Morningstar - Q1 2020 - 60

Investors

On the gas side of our business, we have lowincome programs across each of the seven
states where we operate to help customers pay for
their energy. We have accelerated pipelinereplacement programs in all our states that involve
removing cast iron, bare steel, and even some of
the early vintage plastic from the ground and
replacing that with new, safer, much more reliable
systems. Also, we have tracking mechanisms
that help manage the impact on our customers,
so that there are only modest increases to
folks' utility bills as we're replacing pieces of the
system, versus big increases of 10% at a time.
That's been our focus: being sensitive to
our customers from an economic basis as well
as a safety and reliability basis.

We are open to building a sustainable business
with this approach.
Hulen: We don't have the Googles and the
Facebooks in our electric service territory
as customers. We've got a pretty healthy industrial
load with our steel customers, BP BP and
its refinery, and such. It's not that they aren't
sensitive to the environment, and we have
lofty and definitive targets on emissions reductions
for ourselves. But the economic drive behind this
shift to renewables is just so stark, it drives
the bus in a way.

When you think about coal-fired generation,
just the coal costs itself are in the neighborhood
of $30 a megawatt-hour, so all-in costs on
coal-fired generation for us is approaching $90
a megawatt-hour. Contrast that with unsubsidized
costs associated with wind in the low $30
range and solar probably in the low $35 range.
It's just such a huge economic driver for
us. I don't want to minimize whatsoever the
environmental impact, but I don't want
to lose sight of the economic benefits to our
customers as well. Being in a big steel-producing
industrial area, that's very important.

Part of the Solution
Miller: There are thousands of companies out there
that are not only interested in managing their
energy but fulfilling some of their ESG goals. We've
seen hundreds of gigawatts of renewable energy
purchases by the likes of Google GOOGL, Facebook FB,
and Amazon.com AMZN. They're driving a lot of
the renewable energy industry. How are you handling
that corporate demand?

Bustilho: More and more corporations are
coming to us. Purchasing renewable energy is not
only a brand or a marketing issue, but also
an efficiency issue. For example, a local company
in the northeast of Brazil-a chain of drugstores-
had land and we helped them implement
a solar plant that provides energy to all the stores.
We are working with a bank in São Paulo
to improve their distributed generation to all the
branches in Brazil-5,000 branches-and
source green energy for them.

Some may ask, "But you are a distribution
company, why you are you doing this? You are
killing your market." We have to change
that way of thinking. We are a part of the solution
and that will increase our business. It makes
sense to us, rather than taking to the streets and
protesting, like taxi drivers with Uber UBER.
Because there's no returning from this path. Our
approach is to be part of the solution. That's
also why we are implementing and pushing a free
market, which is another trend in the region.

Morningstar Q1 2020

It's not just building solar; it's about building
all the components-the infrastructure.
Travis Miller

http://www.Amazon.com

Morningstar - Q1 2020

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