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Edited Transcript of NYLD.A earnings conference call or presentation 6-Nov-19 1:00pm GMT

Q3 2019 Clearway Energy Inc Earnings Call

Princeton Nov 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Clearway Energy Inc earnings conference call or presentation Wednesday, November 6, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Chad S. Plotkin

Clearway Energy, Inc. - Senior VP & CFO

* Christopher S. Sotos

Clearway Energy, Inc. - President, CEO & Director

* Craig Cornelius

Clearway Energy Group LLC - CEO & President

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Conference Call Participants

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* Colin William Rusch

Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst

* David Neil Fishman

Goldman Sachs Group Inc., Research Division - Equity Research Associate

* Gregory Harmon Gordon

Evercore ISI Institutional Equities, Research Division - Senior MD and Head of Power & Utilities Research

* Julien Patrick Dumoulin-Smith

BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Clearway Energy, Inc. Third Quarter 2019 Earnings Conference Call. (Operator Instructions) I would now like to hand the conference to your speaker today, Mr. Chris Sotos, President and CEO. Please go ahead, sir.

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [2]

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Good morning. Let me first thank you for taking the time to join us on this call. Joining me this morning is Chad Plotkin, our Chief Financial Officer; as well as Craig Cornelius, President and CEO of Clearway Energy Group. Craig will be available for the Q&A portion of our presentation.

Before we begin, I'd like to quickly note that today's discussion will contain forward-looking statements, which are based on assumptions that we believe to be reasonable for this date. Actual results may differ materially. Please review the safe harbor in today's presentation as well as the risk factors in our SEC filings.

In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation.

Turning to Page 4. I'm happy to report strong third quarter results that give us continued confidence around our revised CAFD guidance for the full year of 2019. Chad will provide more detail in his section of the presentation. The contracts impacted by PG&E continue to perform. Our projects have not been impacted by the recent wildfires, and we continue to believe that the emergence of PG&E from bankruptcy in June of next year is probable.

During the quarter, we entered into an agreement to sell our Dover facility. As many of you are aware, since the beginning of 2019, the 103-megawatt Dover facility became a predominantly merchant gas plant in PJM that does not fit strategically with CWEN's focus on long-term contracted cash flows. CWEN constantly seeks to rationalize its portfolio to deliver efficient contracted cash flows, and the sale of Dover is part of that effort. We would expect the sale to close by the end of the first quarter of 2020.

As Chad will expand upon in more detail, during the quarter, CWEN advanced efforts on securing forbearance from its lenders to its PG&E-exposed projects. As part of these efforts, CWEN was able to obtain resolution regarding the holdco debt at key DOE-related projects, which include the repayment of the outstanding nonrecourse holdco debt at Agua Caliente while obtaining a forbearance agreement on the nonrecourse holdco debt at CVSR.

Today, CWEN is announcing a fourth quarter dividend of $0.20 per share, the same dividend as last quarter. This is consistent with our view that until CWEN obtains additional visibility around the PG&E bankruptcy and has full access to its project distributions, dividends paid to shareholders should be aligned with the available corporate liquidity at our target payout ratio.

In terms of current executed growth projects, we're happy to announce that the Hawaii Solar Phase 1 is online and our Repowering 1.0 project is on schedule. In addition, our Thermal division signed a long-term energy service agreement with the owner of the Four Seasons Cayo Largo resort in Puerto Rico, another great addition to the Thermal platform.

As I will explain later in the materials, with our focus on eventually acquiring Carlsbad, and given our need to prioritize capital deployment due to the PG&E situation, we've also notified Clearway Group that we are not going to pursue the acquisition of Mesquite Star. Rather, we will continue to work with Clearway Group on committing and closing on the remaining existing robust ROFO pipeline while continuing to augment the pipeline with projects that require capital deployment within a time frame consistent with the anticipated PG&E bankruptcy emergence in the second half of 2020.

Turning to the discussion of Carlsbad. CWEN partnered with GIP in raising over $215 million of 19-year fully amortizing 4.21% investment-grade nonrecourse debt. This low-cost capital makes the potential acquisition of Carlsbad much more manageable given CWEN's current capital constraints by lowering the amount of capital required to purchase the asset from approximately $387 million to $180 million before working capital adjustments as well as increasing the CAFD yield to 15%. I cannot be more pleased with this improvement in accretive economics of this important growth project.

Next, Clearway is establishing its 2020 CAFD guidance of $295 million on updating its pro forma CAFD outlook to $320 million. The primary driver of this increase in the pro forma outlook is the potential acquisition of Carlsbad. It is important to note that the pro forma CAFD outlook excludes other growth, including any drop-downs from the ROFO pipeline once the PG&E situation clears.

Turning to Page 5. I want to highlight the continued progress we have made since 2018 at our Thermal business, with over $8 million of existing CAFD growth initiatives and an additional $1.4 million anticipated by our unlevered 5-year average full basis through a new agreement with the Four Seasons Cayo Largo resort in Puerto Rico. I want to emphasize the quality of the asset additions in Thermal.

As you can see in the chart, these assets carry long-dated contracts at very attractive CAFD yields on a levered or unlevered basis. Especially given our constraints around capital during the pendency of the PG&E situation, we expect to see CWEN continue to invest in our Thermal business' growth prospects.

Turning to Page 6. I want to highlight the significant improvements we have made at the capital structure on Carlsbad, making a much more manageable investment for CWEN from a capital formation perspective. To remind our investors, due to the PG&E situation, GIP stepped in under its backstop facility to purchase Carlsbad from NRG as the current owner of the facility. Carlsbad was purchased for $387 million before working capital with an anticipated CAFD yield of 10.3% for a 20-year contracted asset, a very strong profile.

Since then, CWEN and our partners at GIP have worked to back lever the Carlsbad facility on an investment-grade basis in the amount of $216 million at very attractive interest rates on a completely amortizing basis over 19 years. This improves the already strong financial profile of Carlsbad even further, with CWEN only requiring $180 million of capital to acquire Carlsbad at now a 15% CAFD yield on a 5-year average basis, creating a much more manageable capital requirement while also achieving a significant accretive spread in CAFD for shareholders.

Given the importance of this project to the future of Clearway, we are highly focused on seeking ways to acquire the project, and as a reminder, GIP continues to hold Carlsbad through August of 2020 at the same term and conditions as previously, preserving CWEN's economics in the project.

Turning to Page 7. I do not want this page's simplicity to lose importance. Whilst PG&E has put significant constraints on our current capital deployment capabilities, I want to emphasize that with our current 2020 CAFD guidance of $295 million equating to $1.53 of CAFD per share, and the future potential acquisition of the recapitalized Carlsbad, we can see CWEN on a path to $1.63 CAFD per share before any further ROFO asset drop-downs targeted for the second half of 2020 or other sources of growth. I want to assure our investors that despite the PG&E situation, management at CWEN is relentless in its pursuit of CAFD per share growth while being mindful of maintaining an appropriate capital structure during this challenging period.

Now turning over to Chad.

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Chad S. Plotkin, Clearway Energy, Inc. - Senior VP & CFO [3]

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Thank you, Chris. Turning to Slide 9. Today, Clearway Energy is reporting third quarter adjusted EBITDA of $300 million and $177 million of cash available for distribution, or CAFD. With these results, Clearway has now realized $769 million of adjusted EBITDA and $232 million in CAFD year-to-date.

As a reminder, because the underlying contracts continue to perform, all reported results include the company's projects or investments that are restricted from making distributions due to the PG&E bankruptcy. Year-to-date, this includes $46 million in CAFD, including $18 million related to unconsolidated investments.

During the third quarter, the company's diversified portfolio performed quite well as overall results were at the top end of our sensitivity and seasonality ranges. Both wind and solar energy production in the quarter exceeded our median expectations, a welcome respite given the significant weakness observed in the first half of the year. The company's conventional assets also performed well as high availability and start reliability provided for incremental revenue due to various performance-based bonuses and the underlying tolling agreements.

Additionally, the company continued its successful efforts in reducing cash O&M and capital expenditures while maintaining availability. This included realized cost savings, ongoing cost containment and the deferral of maintenance spend at both the Renewable and Thermal segments, some of which we anticipate reversing in the fourth quarter.

During the third quarter, we also moved forward on rationalizing the portfolio with several transactions. First, as Chris mentioned, the company entered into an agreement to sell the 103-megawatt Dover Energy Center. This disposition, upon closing, will allow the company to recycle the proceeds of a nonstrategic merchant energy asset in a market with limited operational scale.

Next, given a provision in the underlying PPA allowing the off-taker to exercise their call option to repurchase the solar system, Clearway closed the sale of a 6-megawatt distributed solar project. After accounting for the sale proceeds from this transaction, Clearway retires the nonrecourse lease financing associated with this project resulting in a modest improvement in net CAFD through the reduction in lease expense.

In addition to these asset dispositions, we have continued to actively work with the project lenders impacted by the PG&E bankruptcy on balanced solutions for all parties. In doing so, efforts have focused on maintaining continuity in both operational and financial performance of the affected projects while also ensuring the prudent management of Clearway's corporate balance sheet. This effort includes the nonrecourse back leverage or holdco financings at both CVSR and Clearway's interest in Agua Caliente.

With the backdrop of the PG&E bankruptcy continuing to provide a high degree of certainty for contract assumption, we crafted a solution with the holdco lenders that included a forbearance agreement for the CVSR holdco financing and a repurchase of the outstanding nonrecourse debt at the Agua Caliente holdco for approximately $40 million inclusive of premium and accrued interest. This solution provided our lenders a reduction in credit exposure while allowing us to maintain the stability of key investments at an attractive incremental CAFD yield, given the reduction in debt service of approximately $3.5 million per year.

Importantly, the company retains the option to place new nonrecourse debt in the future at Agua Caliente. Further, given the size of this investment, the impact to the company's corporate credit metrics is limited and manageable until such time the event of default related to the PG&E bankruptcy is cured and the liquidity benefit from the reduction in debt service is realized.

Lastly, and as noted on the right side of the slide, we are maintaining our revised full year CAFD guidance of $250 million. This is based on median P50 production estimates in the fourth quarter, the contribution of committed growth investments, the ongoing performance of the PG&E projects and the expected catch-up of certain O&M spend that has been deferred year-to-date.

Moving to Slide 10 to review 2020 CAFD guidance and an update to the company's pro forma CAFD outlook. For 2020, Clearway is initiating CAFD guidance of $295 million. As noted, this guidance includes $99 million in CAFD attributed to PG&E projects, the impact of the transactions discussed on the prior slide and assumes all committed growth achieved COD of schedule. Guidance is also based on the company's P50 median renewable energy production expectations. Please refer to the appendix section of the presentation for the underlying sensitivities to this estimate.

While the $295 million estimate approximates our CAFD expectations for 2020, the timing of various known cash flow drivers in the portfolio, the potential impact of Carlsbad and the illustrative impact from new corporate capital formation to fund growth, are just as critical to the forward outlook of the company on a pro forma basis.

First, the portfolio has a predicted increase of around $10 million in expected CAFD, which will inure to the business after 2020. This includes the profile of project-level debt amortization and the expected CAFD profile for growth, including the timing of tax equity proceeds from the Repowering partnership.

Next, as Chris discussed, the Carlsbad transaction, which the company is very focused on completing, presents a highly accretive opportunity with a potential $27 million in average annual CAFD for the company. Realizing that capital formation is required to permanently finance some of our larger growth investments. We next present an illustrative permanent cost of corporate debt financing for both Repowering 1.0 and Carlsbad. This is size and consideration of our long-term target credit metrics and results in approximately $12 million in annual interest expense using an assumed 5% interest rate.

For this illustrative analysis, we note that while the timing of the Carlsbad transaction is still to be determined, we anticipate funding the entirety of the Repowering 1.0 investment under the revolver until such time as permanent financing is raised.

After accounting for all these items and not factoring in additional growth potential from the ROFO pipeline, we are pleased to present a pro forma CAFD outlook of $320 million or an amount that positions the company quite well for future dividend growth upon the PG&E bankruptcy process reaching its expected resolution.

With that, I'll turn the call back to Chris.

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [4]

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Thank you, Chad. Turning to Page 12. I'm very pleased with our third quarter results that increase our confidence with our current CAFD guidance for the full year 2019. As has been our refrain during 2019, we are working to maintain our balance sheet flexibility as PG&E continues towards its emergence from bankruptcy.

As Chad discussed, CWEN made the decision to repurchase its outstanding Agua holdco debt as part of a larger negotiation with holdco lenders regarding Agua and CVSR. CWEN was able to repurchase the Agua debt at favorable terms as well as agree to a forbearance at CVSR with its holdco lenders, allowing for increased flexibility and CAFD regarding these 2 valuable assets during the PG&E bankruptcy and thereafter.

As we approach the end of 2019, I want to highlight our continued execution around growth given our constraints. Hawaii Solar Phase 1 has started commercial operations with Repowering 1.0 on schedule for full operations in phases between November 2019 and January 2020. We continue to focus on highly accretive, high-quality growth opportunities on our Thermal platform with our newest asset under construction in Puerto Rico.

As emphasized on this call, due to the investment-grade-rated financing at Carlsbad, we've reduced the capital required to acquire the asset by more than half and increased accretive economics for our shareholders and will be the focus of our capital deployment in the near term.

As discussed previously, GIP continues to dedicate capital to the development at the CEG level and has previously added to the ROFO pipeline assets that align with our current capital constraints and acquiring funding in the second half of 2020 and beyond.

As always, we manage our growth with a view that is consistent with maintaining our target ratings to preserve our long-term capital formation capabilities. Thank you.

Operator, please open the lines for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Julien Dumoulin-Smith with Bank of America.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [2]

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So a few different questions here, so I'll try to be quick. First off, can you give us your latest sense on California RA pricing? I know we've talked about this a little bit in the past. I think Vistra threw out a number of $7 a month or better of late yesterday on their call. Sort of curious. I know we're a few years out from needing to recontract, but with that market more than doubling, I'm sort of curious at least what your sense is for your discrete assets if you can comment at all.

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [3]

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Sure. And we'll wait for your second question, but I think to your first question, I don't really have a specific RA pricing to give out. I think to your point, it is an illiquid market and we are more than 3 years out. I think it's also important to note if that that number is a year-round number versus kind of summer peak. So I think the bigger point, I think you're illustrating is that prices have significantly improved and continue to. But in order to give a specific number, from my perspective, it's premature.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [4]

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Okay. And turning back to the numbers real quickly. Can you comment a little bit more granularly, if you don't mind, about some of the puts and takes in the $295 million and '20? I know there's a number of different transactions, many of them small that kind of contributed to that. Can you give us a little bit more detail? And then separately, if I can throw in -- just squeeze in another question very quickly. With respect to the Carlsbad acquisition, it seems as if -- ultimately, this is just a corporate releveraging, and then ultimately, the equity check involved is not that materially different relative to the debt employed, correct? I just want to make sure we understand that.

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [5]

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Sure. I'll let Chad kind of go through some of the detail you're looking for on your second question. But regarding your third, I want to make sure I can answer your question appropriately. I would say it's not a corporate releveraging. It's a nonrecourse leveraging kind of at the project, similar to some of the holdco debt structures that you saw at Agua and CVSR. So from our perspective, in terms of corporate capital, before if we had done nothing, you would require, once again, before working capital, et cetera, about $387 million to acquire the project. So from a corporate capital perspective, I might disagree with your view a little bit, that the corporate capital required is significantly different than it was before, once again, about $180 million versus that $387 million. But to emphasize, it's not a corporate leveraging. It is a nonrecourse investment-grade leveraging kind of at the holdco level above the project. Chad, in terms of Julien's second question?

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Chad S. Plotkin, Clearway Energy, Inc. - Senior VP & CFO [6]

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Yes. Julien, I mean, I guess, to answer your question, I think the way you put it is, there's always puts and takes. So I mean there are puts and takes. I mean, I think, obviously, in the way we're reporting with the constraints under PG&E, there's obviously an up arrow relative to the reduction in debt service on the Agua side. I think you've got a little bit of a down arrow on what was originally predicted for the Dover disposition and some other impacts there. We -- obviously, as we talk about, we always do a recalibration as we gather more historical information on expected P50 performance and some of the wind assets. So there's a little bit of a minor adjustment there. I mean all in, it sort of bundles into where we are. I think the way I would think about it also, though, is if you think of how we've been presenting things previously in the prior pro forma outlook, we've generally presented things using our 5-year average CAFDs for growth and knowing that there is sometimes a shape dependent on the timing of expected proceeds and tax equity, the shape of project debt amortization relative to some of those projects. So if you note on Page 10, we have this item we call other base portfolio drivers because that's consistent with how we disclosed it. But there is, call it, about half of that, or 4 of it if you look in the appendix, is actually attributed to that. So you're kind of very close to where we were previously if you factor in that variable.

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Operator [7]

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Our next question comes from Colin Rusch with Oppenheimer.

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Colin William Rusch, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [8]

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Can you guys give us a bit better sense of the dynamics around this forbearance agreement? Is this something that you guys are -- were pushing for to ease some of the cash considerations near term? Is it something that you could repeat? Or is it something that the lenders are looking for to give themselves some more comfort around their portfolio?

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [9]

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Sure. I'll let kind of Chad get into the details, but I think it really is the benefit for both sides that I think we're dealing with, in many ways, what's a unique situation with PG&E, in which you have the counterparty is in bankruptcy, paying full freight under all of its contracts with, once again, a probable emergence from bankruptcy in kind of June of 2020. So I think everyone is working to make certain that we kind of understand the rules of the road, so to speak, while that -- while the pendency of the PG&E situation is ongoing. But Chad, any details?

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Chad S. Plotkin, Clearway Energy, Inc. - Senior VP & CFO [10]

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Yes. I mean, I think, Colin, we've gone through -- since the start of this, we've got an active and very constructive dialogue with our lenders. And I think the one thing I would point out is, and the way we're focused here on the holdco debt is that the holdco debt, unlike some of the other projects, structurally speaking, not on a sizing basis given how we size the debt. But structurally speaking, they don't have a direct secured interest in the underlying project. So it is a little bit different, and naturally, some of those investors that are in that paper are going to have a different kind of view of credit overall. So I think part of the dialogue was just to try to be balanced to sort of create a bit of a win-win. So they feel like they're in a more stable position. They can go back to their own committees and make sure that they can represent a little bit of a reduction in risk and then just create a more stable platform. I mean I'm not -- we're not going to get into the weeds of the underlying agreements, but I think we were quite satisfied with the end result. And candidly, given the ability to purchase some of that debt, it's very manageable within our credit ratios and we feel like it was an attractively priced piece of paper in -- irrespective of the action, et cetera, so.

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Colin William Rusch, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [11]

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Okay. And then just moving on to the development pipeline and the ROFO portfolio, and maybe this is a question for Craig. Could you talk a bit about the dynamics on the development space? There's certainly been a lot of discussion around some decent-sized developers that are running into some distress and maybe liquidating assets. Is there an opportunity to aggregate a fair amount of capacity here over the next, call it, 12, 18 months that is a little bit unique and can leverage the balance sheet for the partner more actively? But love to understand a little bit about where there's opportunity and maybe some areas for growth that we're not necessarily seeing it in the reported numbers.

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [12]

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Sure. Craig, to Colin's point, why don't you take that?

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Craig Cornelius, Clearway Energy Group LLC - CEO & President [13]

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Sure. Good morning, Colin. A few thoughts on that. So first, I think you're correct in noting that the step down of the production tax credits, as well as some of the project requirements that go into qualifying solar projects for full value into the ITC, creates some natural advantages for a well-capitalized platform that has both development and construction and operating capabilities as we do. And in the disclosures that we provide, we make disclosures only on the controlled pipeline that we own or controlled through JVs right now, but those dynamics are certainly setting up for a period of acquisition opportunities that we are engaged on. As I think you're suggesting, there are more pressing matters for the moment in the wind industry, and it's our hope that those dynamics will allow us to add to the opportunity set that we're working on for CODs in the '21 and '22 time frame, in particular as 2020 is pretty well set up for most. And on the solar front, we feel pretty good about the pipeline that we have already but are selectively evaluating places to supplement it, where regionally, we think there's greater opportunity. One of the particular advantages that we bring to bear in those acquisition opportunities is the substantial safe harbor investment program that we've previously disclosed. So with more than 4,000 megawatts worth of equipment that we have invested in to qualify projects for either PTCs or ITCs through 2023, that's increasingly becoming a valuable tool that we can bring to bear in those M&A opportunity situations. And so we're constructive about what that can mean for the whole of the enterprise over the next 24 months.

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Operator [14]

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Our next question comes from David Fishman with Goldman Sachs.

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David Neil Fishman, Goldman Sachs Group Inc., Research Division - Equity Research Associate [15]

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Just a question on how you guys are thinking about the renewable impact from the wind resource year-over-year. When I looked at the third quarter '18 deck, the wind index was about 106% and then this year is 112%, but in the release it's, kind of reported that the wind was actually down year-over-year. So I was just wondering if there's a rebasing of what the P50 was year-over-year. Or what's driving that?

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [16]

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I think the one thing that probably is factored in there because when you look at the index is the removal of a big chunk of the Texas assets because we're excluding that right now because their performance in this past quarter -- I included Elbow Creek and Wildorado, and we're not including that in the index, because as you know, we're going through the repowering process and construction. So those are actually off-line or a big chunk of it during the period. I suspect that's the number, David, on that point. Yes. So that's probably what you're seeing overall is the wider the variance.

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David Neil Fishman, Goldman Sachs Group Inc., Research Division - Equity Research Associate [17]

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Okay, that makes sense. And then I think I heard in the prepared remarks that there's some deferred O&M during 2019. I was just wondering if you guys had put out a number on what the magnitude of that was.

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [18]

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Yes. So there's a number of things. I think as I brought, we're obviously working very constructively across the portfolio on cost containment and savings overall. I think the deferral piece of it tends to fall in a couple of buckets, on the one hand, depending on when -- if a predictive maintenance on the wind fleet can cause some issues where you're deferring spend because you're not having to spend it, and as the facilities begin to turn, that will pick up. And then on the Thermal segment, we run through this frequently where you have expected spend on maintenance and dependent on if it's local and within the city centers, you might have some permitting things. We didn't give a specific number but we're not talking tens of millions of dollars here. It's in the single-digit millions that'll move around.

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Operator [19]

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(Operator Instructions) Our next question comes from Greg Gordon with Evercore.

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Gregory Harmon Gordon, Evercore ISI Institutional Equities, Research Division - Senior MD and Head of Power & Utilities Research [20]

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Really solid numbers. Congrats. Can you just remind us -- I know that you're -- in the deck, you pointed out that $99 million of run rate annual CAFD is associated with PG&E projects. How much cash is currently trapped as of the end of this quarter at the project level? And assuming that they do exit from bankruptcy on or before the June 30 deadline under AB 1054, over what period of time will that trapped cash flow back to the parent so that it can be redeployed?

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [21]

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Sure. Greg, I'll handle it. So I think if you note in the release, so we indicate how much restricted cash is associated to PG&E assets. That total balance is actually -- like on a consolidated basis, is over $140 million. However, that number is not reflective of what I would call the excess cash that would otherwise be available from a distribution perspective. Perhaps a simple way to think about it is, I think in my prepared remarks, I emphasized that we had generated CAFD of roughly $46 million at the PG&E projects. So if you made the assumption, all of that is effectively something that would get distributed over time. And then I couple that with, candidly, at the end of the fourth quarter, we had excess cash in some of our projects -- excuse me, the end of the fourth quarter of 2018, we had excess cash at the projects that were not able to get distributed because of the time frame of which the event of default was -- occurred relative to distribution dates given the PG&E situation. So there was more capital in there. Without -- I mean, I think if I look holistically if I said right now, there's between, call it, $60 million to $70 million of cash in the system that could otherwise be cleared over time, that's not a bad number to think about.

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Gregory Harmon Gordon, Evercore ISI Institutional Equities, Research Division - Senior MD and Head of Power & Utilities Research [22]

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And that will continue to build until you -- until they exit, and hopefully (inaudible)

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [23]

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Correct.

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Chad S. Plotkin, Clearway Energy, Inc. - Senior VP & CFO [24]

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Right. And then to your second question about the speed of release, I would think if using June of 2020 within 6 to 9 months, the vast majority of that should be released.

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Gregory Harmon Gordon, Evercore ISI Institutional Equities, Research Division - Senior MD and Head of Power & Utilities Research [25]

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Great. And what are you contemplating doing in terms of the conversation around the dividend with your Board once you get back to an untrapped ongoing CAFD run rate that actually, in reality, matches your projections and isn't haircut by the traps?

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [26]

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I think as we've indicated before, we -- that any of the cash that is trapped would use to basically acquire acquisitions versus a special dividend or something of that nature. And in terms of dividends going forward, once again, important to assess the facts on the ground at that time, but we do it consistent with our 80%, 85% payout ratio, how we've talked about over the years.

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Operator [27]

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I'm not showing any further questions at this time. I would now like to turn the call back over to Chris Sotos for any further remarks.

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Christopher S. Sotos, Clearway Energy, Inc. - President, CEO & Director [28]

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Thank you. So once again, I want to thank everyone for a call, and I'm really proud of a very strong quarter and good accretive opportunities at Clearway, and I look forward to talking to you in February. Thanks for everyone's time.

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Operator [29]

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Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.