PNM Resources, Inc. (PNM) Q2 2023 Earnings Call Transcript

PNM Resources, Inc. (NYSE:PNM) Q2 2023 Earnings Call Transcript August 4, 2023 11:00 AM ET

Company Participants

Lisa Goodman – Executive Director of IR

Pat Vincent-Collawn – Chairman and CEO

Don Tarry – President and COO

Lisa Eden – SVP, CFO and Treasurer

Conference Call Participants

Ryan Levine – Citi

Julien Dumoulin-Smith – Bank of America

Jonathan Reeder – Wells Fargo

Operator

Good morning, and welcome to the PNM Resources Second Quarter 2023 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would like now to turn the conference over to Lisa Goodman, Executive Director of Investor Relations. Please go ahead.

Lisa Goodman

Thank you, Alan. And thank you, everyone, for joining us this morning for the PNM Resources second quarter 2023 earnings call. Please note that the presentation for this conference call and other supporting documents are available on our website at pnmresources.com. Joining me today are PNM Resources’ Chairman and CEO, Pat Vincent-Collawn; President and Chief Operating Officer, Don Tarry; and Senior Vice President, Chief Financial Officer and Treasurer, Lisa Eden.

Before I turn the call over to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995. We caution you that all of the forward-looking statements are based upon current expectations and estimates and that PNM Resources assumes no obligation to update this information. For a detailed discussion of factors affecting PNM Resources’ results, please refer to our current and future annual reports on Form 10-K, quarterly reports on Form 10-Q, as well as reports on Form 8-K filed with the SEC.

With that, I will turn the call over to Pat.

Pat Vincent-Collawn

Thank you, Lisa. Good morning, everyone, and thank you for joining us today as we head into another heat wave across most of New Mexico and Texas. But today is also International Beer Day and White Wine Day. So we’ve given you some ideas on how to beat the heat tonight.

I’m going to start on Slide 4 with our financial results and company updates. Ongoing earnings were $0.55 for the second quarter compared to $0.57 last year. We are also affirming our guidance for 2023. Lisa will walk you through the details later in the call. Before I hand things over to Don to cover the operational highlights and key regulatory and legislative updates, let me cover a few strategic items.

We extended our pending merger agreement with AVANGRID to December 31, with the option for a further three-month extension through March. The New Mexico Supreme Court weighed in on our request for remand in May, along with requests from other parties to supplement the record. The court denied all the requested motions and continued its appeal process of the commission decision by ordering oral arguments, which were recently rescheduled from September 12 to September 15. You may remember, we have requested the oral argument as part of our briefings last year. Following oral argument, there is no timeline or indication of when the court will issue its decision.

We are confident in our legal arguments in the appeal, the commission’s improper handling of the proceedings and weighing of the benefits, and we continue to believe the existing case record supports approval of the agreement. We are also still confident the merger is the right decision for our long-term strategy and our customers, employees and communities. If the court agrees with us on the appeal, they would remand the case back for modification. It would then be the commission’s responsibility to determine what is necessary to remedy the order and set a schedule. The extension of the merger agreement should provide time to work through the court and commission processes.

In our appeal on Four Corners, the court confirmed last month that we would need to file a proposed plan for the replacement resources in order to continue our plan to exit the plant early. As a reminder, we are a 13% minority owner in the Four Corners plant with only 200 megawatts. We remain committed to fully exiting coal and removing carbon from our resource portfolio. We are focused on the best interest of our customers and are working on next steps, which could include refiling and abandonment case with the commission that would contain the specific replacement resources.

Lastly, let me give an update on the sales process of our joint venture, NMRD. The process announced in May is continuing with bid due during the third quarter, and we still expect to close by the end of the year. With that, I’ll turn it over to Don.

Don Tarry

Thank you, Pat. And good morning, everyone. I’ll start on Slide 6 with operational highlights for the quarter at PNM. We are continuing our plans in New Mexico for a clean energy transition. New solar and storage resources have been coming online, providing energy to help us meet record level demand. We’re expecting 410 megawatts of solar and storage to be added during the third quarter, reflecting a big shift in our system. This will bring our resource portfolio capacity to 60% carbon free.

We also expect another 1,300 megawatts of solar and storage resources that were previously approved to come online by the end of 2024, which will take us above 70% carbon free. The recent Supreme Court decision on Four Corners may have felt like a setback but we remain steadfast in our goal to fully eliminate carbon from our resource portfolio, and we are moving in that direction quickly.

System demands are growing, and we are looking at additional resources to meet future demand. Last year, PNM hit a new system peak for the first time since 2003, and we topped that level with another new system peak in July of this year. In November of last year, we announced an RFP for resources with in-service dates of 2026, 2027 and 2028 to meet the growing needs of our system. Transmission interconnection queues remain a challenge for new resources. The resources that will be selected are those who can meet the 2026 in-service date by having transmission interconnections available or being situated where new transmission is not required.

As a result, the resource available for 2026 will primarily be battery storage, leveraging existing interconnections or substations. We expect to make a filing in the coming weeks for these resources. Meanwhile, on the transmission and distribution side of the business, we continue to invest in reliability and resilience and look forward to solutions to integrate more intermittent resources on our grid. We are also pursuing federal funding opportunities under the Infrastructure Investment and Jobs Act for specific projects to benefit our customers. We have two $50 million proposals that have moved beyond conceptual papers and are being considered for funding under the GRIP program.

We are also a partner in a smaller project that has already received approval under the ARROWS program. It is a partnership to use artificial intelligence powered platform on our grid real-time to manage distributed energy resources. We’ll use findings from this pilot to maximize renewable resources on our grid going forward.

We will continue to explore federal funding opportunities to benefit customers as we look to maximize the benefits of the clean energy transition. We have an abundance of projects in the wings as we continually balance the customer impacts of our capital investments and utilize other funding opportunities that can improve our ability to bring more benefits to our customers.

On Slide 7, I’ll walk you through recent updates on key regulatory proceedings at PNM. Pat has already covered our updates on the merger and Four Corners exit. In our grid modernization application, the commission has asked for us to supplement the record with a cost benefit analysis for our filed investments. We plan on submitting the analysis in early November. The hearing examiner has indicated the remainder of the procedural schedule, will work around the hearings for our general rate case, which has a statutory time clock. We now expect a decision on the grid mod application in the first half of 2024. The shift in this timing for approval does not change the customer benefits and does not create significant changes to our capital spending plan.

In our general rate case, staff and intervenor testimony was filed at the end of June, and our rebuttal testimony was filed last week. Hearings on the case are scheduled for September 5 through the 22nd and we would expect a recommended decision from the hearing examiner in the November time frame with the final order from the commission in December and rates implemented in January. The customer bill impact from the rate change in 2024, coupled with changes in our fuel clause and other riders continues to be less than 1% for the average residential customer.

Last quarter, I talked about our filing for 12 megawatts of battery storage at existing substations as an innovative T&D solution. This process has been docketed with testimony due during the third quarter and hearing scheduled for October. We see this as a good customer solution to alleviate congestion on our system and demonstrates new ways we can leverage technology to provide reliability, affordable service to our customers.

Now turning to Texas on Slide 8. I will cover TNMP’s recent operating highlights and key regulatory updates. TNMP hit a new system peak again this year at the end of June, with even higher peaks reached in July. Temperatures are definitely a factor, but each year’s new peak also reflects continued growth across our service territory. [TNM] (ph) system peak has grown 25% over the last five years, and this is net of our energy efficiency programs that just received EnergyStar’s highest recognition again this year.

We are growing our teams and capital spending in Texas to match and support growth and reliability across our service territory. Our annual capital investment plans have more than doubled in the last five years from $200 million to over $400 million this year. We are seeing growth in all three regions of our service territory, North Central Texas, the Gulf Coast and West Texas. Lisa will talk more about the load impacts we are currently seeing.

Looking forward, we already have one transmission expansion project in West Texas, under review with the ERCOT planning group and are filing a second. Existing data centers in the area were given clearance to ramp their loads at the end of the second quarter and have communicated plans to expand their facilities. We are also seeing an increase in medium-sized transmission requests from oil and gas load.

North Texas continues to be one of the hottest housing markets in Texas and growth in the Gulf Coast is evident in new substations and supporting T&D infrastructure. New load in both areas is being studied by TNMP planning groups, and we continue to receive inquiries from new and existing industrial and large load customers. In terms of regulatory updates, we reached a unanimous settlement with staff and interveners in our filing of our distribution investment recovery, known as DCRF, and received commission approval of the settlement. This year was another year of constructive settlement for 98% of our requested amount, resulting in a $14.5 million increase to be implemented September 1, recovering an incremental investment of $157 million of rate base.

On the transmission side, we’ve implemented updated rates under our first TCOS filing for 2023 in May. And we have made our second filing in July with rates expected to take effect in September. We’ve requested an annual increase of $4.2 million to recover an incremental $21.4 million in capital investments.

Turning to Slide 9. I’ll highlight some of the new builds from this year’s Texas legislative session that impact our business. Grid reliability and resilience were a priority in this year’s session and bills passed to provide TNMP the flexibility to further strengthen its infrastructure and allow for timely rate recovery. The bill with the largest near-term financial impact to our business is the DCRF legislation, adding a second filing per year and shortening the time frame for proceedings, similar to the TCOS filings on the transmission side.

We are having stronger-than-expected load at TNMP this year, which Lisa will talk more about. And this means our returns are strong enough that we will not have a second DCRF filing this year. We will look for benefits of this legislation impact to affect our bottom line in 2024. Also on the distribution side of the business, system resilience and temporary mobile generation bills were passed and commission rule makings will be underway soon. Temporary mobile generation will play an important role in each region of our service territory, assisting TNMP in restoring power to distribution customers after a significant event, especially because our network is dispersed across the state.

On the transmission side of the business, legislation was passed specific to West Texas transmission planning and six-month CCN deadlines which will help us move beyond the current projects that have resulted from sustained load growth and assist in getting ahead of higher demand projects in the future. These transmission projects are generally recovered through the TCOS mechanism and this approved legislation will help our projects move more efficiently to accommodate new load not only in West Texas, but across TNMP.

Total employee compensation is another bill that will improve TNMP’s ability to recover the expenses necessary to run its business and the damage critical infrastructure bill helps to protect our investments in response to criminal events across the country. As we develop our business plans for next year and beyond, we will look to prioritize investments aligned with these measures that improve the quality of service for our customers and future customers. The TCOS and DCRF riders, along with this year’s new legislation, will make it increasingly possible to earn close to our authorized return at TNMP without a general rate case filing.

With that, I will turn it over to Lisa.

Lisa Eden

Thank you, Don, and good morning, everyone. I’ll start on Slide 11 with a summary of the year-over-year changes in second quarter earnings. Earnings per share in the second quarter of 2023 were $0.55 compared to $0.57 in the second quarter of 2022. Weather in both states reduced EPS by $0.04 year-over-year. At PNM, higher transmission margins increased our revenues and lower costs from our generation portfolio transition and gas plant outages in 2022 also increased the bottom line compared to last year.

TNMP had higher transmission and distribution investment recovery and increased customer usage from load growth. The increase of both utilities was partially offset by expenses for depreciation, property tax and interest associated with our new rate base investments, along with increases through our planned O&M spending. We are trending above our annual expectation for O&M and will make use of favorable weather opportunities in the second half of the year to bolster our system and enhance service to our customers. Higher interest rates reduced earnings at the corporate segment, net of the hedges we previously put in place.

On Slide 12, I’ll cover our load growth for both PNM and TNMP. At PNM, the shoulder month and milder temperatures brought lower volumes. On a year-to-date basis, we continue to see a slower ramp-up from some of our larger industrial customers, which has been partially offset by the residential and commercial classes that are ahead of our expectations. The end of June brought a significant change in temperatures, which quickly rose to the record highs seen in July and led to multiple new system peaks. We continue to see strong inquiries stemming from economic development efforts at the state level, further supporting our plans for increased system demand and additional resources needed on our system.

At TNMP, growth in the second quarter was more than enough to outweigh the impact of milder weather year-over-year. As Don mentioned, we hit a new all-time system peak in June and then again in July even as crypto mining customers scaled back their usage. Volumetric load grew in the second quarter and nearly offset the decrease we saw in the first quarter. The strong housing markets and growth in subdivisions that Don mentioned, are largely seen through our volumetric load. Demand-based load reflects the ramp-up of crypto mining customers throughout last year. We continue to see growth from this segment of the business, and we are also seeing continued demand-based growth from other customers in all three regions of our service territory.

Expansion by our larger existing customers and new industrial customer inquiries has positively impacted our demand-based load. We will review our guidance after Q3, but it’s likely that our demand-based growth in Texas will exceed our expectations for the year. In terms of weather, when looking at the entire quarter, TNMP’s degree days were pretty close to normal and then had a significant impact on TNMP’s earnings this quarter. Last year, the second quarter was hotter than normal, so there is a decrease in EPS year-over-year related to weather.

Turning to Slide 13, I’ll provide an update on our assumptions for the rest of the year. We are affirming our 2023 guidance range of $2.65 to $2.75. Our increased results in the first quarter were partially offset by the impact of milder New Mexico temperatures in the second quarter. We have updated our quarterly earnings distribution to reflect our revised assumptions. July temperatures indicate we will likely be in the top half of the guidance range this year and we will reevaluate our expectations based on Q3 results at our next earnings call. We will also provide an update to our capital plan to incorporate investments associated with the recently implemented legislation in Texas, any timing shifts in grid modernization investments and any other updates.

We refinanced $500 million of our holding company term loan in June, extending the maturity out another year to June of 2026. In addition to spreading out our maturity dates, we increased the diversification of our lenders [Technical Difficulty] our overall financial risk. We continue to have $1 billion of interest rate hedges in place this year through September with $850 million for the remainder of the year and $600 million in 2024.

In terms of equity through our ATM program, we added another $50 million of forward sales in the second quarter, bringing our current total to just under $100 million. We will continue to look for opportunities to sell another $100 million of equity for the remainder of the year through this program or other vehicles to reach our total plan of $200 million.

With that, I will turn it back over to Pat.

Pat Vincent-Collawn

Thank you, Lisa. Before I open it up for questions, I want to give a special thanks to all of our teams across Texas and New Mexico who have been focused on maintaining reliability and supporting our customers during this extraordinary heat wave across the Southwest. These types of weather events are a reminder that our investment plans for clean energy and for reliability and resilience of the grid are critical.

Our future will be directly impacted by the steps we take today to protect our environment and improve the lives of our customers and communities. Our annual sustainability report published today talks more about our commitments and reports on the progress towards our goals. You can find the report on our website.

Alan, let’s please open it up for questions.

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Ryan Levine of Citi. Go ahead.

Ryan Levine

Good morning.

Pat Vincent-Collawn

Good morning, Ryan.

Ryan Levine

Hey. Maybe to start off in terms of your — the recent comment around potential changes to the capital program to be announced with the next quarter release on the heels of the [favorable] (ph) Texas legislation. Can you give any color as to what’s the scope and the opportunity that you’re evaluating currently? And any color as to what the process looks like from here?

Pat Vincent-Collawn

Sure. I’ll let Lisa answer that one for you.

Lisa Eden

Yeah. And like I said in my script, Ryan, we will take into account the recent legislation, look to see what we can do there. As you know, the legislation, some of that legislation needs rules around this. And so we will work through that. We also will incorporate any timing changes regarding our grid mod and any other updates that we see. And so that will be coming forth in Q3.

Ryan Levine

Okay. So to the extent that some of those clarification timelines get delayed, should we expect a delay in when you pull out your capital plan? Or do you feel pretty comfortable with Q3 disclosure?

Pat Vincent-Collawn

We feel comfortable that we will have some updates in Q3.

Ryan Levine

Okay. Maybe switching gears. In terms of the Four Corners process from here, in terms of the legal language in the merger agreement, what obligations you have to continue to pursue that exit? And how does that frame or influence your path forward through the remaining portion of the year?

Pat Vincent-Collawn

Well, the main thing that is pushing our path forward is our desire to do what’s right for our customers and to provide savings for our customers along with continuing to be carbon-free. So that is what is guiding our analysis. The merger agreement said that we needed to have a — make a regulatory filing and have a signed contract in place. Those two things are still in effect. So, satisfied the merger agreement guiding is the customers.

Ryan Levine

Okay. And then last question. In terms of load forecast from here, clearly, AI is topical. Are you seeing any of that load materializing in your service territory? Or do you see any upside to your load forecast?

Pat Vincent-Collawn

When we look at our economic development, Ryan, we see a lot of data centers here in New Mexico and some manufacturing plants. The Inflation Reduction Act incentives, I think we’re starting to see that. And in Texas, we see crypto. We haven’t seen anything specific to AI, but we do have in both territories, healthy — very healthy economic development pipelines.

Ryan Levine

Thank you for taking my question.

Pat Vincent-Collawn

[indiscernible] not be the only CEO that didn’t say AI on an earnings call. Thank you for that.

Don Tarry

Thanks, Ryan.

Operator

Our next question comes from Julien Dumoulin-Smith of Bank of America. Go ahead.

Julien Dumoulin-Smith

TGI Friday, guys. Thanks for taking as always. Appreciate it. 5 o’clock somewhere.

Pat Vincent-Collawn

Hey, man.

Julien Dumoulin-Smith

So just to that end, speaking of being the end of the day, how about the end of the year. So just talking about this new December time frame, what will you know in terms of that time frame in terms of the transaction, right? Presumably, given the — all the various pieces, I surmise that you may not necessarily have a new decision from the PRC by that time frame. But what will you know by the end of December in order to assess or reassess it may be?

Pat Vincent-Collawn

Well, my crystal ball is a little cloudy when it comes to the Supreme Court, just — so we’ll just stipulate that. We’re pretty confident that we should have a decision from the Supreme Court before the end of the year. I mean, in a perfect world, we have a decision from the Supreme Court. It’s very specific about what the commission needs to do and the commission has done. Possible. I don’t think it’s probable. So I think we’ll have a decision from the Supreme Court telling the commission where the court believes it aired and telling you what it needs to do to fix that. That’s where I think we’re going to be at the end of December. Now it’s possible, again, the Supreme Court doesn’t rule because, as you know, there’s no set time frame.

Julien Dumoulin-Smith

Got it. And without trying to be deterministic about this, are there any specific parameters that are a red line around the deal per se as it pertains to either the court outcome or, b, the other dynamic around the rate case itself and that time line, whether or whether not it’s resolved entirely?

Pat Vincent-Collawn

I will take on the merger, I’ll let Don talk about the rate case. Obviously, if the court upholds the commission, we and AVANGRID are going to have to think about what our chances would be when that happens. But I can’t think of any scenario of any red line that they would put in there that would be an issue, so…

Don Tarry

And on the rate case side, we should have a decision by the end of the year. I mean hearings are in September. Expect a recommended decision in November and the commission has to order by, I think, it’s around January 3 to 4.

Pat Vincent-Collawn

Third or fourth, yeah.

Don Tarry

There will be a decision on the rate case by then.

Julien Dumoulin-Smith

Right. So you should have pretty ample clarity on a lot of things. In fact, to that end, if you can elaborate a little bit, I mean, considering that the deal is not necessarily overlapping with the timeline for the rate case, is there a potential for any kind of settlement in this case? Or just has it been too long and too many different parties involved for that to be credibly considered at this point in time?

Don Tarry

On the rate case, we would never say never, but where we’re at right now as we’re preparing for the hearings that start next month, and that’s where our focus is at, so…

Julien Dumoulin-Smith

All right. Fair enough. And then lastly, just in terms of the CapEx update, can you break down the specific piece? I know Ryan was just pushing on this, but can you break down the different buckets, A, in Texas? B, just grid mod what the different permutations might be? And C, what the — what is currently in your planning process in Texas as it pertains to generation resources. I imagine that could very well be a further aspect to your next CapEx update as it pertains to the Texas load, if I hear you right?

Pat Vincent-Collawn

You’re asking us what the upside to the upside is.

Julien Dumoulin-Smith

Always, come on. You know one thing.

Pat Vincent-Collawn

I’ll let Lisa answer that.

Lisa Eden

So Julien, we said that we will provide an update in Q3, right? And so we will go through and look at the — what’s available and what’s appropriate to add to our capital budget, also incorporate any timing associated with grid mod and any other updates and so we’ll just have to wait until Q3 to see what that CapEx plan looks like.

Don Tarry

And I would add to what Lisa said. We do see the legislation being extremely positive in Texas as we look to continue to create resilience in the grid. So there are opportunities there. But as Lisa said, we’ll address those in Q3.

Julien Dumoulin-Smith

Awesome. All right. Great. But with Q3, you’ll have the — just to clarify that on Texas, you’ll have the visibility ready to come forward with something. I know that the resiliency process itself is — could take a little bit of time here, too, right, at least for —

Lisa Eden

Yeah. So we will review what the opportunities are, and we will share that in the Q3 call.

Julien Dumoulin-Smith

Excellent. All right guys. Thank you very much.

Pat Vincent-Collawn

Thank you, Julien.

Julien Dumoulin-Smith

Enjoy it.

Pat Vincent-Collawn

Thanks.

Operator

[Operator Instructions] Our next question comes from Jonathan Reeder of Wells Fargo. Go ahead.

Jonathan Reeder

Hey, good morning, team.

Pat Vincent-Collawn

Good morning, Jonathan.

Jonathan Reeder

Just to follow up a little bit on the rate case. What’s your view of the intervener positions that have been filed? And when would a settlement if one is to be reached, need to be filed by?

Don Tarry

I mean, the positions of the interveners, they seem to be heavily focused on really our transition out of our generation resources. So I mean, whether it’s Four Corners, the Palo Verde lease, the 114 megawatts we transferred out of, they even have some San Juan in there as well. So that — if you look at the overall briefings that they’ve provided and the testament they provided has primarily been focused in that area. On the settlement side, I would never say never, but as I said, Jonathan, we’re focused on preparing and putting the best case forward that we have in September, so…

Jonathan Reeder

When would you need to reach a settlement, though, in our region, like does it need to be before the hearing or is that just kind of the preferred date?

Don Tarry

Ideally, you would like to before the hearings. But again, as I said, we’re focused on preparing for that case.

Jonathan Reeder

Okay. Would you say, like, are the parties motivated to reach a settlement? Or maybe to ask another way, do you believe like the newly constituted PRC would honor settlement agreement, whereas the prior PRC kind of had a reputation for modifying them?

Don Tarry

I’d probably be speaking for the commissioner. So I’d prefer not to hop into that. I think that they haven’t been against settlements. They haven’t taken the position that settlements are a bad thing at the commission, but we’ll have to wait and see how this commission reacts as we move forward. So…

Jonathan Reeder

Okay. But like past President, has that influenced, I guess, the parties like desire to reach a settlement or is that still something that you think parties are working towards?

Pat Vincent-Collawn

Jon, it’s just hard to say because we haven’t seen this commission make any major decisions, right? Remember, we only have two commissioners on this because Commissioner O’Connell — Chairman O’Connell recused himself because he had filed testimony with Western Research Advocates on some of the issues. So I think given all those factors and we’ve got some turnover among the intervenor staff themselves, it’s kind of hard to make a conjecture on this one.

Jonathan Reeder

Okay. All right. Shifting to the Four Corners, what has to happen, I guess, for you to refile the application, like, will the results of last November’s RFP, I guess, shape the replacement resource plan, which you could then include?

Pat Vincent-Collawn

Yeah.

Don Tarry

I mean from the Supreme Court ruling, it’s clear that we have to file actual resources and the timeliness of that. As I mentioned, we have a multiple set of RFPs ongoing right now, ’26, ’27 and ’28. So as you kind of look at those realms of things, you would want actual resources that you file in the next case. So you want as clean a case as you possibly can.

Jonathan Reeder

The results of that [Technical Difficulty] are expected here in the next few weeks?

Don Tarry

Our results, we issued those RFPs earlier this year, and they’ll come in over the next couple of weeks. And then we’ll — like Pat said, the key element is you got to look at the customer benefits and the timing of how it all aligns and we’re going to do the right thing that makes sense for the customers.

Jonathan Reeder

Okay. Okay. And then I guess, can you talk a little bit about the planned 2026 resource filing? Is this something that, I guess, the PRC approves. And actually, lays out potential recovery of future generation additions? And then like will it also indicate whether PNM is able to own any of this generation versus the prior PRC’s preference for PNM just to sign PPAs?

Don Tarry

Yeah. Jonathan, I’m not going to get ahead of our filing. Our filing will likely be in the next two or three-week time period. And so I think that will kind of lay out the direction. Again, when we go through our RFP process, we’re looking at the deliverability of the resources and what’s cost beneficial to customers. And that’s the screen that always — we always have to go through, and it’s the right thing to do. So as we go through those screens, as we put these plans in front of the commission, that’s our focus.

Pat Vincent-Collawn

And, Jonathan, remember, this time around now, we have the commission — we have an independent valuator involved in it, which I quite frankly think is very helpful because they are a non-biased, nonpartisan look. And so it does make sense for us to own some generation coming out of that, and the independent evaluator agrees, I think we have a much better shot in getting that generation.

Jonathan Reeder

Okay. But does the PRC ultimately approve this plan that you kind of file and lay out, like is there a conclusion to it? Or is this just what you kind of propose? And then going forward, you implement it as needed on like a piecemeal basis?

Don Tarry

We’ll file it as an actual plan that seeks commission approval. So that will be the path. When we make the filing in the next two or three weeks, it will be asking for approval of these specific resources.

Pat Vincent-Collawn

Correct.

Jonathan Reeder

Okay. Great. I appreciate that clarity.

Pat Vincent-Collawn

Yes. It’s not the IRP, which is what we file for sport, yeah.

Jonathan Reeder

Okay, great.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Pat Vincent-Collawn for any closing remarks.

Pat Vincent-Collawn

Thank you, Alan. And again, thank you all for joining us this morning. Please stay safe and cool and keep out of those heat waves. We’ll talk to you all soon.

Operator

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.