of our program going forward is the fact that all three of our platforms have very strong growth. And against that backdrop, we understand that we're a company where we need to privilege the dividend, right? So our investors expect us to return capital turn the call over to Eric. In a very competitive way with our dividend and what you've seen us do in the summer of 2020 Julian and now most recently in the last 90 days Put $1,000,000,000 of share repurchases to work.

Speaker 4

And again, as someone mentioned earlier, flexing the balance sheet a little bit Between now and the end of 2023 to put another $1,000,000,000 of work. So when we think about that return of capital, it's really a 2 pronged opportunity of dividend turn the call back over to the operator. Just opposed aside the share repurchases. Now to your point as you go forward in the plan, there are a variety of things that could cause our plan to get bigger. When you think about LNG, I made this comment earlier in my prepared remarks, but we certainly think what's unique about Sempra Infrastructure Sure.

Speaker 4

We've given them a mandate to be self funded, right? So they're in a position where with an investment grade balance sheet, they can source the capital markets, They can source debt. They can raise money at the project level. They've demonstrated a willingness to do that. So think about Cameron as an example.

Speaker 4

We originally owned about 50% of that project and through our sell down at Sempra Infrastructure to a 70% level today, Our look through equity participation at Cameron today is roughly 35%. So we have a lot of flexibility under Faisal's leadership and Justin's leadership to make sure that we're very, very disciplined before we spend dollars on the LNG business, but their job is to risk adjust those cash flows in a way Make sure these are accretive opportunities for the Sempra shareholder.

Speaker 11

Got it. Excellent. So just

Speaker 3

on buyback commitment that's assumed in the plan, there's no specific number per se?

Speaker 4

So I think what we're saying is that we have identified programmatically that we're going to spend another $1,000,000,000 around share repurchases between now and 2023. And beyond that, we'll be opportunistic based upon what's in front of us and what we think creates the best kind of adjusted total shareholder return for our investors.

Speaker 10

Yes, absolutely. A lot of moving pieces here.

Speaker 3

Thank you again and congrats once more. Rob, I'll speak to you

Speaker 4

guys soon. Thank you, Julien. Appreciate it.

Operator

Turn the call over to Craig Shere with Tuohy Brothers. Please go ahead.

Speaker 6

Hi. Congratulations on another good quarter and the ongoing growth.

Speaker 4

Thank you, Craig.

Speaker 6

Turn the call over to Jeff, you mentioned the stressed and uncharted global energy market and the related opportunities on slide 34 turn the call over to the operator for more Sempra infrastructure project. Now up to $9,000,000,000 of incremental accretive projects is certainly turn nothing small, but that seems to ignore Port Arthur in the ECAF Phase 2. I realize for various reasons, Some of these additional projects may be more towards the end of the decade. But in a perfect storm of Global Energy and Security, There may be quite an appetite for multiple large scale projects that Well, maybe not FIDing exactly at the same time, maybe they could overlap in construction over 1 or 2 years and be quite a bit turn the call over to the operator to discuss the question and answer session. So the first part of my question is, in a perfect turn the call over to Tom.

Speaker 6

Would you be willing to take on that much? And if we're looking at perhaps $20,000,000,000 ish of SIP growth CapEx 2 decades end. And I know this was asked in a different manner, But what I'm trying to get at is, if it got to be that big, does that necessarily augur for additional structural change?

Speaker 2

Turn the call over to Eric.

Speaker 4

Yes. It's a really interesting set of questions and I want to compliment you because you have long been a follower of the LNG markets And we've always appreciated our dialogue with you and your firm about this. But you used twice this reference to a perfect storm. And we don't take too much Confidence or happiness in the fact that we've been predicting this for over 5 or 10 years, this need for what needs to happen in the middle of the decade. And we certain no one forecasted What's currently taking place and I think Perfect Storm is the right characterization of it.

Speaker 4

Look, there's no question that there's a commitment globally to turn the call back

Speaker 2

to the operator to the operator to the operator to the operator to the operator to the operator to the operator to the operator to the operator to the operator to the operator to the operator

Speaker 4

to the operator to the operator to the operator to the operator to the operator to the operator. Turn the

Speaker 2

call over to Eric. As you think about both

Speaker 4

developing markets and OECD nations, there is a strong and growing role, a very important role for natural gas. And LNG is really going to be the feedstock that allows both Europe and Asia to make that transition with order in a way which is affordable. It is turn the call back to the call. So I think we're in a very fortuitous position. I think you're really describing for us So maybe you can think about to Craig's question Faisal, how you think about that opportunity and how it can be flexed and how big it can be for our company?

Speaker 17

Yes. Craig, I think that would be awesome if we could do all these projects all at the same time, but obviously we have to be disciplined about how we do it. So If we think about over the long run how we're going to source that capital, so at Sempra Infrastructure, obviously, when ECA Phase 1 comes online, We're going to have a step up in cash flows there. So we have very strong internally generated cash flows to fund growth projects in the future. The second part of it too is we have our Partners now in KKR and Adia, they can also be a source of capital for big projects like that.

Speaker 17

And thirdly, we can pull capital at the project level. So similar to what we've done Cameron, we can do that in other projects too. So I'd say as we think about the future of funding these projects, we feel very good about how we can source the capital turn into that growth. And I

Speaker 4

would just maybe Craig as a final comment say, in the perfect storm you're describing, I think there'd be a lot of alignment around government agencies and support across our industry to pull projects forward as necessary if we can to be helpful to Improve the energy security of our allies.

Speaker 6

One would hope that our

Speaker 4

We're in agreement.

Speaker 2

Turn

Speaker 15

the call over to Eric.

Speaker 2

Thank you.

Speaker 4

Thank you very much.

Operator

And we'll take our next question from Sunil Sibal talk with Seaport Global Securities. Please go ahead.

Speaker 13

Yes. Hi. Good morning, folks. Good morning. Thanks for all the clarity.

Speaker 4

Turn the call over to

Speaker 13

the operator. Actually, I had a couple of follow ups on the LNG discussion. So it seems like the European utilities over the last few years turn the call over to taking on long term commitments with the 20 year contracts or so considering that the changes we are seeing Currently, has that kind of discussions opened up again? I was just curious on that.

Speaker 4

Yes, sure. A couple of things have taken place. One is European utilities are doing several things. They are turn the call over to the operator. Taking on longer term contracts, number 1, you're seeing other companies make more investments in pipeline, what they call future ready Pipelines for hydrogen, which is probably further along than we are in the United States.

Speaker 4

But Justin talked about really the improvement in how he's envisioning The long term contract environment and maybe Justin you could just recap that in terms of the nature of the conversation you're having with counterparties currently.

Speaker 9

Yes. Thank you, Jeff. Yes. Sunil, I think you had been seeing some reluctance on the European utilities to really Go out on long dated contracts. I think a lot of that was driven by uncertainty around the taxonomy as well as Carbon tax related questions.

Speaker 9

So I think some of that overhang is still turn Sure. But I will say we're seeing a significant uptick in interest, particularly given some of the things that we've described as Jeff described in the global markets. Turn the forward clearly currently affected by what's happening in the Ukraine, but we are still Seeing significant interest in the 10,000,000 tons that I'm talking about marketing in Europe and Asia turn the call back over to the operator.

Speaker 13

Thank you, Justin. Yes. Thanks for that. And then one clarification on the 1 MTPA that you mentioned for the Cameron debottlenecking. Is that capacity all spoken for between your partners in that project?

Speaker 9

So, yes, that capacity would go to the current off takers. And so it basically represent in a sense captive customers for the marginal Earnings that would come out of those additional volumes.

Speaker 13

Got it. And then last question on that. I think you mentioned improvement in return profile on these projects. Could you give us a sense of directionally What kind of improvements are you seeing? And I presume that the contract construct with regard to the nature of the contract is turn It's pretty much similar to what we did

Speaker 2

for Cameron. Yes.

Speaker 4

I'll pass this to Faisal. But I think one of the things we're referring to here is The nature of scarcity that you see in the marketplace and the growing recognition that you're seeing about the growing role of natural gas turn this call into 2 things to happen. Number 1, increased openness by customers to enter into long dated contracts and number 2, Greater competition for the capacity that we're looking to market both in the Gulf and the West Coast. And Fisley, anything to that in terms of what we're seeing?

Speaker 17

Yes. I mean, Trevor has also laid this out in his capital allocation sort of framework. But it's targeting those sort of mid to high teens equity levered IRRs

Speaker 2

turn the call over to Ericsson.

Operator

And we'll take our next question from Nicholas Campanella with Credit Suisse. Please go ahead.

Speaker 10

Hi, Nicholas.

Speaker 12

Hey, team. Hey, long time no talk. I guess just turn the call back to the operator. On the California utilities and in terms of what's assumed in the broader 6% to 8% CAGR here, I know we talked about the GRC cycle coming up. You also have cost of capital coming.

Speaker 12

Are you just kind of assuming status quo through 2025, 2026? Or How should we think about that?

Speaker 4

Yes. A couple of things for you in terms of the 5 year plan. 2 of those years are under the old rate case And then 3 of the forward 5 years will be covered by the rate case that goes into effect on January 1, 2024. In terms of cost of capital, turn the call back over to the operator. We're obviously following the proceeding very closely.

Speaker 4

I think in our current range for 2022, it's contemplated whether The trigger mechanism applies or doesn't apply. It's contemplated in the range. We view it as having between a $0.05 and $0.10 impact either way. And then in terms of the GRC assumption, as we think about forecasting in future periods, you recall Nicholas, our convention has been turn the call back over to Steve. To use substantially similar attrition mechanisms from the past.

Speaker 4

So if you look at the attrition mechanisms that PG and E and Edison recently got turn And our average attrition mechanism across both utilities over the last 5 years that's a good proxy for our expectation in the plan going forward.

Speaker 2

Turn the call over to Eric.

Speaker 12

Great. Thanks a lot. And just one more cleanup question here on LNG or sorry the SiP EBITDA, You gave 2022. We have earnings guidance for 2022 and 2023. Is there any reason why 23 wouldn't track similar to how you framed the change in earnings from an EBITDA perspective.

Speaker 12

Just trying to think about EBITDA at SIP for 2023? Thanks.

Speaker 17

Yes. So the earnings for the earnings you see in our guidance range for 2022 and 2023 assumes The proportional amount of earnings, so the NCI is in there. So for example, in 2022, you're seeing roughly 25% interest to our non controlling shareholders. And then in 23%, you're seeing 30% non controlling interest. That's why you see a little bit of a change there.

Speaker 17

But on a gross basis, the EBITDA is basically

Speaker 8

That's pretty straightforward. But let me just say this. The reason we just put 22 in there, there was nothing With regards to why we didn't put 23, it's largely the same.

Speaker 12

Yes. Just wanted to confirm that. Thanks for the time. Really appreciate it.

Speaker 10

Turn the call over

Speaker 2

to Jeff Martin.

Operator

And that concludes today's question and answer session. At this time, I will turn the conference back to Jeff Martin for any additional or closing remarks.

Speaker 4

Sure. In closing, I wanted to make sure we took the time to summarize some of It includes current authorized blended ROEs today that are slightly higher than 10%. We posted record adjusted EPS results turn the call over to Eric. This was the 12th consecutive year that we've been able to raise our dividend. And today, we announced our long term EPS growth rate of 6% to 8%.

Speaker 4

And by the way, over the last 10 years, we delivered turn 7% to 8% annual CAGR in terms of EPS growth. I would also note that we're really benefiting from a simplified business model with turn the call over to our speakers. And all of these results are being backed by shareholder friendly repurchases turn the call over to the operator for questions. 1,000,000,000 in the summer of 2020 and another approximate $1,000,000,000 through 2023. We appreciate everyone joining the call.

Speaker 4

Trevor and Justin and our IR team will be attending the Credit Suisse Conference next week in Vail and also turn the call over to the Morgan Stanley conference next week in New York. And we hope we have the chance to see many of you there in person at both of those events. This concludes our call.

Operator

Turn the call over to the operator. Thank you for your participation. You may now disconnect.

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