Thank you for your patience. This is the conference operator. Welcome to the Algonquin Power & Utilities Corp. 2020 Second Quarter Analyst and Investor Earnings Call. Please remember that all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be a chance to ask questions. I will now hand the conference over to Christopher Jarratt, Vice Chair of Algonquin Power & Utilities Corp. Please proceed.

Great. Thanks. Good morning, everyone and thanks for joining us this morning for our 2020 second quarter earnings conference call. As mentioned, my name is Chris Jarratt and joining me on the call today are Arun Banskota, our Chief Executive Officer; David Bronicheski, our Chief Financial Officer; and Arthur Kacprzak, our Deputy Chief Financial Officer. To accompany our earnings call today, we have a supplemental webcast presentation available on our website, algonquinpowerandutilities.com. Our financial statements and management discussion and analysis are also available on the website as well as on SEDAR and EDGAR. And before continuing the call, we would like to remind you that our discussion during the call will include certain forward-looking information including but not limited to our expectations regarding future earnings and capital expenditures, as well as potential future impacts of COVID-19. We will also refer to certain non-GAAP financial measures, and at the end of this call, Amelia from our Investor Relations team will read a short notice regarding both forward-looking information and non-GAAP financial measures. Please also refer to our most recent MD&A filed for important information on these items. On our call this morning, Arun is going to provide the strategic achievements for Q2 2020; Arthur is going to follow with the Q2 financial results; and David will speak to our recent capital raise. And then, we'll wrap up with Arun concluding with our strategic outlook for the business. We’ll then open the lines for questions. And as usual, I'd ask that you restrict your questions to two and then re-queue if you have any additional questions. Now, before I turn things over to Arun, I would like to say a few words regarding David Bronicheski, who is retiring in September after serving as Algonquin’s CFO for 13 years. On behalf of all our employees and the Board of Directors, I would like to thank David for his many contributions. Personally, I can tell you that, it's been an absolute pleasure to work with David over the past 13 years, and I wish him the best in retirement. David's contribution to this organization over this time period has been immense, including building an extremely strong finance team that will succeed him. Thank you, David. And with that, I would turn things over to Arun.

Thank you, Chris. And, good morning to those who've been able to join us on the call and online. As a business providing mission-critical energy and water services to our customers, we continue to perform well, both from a financial and operational standpoint as we continue to navigate through the impacts of COVID-19. Given the resiliency in our business model, the Company has been able to provide uninterrupted and continued high-quality utility services since the onset of the pandemic. As expected, given the changing patterns of our customers, we have seen some moderate decreases in customer demand across some of our utilities, which has impacted our second quarter results by just over $0.01 on a per share basis. Arthur will provide more commentary on these financial impacts. Operations of our renewable energy generation facilities has naturally supported social distancing. And with the lion's share of our business under long-term contracts with creditworthy counterparties, we have not experienced any negative COVID-19 impacts. Our major renewable energy construction projects of approximately 1,600 megawatts continue to be considered essential infrastructure in the jurisdictions in which they are located. And therefore, construction has been proceeding despite the COVID-19 pandemic. At all of these sites, the anticipated timing for the projects to be placed in service has not been materially impacted by COVID-19 to date. I'm pleased to report that continuity of safe harbor deadline for U.S. federal production tax credits has been extended by one year, which provides more flexibility for our U.S. wind projects currently under construction to qualify for the maximum PTC. Overall, I'm pleased with the progress we've made so far this year, and I'm confident we will continue this into the second half of the year. Since joining the organization in February, I've been focusing my efforts on three pillars: operational excellence; growth; and environmental social governance, ESG. I would like to spend a bit of time going over each pillar. Firstly, on operational excellence, which is all about having a laser focus on improving day-to-day service delivery in all areas. To do this well, it takes real organizational agility. Our response to COVID-19 has been a great example of how our organization and our frontline workers were able to pivot without missing a beat in delivering essential services for our customers. At Algonquin, safety is more than a priority; it is part of how we operate. And despite our industry-leading performance, we are always looking for ways to improve. I'm pleased to share that our safety culture was recently recognized and awarded by the National Safety Council in our central region for working 2 million employee hours without injury. An even greater achievement, when you take into account, the reference timeframe included operating under COVID-19 times. Customer focus has to be at the heart of any operational excellence strategy. Over the past three years, we have increased our J.D. Power results by 48 points as we strive towards top quartile. We continue to listen and act upon our customers' needs. Specifically, as part of our grid modernization efforts, we have now installed over 13,000 electric meters in the first few weeks of our advanced metering project in Missouri, as we continue to demonstrate the customer benefits and receive regulatory support for our smart meter deployment. We have progressed well on our Customer First Program and recently completed the global design phase and are on schedule to launch first in Massachusetts. Second, Algonquin has a strong history of growth, and I am committed to continuing this growth trajectory and adding value to our customers and shareholders. As I look forward at the changing energy market, I believe that the commercial and industrial, C&I business segment will represent an enormous channel for growth. Today, it accounts for the majority of energy consumption, in fact, more than transport and residential commercial combined. The vast majority of industrial consumption is fossil fuels, petroleum, coal, and natural gas. Commercial and industrial businesses will want to continue to decarbonize in the coming years, and I'm confident they will become much larger consumers of renewable energy. That is why I'm particularly excited by our recently announced four-year framework agreement with Chevron, seeking to co-develop more than 500 megawatts of renewable power projects to provide electricity to their operations. This partnership unites Algonquin's technical and operations renewable power expertise with Chevron’s scale, land, and local knowledge to enable faster, more cost-effective renewable power solutions. This is exactly the type of growth opportunity that gets me excited about the prospects for this sector, and our collaboration with Chevron is proof-of-concept. We can create shareholder value for Algonquin by helping customers decarbonize. Finally, on ESG, Environment Sustainability Governance. We remain formally committed to sustainability through the inclusion of environmental, social, and governance values in our daily operations and business planning activities. There has been much focus on the E, or environmental, including a closing of our Asbury coal plant in March, which has reduced our greenhouse gas emissions by approximately 1 million metric tons of carbon dioxide. I wanted to provide some commentary on the S, social factors and G, governance factors as well. In terms of social initiatives, one of our key sustainability goals is to achieve top quartile employee engagement. Despite COVID-19, I'm pleased to report that the organization has made great progress on our 2020 employee engagement results. Our 2020 engagement score is near North American top quartile ranking. The improvement is evident that we are committed to putting actions in place to continue to be a top employer of choice. As for G, we are focused on building effective governance practices for the long term. Our commitment to diversity and corporate governance practices can be evidenced by our continued year-over-year improvement in governance scores from independent organizations. Before turning the call over to Arthur, I want to touch on the recent FR executive ruling in Missouri that we received last month. Under Missouri law, Senate Bill 564, electric utilities have the option to apply for a weather-decoupling mechanism. In our 2019 rate review, we requested a weather-decoupling mechanism to provide stable rates to customers. We believed and continue to believe that this is a good way to reduce volatility, not just for the utility, but also for customers. However, with this recent order, the commission denied our request, and as a result of this decision, the Company reevaluated other options under Missouri law and opted to elect PISA, Plant in Service Accounting. The PISA election is not subject to additional approval. It is expected to reduce the regulatory lag, smooth the rate impact of necessary investments for customers, and will remain in place through 2023. Later on this call, I'll provide an update with respect to our major capital projects. With that, I'll pass it on to Arthur for a review of our Q2 2020 financial results. Arthur?

Thanks and good morning, everyone. I'm pleased to participate in my first quarterly earnings call with the investor community, and I look forward to meeting with all of you in person in the months ahead as these COVID-19 restrictions start to ease. In the second quarter of 2020, our adjusted EBITDA came in below our expectations at $176.3 million, which is down approximately 7% from the $190 million that we reported in the previous year. The Regulated Services Group delivered $112.8 million in operating profit in the current quarter. This compares to $109.5 million in the same quarter last year. The increase is primarily due to the addition of New Brunswick Gas and St. Lawrence Gas, which closed late last year, the implementation of new rates as well as operating cost savings realized during the quarter. This has been partially offset by decreased customer demand due to weather and the impacts from COVID-19. We estimate the effects of the pandemic on the Group's second quarter divisional operating profit to be approximately $9.6 million. The Renewable Energy Group reported Q2 divisional operating profit of $82.6 million, as compared to $93.4 million in 2019. The decrease was primarily related to the timing of distributions received in the second quarter of last year, related to the Company's investment in an affiliate of Atlantica Yield. Our Q2 adjusted net earnings per share came in at $0.09, which compares to $0.11 reported last year and was below our expectations of between $0.11 and $0.13. As Arun has mentioned, COVID-19 negatively impacted our results by just over $0.01 this quarter. We also anticipated that our acquisition of the Bermuda Electric Company would close early in 2020, which is now anticipated to take place later in the year. The delay in closing impacted our adjusted EPS by another $0.01. I would now like to provide a few more details on some of the impacts from the COVID-19 pandemic, from a financial perspective. First, with respect to collections and accounts receivables. While the majority of our customers continue to regularly pay their utility bills, like other utilities in the U.S. and Canada, we have curtailed collection activities, including disconnections for nonpayment during the pandemic. We believe that this is the right thing to do in support of our most vulnerable customers during this unprecedented time. These measures have resulted in collection delays, which has increased our over 60 days past due accounts receivable. Although we have not experienced significant write-offs, we have increased our allowance for doubtful accounts provisions modestly. Beginning in July, we have started to resume normal collection procedures in several jurisdictions, and we expect our accounts receivable balances to normalize in the coming months. Second, as previously mentioned, the Regulated Services Group has experienced load reductions due to decreased demand resulting from COVID-19. This impacted divisional operating profit by an estimated $9.6 million as compared to the same period last year. Although future impacts to customer demand resulting from COVID-19 are uncertain, we have already seen some gradual easing, and we expect that to continue in the upcoming months as the states we operate in continue to open up. Third, as discussed in our Q1 call, we began implementing cost containment strategies in response to the demand decreases caused by the pandemic and unfavorable weather. I am pleased to report that in Q2, the Company was able to achieve approximately $5 million in cost savings and expect to show similar savings in Q3 and Q4 to achieve further expense reductions of approximately $10 million in the second half of the year. Some of the reductions are occurring naturally, like lower travel expenses over the course of the year. But, we are also taking proactive measures to reduce operating expenses where possible, of course, without compromising on safety, security, and reliability of the services we provide to our customers. Our Regulated Services Group continues to track the incremental impacts related to COVID-19 and will be seeking recovery in all of its regulatory jurisdictions. Several jurisdictions have already approved mechanisms or accounting orders for the recording of and tracking of these incremental impacts, and others are expected to do so in the coming months. Before turning things over to David, I'd like to touch briefly on our earnings guidance. The Company reiterates its current 2020 adjusted net earnings per share guidance of between $0.65 and $0.70. This adjusted guidance is based on certain assumptions, which are more fully described in our Q2 2020 MD&A. With that, I will turn it over to David to talk about some of our recent financing activity. David?

Thanks, Arthur, and good morning everyone. As everyone is acutely aware, COVID-19 has changed a lot of things in North America and around the world, including creating unprecedented uncertainty in the public capital markets. This, coupled with Algonquin's largest capital program in its history in 2020, our treasury team felt it was prudent to be proactive in the execution of its funding program. Given the risks and uncertainties that we see ahead of us, the possibility of a second wave of COVID-19, upcoming U.S. federal election, trade issues with China and all the potential that this disruption could have on the equity capital markets, we felt that on balance it would be prudent to solve for equity needs for this year and put us in a position of strength for next year. We successfully accomplished this by completing an equity offering in a bought deal offered here in Canada. This was the first broadly marketed offering that we had in Canada in three years. We were also able to issue additional equity in a concurrent private placement with an institutional investor on the same terms for total gross proceeds of $724 million. The proceeds of the offering are expected to be used to partially finance our previously announced renewable development growth projects and for general corporate purposes. In conjunction with our at-the-market equity program or ATM, total equity raised this year is $845 million. Following this equity offering, Algonquin is well positioned to weather any potential future impacts from COVID-19 into 2021. I'm also pleased to report that Algonquin attained another milestone in the quarter and has been added to the S&P/TSX 60 here in Canada. This is a tremendous accomplishment for Algonquin. This will generate additional volumes and make us more visible to investors, both inside and outside of North America. Now, before I turn things back over to Arun and open the lines up for questions, I’d just like to say a few words to all of the analysts and investors on the call this morning. Today will be the last time I'll be addressing our investor community on these quarterly calls, as I will be retiring next month. For the past 13 years, I've had the honor of serving our employees, our investors, and our customers as Chief Financial Officer of Algonquin. For 52 consecutive quarters, I've had the privilege to update everybody on the ups and downs of Algonquin's growth and fortunately more ups than downs, from a company taking it from a market cap of just $200 million back in 2008 to the $11 billion market cap company that it is today. Certainly, a blue-chip TSX 60 listed company spans not only North America but also has significant investments around the globe. And I might add, one that's been ranked in the Top 10 as among the most sustainable companies in the world. But, as everyone knows, there always comes a point when you know in your heart, it's time to step aside and let others take the reins. And that time for me is now. While I look forward to slowing down a bit and spending a lot more time with family, I also take a lot of comfort in knowing that you are in the very capable hands of a new generation of management. I have every confidence that Arun, Arthur, and the entire very talented executive team that Ian Robertson, Chris Jarratt, and I have put together at Algonquin will not only continue executing on our existing plan but will also build on it with the new ideas and the new energy that inevitably comes with new leadership. With that, I'll pass things back over to Arun.

Thank you, David. Before we close out our prepared comments this morning, I want to give a quick update on our five-year strategic plan. We’ll then open the lines for the question-and-answer period. Algonquin remains committed to and reiterates our five-year $9.2 billion capital investment program, across our two business groups, which is expected to grow our asset base to nearly $17 billion by the end of 2024. The total growth thesis has not been impacted by the challenges currently being experienced due to COVID-19. Algonquin remains well-positioned, both in the near and long-term to continue executing on our long-term capital plan. Before wrapping up my formal remarks, I wanted to spend more time highlighting our pillar of growth, which I spoke of earlier. We remain committed to our strong track record of growth with many levers at our disposal. In our Regulated Services Group, we have our BELCO and New York American Water acquisitions in our pipeline of capital investments. In our Renewable Energy Group development, our growth continues to be focused on greenfield development as well as in the C&I space where important long-term customers are supporting renewable growth as we have contracted General Mills and Kimberly-Clark for our Maverick Creek wind facility and Facebook with Altavista Solar and our recently announced framework agreement with Chevron. In summary, our three pillars of operational excellence, growth, and ESG will be a key foundation as we continue to build the business and continue to bring long-term value to our shareholders. In fact, for one of our pillars, ESG, we plan on releasing our updated 2020 sustainability report later this fall. We remain focused on delivering capital investments that enhance value for both, our customers and shareholders. We remain firmly committed to extending our track record of creating shareholder value in the current year and beyond. Before opening up the lines for questions, I’d also like to take this opportunity to acknowledge David's many contributions, which played an integral role in Algonquin’s success. On behalf of everyone we have had the privilege to know and work with you, David, thank you for your years of dedicated service and leadership, and all the best as you enjoy your retirement. With that, operator, I'd like to open up the lines for questions.

Thank you. Our first question comes from Sean Steuart of TD Securities. Please go ahead.

Thank you. Good morning. A couple of questions. On Missouri, can you give us some context on the rehearing timeline and process, and I guess your general thoughts on the lack of weather normalization mechanisms being approved in the decision?

Sure. Thanks, Sean. Good morning. We have already requested a rehearing regarding the rate of return and equity fitness. We were clearly disappointed with the outcome from the commission, and we have filed for a rehearing. There is no specific timeframe for when they will respond to us or if they will grant the rehearing. Additionally, we filed for another rate case towards the end of the year, which gives us another opportunity to better persuade the commission regarding our stance, particularly on equity fitness.

And question on the agreement with Chevron. Can you give us a little bit of background on how that came together and your thoughts on similar agreements potentially with other oil majors going forward? Is that an avenue for incremental potential growth?

Yes, it is clearly a fairly lengthy process. As you can imagine, this is something really important for Chevron. So, I assume they talked with a number of other parties as well. We spent considerable time and energy with them going through their projects, how they view renewable energy projects, what is the kind of partnership they wanted? And with all of that through many months of discussions, we felt good about the partnership. Both of us were very aligned in terms of what we were looking for. Chevron was looking to really minimize the levelized cost of energy. And with the price point around both wind and solar energy, we can certainly meet those targets. But, it is a framework agreement, which basically lays out how the two parties will work together in the future. We are already in discussions about making that into real projects and we have plans to, in fact, start construction sometime in 2021 on the first of those projects.

Thanks for that detail. And David, congratulations on a well-earned retirement, and thanks for your help over the years.

Thanks, Sean.

My first question here is just on the commentary around Plant in Service Accounting. I'm wondering if you could comment at all on the lift you expect to get from that to rate base, going forward?

There are a couple of important points to mention. First, there is no regulatory lag with PISA, which is significant for us. Additionally, it helps to stabilize the rates for our customers over the long term. However, this does not impact our capital plan or any other sources; these are mainly the advantages we observe.

Thank you for your question. I wanted to follow up on the agreement with Chevron. Is it too soon to talk about what you anticipate for the Power Purchase Agreements for those projects? Should we expect something similar to the contracts that have been recently signed in the U.S.?

Clearly, it lays out what are the rules and responsibilities of the different parties. So, obviously, we as a developer sourcing the supply chain, being responsible for the financing part of things, while Chevron obviously has local knowledge, they have their land and all the facilities. So, it really brings the two separate knowledge bases of the two parties together. In terms of the power purchase agreement, that's going to be really very site-specific, things like what is the firm, what is the kind of financial structure? All of those things are going to be done in the power purchase agreement. And again, both sides are convinced that what we want to do is minimize the levelized cost of energy over the long-term for Chevron. And that's going to be the goal of the power purchase agreements.

Excellent. Thank you for that. And I'll echo Sean's comments, congratulations David on a well-deserved retirement.

Thanks, David.

Great. Thanks. Good morning, everyone. So, my first question relates to the reiteration of the guidance. Could you just talk about what some of the biggest risks to hitting your guidance is? I was just doing the quick math. I'm not sure if it's correct or not. But, I get the sense that you need a 23% earnings improvement over the second half of 2019 to hit the low end of your guidance. I'm just wondering whether you're comfortable with that and what are some of the risks of not hitting guidance.

Hey, Nelson. It's Arthur. I'll try to take that one. So first of all, let's say, point you to the MD&A with respect to some of the assumptions that we've made with respect to our reiteration of guidance. So, you can look at some of the factors. But maybe to provide a little bit of color around that, in terms of impacts from demand reductions and COVID, we actually have been seeing quite a lot more normalization, especially with respect to our demands on our C&I customers. So, demand has been normalizing over the course of Q2 and we continue to see that into Q3 as well. I mean, the other thing to point, it's been a very hot summer. So, the weather actually has been cooperating with us as well. So, as far as we see it right now and working through the various factors, we do see ourselves still reiterating that guidance.

Okay, I understand. My second question is about the Chevron deal. I know the initial focus will likely be in the U.S., but the target regions also include Argentina, Kazakhstan, and Western Australia. Can you discuss your confidence level in Argentina and Kazakhstan and what your strategy will be for those areas?

As you've noted, Nelson, we are definitely not operating in countries like Argentina and Kazakhstan right now. However, Chevron was looking for a global partner and preferred not to engage different partners for each nation. This need led to the creation of a framework to include these initial facilities, with the possibility of expansion over time. Our comfort level is high, especially since Chevron is the main counterparty and their operations are situated on Chevron land. They have extensive knowledge of these regions. Therefore, even though we are considering areas like Kazakhstan and Argentina, we are primarily relying on Chevron's credibility.

I have a couple of questions. Regarding the guidance for this year, you provided quarterly predictions at the beginning of the year during your Analyst Day, which were established before COVID. If we total those numbers, it seems to align with the last question about some variation. How are you assessing the factors at mid-year that will help you return to the guidance range compared to what you previously communicated? From your earlier comments, I understand there is a $10 million cost reduction; could you elaborate on the other factors at play? Additionally, on your CapEx budget, you have reiterated your stance, and I noticed the Granite Bridge project was canceled. How much of the CapEx was associated with that project, and what will take its place? Can you discuss the changes in the CapEx budget as well?

Sure. Regarding our guidance, we previously provided quarterly guidance and adjusted it last quarter due to COVID-19. As we evaluate our guidance for the year, we are focusing more on an annual perspective. We believe our operating cost savings will allow us to maintain our guidance. On the capital expenditure side, Granite Bridge was projected to be in the $250 million to $300 million range. At that time, we felt it was the right solution for our customers concerning natural gas and storage options. However, as we developed it, one of our largest customers on the Tennessee Gas Pipeline decided not to renew their contract, which resulted in a significant amount of long-term pipeline capacity becoming available. We made a decision that was best for our customers, which is also beneficial for us. Nonetheless, there will still be system-wide needs for upgrades and potentially adding storage solutions. When discussing a five-year plan, we are a development company with a pipeline of projects focused on resiliency, safety, and security. This is why we are confident in reaffirming our $9.2 billion CapEx plan.

Got it. So, it sounds like you guys have something in mind already. Okay. If I can revisit this, I have a conceptual question. The dividend is currently annualized at a level of $0.62. How do you view the balance between dividend growth and cash for growth? You have been quite proactive this year. What are your thoughts on the company's future payout ratio and positioning? I'm particularly interested in this perspective from the new management team, especially in light of the opportunities you've outlined.

Yes. Julien, I mean, I think at our last Investor Day, we reiterated what our dividend growth would be and reiterated that all the way through 2021 and committed to re-look at it after that, so more on a payout ratio basis.

Our next question comes from Robert Hope of Scotiabank. Please go ahead.

Good morning, everyone. And congratulations, David. I want to revisit the Chevron deal and how you are approaching your international strategy. With Atlantica and Aegis in play, are you considering using a third-party to maintain the equity accounting, or are you planning to consolidate them? I'm interested in understanding how the international aspect of the Chevron deal might influence your sidecar entities.

Sure. Thanks, Rob. And really, we fundamentally consider ourselves to be a North American energy and water company, right? The vast majority of our business continues to be in the U.S. and Canada. This Chevron transaction was again, like I explained earlier, a little different because they were truly looking for a global partner. And clearly, they’ve got facilities around the world. They’ve got very large facilities in the Permian Basin around Texas and New Mexico. Those are probably going to be among our first ones where we're going to be transacting around. But again, because of the fact that they wanted a global partner, we felt more comfortable taking Chevron risk rather than international country and going into different jurisdictions. So, our thought process is somewhat different perhaps. We see ourselves going out there with a strong partner like Chevron, taking Chevron credit risk rather than all these different country risks. But fundamentally we are a North American energy and water company.

All right. And then, as a follow-up, you mentioned that you could see, it looks like some of the U.S. properties start construction in 2021. When you take a look at that 500 megawatts, how do you think it will be built through the years and kind of which countries do you think will be developed first?

When we began our partnership, following the signing of the framework agreement and the information exchange, our teams collaborated closely. We started receiving site-specific details from Chevron, which we are currently reviewing to determine the most suitable technology, whether solar or wind, and the appropriate capacity for each site. At this moment, we are in the initial phases of developing our financial model and the power purchase agreement, so I can't provide further specifics. However, both we and Chevron are eager to see progress, and we've discussed beginning construction and budgeting for some projects as soon as 2021. Considering the impact of COVID, we expect the earliest projects to be in the Permian Basin, though we are also exploring other opportunities.

Our next question comes from Rupert Merer of National Bank. Please go ahead.

Good morning, everyone. Congratulations on retirement, David, and congratulations to Arthur too. I wanted to take one more crack at the Chevron deal. So, with your relationship with Atlantica and with Aegis and more international footprint, are there any conflicts with the Chevron deal and these relationships or any opportunities for these partners to be involved in the project?

We don't see any conflicts. There certainly could be opportunities in the future for us to work through either Aegis or partner with Atlantica. Those remain open. The C&I strategy is very important for us, and this Chevron relationship is very important for us. And they also really wanted a one face partner rather than having a number of other partners face on the other side of the table. So, we will be taking the lead. Again, the goal from both sides is very, very clear; is to minimize the levelized cost of energy, and we will do the right kinds of partnerships if need be, the right kind of financing structures as needed in order to achieve that goal for Chevron and for us.

Given the comments you made earlier about the size of the C&I opportunity, and we see this global approach towards investment in infrastructure and renewables. So, do you see a potential for shift in the focus of Algonquin back more to renewable energy and maybe a little away from regulated utilities?

Well, we actually like the balance we have in terms of the 65%, 70% regulated, remainder renewable energy, we like that balance. There's a lot of cross synergies in terms of ideas and things of those sort on how either of those two business boxes could get better as well. So, we obviously want to maintain our BBB credit rating. So, there's a lot of factors around that. I don’t see any major departure from what we’ve announced before. We also have opportunities on the regulated side. We are an acquisitive company. We’ve announced obviously BELCO and New York American Water only over the five-year horizon. But, you can probably rest assured that we’re always in the market looking for the right transactions that meet our financial and our shareholders’ financial thresholds.

Thank you. Secondly, regarding costs, your cost-cutting initiatives aim for a $10 million reduction in the second half of the year. Can you explain where that will come from and how the administrative costs are involved? They increased slightly from the previous quarter. Should we expect that to be the new normal for administrative costs, or will they decrease in the second half of the year as well?

Yes. Sure. So, maybe I can start with the admin cost. The one thing I want to maybe point out on the admin cost, some of that is probably climbing. So maybe that variance seems a little bit higher than it truly is because as we look back in the prior year, our admin costs were actually flat year-over-year. So, maybe a little bit exacerbated the difference. I mean, when you look at the increase in admin costs, I mean, some of the costs there maybe could be considered a little bit one-time in nature, increased professional fees, et cetera. But, in general, there is some increase. I mean, just the fact that we're becoming a bigger organization, really the admin costs are catching up.

Okay. Thanks very much. I appreciate the color.

Yes. To address your second question regarding cost savings, these are occurring naturally. With people traveling less and fewer conferences, we are also reviewing other areas and have implemented a hiring pause. Non-critical positions are on hold for now, and we're examining expenses like property taxes. We're thoroughly assessing the organization to identify potential cost savings. However, we are committed to not compromising on safety, reliability, and resiliency; those are priorities.

Great. Good morning, everyone. First, David, all the best on retirement. Going to the guidance again. One of the items you talked about was closing the BELCO, small contribution, but would be needed to hit the low end? I mean, just give us an update on that. And then, what you’re talking about closing acquisitions, status in New York Water, where I think there's been an offer to maybe let municipalities bid on assets, just maybe prospects for closing those acquisitions in the next 12 months?

Sure. It's Chris, Mark. Maybe I'll take the first one, BELCO. So, just by way of background, the application was submitted to the regulatory authority on October 4, 2019. The public consultation process was completed on May 4 of this year. The other background component is that the government extended their guideline date to when a decision will be made to October 4, which happened to be 12 months after the application was submitted. And so, I guess, if you just step back for a little bit, I think you’d say that a duration for a regulatory decision on a regulated utility of one year is probably not unusual. And, I guess, we could be accused of being a little bit optimistic on our initial timing expectations. But, that was probably because of the regulatory approval process in Bermuda is a very new process, and that the RA’s mandate for electricity is only three or four years old, and just no one had ever gone through the process. But, I agree, we probably were a little bit optimistic. And throw in, there's been a couple of unusual circumstances, such as the RA’s succession that they underwent every regulator, the Board of Commissioners was changed, and something called COVID that you might have heard about. But, if you just look at the benefits of the transaction, which was what we keep focusing on, there's a huge benefit to the people of Bermuda and there's a huge benefit of the customers of BELCO, we're very optimistic that this will be approved. It's just get to work. Even in the times that we're in, this represents so many benefits to all stakeholders.

Mark, good morning. On New York American Water, as you know, we filed a joint petition back in February with the New York PSC. Based on what we've recently seen on the revised procedural schedule, we are expecting to have evidentiary hearings beginning in mid-December, and we're expecting the transaction to close sometime in 2021.

And is your view of this opportunity for these municipal bids to come in and some of that participation, is that going to extend the process? And how confident are you that ultimately PSC sees Algonquin as the best owners of this asset?

In fact, that was what extended the process because there are the two towns that have sort of approximately 10,000 customers out of total 125,000 customers that expressed interest. And we support the New York PSC doing a fulsome review and different options as well. But we remain confident that we'll be able to close on this transaction sometime in 2021.

Our next question comes from Ben Pham of BMO. Please go ahead.

Thanks. Good morning. I had a question on your funding plan, now with what equity you’ve done. So, you basically reiterated the $9.2 billion. You’ve done some equity more recently. And I think you mentioned about half of that CapEx is going to be funded by debt and FFO. So, maybe you can update us on, what's the funding breakout going forward over the next four years in terms of preferred shares, equity grip, asset sales, all the options you look at?

Sure. I'll try to address that one. As you know, we did have our equity raise. We tried to get ahead of our equity needs this year. So, I think we are taking care of certainly 2020 and into 2021. I mean, as we look forward with respect to funding plans for the remaining CapEx, I mean, in the future, we've talked about certainly mandatory converts. It’s a product that we still like quite a lot. It matches the earnings profile with the cash flows of the investment that we are making. So, mandatory converts are definitely on the table for us in the future. Otherwise, the funding plan kind of remains as is with debt and equity and free cash flow.

Do you have a reassessment for next year, or is it the base plan that has come back for the second half?

Yes. And I think we will reassess the ATM early next year. I think, this year, we've shut down the ATM. We really are done with equity for this year, but next year, we'll take a fresh look at it.

I can revisit Missouri a bit more, as there are several moving parts in the Management Discussion and Analysis. Essentially, you applied for $22 million in revenue increases but only received $1 million, which is understandably disappointing. You plan to request more funding. In the meantime, you've put the Plant in Service, which leads to a deferral of depreciation. The idea is that by spending capital expenditures each year over the next couple of years during the deferral period, you can recover that capital expenditure immediately to compensate for the revenue that was not approved. By 2023, your rate base will essentially be rebased automatically. Is that the intended outcome of the bill?

Again, primarily, it is around reducing regulatory lag. That is the primary attraction for us, frankly. I mean, we wanted to do weather decoupling because we thought it was good for the customers and for the utilities and not to see these large variances due to weather. But, when that did not happen, we opted for PISA, as you probably know. The other two investor-owned utilities in Missouri have also opted for PISA earlier. So, we are in good company from that perspective. But, we’re primarily seeing the benefit of reducing the regulatory lag and smoothing out the cost for our customer base.

Okay. So it's not only just rate base, it’s also the income statement here as well, the cost structure and what not?

That’s right.

David, congratulations on a very successful career. I wish you all the best on retirement. I hope you have many, many happy years in retirement. So, a lot’s been discussed. I wanted to maybe step back and just talk about the U.S. election. And in the event of a democratic sweep, I guess, I'm thinking about both sort of pro-renewable policies, like tax credit extensions, carbon regulation, but also thinking about the potential increase in the corporate tax rate. And I wondered if you could just maybe at a high level, give your thoughts on the implications for Algonquin in the event of democratic sweep?

Sure. I can start by discussing the tax rate, which has received considerable attention lately. Joe Biden is proposing to increase the tax rate from 21% to 28%, along with some minimum tax increases. This situation can be viewed as a reversal of 2018 when rates were lowered. At that time, it was neutral for our earnings per share in the utility sector and slightly negative for cash flow, while it positively impacted the non-regulated side. You can think of this as a direct reversal. There are still many details to clarify, especially regarding how the new minimum tax will interact with the existing rules and whether certain provisions will be repealed. We will closely monitor these developments, but overall, it resembles the previous changes we experienced.

In terms of the overall environment, we've managed very well, even under an administration that may not be as supportive of renewable energy. Therefore, we expect to perform exceptionally under an administration that strongly advocates for renewable energy. Our fundamental views remain robust. One thing we might see is more direct federal procurement of our renewable energy. We are well-positioned for that. As you may know, we have a solar facility in Maryland, Great Bay Solar, which contracts directly with the federal government. This gives us experience and expertise in this area. There may also be opportunities to incorporate more renewable energy into our rate base. Overall, we believe that pro-renewable energy policies will enhance our renewable energy growth story.

That makes sense. And then, for my last question, regarding Chevron, it's obviously an exciting development and likely something we'll see more of in a broader context. As you begin to execute on this agreement, is there a natural point at which you could expand this relationship? In other words, could it be a year or two into the partnership, with things going well and both sides eager to increase the scope, or is that less likely? Do you view this as fairly separate, or do you need to wait longer to mutually decide on extending or expanding the arrangement?

Stephen, we certainly hope to. If you look at the press release, it actually does not say 500 megawatts; it says over 500 megawatts. So, we are certainly hopeful and we obviously need to prove ourselves as a good solid partner with Chevron. And we have every intent of doing that. We also frankly see this as almost like a passport project in terms of being able to do similar projects and hopefully with other potential C&I customers as well. So, we're excited about that possibility also. So all-in-all, I think it's one more growth lever that we have within the Company.

Hi. Good morning. Maybe just going back to the guidance for this year and maybe looking beyond. It sounds like you can offset some of the weakness here to date with some cost savings but probably agree that 2020 has been full of surprises so far. And maybe you mentioned some fear, uncertainties, U.S. elections, second wave, et cetera. Can you talk about some of the other levers that you can try and pull to offset anything else that might come your way over and above the $15 million of cost savings?

Yes, I'll address that. We are exploring some potential self-monetization strategies with our assets, which may provide some offset from an earnings and operations perspective. We have committed to $215 million and are working to maintain that. However, it is an uncertain time for the remainder of the year. While we aim to stick to our guidance, we are unsure of the future impact of COVID or weather conditions, which adds to the uncertainty.

I think we can agree on this point. Regarding authorized ROE trends, we have observed a downward trend in many recent U.S. rate cases. Additionally, the gap between these rates and long-dated bond yields has widened recently, indicating that we might see a reduction in allowed ROEs in the future. Can you share your thoughts on the expected allowed ROEs for your utilities?

Sure. Good morning, Naji. One of the strengths of our decentralized model is that we operate in water, gas, and electric utilities across 14 different jurisdictions. While we've seen results in Missouri, we've also observed outcomes in other states like California at 10% and Georgia at 10.4%. Therefore, it’s challenging to conclude a comprehensive North America-wide ROE narrative based solely on Missouri’s performance. We have witnessed higher ROEs approved by commissions in other areas as well.

I would like to turn the conference back over to Mr. Banskota for closing remarks.

Thank you, operator, and thank you for taking the time on our call today. With that, please stay on the line for our disclaimer.

Our discussion during this call contains certain forward-looking information including but not limited to our expectations regarding future earnings and capital expenditures, as well as potential future impacts of COVID-19. The forward-looking information is based on certain assumptions including those described in our most recent MD&A filed on SEDAR and EDGAR and available on our website and is subject to risks and uncertainties that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. Forward-looking information provided during this call speaks only as of the date of this call and is based on the plans, beliefs, estimates, projections, expectations, opinions, and assumptions of management as of today's date. There can be no assurance that forward-looking information will prove to be accurate. And you should not place undue reliance on forward-looking information. We disclaim any obligation to update any forward-looking information or to explain any material difference between subsequent actual events and such forward-looking information except as required by applicable law. In addition, during the course of this call, we may have referred to certain non-GAAP financial measures including but not limited to adjusted net earnings, adjusted EBITDA, adjusted funds from operations, adjusted net earnings per share, and additional operating profit. There is no standardized measure of such non-GAAP financial measures. And consequently, APUC's method of calculating these measures may differ from methods used by other companies and therefore they may not be comparable to similar measures presented by other companies. For more information about both forward-looking information and non-GAAP financial measures, including a reconciliation of non-GAAP measures to the corresponding GAAP measures, please refer to our most recent MD&A, filed on SEDAR in Canada or EDGAR in the United States and available on our website.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.