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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.
Ladies and gentlemen. Thank you for standing by and welcome to the AVANGRID Fourth Quarter and Full Year 2019 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions] Thank you.
I would now like to turn the conference over to your speaker for today Patricia Cosgel, Vice President of Investor Relations and Shareholder Services. Please go ahead.
Thank you, Jack, and good morning to everyone. Thank you for joining us to discuss AVANGRID’s fourth Quarter 2019 earnings results. Presenting on the call today are Jim Torgerson, our Chief Executive Officer; and Doug Stuver, our Chief Financial Officer. A team of AVANGRID officers will also be participating on the call to answer your questions. 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 US Private Securities Litigation Reform Act of 1995 based on current expectations and assumptions, which are subject to risks and uncertainties. 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, the comments made during this conference call and 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. You should 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, Patricia, and good morning, everyone and thank you for joining the call. I think when went into 2019 we knew it was going to be a challenging year and but we took actions to position the company to be better for the future, still we were very disappointed with our financial results which were below our expectations. However, in 2019 we did achieve some significant accomplishments in line with our long-term strategy that does position us very well for the future particularly one new rates go into effect in Maine and New York.
Now I’m also happy to announce that in New York we filed the letter today notifying the commission we’ve reached the settlement in the New York State Electric and Gas, Rochester Gas and Electric rate cases. Furthermore, we invested $3 billion which was up 73% against 2018 to help modernize and upgrade the grid and increase our renewable capacity. We achieved savings of $75 million pretax in 2019 from our forward 2020 program which helps to partially mitigate the negative impact of lower than expected wind resources, the outage restorations and staging cost and lower than expected transmission revenues. But it also helped in reducing our cost structure mainly in the corporate areas for the future.
In the Networks business, we recently received a final decision from the Maine Public Utilities Commission in the CMP distribution rate case and the metering and billing dockets [ph]. Now our rate cases in New York and Maine represent about 55% of our total rate base with new rate plans going into effect this year. In Maine it will be on March 1 and then in New York it should be in May depending on the settlement which we’re drafting now.
Now one good thing in the New York case the staff position on the minor storms will allow recovery or deferral of the vast majority of those costs which have been playing us for the last year and half. Our New England Clean Energy Connect Transmission Project did receive several key permits [indiscernible] necessity, the Massachusetts DPU, the Land Use Planning Commission and we’re continuing making progress for start of operation in 2022.
In Renewables, we continue to execute on our strategy. We commissioned 831 megawatts of wind projects in 2019 including 605 megawatts in the fourth quarter and we’re constructing 700 megawatts of onshore wind and repowering 366 megawatts of wind. They’re all expected to be in operation in 2020. During 2019, we executed 480 megawatts of new TPA [ph] contracts and exceeded our long-term outlook target of 2,000 megawatts.
We closed on the asset sale and transfer of 50% interest of two renewable assets with a positive impact of $0.32 per share which exceeded the initial 2019 outlook estimate. In Offshore Wind, our Park City Wind project which is 50-50 joint venture with Copenhagen Infrastructure Partners was awarded 804 megawatts in [indiscernible] Offshore Wind RFP and we do expect to see some synergies with our Vineyard Wind Project in terms of logistics, supply chain and once constructed in OEM. That incorporated governance we were named as one of the world’s most ethical companies by the Ethisphere Institute in 2019 and 2020 and received an award for Best Corporate Governance in the US by World Finance Magazine in 2019. We were also recognized as the North American Utility with Best Corporate Governance by Ethical Boardroom Magazine.
Now turning to Slide number 6, for the fourth quarter of 2019 net income was $223 million or $0.72 a share up $0.34 year-over-year and our adjusted net income in the fourth quarter was $230 million or $0.74 a share which was up $0.18 versus 2018. Financial results in the fourth quarter reflect the sale and transfer of 50% of the two renewable assets in line with our strategy optimized the value of our renewable portfolio. So the year-to-date net income was $700 million or $2.26 a share which was up 18% or $0.34 a share year-over-year and adjusted net income amounted to $673 million or $2.17 a share which was down $0.04 from 2018.
The key drivers for the year-over-year results by business are in Networks. Adjusted earnings per share decreased $0.07 to $1.50 per share results reflect the impact of higher depreciation. New York Storm settlement and the NYSEG SAIFI reliability revenue adjustment and higher outage restoration and staging costs. These negative impacts more than offset the rate increases in New York, Connecticut and Massachusetts although reduced by lower transmission of revenues in Maine due to historically low volumes in the fourth quarter versus prior year. Compared to our expectations full year impact to the outage and restoration was a little bit higher.
Renewable results improved year-over-year with adjusted earnings per share up $0.12 per 21%, $0.72 per share and driven by the sale of assets. Higher revenues from Thermal and Trading and the contribution of new capacity this was partially offset by lower pricing related impacts, expiring PTCs and lower wind resources for existing assets. The Forward 2020 plus plan product pretax savings of $75 million in 2019 which was in line with our target range of $70 million to $85 million and this was mainly achieved through spend management initiatives which contributed about $45 million, capitalized labor which was about $50 million pretax. Now these savings help to mitigate the impacts from higher outage restoration and staging cost particularly NYSEG. The reduced transmission revenues in Maine in the fourth quarter in the lower wind production primarily in the first quarter.
The key impacts during the last quarter versus our expectation by businesses result in a lower than anticipated adjusted earnings per share, in the fourth quarter Networks was negatively affected by the impact of 2018 New York storm settlement and the NYSEG SAIFI reliability revenue adjustment which totaled about $0.04 a share negative. The in action on the FERC ROE was about $0.06 a share which I think most of you are aware that FERC did not act and then the reduced transmission revenue in Maine was down constantly down about $0.05 a share.
In the fourth quarter and versus our previous expectations, renewable benefitted from larger than anticipating gain on asset sales although net development assets right offs of about $0.09 a share which was partially offset by the below normal wind resource of $0.03 and reduced wind pricing of $0.04.
Moving onto Slide 7, before I do that, I want to mention that for the first part of the year through about February 24. We’re on track with our wind resource production. The west is actually up significantly whereas the Midwest and Northeast are down about double digits and Texas is off, a little bit as well. But so far, we’re tracking with our plan for the - up to this point in time. Now on Slide 7, move onto the capital spending. We invested approximately $3 billion in 2019 and this represents 73% increase opposed to last year driven by growth in both business segments. Overall about 55% of the capital spending in 2019 was in Networks and 45% renewable. By business the capital spending and renewable amounted to approximately $1.4 billion increasing by about $1 billion year-over-year due to projects under construction in 2019 repowering in a new offshore development lease area.
Networks capital spending increased by 17% year-over-year to $1.6 billion driven by ongoing assets replacement, system automation and technology upgrades. We expect these increased investments to drive AVANGRID’s future long-term growth.
Now turning to Slide 8, moving to our outlook for 2020. Our earnings per share is expected to be between $2.06 and $2.26 per share. We’re guiding to our adjusted earnings per share which is expected to be between $2.17 and $2.37 per share. For Networks, our 2020 outlook reflects additional stability with the conclusion of the New York and Maine rate cases and the resulting rate increases which will allow us to earn our lottery turns and recovery the amortization of regulatory assets and costs associated with our growing rate base, vegetation management and outage restoration and stage –absence of the New York storm settlement and NYSEG SAIFI reliability revenue adjustment as well and then the negative impact we’re going to see from depreciation of new assets but most of that in lease for the networks business which should be included in rates.
Now there is no assumption for the FERC ROE including in our guidance. We just do not see whether FERC will actually make a decision or what direction it will go based on the Midwest ISO recent decision and now the rate hearing that’s occurring there. For renewable, our outlook is driven by normal wind production on our existing assets assuming life-to-date asset production so we’ve adjusted again the life-to-date asset production levels.
The full year contribution of new capacity which was 831 megawatts and repowering benefits including PTCs and increased production. A lower contribution from asset sales we don’t anticipate anything more than something in the $0.05 range this year. Lower thermal revenues as 2019 benefit from increased volatility prices in the west. Our [indiscernible] generation power plant significantly increased production which really compensated for lower hydroelectric generation in the Northwest in 2019 and also a gas pipeline that was out of service which caused the prices to be higher and rebenefit [ph] from that. For corporate, our outlook is driven by the impact of financing cost driven by increased debt and lower positive tax adjustments.
Moving onto Slide number 9 and the highlights from our Networks business. In New York as I said and the NYSEG and RG&E rate cases we’ve reached a settlement we notified the commission of that today. And new rates will be expected to be effective in May of this year. In addition, we settled 2018 New York storm investigation and involved a financial penalty of $10.5 million after tax which we did not have all of that in our original guidance in the fourth quarter. In Maine, final decisions in the CMP’s rate case and metering and billing docket were announced during Maine Public Utility Commission deliberations in January this year.
For the CMP rate case, we received a written order last week with 9.25% authorized ROE and a 1% negative ROE management efficiency adjustment until customer service metrics are met for 18 months. It has 50% authorized equity, there was a 25% increase in funding for vegetation management that takes it up to about $25.5 million, increased minor storm recovery to $8.1 million from $4 million and the collection of previously deferred under recovered Tier 2 storms of $10 million in cash.
For the CMP metering and billing system the examiner’s report found no systematic problem within CMP’s metering and billing systems that would have caused erroneous high usage on customer’s bills. The examiner’s report also identified issues with CMPs implementation of its billing software and requires establishment of an independent electricity use audit program and a resolution of all remaining histories and complaints.
Turning to Slide 10, concerning $950 million New England Clean Energy Connect Transmission project and that’s going to deliver 1,200 megawatts of Canadian hydropower to the New England grid and the project continues to advance to the permitting process. On January 8, we received a Site Law Certification from the Maine Land Use Planning Commission. The Maine Department of Environment Protection draft decision is expected in early March and final decision expected in April. The US Army Corps of Engineers approval is expected early in the third quarter 60 to 90 days after the Maine DEP final decision, then the ISO-NE I.3.9 approval is expected in the first quarter of 2020. The Presidential Permit which is not needed to start construction it’s just needing to cross the border is expected to be issued approximately 60 day after the US Army Corps of Engineers and the ISO-NE I.3.9 approvals. We still expect to start construction in the third quarter of 2020 and start operation by the end of 2022.
While opposition to our clean energy project which is supported by fossil fuel generators and the potential of state referendum remain, we have contributed resources for our political - action committed called Clean Energy Matters dedicated helping Maine voters under the benefits of NECEC and correct misinformation about the project. The benefits of the NECEC include $14 million to $44 million per year and lower future electricity cost in Maine, 3.6 million metric tons reduction in the regional CO2 emission which would be equal to at least 700,000 fewer cars on the road. A $1 billion investment in infrastructure in Maine with $250 million local benefits for Mainers.
Turning now to Slide 11, in Renewables we are executing our strategy with 831 megawatts of onshore wind commission in 2019 including 605 megawatts in the fourth quarter. With the 307 megawatts Karankawa Wind Farm in Texas to 201-megawatt Montague Wind Farm in Oregon. It came online in October and the 97-megawatt Coyote Ridge Wind Farm in South Dakota that came online in December of 2019.
Also in 2019 we purchased Patriot Wind, a 226-megawatt wind farm in Texas at COD in June. We have 700 megawatts of onshore wind projects under construction and 360 megawatts of wind repowering that are all expected to be operational in 2020. We had a new PPAs for 480 megawatts during 2019 including the 215-megawatt PPA for Montague Solar in Oregon and the 68-megawatt PPA for Camino Solar and battery storage in California both secured in the fourth quarter. But also in 2019, we signed the PPA for 140 megawatts for La Joya II Wind Farm in New Mexico in the second quarter which was not in our plan and a 52-megawatt extension of Tatanka Ridge Wind project in South Dakota again not in our plan in the first quarter.
On Slide 12, Renewables exceeded its growth expectations while optimizing its asset portfolio. We exceeded by 212 megawatts, our 2018 to 2022 capacity target having 2000 megawatts operational by the end of 2022 with executing contracts. Off these 2,212 megawatts 831 megawatts of onshore wind projects came online in 2019 and we’ve signed contracts for 1,381 megawatts of wind, solar and battery projects that are expected to come online between 2020 and 2022.
We are not including the 400-megawatt PPA’s executed for wind which now is scheduled no earlier than 2023. We’re moving forward with optimization of our Renewables asset. In December, we closed the sale of 50% ownership interest in two projects in Arizona to Axium Infrastructure. The EPS impact in 2019 was $0.30 exceeding our initial 2019 outlook estimate of $0.10. This is a continuation of the ongoing strategic initiative to optimize our assets and pipeline and we expect approximately five tens [ph] from sale of assets in 2020. We increased our pipeline by 19% year-over-year from 14.9 to 17.7 gigawatts.
Slide 13, considering the offshore business. The Bureau of Ocean Energy Management published a revised timetable of our Vineyard Wind 800-megawatt offshore wind farm in joint venture with CIP. BOEM’s new schedule places a final supplemental environmental impact study on November 13 and the record of decision by December 18, 2020. Considering the revised base case we target a commissioning date no earlier than 2023. We also see no risk of the PPA termination under a later commissioning date.
The good thing is, with this later date it will also help develop synergies with our Park City Wind. So during 2019, the project secured other key permits including the approval from the Massachusetts DPUC of the contract with the electric distribution companies as well as the approved permits for the interconnection with the regional grid. The Massachusetts Energy Facility Citing Board.
We anticipate qualifying for the 18% ITC for this investment. In addition, Vineyard Wind has been qualified for capacity of 156 megawatts in summer and 278 megawatts in winter and ISO-NE capacity auction in February which also includes the 54 megawatts awarded in 2019. In Connecticut, Park City Wind, our Vineyard Wind joint venture to [indiscernible] selected in Connecticut’s offshore wind RFP in December.
Park City Wind will generate 804 megawatts of clean energy which will provide the equivalent of 14% of the state’s electricity supply. The project will be located near Vineyard Wind’s other planned offshore wind farm south of Martha’s Vineyard with an expected end service date of about 2025. We’re now negotiating a 20-year contract with the state distribution companies. The project will reduce the regional greenhouse gas emissions, create jobs, generate direct, economic benefits of about $890 million including energy cost savings to Connecticut rate payers including up to $26.5 million in workforce development initiatives.
We announced the partnership with Marmon Utility LLC in Connecticut to supply offshore inter-array cable cores, creating the first US Tier 1 offshore wind supplier and Park City Wind has the potential to establish Bridgeport as an offshore wind hub. On Page 14, you can see AVANGRID is developing offshore projects and three lease areas in Massachusetts. Vineyard Wind holds two lease areas which accommodate up to 3 gigawatts and 2 gigawatts respectively and our share is 50% of that.
Vineyard Wind and Park City Wind are being developed in the first lease area. Both leases are owned jointly with CIP and is built potential capacity for submission in the future RFPs. In addition, the Kitty Hawk lease area is 100% owned by AVANGRID Renewables and has a potential capacity up to 2.5 gigawatts. Lastly, on February 20 the Site Assessment Plan was approved by BOEM for Kitty Hawk. The US Offshore wind market has gained considerable momentum in the US and in the Northeast in particular. Massachusetts, Connecticut, New York and Rhode Island has set ambitious offshore wind targets and almost 5,000 megawatts have been awarded. In addition, New York announced its second 1,000-megawatt offshore wind RFP with bids due in August and selection in November.
Slide 15, is one of the cleanest US utilities and a leader in renewable energy. AVANGRID is at the forefront in ESG. In 2016, we pledged to reduce emissions intensity and to be carbon neutral from our own generation by 2035 making AVANGRID the first US utility to set a goal for carbon neutrality. AVANGRID supports the UN’s sustainable development goal and we’re particularly focused on the goals targeting affordable and clean energy and climate action which are SPG 7 and 13. But our activities also directly contribute to other goals like life on land or industry, innovation and infrastructure among others. We’re committed to create value to our society in a sustainable way through our investments and initiatives in our communities.
In 2019, we actually reduced the Lost Time Accidents by 11%. We organized our innovation form with the participation of students from MIT, Yale, Harvard, Cornell and UCONN. AVANGRID is establishing a new private, secured fiber-optic network which is an industry leading practice in cybersecurity.
On Slide 16, we continue to make important progress and our efforts to deliver the benefits of portable clean energy to our customers and community. 2020 is the third year AVANGRID earned a place on the Global Clean 200 list of the world’s most significant publicly traded firms according to the size of clean revenue from products and services that provide solutions for the planet. We’re also constituent of the FTSE4Good Index Series and participate in the carbon disclosure project, a global environmental disclosure system.
AVANGRID also gained reorganization as a leader in corporate governance. For the second consecutive year in 2020 and 2019, we’ve been recognized by the Ethisphere Institute as one of the World’s Most Ethical Company. We also earned the prestigious compliance leader verification status from Ethisphere Institute. AVANGRID was Best Corporate Governance for North American Utilities by Ethical Boardroom and recognized by World Finance Magazine for Best Corporate Governance in the US.
Now in conclusion, we continue to execute on our long-term strategy to deliver sustainable growth by investing in clean energy as we build the grid of the future and serve our customers through innovative and smarter energy solutions. For 2020, we’ll continue executing in our long-term strategy and enhance the performance at our regulated utilities to drive our longer term growth.
And I’m going to turn it over to our CFO, Doug Stuver.
Thank you, Jim. Good morning, everyone and thank you for joining us today. I’m now on Slide 18. On this slide [indiscernible] earnings per share from the fourth quarter and the full year of 2018 to the same periods in 2019 on a US GAAP basis and on a non-US GAAP adjusted basis. The adjusted EPS amounts in these periods show the impact of the exclusion of positive mark-to-market adjustments in the renewable segment resulting from favorable price movements in our merchant hedges in the quarter-over-quarter and year-over-year periods.
In the quarter-over-quarter and year-over-year comparison the impacts were $0.09 negative and $0.33 negative to our adjusted results respectively. With our four repowering projects well underway the adjusted results build the impact of the exclusion of negative accelerated depreciation which were $0.05 quarter-over-quarter and $0.10 year-over-year favorable adjustment.
Finally, the additional significant item excluded from the adjusted GAAP EPS go forward our impacts from tax reform reported in 2018 resulting in a negative $0.13 quarter-over-quarter and negative $0.15 year-over-year impact. Before reconciliations for this were shown in the appendix, if you’d like to review further. As you can see on the slide networks adjusted quarterly results were flat in 2019 versus 2018 while the annual results are lower in 2019 versus 2018.
In the 2019 and 2018 calendar years, we had non-deferrable outage restoration and staging costs of $0.13 and $0.10 respectively for $0.03 negative year-over-year impact. In the fourth quarters of 2019 and 2018 we incurred $0.03 of non-deferrable outage storage, outage restoration and staging costs as well. In 2018, we also had additional secondary impacts from outages in the form of lower AFUDC and capitalized labor along with the KD penalty that represented negative $0.04 impact. Those items along with the $0.10 of outage restoration cost combined to produce $0.14 in outage related cost for the 2018 calendar year.
In 2019, we had the New York storm settlement and safety revenue adjustment that combine for a $0.04 negative impact bringing total outage related cost to a negative $0.17. importantly, given our expectations resulting from the CMP rate decision and the New York companies rate case we expect if we have the same recovery and reconciliation measures in place in 2019, we would have mitigated approximately 80% to 90% off the roughly $0.13 in 2019 non-deferrable outage restoration and staging costs.
In the renewable segment, the quarter-over-quarter and year-over-year comparison largely benefitted from asset sales, new wind projects and thermal and trading revenues while pricing related items in the PTC roll offs were the negative drivers. Wind was marginally worse for our existing assets in 2019, but remember this is compared to 2018 wind which was also below our life-to-date average.
Our corporate segment largely reflects higher interest expense as we issued $750 million green bond to fund our growing portfolio of sustainable energy projects as well as period-over-period tax impact. The next several slides provide more details on the business segment impacts. I’m now on Slide 19 which summarizes the key results and business drivers for networks. For the fourth quarter, you can see that adjusted EPS was flat quarter-over-quarter at $0.36. In the quarter-over-quarter comparison we experienced a net benefit of $0.04 from rate increases with a $0.07 positive impact from higher rates and a $0.01 benefit from lower earning sharing less to $0.04 negative impact from lower transmission revenues in our CMP utility.
The lower CMP transmission revenues which were below expectations by $0.05 for the quarter were the result of unexpected regional [indiscernible]. Networks also improved $0.03 from a number of other small benefit such as improvements in capitalized labor in AFUDC. Those positive impacts were offset by $0.03 negative impact from higher depreciation and a $0.04 negative impact from a penalty resulting from New York’s review of our 2018 storm response and a safety revenue adjustment related to outage frequency as NYSEG.
Outage restoration and staging costs were flat in the fourth quarter of 2019 compared to the fourth quarter of 2018. For the full year 2019 the Networks business reported adjusted EPS of $1.50 per share which was a decline year-over-year of $0.07 or 4%. For the year-over-year comparison rate increases provided a net benefit of $0.09 including a $0.17 positive impact from higher rates, a $0.03 negative earning sharing impact and a $0.05 negative transmission revenue impact. The transmission revenue impact for the year was $0.08 below our expectations.
The positive impacts of our rate increases were more than offset by negative $0.03 earnings impact from higher outage restoration and staging cost, a $0.04 negative impact from the New York storm settlement and NYSEF SAIFI revenue adjustments and $0.11 of depreciation from new assets placed in service. The networks results include the benefit of the achievement of our Forward 2020 Plus target resulting in an approximately $0.09 positive impact in these results.
Turning to Slide 20, our Renewables segment achieved quarter-over-quarter and year-over-year improvement adjusted EPS for the fourth quarter 2019 was $0.35 a $0.23 improvement from the fourth quarter of 2018. This largely reflects the successful sale and transfer of control for 50% of our Dry Lake II Wind project and Copper Crossing solar project in the fourth quarter. Those resulted in a gain of $0.30 for the quarter-over-quarter comparison offset by development pipeline asset write-downs of $0.03.
Wind performance for the quarter from existing assets was flat quarter-over-quarter and new assets and service Patriot and Montague contributed $0.01 versus prior year’s fourth quarter. Even though the quarter-over-quarter impact was minimal as I noted earlier 2019 was another low wind year for us overall. But the fourth quarter 2019 net capacity factor at 28.7% compared to the [indiscernible] to 2018 fourth quarter average of 30.1%.
Pricing related impacts were negative drivers in the quarter-over-quarter comparison as well. Approximately $0.01 of this negative $0.06 impact is due to power prices while $0.02 is due to regs and $0.03 is due to status changes. The status changes represent a combination of PPA expirations and contracts rolling to merchant due to the First Synergy Solutions bankruptcy.
Finally, adjusted EPS for the full year 2019 was $0.72 which is $0.12 higher than 2018 and a 20% increase. The key drivers impacting year-over-year comparison were similar to the quarter-over-quarter comparison with the asset sales, net of development asset write-offs resulting in a $0.29 benefit. Our new wind projects commissioned in 2019 added $0.02 for the year in the Klamath thermal and trading revenues were positive $0.05 for the year due to higher prices and volatility earlier in the year in the Northwest, when we had exceptionally cold first quarter and also the Canadian pipeline rupture.
This is partially offset by lower pricing related impacts $0.21 expiring PTCs $0.04 and lower wind resource on existing asset. Wind production from our existing assets was down $0.02 year-over-year with a 21.9% net capacity factor in 2019 versus a 29.8% net capacity factor in 2018 or roughly 2%. To more to the networks business embedded in the results is the approximately $0.09 per share benefit from our Forward 2020 Plus efficiencies.
Now turning to Slide 21, we take a look at the corporate segment which recorded adjusted EPS of $0.04 for the fourth quarter of 2019, a decline of $0.04 from the fourth quarter of 2018. Adjusted EPS was a negative $0.04 for the full year a decline of $0.09 compared to 2018. These quarterly and annual declines are largely driven by additional interest expense from the issuance of the $750 million of Green Bond in May 2019 and the period-over-period differences in taxes including street [ph] tax item.
The consolidated effective tax rate for 2019 was approximately 17% excluding discrete items and that’s down from the 19% level that we had for the first nine months of the year. On Slide 22, we look at the financing and dividend strategy as we noted in 2019, we issued $750 million Green Bond this brings our total Green Bond’s outstanding to $1.35 billion. In addition to that, we have $2.5 billion sustainability linked credit facility that we implemented in 2018. Our credit ratings are very important to us and we maintain our stable BBB plus, Baa1 ratings with the rating agencies.
We’re also maintaining payout target of 65% to 75% and note that the board recently declared the first quarter dividend of $0.44 payable on April 1 of this year. On the next slide, Slide 23, we turn to our debt and cash flow for 2019. Cash from operations was $1.6 billion we had combined cash capital expenditures from our growth in Networks and Renewables of $2.7 billion and dividends of $545 million. This resulted in us raising about $1.7 billion of additional short and long-term debt to cover the GAAP and then cash increase by $141 million compared to 2018.
As expected, we’re funding our strategic growth with debt and our net debt to total capitalization ratio is increasing although it’s still quite strong. We have a green financing strategy with $750 million Green Bonds being issued and the total of $1.3 billion outstanding and again the sustainability of credit facility. On Slide 24, we look at our estimated cash flows and financial metrics for 2020. We expect operating cash flows of over $1.7 billion with improvements versus 2019 resulting from rate increases that moderate the impacts of outage restoration and staging cost, return to more normal wind performance and new capacity placement service.
We expect capital expenditures of approximately $2.8 billion with over 70% of that spend on our core operations in the networks business and the remaining $800 million primarily with new Renewables project. This will increase our debt as we fund the growth and dividends with $1.2 billion in new debt increasing our debt ratio to a still strong 38%. Those impacts improve our cash from operations pre-working capital to debt ratio to approximately 16.6% from the 2019 level.
Now in Slide 25, here we show our 2020 EPS outlook of $2.06 per share and $2.26 and our adjusted EPS outlook of $2.17 to $2.37 along with individual business segment ranges. When we set this adjusted EPS guidance, we’ve considered several key drivers that Jim already mentioned. We don’t assume any FERC action on the ROE decision in 2020 and therefore this can be both the risk and an opportunity to our outlook, if there’s a decision from the FERC. Depending on the ROE and the incentive mechanisms that are set. We assume approximately $0.03 of non-recoverable outage restoration and staging cost will still be exposed to in 2020 with the new rate plans in New York not expect to take effect until May.
We believe our rate outcomes in New York and Maine will go long way towards mitigating our outage and restoration cost, but we still have exposure early in the year and until the new rates go into effect. In our Renewables business, we’re subject to wind resource variability and as Jim notes we’re tracking with our outlook expectations through the first part of this year and then I commercial operation dates of our projects in construction, the success of any asset sales and results could be impacted by changes in merchant prices.
On the asset sales, Jim had mentioned we’re at $0.05 as the expectation in our 2020 outlook for that contribution. Taxes, ongoing efforts implement best practices and operating efficiency. And operations and maintenance cost also impact the business. We assume a consolidated AVANGRID effective tax rate before discrete items of approximately 12% in our 2020 guidance.
Moving to Slide 26, we provide some key sensitivities for 2020 outlook for each of key business segments including distribution and transmission ROEs, the FERC ROE decision and outage and restoration cost in our networks business. Wind NCF merchant prices and asset sales in our Renewables business and interest rates on new corporate debt.
Finally, on Slide 27, we conclude with investment highlight for our company. We highlight our attractive investment opportunities in both our networks businesses and Renewables businesses winning key awards in two major offshore wind RFPs and one major onshore RFP for our transmission project. Those position us a leader in New England for the development of clean energy projects. We also want to emphasize our leading role in being a sustainable energy company in the US having the first carbon neutral energy target which we’re committed to achieve by 2035, as well as the recognition in awards we received as an important sustainable company with strong corporate governance. We have a distinctively strong balance sheet and solid investment grade credit ratings and a commitment to increase our dividend in line with our 65% to 75% target payout ratio.
Thank you and with that, I’ll now hand the call back to our operator Jack for any questions.
[Operator Instructions] Julien Dumoulin-Smith from Bank of America. Your line is open.
This is Alex Moore calling in for Julien. Thank you so much for taking our question. I first wanted to chat a little bit about asset sales in. I’m aware that long-term guidance is going to be provided at the Analyst Day closer to mid-year. but just in terms of expectations from 2020 going into 2021 how should we be thinking about asset sales and maybe some of the other items that folks might think of as more or less one time?
Going into 2020, we only anticipate - keep in mind we’re looking at development projects and one that we would look to sell that would make sense be owned by somebody else or to develop and move along because they don’t meet our criteria or whatever reasons. But the fact is we’re figuring it’s not going to be any somewhere in neighbour $0.05 a share and we would think that’s about all for 2020. We don’t anticipate anything else. The ones we sold in 2019 to Axium we got a significant premium on those as you saw we had a gain of $0.32 a share and do get a little bit of hit because of the reduction in the revenue we would get, but we still get 50% of it and I think the impact was about $0.01 a share. So, you could see why we chose to do that transaction. But going forward it’s not going to be anywhere near significant.
Okay, thank you so much. Another question that I have is, about ROE recovery and maybe we can talk a little bit more about the settlement that you’ve filed. Notice [indiscernible] in New York and then also with Maine I know what the 100 basis points adjustment that puts you at a about 8.5 authorized ROE for at least 18 months there. How should we be thinking about earned ROE recovery in both Maine and New York?
While first off in New York all we’ve done is filed a letter with the commission indicating we’ve reached the settlement staff and a few other parties and the terms of that won’t be public for a little while. And in Maine as we correctly said, the ROE that’s been allowed for the next 18 months at least is eight quarter [ph]. I don’t know Tony, if you want to comment on what you.
As Jim said agreement and principals been reached with the New York staff and several parties we filed at this morning. Over the next several weeks the settlement document will be put together and we’ll be speaking to support of many of the parties who been involved in the case, so that’s underway and going well and we’re happy that we’re able to file that this morning. And in Maine, the decision has come out and it is public, so that penalty will stay in place the 100 basis point penalty for 18 months. We do have - the mechanism is that, there is a rolling average of the performance of the certain customer service metrics. We’re currently tracking in compliance with all those metrics right now, so the goal for us is to continue to maintain that level of performance and at end or as we get to the end of that 18 months. We’ll be able to file to have the ROE penalty removed and reinstated the 100 basis points going forward and very specifically saying there that we do not have to necessarily file another rate case, but the exact mechanism is not yet well defined. So, there’s a process that we’ll have to file and do that going forward.
And Alex just keep in mind from an earned standpoint in New York, we still have four months where we don’t have the rate increases so. For NYSEG it’s going to –we’re going to be a lower return on an earned ROE. I think we’re probably down I don’t know about 5%, 6% in that neighborhood is what we’ve said for the first four months and then hopefully we’ll build to earn the allowed return. New York - if you look at Con Eds [ph] settlement there are lot of tracker we would expect rolling in with the number of trackers as well, which should put us in position earned and allowed return.
In Maine, it’s going to be a little more challenging. We got two months where we’re not going to have a rate increase because it doesn’t go into effect until March 1 and then we’ve also have the –there’s a pension adjustment which hasn’t been allowed which is about $5 million. Well that’s going to have an implication in the allowed return. I can’t really give you a prediction on what that’s going to be, but knowing it’s going to be a little more challenging in Maine, at least this year. Going forward we’re positioned well though is the way I look at it, by selling the rate case in New York, getting the outcome in Maine, getting the settlement, the docket on the billing and metering done. Getting the 2018 storm hearing in New York behind us even though we suffered a penalty on that. So, I think we put all these things, gotten them all resolved. So now we can move forward and execute on our plans.
Let me just reiterate, I think 2020 will be a bit of transition year because there are some onetime items as Jim said particularly it’s CMP and we have stub periods of two months at CMP and four months at the New York companies. Recognizing those distribution portion to CMP and New York those two amounts to more than half of our rate base. But looking at 2021 and beyond then, Tony mentioned we expect to - and our goal is that within 18 months that 100 basis points will be lifted and we really see then the ability of those companies to fully see the impact of the rate agreements that we have in place.
Praful Mehta with Citigroup. Your line is open.
As you said 2019 clearly it was a bit disappointing from your perspective. As I look at the EEI guidance you gave around the adjusted EPS and the 12% to 14% or the 8% to 10% adjusted EPS growth rate through 2022 given what you’re now guiding for 2020. Do you still see that as achievable or do you now see that the 8% to 10% CAGR that you talked about is more difficult and you want to reset that number going into the Analyst Day?
We’ll look at Analyst Day, Praful. I mean we haven’t done anything beyond that yet, so we really can’t comment on it. But we will reset that range when we hit the Analyst Day in May.
Got it. Okay. Then in terms of the NECEC project and the referendum, you still seem to have the target of starting construction, but it sounds like construction will begin before the outcome of the referendum, is that still the right understanding and how do you expect to kind of offset the risks of negative referendum outcome?
Yes, sure. So, couple of things Praful I would say, first as Jim mentioned we established a PAC called Clean Energy Matters and its focus is two-fold right now. One is obviously, trying to correct a lot of the misinformation that quite frankly fossil fuel interest are having, an impact in Maine with. So that’s number one. But also, very importantly, right now we’re in the midst of the Secretary of State reviewing the 750,000 signatures to ensure their validity and one of the things the PAC will be doing is to its own review of that. so, the sector state has 30 days, that should be completed the 4th of March and then we’ll have 10 days to our own review, so that’s the first and foremost.
If after that process they still have the minimum roughly 63,000 valid signatures that are needed to move forward then obviously the PAC will continue to focus on what it’s been doing to get information out there about the benefits of the project both for Maine and for New England in an effort to defeat that. When it comes time in the Q2 early Q3 where we have all the permits and we look to construct. We’ll make decision at that point, but our goal right now is everything as systems go to begin construction in Q3.
Now we’re going to - things in Maine to make sure to see how things are going. And we’ll make a decision as to how much we intend to invest at that point in time.
Fair enough and just lastly. In terms of just management and next steps. I know there was a change made last year I think in June to bring Deputy CEO as you all know so, I just wanted to understand how does that timing of that play out. What are the next steps there? Any kind of changes that we should be thinking about or understanding that would be helpful as well.
Nothing new on that, Praful. I mean that was really for the long-term succession planning process that we have in AVANGRID, so nothing new.
Understood, all right. Thank you, guys.
Michael Sullivan with Wolfe Research. Your line is open.
I wanted to start with the Networks number that you guys put out for 2019. So, I think you highlighted some of the items in Q4 that totaled about $0.15 relative to expectations. But the year actually came in I think $0.18 below the low end of where guidance was going into this report. So maybe just any more color on what else had an impact there?
We’ll let Doug. He got the numbers.
Ticked off the few of the items here. So, we’ve got obviously the FERC ROE item that did not come through lower transmission revenues the New York storm settlement safety revenue adjustment and then we have some other miscellaneous items such as a gas penalty item, uncollectibles, depreciation, construction work in progress right off. So, all of those I would say really kind of combined to get us to that reset level that we’ve ended up for the quarter.
Okay and can you just provide a little more detail on the Maine transmission revenues and how volatile that can be year-to-year and how the sort of investment recovery works there? I’m just little unfamiliar with that being such a big swing factor on an annual basis.
Yes, what happened in the Maine in the fourth - it was really all in the fourth quarter. We saw a decline in the volume, the outcomes, that went through the transition lines in New England and so we have the share in the regional network service and it declined for that. And so, in the past, it’s been up and down a little bit and maybe Tony, you can talk a little bit about what’s going on there?
Yes, so we’re evaluating that right now because the mechanism in Maine while we’re both involve Maine and Connecticut is, well part of the ISO-New England process. In Connecticut we’ve got a rate mechanism that allows us to recover through the local loads, any discrepancies to [indiscernible] allowed return so it effectively acts like a decoupling, that doesn’t exist in Maine. We’re looking at some opportunities right now that to investigate that going forward there’s a process in ISO-New England that is underway that changes the rate structure that would effectively accomplish that same level of stability that we have in Connecticut right now. So, it’s something we’re looking at because we do want to be able to get the variability out of this segment going forward.
Great, that’s just really helpful color and then my last one just switching to the Renewables side of things. Can you just remind us where you guys are on a percent contracted basis and as we think about 2020 guidance, how exposed you’re to merchant pricing and also what - how much PPA’s are rolling off next year?
At the end of 2019 we’re 69% contracted and I think the average life of those is about 9.5 years plus we have another 13% in hedges. So, it gets us to in all in 82% coverage on our price exposure. As you move out to the subsequent years that based on where we sit today drops off but then kind of recovers in the form of new projects coming online that are fully contracted. So, we stay in the 70% plus coverage ratio out for at least three years into the future and again that will, I expect to go upward as we move through time.
Okay, thank you.
Caroline Bone with Evercore ISI. Your line is open.
I guess I’m just wondering if we could follow-up on NECEC. Can you talk about what sort of options you guys have, is there a referendum in Maine doesn’t go your way?
Well there is a lot of moving parts to this and some of it quite frankly we can’t get into. There’s certainly the ability for court challenges depending on the nature of the referendum. Obviously the first and foremost as I mentioned is, we’re focused on looking at an insuring the validity of the signatures that are there and making sure there are at least 63,000 valid signatures. But this could go in a number of different directions so it’s really hard to say and that’s why what I said earlier was that, the goal is to start as soon as we have all of our of our permits and we expect that by early third quarter and we’ll assess at that time, kind of where all these potential moving pieces are. I mean, the fossil fuel generators in Maine and New England continue to spend significant money trying to kill this project because this project will introduce 1,200 megawatt to clean energy which means they’ll make less than their fossil fuel plants and so we’ve been geared up and continue to focus on helping people in Maine truly understand the benefit of the project and making sure that if there is a referendum of signatures are valid.
Just on that signature point, have you been able to been able to actually see the list or do you have to wait until March 4?
Right now, it’s in the hands of Secretary of State. They get 30 days essentially from when they were submitted earlier in the beginning of February, so as I said by March 4, they will be done with their assessment and then we’ll have an opportunity. There are something we can do in the interim but the reality is, our best opportunity when we have that 10 day window.
Okay, thank you.
Well know by the middle of March, where that referendum is.
Okay, that’s helpful. Thanks. Then the other question I had was just if you could quantify and this is on the Renewables business. If you could quantify what sort of EPS uplift, we should expect from you specifically returning to normal wind production in 2020?
By way of example, for our existing resources in 2019 we had a 21.9% net capacity factor. If you look at life-to-date average which now includes 2019 which unfortunately again brought down that life-to-date average, that works out to about 30.2%. So, you’ve got basically 1.1% of improvement and then if you go to our sensitivity table. Basically, for every 0.5% plus or minus in that capacity factor that represents about $0.04 per share. So that should you give you some idea of how those numbers.
Okay, that answers it. Thank you. That’s it from me. Thank you.
Insoo Kim from Goldman Sachs. Your line is open.
Sticking to Renewables for a sec, could you give a little bit more color on the current PPAs and the current hedges start to roll off and you’ve replaced them with your new PPAs or your future hedges. What type of difference we could see potentially given what you see today in the market for a pricing?
Well the pricing, when you look at PPA they reflect market pricing, but they’re signed up for a little longer term. So maybe Alejandro, can give you the best sense of what’s going with pricing today?
Thank you, Jim. Well I mean as you were commenting before we have seen in the range of 70% right now of long-term PPAs on our assets. And I mean our objective is to keep that percentage in the range 70%, 75% so as PPAs are coming to an end either we substitute them with new assets with long-term PPAs again or otherwise what we’ll do permanently is monitor for all the kind of contracts in [indiscernible] hedges or price hedges that kind of bring these figure back to that range of 70%, 75% which is what we’re targeting.
But in terms of pricing, it’s given where the market forwards are, we would assume that [indiscernible] equal the overall pricing whether those hedges or PPAs could be potentially downward trajectory from before?
When you look at - I don’t know that’s gone down much more because they’ve been down for the last couple of years. So in the forward curves you look at those depending on which ones you look at, they show an uptick in the 10 years out. How much that reflects in the PPA remains to be seen because you’re negotiating those typically and you’re either responding the RFPs or directly negotiating with customers. So as our PPAs grow along, you’ll see start seeing a lower average PPA because the higher price PPAs are starting to come out and if you look at in the slide we had on page, I guess Page 40.
You can see that the average PPA went from $53 down to $50.6 in 2019 and the merchant prices. Mainly when you look at it, the merchant prices were like $29 for energy in 2018 and down to $27 on average in 2019. The bigger change was in the regs [ph] and hedges which dropped down. But we’re not seeing I don’t know if Alejandro sees any different. But we’re not really seeing any big change in prices right now. Natural gas being low as it is, it’s down $1.80 or something right now that will have an impact on prices in certain markets.
For 2022, I’ll just add that we have nothing really expiring from a PPA standpoint. So there’s not really an exposure for that year.
Understood and then the Networks business. I think I heard you guys say as you filed the letter with the commission stay, I don’t know if anything is publicly available in terms of filings. But does your Networks guidance in 2020 embed the settlement terms that you may already know and have been reached and are you able to share in terms of ROE and potential rate case numbers that settlement reached embedded?
All we filed so far is a letter to the commission and it is public. It says that we reached the settlement with the staff and a few other parties. There are no other terms available at this point.
Yes, over the month of March, the actual settlement document will be drafted. So, we would expect by let’s say the end of March that you’ll probably have a document that’s public that will able to give you the types of information you ask for.
Got it, but in terms of the guidance for 2020 you’ve embedded some portion of what you reached, okay. Got it.
Yes, absolutely.
Thank you.
For the last eight months of the year.
Right, thank you.
Jeffrey Campbell [ph] with Toying [ph] Brothers. Your line is open.
We’ve had a lot of good specific questions. So, I’m going to ask a couple of little bit broader ones. For 2020, Renewables are approximately 30% of the positive adjusted earnings per share and Renewables will also receive about 28% of the 2020 CapEx versus 47% in 2019. As you look out over whatever time period is appropriate what trends do you foresee for Renewables either as a percentage of total adjusted revenues, percentage of total CapEx spend or both or whatever other metric you prefer?
I think the best way to look at is, first off, we’re going to see redoing our long-term outlook and we’ll have that for Investor Day in May. So, I think it’s better to comment on it at that point as we look to see the future because we’re going to be extending the timeframe that we look out, probably looking a more like through 2024 at this point. But we’ll able to give you a good solid answer at that point on the longer term outlook. Right now, I would say as of the long-term outlook we had the last about a year ago, it’s probably in the same ballpark of 70-30, 75-25.
Yes, that’s fair.
We’re going to update all that for May.
Right, we’ll look forward to that in May. Thank you. This is a little bit broader question. It’s probably middle further around the future. But I was just wondering if you’re looking at any of your existing wind farms as candidates for hybrid build out, with some of the wind throughput variability would seem like getting solar and or storage might provide a nice boost and it also seems.
Yes, I know we were looking at that. One of our wind farms, so Alejandro, do you want to talk about that a little bit?
Yes, well it’s recently something that we look at in generally now wind farms [indiscernible] more opportunities for hybridization they are - there are some markets that are better suited for that. But at the end, this is analysis on one-by-one wind farm depending on grid capacity and depending on land issues and permitting issues. But yes, it’s certainly something that we look at closely.
Tim Winter with Gabelli. Your line is open.
Tim, hello?
Tim Winter your line is open.
Good morning, can you hear me?
Yes, Tim. We got you now.
Okay, sorry about that. I have a few questions about the Renewables market. First, your 18-gigawatt pipeline can you talk about you moved that into construction phase? Do these projects need to be contracted? And then second, is the market appear to becoming more competitive or margins spending? And then finally, dramatic improvement in the Renewables IPP market or stock market, yield co market if you will. Any thought about creating yield co and recycling capital through an entity like that?
Well, let me deal with the yield co first and then Alejandro can talk about the other stuff. I mean we always look at ways to be able to financing better and use our capital appropriately so with the yield co market doing better. It’s something that we think about in the past. It’s not area that we looked at because frankly we didn’t need the capital that we recycled through yield co. going forward as we progressed maybe it’s something that could bear through. So, it’s something we’re going to obviously take a look at. So, we’re keeping that in the back of our minds right now and maybe more in the forefront as the future moves. So maybe Alejandro can talk about the other questions.
Yes, sure. So, on the pipeline, right now as we have mentioned the presentation. We have the pipeline of 17.7 gigawatts so this is pretty much uniformly distributed among our three technologies little bit bigger on solar and what obviously the way in which we develop these pipeline, is try to align as much as possible the development, the maturation process. With the off take opportunities and then we take investment decisions once the development pass and the off take pass are mature enough and this is actually something that it has to do with, what we have discussed about selling assets as well because in some cases because we cannot build our full pipeline in some occasions because of the stages of development of some projects or the stages of off take opportunities for them. It is a good opportunity for us to sell those rather than building them.
And what about the market Alejandro. Are you seeing any - I guess Tim was asking, have we seen any deterioration. I don’t know that we have, but?
Well deterioration, I wouldn’t call it that way. I mean we are analyzing the different markets which are evolving in different ways. There are areas that were not good markets for us in the past that might be commenting in the near future and all the markets that are getting saturated where we have been very successful and maybe we’re not going to be that successful anymore. So, it’s a dynamic process and we’re obviously looking at that on a regular basis.
Okay, great. Thank you, guys.
Paul Patterson with Glenrock Associates. Your line is open.
Just a few quick follow ups on the FERC ROE expectation or you guys said, you had no assumption, I think. I was just wondering what does that actually mean, I guess?
Basically, no decision that would impact 2020 results.
Okay, I got you. And then in terms of the New England Energy Connect have you guys done any internal polling, by internal I mean have you guys done any polling on how that referendum looks with respect to the mean?
Yes, we have. We do polling on a monthly basis started back in December.
And how does it look?
Obviously, that’s relatively confidential given the nature of the atmosphere in Maine. But we continue to push very hard through our New England Clean Energy but clean energy matters packaging - push very hard because we think it will make a difference when people truly understand the facts about the project and we can demonstrate what’s true and what’s not based upon some of the misinformation that’s been put out there.
Okay, so you guys feel pretty confident. If a referendum I mean - my understanding is correctly that if a referendum does make it to the ballot that you’ll prevail, where the ballot initiative will now prevail?
That’s our role.
Okay and just in general, how should we think about what - could you go and start construction before that and it sounds like, what should we think about the total capital investment that will be in place maybe by the time by election day, I guess?
Yes, I think what I would say on that is, I would defer until we do our Investor day in May. We’ll know a lot more then in terms of where we are with things and have an opportunity to update the timeline of expenditures from what we had last put out back in February of last year.
Good. And then, the New York terms are not public, you’re not going to share any of them with us.
We can’t. Those settlement discussions Tony [ph] knew better than I are confidential. All that’s been announced is virtually a letter to the ALJ, it says the settlement has been reached and the parties will look to draft the document for submittal to the commission by the end of March.
So, you should have that by the end of March, one we get it to the commissions.
Andrew Levi with ExodusPoint. Your line is open.
Just a few questions. Just on the power line, do you have any earnings embedded into 2020 guidance of that AFUDC?
Yes, there’s some.
Yes, there’s some but it’s not much at this point.
What’s it like $0.05?
I think last year when we did the long-term outlook, we had $24 million pretax and that assume we were going to spend several hundred, $300 million plus in this year which that it’s not going to happen. So, I think and as Bob just said on the last call, we’re going to update things in the Investor Day in May. But we have very little embedded into our outlook right now.
Okay and then as far as the ballot initiative itself. Any clue, is it about 50,000, 60,000 votes that kind of or need yes votes that are needed to kind of get it past.
You need 63. We’re needed [indiscernible] 10% of the number of the people had voted in the previous election. A little over 63,000 valid signatures. They submitted about 75,000.
Not the signatures. I’m wondering how many likes votes. Like assuming if it kept.
It’s a majority vote.
It’s a majority. Okay.
At Election day it would be a majority vote.
Okay, I understand.
Over 50%.
And just to make sure that I’m using the right base for the grow off of, the 2019 I guess had about $0.32 of one time gain to that, is that right? And then you had some storm issues that you might get back? But is it kind of like $1.90-ish type of clean number that we should be thinking about that’s 2019 starting point and then after backing $0.12 or one-timers in 2020, clean base around 2.15-ish just rounding up?
In terms of 2019. I’d say you’ve identified the big item we’ve got the $0.32 for the asset sales. In 2020, we assumed $0.05 so year-over-year that would be about $0.27 differential. In terms of other items in 2019, we’ve had different pluses and minuses that throughout the year that pretty much I’d say add up core net out to no major net positive or negative. So, I’d largely just use that as a - I mean the transmission is one item that we talked about today that was a downside for 2019, we expect to see a better path next year. We had some penalties in New York. Eight penalty along with the negative revenue adjustment. On the positive side, we had an asset retirement obligation adjustment in Renewables that we would not expect to recur. So those help to kind of somewhat washed against one another.
Ashar Khan with Verition. Your line is open.
My questions have been answered. Thank you.
Praful Mehta with Citigroup. Your line is open. Mr. Mehta your line is open. There are no further questions at this time. I would now like to turn the call back over to the presenters for closing remarks.
Well thank you everybody for listening today and for your questions. Should you have more, I’m sure you’ll contact our Investor Relations team. So we’re optimistic about how things are going to go, particularly with the rate cases being resolved and so now we can - we’ll have a few challenges this year. But I think we’re positioned very well for the future. So thank you all for your participation.
This concludes today’s conference call. We thank you for your participation. You may now disconnect.