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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you for standing by, and welcome to the AVANGRID First Quarter 2020 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker for today, Ms. Patricia Cosgel. Thank you. Please go ahead.
Thank you, Polly, and good morning to everyone. Thank you for joining us to discuss AVANGRID's First Quarter 2020 Earnings Results. Presenting on the call today are Jim Torgerson, our Chief Executive Officer; and Doug Stuver, our Senior Vice President and Chief Financial Officer. Also joining us today for the question-and-answer portion of the call will be Bob Kump, Deputy Chief Executive Officer and President of AVANGRID; Alejandro de Hoz, President and Chief Executive Officer of AVANGRID Renewables; and Tony Marone, President and Chief Executive Officer of AVANGRID Networks.
If you do not have a copy of our press release or presentation for today's call, they are available on our website at www.avangrid.com. During today's call, we will make various forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 based on current expectations and assumptions, which are subject to risks and uncertainties. We actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in AVANGRID's earnings news release and the comments made during this conference call in the Risk Factors section of the accompanying presentation or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, avangrid.com.
We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. Please refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of non-GAAP financial measures to the closest GAAP financial measures.
I will now turn the call over to Jim Torgerson.
Thanks, Patrice, and good morning, everyone, and thanks for joining us today. I'm happy to report that AVANGRID delivered strong results in the first quarter and earnings improved year-over-year, driven primarily by our Renewable business. And while we are pleased with this solid start of the year, the key focus has been and will continue to be the COVID-19 pandemic and its potential impact on our businesses and our key stakeholders.
We recognize the challenges that the situation poses for our workers, some of whom are at home managing work, families and even the illnesses of those close to them, including members for our workforce, who are personally dealing with the virus.
Fortunately, that's very few a number at this time. And we appreciate the great work that they continue to do to support not only the company but the essential role that we serve in the community. Now we're actively monitoring and addressing COVID-19 impacts and are implementing plans to address such impacts on our business.
Even as the COVID-19 pandemic has upended our everyday lives, our operations and investments continue. But during this pandemic, our top priority is to ensure the health and safety of our employees, suppliers and community, which is critical to our ability to deliver reliable electric and gas service to our customers and to generate clean energy. We have a critical duty to our community as first responders to provide essential electric and gas service to the 3.3 million customers that depend on us.
We need to ensure that the hospitals, nursing homes and critical care facilities we serve has sufficient reliable service. We need to support our residential customers as they transition into remote work and distance learning.
In this unprecedented crisis, many of our customers are facing economic hardship, and our operating companies have announced the suspension of service shutoffs and late fees. Now AVANGRID will also continue to support the economic recovery and job creation by providing stable quality jobs and continuing to invest in our clean energy future through our renewables portfolio and our grid infrastructure. Our solid liquidity and access to capital will facilitate our strategic plans through the pandemic challenges. Our business model is resilient, and we have levers to mitigate many of the impacts of the pandemic in our businesses.
For instance, our regulated utilities have revenue decoupling and a renewable assets target 75% to 85% of their production under contract or hedge. And currently, for the balance of 2020, that number is about 79%. Our key projects continue to advance. In our offshore wind business, Vineyard Wind's permitting process is on track, with no changes to the Bureau of Ocean Energy Management latest time line and final Record of Decision, which is expected by December 2020.
Our Park City Wind offshore wind project is also moving forward with the negotiation of contracts with Connecticut Utilities and Process. In addition to this, we have 900 megawatts of onshore wind and repowering projects under construction that are all on track to come online in 2020.
In our onshore wind business, we commissioned in March the 158-megawatt Otter Creek wind project, located in Illinois. Our New England Clean Energy Connect Project received a draft approval from the Maine Department of Environment Protection with final decision expected shortly. The project also awarded key contracts of over $320 million using Maine workers to build the new high-voltage DC transmission line from the Canadian border to a substation in Lewiston.
Now turning to Slide 6. The first quarter results improved year-over-year, reflecting wind resources in line with our historical average in Renewables. Our net income for the quarter was $240 million or $0.78 per share, up $0.07 or 10.6% above first quarter of '19.
The adjusted net income amounted to $236 million or $0.76 per share, up $0.06 or 8% versus the first quarter of '19. Now the key drivers for the quarter-over-quarter results by business really are in Networks. Adjusted earnings per share for the first quarter of 2020 decreased by $0.01 per share to $0.64. As the positive contributions from our rate increases of about $0.01, was offset by the impact of higher depreciation of $0.03 and outage restoration cost of $0.01.
In Renewables, the adjusted earnings per share increased by $0.13 to $0.15 per share, driven by the contribution of 831 megawatts of new wind projects that were commissioned during 2019, adding about $0.04 a share. And higher wind production from existing assets, we were 19% above the previous year's quarter and added about $0.07 a share. And this was driven by better wind resource and improved availability. Total production, including new capacity, was 36% above 2019, and this was really partially offset by lower merchant pricing. To give you where we're at through April 26, the month today, we're about 17% versus our life-to-date average, but 7% above 2019. And year-to-date, we're now running about 3.6% versus our -- down versus our life-to-date average, but 29% above 2019.
On a consolidated basis, there was a positive tax impact quarter-over-quarter that contributed to our earnings. This is the net impact of a benefit in the business is primarily Renewables due to the PTCs, which are really offset and incorporate. Now moving to Slide 7. On our COVID-19 response, we're actively monitoring and addressing the key COVID-19 impacts on our businesses. AVANGRID has instituted several company-wide measures to protect the health and safety of our customers, communities and employees. To assist our customers, we implemented customer disconnect moratoriums and waiver of late payment fees. We also minimized exposure between our customers and our employees we discontinued in home meter readings and suspended nonemergency in residence work.
For our community, together with AVANGRID Foundation, the company is donating an excess of $2 million to support response and recovery, including over $1 million to support the state and local responses in the 24 states where we operate and an additional $1 million from AVANGRID Foundation to support response at a national and regional scale, focused on disaster response, livelihoods and basic needs. In addition, 31,000 protective masks have been donated to hospitals across AVANGRID service territories, and we're coordinating a public response to the pandemic with legislators and regulators. To protect our employees, we've activated emergency response business continuity plans, emergency op centers, our unified command and executive level crisis management teams. We're also working closely with our federal and state regulatory and governmental authorities and communicating daily with our employees.
We have over 4,700 employees that are able to work from home, which is more than 70% of our total employees. Our crews, grid operators and customer service employees that cannot work from home, they are maintaining social distancing and using personal protective equipment, such as face coverings. We've enhanced cleaning in all of our facilities and deferred nonemergency work in customer homes. As an essential energy provider, we're ensuring the continuity of our electric and gas service to customers that depend on us during this pandemic while maintaining safety, reliability and responding quickly to storms.
We are supporting emergency services and hospitals by helping them prevent service interruptions during an emergency. We will continue to support our economy by continuing to invest in critical infrastructure and our clean energy future. Now going to Slide 8. During the COVID-19 pandemic, our top priority is to protect and support our customers, employees, contractors and the communities in which we operate.
Now due to the critical business needs at this time, we've decided to postpone our Investor Day until the fourth quarter of 2020. Considering this postponement and several assumptions that have changed since our original long-term guidance was introduced in February 2019, we're withdrawing our current long-term guidance for the 2018 to 2022 period as well as the supporting assumptions until we provide a new long-term outlook later this year, that will give us better clarity on our major projects, NECEC and the Vineyard Wind; the New York rate case, hopefully, will have a settlement by them, hopefully sooner than that. And then we'll be able to determine how well we're doing and meeting the metrics in Maine that could restore the 100 basis points to our ROE.
For 2020, we are affirming our 2020 earnings per share of $2.06 to $2.26 and adjusted earnings per share of $2.17 to $2.37 per share. As our current expectations are that we will be able to absorb the impacts of COVID-19 on our businesses, we will be closely monitoring and addressing the potential COVID risks and mitigation, which Doug Stuver will address later in this presentation. Overall, despite the risks resulting in the pandemic, such the potential impacts on demand, overdue debt, our merchant prices, our business model remains resilient, and we're confident in our ability to deliver on our targets.
Financially, we're well positioned with sufficient liquidity and continued access to capital markets. From a regulatory perspective, we are actively engaging our regulators, as the COVID-19 crisis continues. We're also working with our suppliers to ensure minimal disruption to our capital programs. Now moving on to the highlights for networks on Slide 9. In New York, due to the pandemic settlement negotiations have been extended to May and the company has filed a request to extend the suspension period of September 13, 2020, for rates effective September 1, 2020, and requested a make-whole provision to April 17, the Public Utility Law Project filed a motion to halt settlement negotiations to introduce new testify on the pandemic impact and April 7 ruling denied the motion and allowed parties to address the pandemic impacts during settlement negotiations.
In Maine, Central Power was authorized a $17.4 million or about almost 7% rate increase, effective March 1, with storm recovery effective January 1, 2020. It had 50% authorized equate, 9.25% ROE and a 100 basis point downward adjustment until customer service metrics achieved -- were achieved for 18 months. Now we are meeting those metrics as we speak. proposed delayed collection of storm cost and Tier 2 storm reserve funding to reduce the impact of customers of COVID-19.
Concerning FERC on March 20, the Commission issued a notice of proposed rule-making that would expand electric transmission ROE incentives. The proposal would increase the RTO participation incentive from 50 to 100 basis points and included 250 basis point cap on total ROE incentives for new projects and comments are due on that July 1. Concerning our $950 million New England Clean Energy connect Transmission project, that's going to deliver 1,200 megawatts of Canadian hydropower to the New England grid. The project continues to advance through the permitting process.
On January 8, we received the Site Law Certification from the Maine Land Use Planning Commission. The Maine Department Environment Protection draft approval was received on March 13 and final decision is expected shortly. This is the last state permit we need in order to move forward. The U.S. Army Corps of Engineers approval is expected in early third quarter, 90 days after the Maine DEP final decision. And the ISO New England I.3.9 approval is expected in the second quarter of 2020. The Presidential Permit, which really isn't needed to start construction, it's just needed across the border, is expected to be issued approximately 60 days after the Army Corps of Engineers and ISO New England approvals.
In addition, the project has recently awarded over $320 million in contracts to several companies, including Maine in a joint venture with Herby construction Electric [Technical Difficulty] which would be equal about 700,000 through cars on the road and reduced energy costs in May. The $1 billion investment in infrastructure in Maine would yield $250 million in local benefits for mainers and support local economic development and employment by creating an average of about 1,600 jobs per year during construction. Now moving on to Slide 10, on our Renewables business, we have several exciting projects that continue to keep AVANGRID at the forefront of renewables energy in this country, and we'll continue to drive the long-term performance of our business.
Concerning our onshore wind projects. During the first quarter, we commissioned the 158-megawatt Otter Creek wind project in Illinois with T-Mobile. We also completed the repowering of 2 wind projects, our 100-megawatt Trimont Wind project in Minnesota and our 22-megawatt Mountain View project in California. Additionally, we have approximately 542 megawatts of onshore wind under construction and 243 megawatts of wind repowering projects underway, on track to be operational in 2020. In offshore wind, our 800-megawatt Vineyard Wind offshore wind project in joint venture with Copenhagen Infrastructure Partners is on schedule with no changes to the most recent Bureau of Ocean Energy Management time line.
The draft supplement to the EIS is extended and expected to be completed by June 12, with final approval expected by November 13 and a Record of Decision and approval is targeted for December 18. Officials have recently indicated that the agency is overall on track and on schedule to deliver its final decision by year-end as expected. Our 804-megawatt Park City Wind offshore wind project submitted the initial environmental and fisheries mitigation plan to the Connecticut Department of Energy and Environment Protection. Execution of PPA is expected in early May.
Our Kitty Hawk offshore wind project off the coast of North Carolina, with a potential capacity up to 2.5 gigawatts, is also moving forward as planned. The assessment plan was approved by BOEM in late February, and we're now preparing to deploy instrumentation to commence wind, wave and title monitoring programs. In addition, we're seeing upcoming opportunities for our offshore wind portfolio in New York and Virginia.
In New York, the New York Public Service Commission authorized New York Energy Research and Development Authority, or to issue a solicitation for 1,000 megawatts or more up to 2,500 megawatts of offshore wind capacity in 2020. And in Virginia, the Governor signed legislation in April 5 for 5.2 gigawatts of offshore wind by 2035. Now moving to Slide 11. During this pandemic, we remain committed to our vision of building a cleaner and smarter energy future.
In 2016, we pledged for our generation fleet to be carbon-neutral by the end of 2035, making AVANGRID the first U.S. utility to set a goal for carbon neutrality. This week, we are releasing our fourth annual sustainability report, highlighting our continued progress and leadership in promoting sustainable energy and sustainable community through our purpose and values. Highlights from the report include, in 2019, the emissions intensity from our own generation was 6x lower than the U.S. utility average in 2019.
In 2019, we also continued to expand our wind generation fleet, the nation's third largest. We've increased our renewable capacity by over 1,700 megawatts since AVANGRID has created and currently have approximately 7,500 megawatts of capacity, and we're a leader in the emerging offshore wind industry. Notable achievements for Networks include ongoing investments to replace aging transmission and distribution infrastructure. These investments will not only improve the safety and reliability of the electric and gas distribution system, but also will reduce methane emissions and corporate advanced technology, improve system resiliency and enable customers to adopt distributed energy solutions. We're also collaborating with states and electric vehicles advancement. AVANGRID Networks launched EV demonstration pilot projects and has also proposed investing $34 million in New York and Maine to build charging infrastructure and expand access to electric vehicles.
We're committed to the United Nations Sustainable Development Goals as a best-in-class energy company, we're focused on the goals targeting affordable and clean energy and climate action. We're also directly contributing to promoting innovation and education, protecting biodiversity and supporting gender equality, particularly the empowerment of women. We've incorporated these goals into our company's strategy and corporate governance system. Our corporate governance has been recognized and awarded by various external parties for being best-in-class.
On April 7, AVANGRID completed its third green bond issuance with a $750 million 5-year bond. AVANGRID is now the seventh large green bond issuer in the U.S. with a total of $2.1 billion issued. In summary, we remain focused on delivering clean, reliable and affordable service to our customers through our commitment to innovation and safety. Has previously announced, I decided to retire the day after our annual meeting of shareholders. Between now and then, we'll continue navigating these unprecedented public health and economic challenges due to the pandemic.
AVANGRID is fully committed to the health and safety of our customers and employees supporting our communities and being part of the economic and job recovery. And I believe I'll be leaving the company well positioned for the future.
Now I'm going to hear from our CFO, Doug Stuver.
Thank you, Jim. Good morning, everyone, and thank you for joining us today. I hope all on the call and your families are healthy and doing well during this challenging times. I'm now on Slide 13. On this slide, we roll forward earnings per share from the first quarter of 2019 to the same period in 2020 on a U.S. GAAP basis and on a non-U.S. GAAP adjusted basis. Adjusted EPS reflects the exclusion of favorable mark-to-market adjustments in the Renewables segment, restructuring charges and accelerated depreciation related to the repowering of 4 wind projects.
The combined impact of which was only $0.01 per share on a quarter-over-quarter basis. We have the full reconciliations of this in our appendix to the earnings presentation. As you can see on both the U.S. GAAP and adjusted basis, we had significantly improved results for the first quarter of 2020 compared to the first quarter of 2019. This is primarily due to the positive impacts in our Renewables business of $0.15 on a U.S. GAAP and $0.13 on an adjusted basis from the 831 megawatts of new assets placed in service in 2019, including the PTCs for those projects, as well as from improved wind production and availability on existing assets.
For the first quarter of 2020, our net capacity factor, including new resources, was 33.7% as compared to 28.1% in the first quarter of 2019 and above the 2011 to 2019 first quarter average of 31.8%. The slight decline in Networks results for the quarter of 2020 of negative $0.01 compared to the first quarter of 2019 was due to higher depreciation and outage restoration costs, offsetting small positive rate increases.
Lower corporate earnings in the quarter-over-quarter period related to consolidating tax adjustments, which are offset primarily in Renewables. Now the next several slides provide more detail on the business segment impacts. On Slide 14, we summarize the results and key drivers for the Networks, Renewables and Corporate business segments.
For the first quarter, you can see that the Networks results were lowered by $0.01 quarter-over-quarter, with $198 million of adjusted net income and $0.64 earnings per share. We received a benefit of $0.01 quarter-over-quarter due to new rates for Connecticut Natural Gas, which is in the second year of a 3-year rate plan and Southern Connecticut Gas, which is in the final year of its 3-year rate plan as well as a small amount for new rates in CMP that were effective March 1.
These incremental revenues were offset by higher depreciation of $0.03 due to new assets placed in service and outage restoration costs of $0.04, which were $0.01 higher than the first quarter of 2019. The taxes and other category primarily includes the tax reform-related excess deferred tax benefits of $0.04 that is spread over 12 months and will reverse in future periods as these benefits are returned to customers.
In the first quarter of 2020, we did not see a material impact related to COVID-19 on sales and uncollectibles as the state disconnect moratoriums and stay at home requirements didn't begin to go into effect until mid- to late March, and we have decoupling at our utilities to mitigate the lower demand. As I mentioned earlier, our Renewables segment was the key driver for the quarter-over-quarter improvement in earnings.
Quarter-over-quarter Renewables adjusted net income increased by $41 million or $0.13. Performance period-over-period was significantly impacted by 19% higher production from our existing wind assets due to higher wind resource and availability, along with new assets that went into service in 2019 and the first quarter of 2020. The West region, which is the region that has the highest average PPA prices, experienced the largest increase in total production, followed by the South with both regions benefiting from improved wind resource and new assets placed in service in 2019.
Improved wind production from existing assets and new assets explained $0.11 of the quarter-over-quarter improvement, while PTCs from the new projects added another $0.04. Reducing these positive impacts was a $0.04 negative impact to earnings from plant operations and trading and this is the category that benefited in 2019 from a very cold winter, price volatility and the Canadian [Technical Difficulty] to an underwriter and have small maturities at the other operating companies. We expect to issue another $2 billion of new debt at the operating and parent companies by the end of the year.
Our dividend [Technical Difficulty] on July 1, 2020. Now I'll turn to Slide 17 and give some more color on our current expectations of the areas of risk and the mitigation measures we have related to COVID-19. As Jim noted, this is a key area of focus for our entire company, and it highlights our responsibilities as an essential service and partner to the communities in which we operate and the resiliency of our team and our business.
With careful and ongoing planning and diligence, we were able to quickly and very successfully mobilize to enable our over 70% of our workforce to work remotely, and we've also implemented enhanced measures to social distance and compartment key operations and work areas. Fortunately, to date, this has benefited our workforce by impeding the spread of the virus in regions of the country that have been hotspots.
As I've noted, our liquidity and access to capital puts us in a position to work through the funding needed to continue to implement our strategic plans, even in light of expected COVID-19 impacts. We have decoupling in all of our utilities, except for CMP transmission and Maine Natural Gas, which significantly removes the impacts of lower demand in our service territories. We're working closely with suppliers in our Networks and Renewables businesses, as we implement our capital plans for the year, and we do not anticipate delays in our 2020 wind projects, which are expected to reach their commercial operation dates at the end of the year.
We've included in our appendix some sensitivities to risks I will highlight on the next few pages, and those are intended to include potential pretax income and cash impacts we are working to mitigate and address and not cumulative impacts. As you'll see, the potential pretax income impacts based on our current assumptions are relatively modest.
On Slide 18, we look at the impact of COVID-19 on our Networks business and the mitigation measures that are in place or which we're currently pursuing. Our current expectation is for 3 months of stay at home policies in place in the four states in which our electric and gas utilities operate and disconnect moratoriums eased by June 30. In terms of demand, we're seeing drops in commercial and industrial load with the various stay at home policies, but increases in residential load, which was approximately 63% of our revenues for 2019.
We expect to continue to see lower demand from C&I customers as the pandemic progresses and assuming our modeling roughly a 3-month recovery period, with some lasting demand destruction continuing beyond 2020 as businesses try to recover from the shutdown and communities adjust to new norms of social distancing. However, as I mentioned previously, all of our distribution utilities, except for main natural gas, have full revenue decoupling mechanisms across all customer classes.
Our UI and CMP transmission rates reset annually and UI transmission also has a decoupling mechanism. These decoupling mechanisms substantially stabilized revenues, limiting the upside when mode exceeds approved revenues but also insulating the companies in times such as this. With disconnect moratoriums in place in each of our regulatory jurisdictions and as customers delayed bill payments due to the economic hardships associated with COVID, we expect to see an increase in overdue receivables a portion of which we expect will turn into uncollectible expenses.
With the assumption of a three month duration of disconnect moratoriums for all of our regulatory jurisdictions, we currently do not expect a net income impact as we will seek to defer and expect to achieve regulatory recovery for the estimated potential uncollectible expenses, which we estimate at roughly $18 million for that period.
There are also potential COVID-related regulatory impacts in New York and Maine. In New York, we're currently in confidential settlement discussions to address the impacts of COVID-19 and have requested a deferral of the effective date of September 13 with a make-whole provision to April 17. To address the COVID-19 impacts in Maine, we proposed to mitigate our rate increase with the delayed recovery of $34 million of deferred storm costs and recovery over 2 to 3 years.
We're also closely working with our suppliers as we implement our capital programs in our Networks businesses. With the social distancing and compartmentalization of work, we anticipate that there could be lower-than-anticipated capital spending for the year, although we are actively working on mitigation strategies across our asset portfolio. Moving to Slide 19, we review the potential impacts of COVID-19 on our Renewables business. We have 4 projects with commercial operation dates at the end of the year.
We do not currently expect delays in these projects due to COVID-19. Work continues on these sites with social distancing and segregated teams, but we do not expect turbine deliveries until later in the year. Our repowering projects, as noted, are lower risk and largely completed. While delays are not currently expected, we recognize that with the force majeure notices we've received from suppliers, there is a potential risk of delay depending on the length and severity of the pandemic and its global impacts. However, we highlight that the 100% PTC qualification is turbine by turbine, so it would apply to turbines completed in 2020, even if the project in its entirety does not reach COD.
With the 5% safe harbor elected for these projects, we're confident of qualifying for the PTC even if the turbine installation slaps into 2021 through our demonstration of continuous efforts. Finally, the industry is working on seeking an extension of the safe harbor provisions by 1 year for projects started in 2016. Reviewing other risks in the Renewables business, we note potentially small impacts from merchant prices due to low demand. And we do not currently expect credit defaults on our high-quality portfolio of counterparties, 97% of which are investment grade.
On Slide 20, we conclude highlighting the long-term value of our company. We have attractive investment opportunities in our Networks and Renewables businesses. These include our leadership in offshore wind in the U.S., as we developed 3 lease areas on the Eastern Sea Coast, providing further value and diversification to our business, while solidifying our position as a major sustainable energy company in the U.S. Our target of carbon-neutral generation by 2035 also supports that position. Importantly, we believe our strong balance sheet and solid investment-grade credit ratings proved to be a strong asset, particularly in this challenging COVID-19 environment.
And lastly, I want to end with a recognition that, as Jim noted, this will be his last earnings call prior to his retirement on June 23, and I want to thank him and wish him well. It's been a pleasure working with you, Jim. Congratulations on your upcoming retirement and thank you on behalf of all of our employees for your leadership and contributions to the business.
Thank you. I will now hand the call back to our operator, Poly, for questions.
[Operator Instructions]. And your first question comes from the line of Insoo Kim with Goldman Sachs.
Maybe first question, acknowledging the benefits that you do have with decoupling. Can you just give a little more color in your jurisdictions, the magnitude of the demand impact that you're seeing by customer class?
Yes. Maybe Tony Moran, he is here to give you a quick update on what we're seeing. It's -- obviously, we're seeing an increase in residential and C&I is down. But Tony, do you want to?
Yes. So what we're seeing, especially where we have the smart meter to be able to capture accurate data, is increases on the residential side in the 6% to 7% range. C&I loans are down. They vary quite a lot from jurisdiction to jurisdiction. But we're seeing anywhere from 10% to even 15% on some of the C&I loads that we've experienced so far. As Doug mentioned before, with the decoupling that there'll be the homogenizing of that across the board, but we are seeing those impacts.
The other thing I can add, too, so we have on Slide 31, the COVID impacts, and this is one of them in terms of the demand and decoupling we're showing a very modest pretax income impact of only $1 million. And from a cash standpoint, roughly $17 million.
Tony mentioned percentages for residential, commercial and industrial. We're actually using more conservative assumptions in this modeling. We've assumed a 5% improvement in residential and about a 15% reduction in commercial and industrial. And residential is the higher tariff customer class. So that's where we're getting the mitigation by. Even though residential is a smaller percentage increase, in terms of price, it has a significant benefit to offset commercial and industrial.
Got it. And then in terms of collecting on the cash per the decoupling, are more -- most of the setup so that it's kind of more of an annual true-up? Or is it kind of half semiannual?
Yes. So we have a reconciliation mechanism in each jurisdiction. It's a little bit different in terms of the exact timing. But the true-up, whether it's positive or negative, typically connected, midpoint of the following year over 12 months.
There are some nuances with each location.
Understood. And correct me if I'm wrong, but I believe on its recent earnings call said that in your Vineyard Wind could be delayed until 2024. Are you guys getting any sense just on the perming side? I know you've mentioned that hasn't changed the dates on the supplemental or the final EIS processes? But any sense just that you're seeing that it could be delayed a little bit longer than that?
At this point, we're still believing -- we said all along, it wouldn't be any earlier than 2023. I think we're still on track with that. They might have been hedging a little bit because of the COVID-19. But right now, we're not seeing a whole lot of delays. I don't know, Alejandro is on the phone. Maybe he can expand a little bit on what we're seeing.
Thanks, Jim. No, indeed, as you were mentioning, we can actually deliver the project in 2024 and still be perfectly on time in terms of the PPA validity just by posting additional securities. But our intent is to deliver the project as quickly as possible. And as we said in the past and we know now that it cannot be earlier than 2023, we're going to do the best to do it as quickly as possible in that frame in a period of '23, '24. So it's certainly too early because of all the moving parts to say exactly when it will be.
And just one more add on, if I could. So if it is delayed beyond 2023 into 2024, are you still confident that you could qualify for the 18% ITCs?
Well, the 18% ITC -- sorry, Jim, go ahead.
Sorry. Go ahead, Alejandro.
The 18% ITC is also valuable in 2024. So there is no difference in that sense between 2023 and 2024.
Got it. And Jim, congratulations on your coming time.
Thank you. Looking forward to it.
And your next question comes from the line of Durgesh Chopra with Evercore.
And Jim, congratulations as well, and all the very best to you.
Thank you.
So just wanted to -- a lot of moving pieces on income taxes. Maybe, Doug, what -- sort of what onetime items drove the 7% effective tax rate versus the 12% guide?
And what should we be modeling for Q2 through Q4 this year?
Yes. I would say, really the couple of items that are driving the effective tax rate down from the 12% originally in our guidance to the roughly 7% we're seeing right now, one is just higher AFUDC equity. That's an item that would not be offset in rates, so that would fall to the bottom line. And then there's also higher excess deferred income tax amortization, that is something that over the course of the year does get offset in rates.
This is where we've got the deferred income tax liabilities from the Tax Reform Act that will be passed back to customers. Beyond that, there's also some higher PTCs that we're seeing. So that would be on the renewable side and would fall to the bottom line. And I'd say those are really the major items to speak of.
Got it. And then how -- what should we -- should it be closer to the 12% for the rest of the year? Or it should be -- from Q2 to Q4 in 2020?
No. It should be still at that roughly 7% as the overall consolidated effective tax rate for the year. So yes, that's what I would suggest.
Got it. Okay. Understood. And then maybe just one quick -- and I think you've put this information in the slides previously. But in terms of merchant exposure on the Renewables business, what percentage of perhaps your PPA contracts or margins or PPA versus merchant in the Renewables business?
Yes. I think we were saying that we target 75% to 85% between the PPA and hedges. This year, for the balance of the year, it would be at 79% that's already fixed, whether it's a PPA or a hedge. So we have about 21% merchant exposure.
Your next question comes from the line of Sophie Karp with KeyBanc.
So a couple of questions from me. So first is on New York settlement negotiations, right? And so that's been going on for a while, and now we have the pandemic. And so I would just I wondering if the kind of the impact of COVID on the rate payers is factoring in any way in these negotiations right now? Or do you think you -- is it your expectation that this will be completely kept separate from the ongoing kind of rate case?
Yes. I think we said that there was a filing by one of the participants to update everything and then -- and not include the COVID-19 and just redo everything. And the judge said, no, you can go ahead include the COVID-19 in the settlement discussions. So yes, they're being included, and we're having discussions about that. And as you might expect, the governors and the utility commissioners from the staff are looking to how do we mitigate some of these costs that people are going to be bearing. And so we're having further discussions about how to deal with the COVID-19. I don't know, Tony, do you want to add something?
No, Jim, I think you characterized it well. Clearly, the COVID is impactful on our customers, and I think all the parties -- settling parties want to make sure that we take the opportunity and the settlement to put any adjustments or tweaks necessary to consider some of that. So that's what we're working through right now.
Got it, got it. And the second question for me is on the Renewables side. Are you seeing any pressures on your book as far as off-takers may be experiencing deterioration in credit quality or in the business? Should we begin thinking about that as a potential risk? Or do you see that as like more or less insulated?
Yes. We're pretty comfortable with the off-takers. We have 97% of those are investment-grade credits. So we feel pretty good about. Now we do -- we watch them all very closely. We have a group that their responsibility. We have a risk group that looks at credit constantly, and it's monitored daily. So we're keeping track of it. But right now, we feel pretty good about it. Alejandro, anything else there?
No, I think that's exactly the case, Jim. I would maybe just add that in terms of future offtake opportunities, we are not seeing actually any slowdown the appetite in the market. So we are having a lot of conversations with many parties for future offtake opportunities.
Great. Thank you, Jim, and congratulations on your retirement. You will be missed.
Thanks, Sophie. I'll miss you guys, too.
Your next question comes from the line of Julian Demulan Smith with Bank of America.
And congratulations, Jim. If I could just --
Thanks, Julian.
Absolutely, it's been a pleasure. I suppose -- actually, let's start with that subject back. When you think about just succession public details on succession planning what is the plan, especially in light of some of the changes in schedule for the year at the outset? And then maybe the core question I'd be curious about is, how do you think about the balance sheet? And obviously, you took away the long-term guide here, but how do you think about positioning in light of on APLA?
On the succession plan, I think that's what you're asking. We're breaking up a little But as far as looking at it right now and they're evaluating internal and external candidates. So I would expect there'll be, hopefully, an announcement soon. But I -- the Board is working on it right now. And as far as liquidity, Doug, if you want...
Yes. Just on the credit metrics topic, going back to the fourth quarter earnings call, I think I mentioned that, in 2019, we saw cash from operations preworking capital to debt of about 16%. And in 2020, we were projecting to be about 16.6%, so some improvement. With the cash flow impacts of COVID-19, that's a bit of an unpredictable variable. But you can see in our slides that basically some working capital negatives that we would see are offset by potential CapEx reductions that would bring us to a largely net neutral position.
So overall, I don't see that COVID-19 based on our current outlook is necessarily going to materially negatively impact our cash flows overall were our credit metrics. But obviously, that's a fuzzy crystal ball at this point.
Just a quick one on mitigating the risk around transmission. Obviously, there's a lot of questions or hurdles that you come still. How do you think about mitigating risk in the spending that you all want to do to the extent of building out the NECEC?
Are you talking about NECEC, Julian?
Yes. How do you think about risk around NECEC given some of the pending uncertainties, specifically the effort?
Yes. There's a lot of things we have going on right now, and we formed a pack in order to get the facts out about NECEC. I don't know, Bob, you may want to just talk about some of the things we're doing.
Yes, sure. So as Jim was saying, Julian, a lot of work being done to have the folks in Maine recognize the many benefits that come with this project. And in particular, the economic benefits that come with this project, considering the situation we find ourselves in now. As Jim mentioned, the estimates are that it would inject over $500 million of economic benefits over the construction period and 1,600 jobs and up 3,000 include indirect and jobs associated with it.
We saw this when we did a number of years ago. It was a tremendous boost to the economy. So we think the economic benefits are going to be tremendous and at a time that the state is going to need it most. In terms of the permits, as Jim said, we're really waiting any day now for the final state permit. And then we have the Army Corps and the DOE Presidential Permit. But our goal right now is to focus on getting all of those permits done so to be able to start construction in the summer.
Your next question comes from the line of Steve Fleishman with Wolf Research LLC.
I had a question on the same topic on NECEC. Just first on the Army Corps approval, is there any potential impact from the NWP 12 decision in Montana related to you?
No, no. We were on a fast track
Why?
I think that -- we talked
Because I thought they've kind of halted all permits?
Very fast track, I think, projects. We are not in that category. And so there's no impact to us.
Okay. Great. And then just on -- I think you're going to challenge the decision by the court up to the Supreme Court in terms of the validity of the signatures. Is there any update on timing and process of that to the Supreme Court?
Yes. We did file an appeal to the Law Court, which is the Supreme Court in Maine. Oral arguments were actually held yesterday, and the decision is supposed to be by the Law by May 13. So that's the current process with the appeal of the Secretary of State's approval of the signatures for the referendum. And we are challenging it for a lot of good reasons. We found what we believe are a lot of irregularities people doing notary public work when they're also doing work for the campaign to push the referendum.
So we feel we have a good case. But obviously, the Secretary of State approved enough sufficient signatures and the Superior Court judge went along with what the Secretary of State said, but so we appealed to the Supreme Court in May.
Okay, great. And then last question, different topic. The uncollectibles deferral in New York, I guess, maybe more than just New York, but I guess, specific New York, has there been anything that the commission has said or precedent that you're able to do that deferral?
So at this point, we do not have a mechanism in New York for an uncollectible deferral. And if there's -- it's possible that there could be a generic proceeding, which we would obviously be a part of and this is also an issue that we are looking at as part of the settlement discussions that are still ongoing right now. We do anticipate, though, that 1 way or another, that there will be some mechanism of recovery for unexpected costs. And there's a few pathways whereby which we could achieve that. But there has not been, unlike, say, Connecticut, for example, we set up a specific docket related to COVID-19 impacts on customers in the business.
Similarly just yesterday afternoon, the Maine PC also put forth the docket. New York at this time does not have a similar docket, so we'll pursue different strategies there.
Steve, I will say that there is, to your point around President, you recall, back in the 2008, 2009, example, there was a generic proceeding instituted and ultimately an order that came out that provided some protection for costs associated with that time period. So and we'll see what happens.
And considering that the Commission and the Governor really wanted the utilities to voluntarily, call it voluntarily, stop the -- any shutoffs and continue the basically and then not a disconnect orders and so forth that there is a basis to say that we should be able to get recovery of that, and we believe we will.
And your final question comes from the line of Paul Patterson with Glenrock Associates.
Congratulations, Jim.
Thanks, Paul.
So just to follow-up on a few things, the Supreme Court, when do you expect the Maine Supreme Court to rule on this?
According to the constitution of Maine, they have to rule within a certain time frame, and that date happens to be May 13. So they have to by that.
Awesome. And then on the FERC NOPR, could you tell us -- could you quantify what the potential upside would be if the NOPR basically is approved as it as it currently stands as they currently propose it?
Yes. I think our people looked at it and said, if it goes into effect as proposed, it's going to depend on what the ROE is too, but it would be about $0.01 a share.
That just reflects the 50 basis point additional adder for RTO from 50 to 100.
Right.
That would be the only benefit associated with it?
Well, I mean, potentially on future projects, but the other potential incentives wouldn't retroactively apply to prior investments. So the only thing that would affect current investments is at 50 basis points adder for the RTO.
Okay. Great. And then in Connecticut, just what -- could you give us a little sense of what the average has been in some of your service territories? I guess, in particularly, I was wondering about Connecticut because it seems like that's been sort of high for New England and what have you. Just what the -- what you've seen so far in April? Or any sort of color you could give? And I know you're planning on deferring and what have you, but just sort of give us a sense as to what your experience has been?
Yes. This is Doug. In March, for example, what we saw is roughly about an $8 million increase overall with Networks in terms of arrearages versus February. And if we look back a year, that was roughly about $1 million increase that we saw in March of 2019. So arguably, you could say roughly a $7 million net increase in arrearages year-over-year. That could be potentially attributed to COVID. Through the first half of April, frankly, we've not really seen any abnormal increase in arrearages thus far. Now we do expect that to happen, but so far, it's been relatively muted in the first half of April.
And that increase was overall the utilities, Paul.
Yes.
Okay. That's great to hear. Once again, congratulations, Jim, and best wishes for everything.
Thanks, Paul. Appreciate it.
And at this time, there are no further audio questions.
Okay. Well, I want to thank everybody for participating. Thanks for the best wishes that you gave me and look forward to seeing how that the company does great into the future. So thanks again, and everybody else will be talking to you. And we'll see at the -- I guess, the AGA Virtual Conference, but have a great day.
And thank you. This concludes today's conference. You may now disconnect.