AES
#<UNK>, remember that 10% was through 2018.
So we're doubling the period going out through 2020 and saying 8% to 10%.
I think it's still consistent with our general trajectory.
We did use a baseline as a midpoint of 2016 guidance.
Remember that we got about $300 million from Maritza in 2016 so you're not going to get to normalize for that.
(Multiple speakers) This is <UNK>.
I think the shift will be more front-end loaded because we have $1 billion of equity in our construction projects.
Those projects are coming online in 2018, so we will see more contribution front-end loaded from those investments.
Put it this way, the cost overruns are expected to be in the range of 10% to 20%.
We have financing that we're closing on for up to 22%.
So, it would cover even the worst estimate in terms of cost overrun.
That's correct.
110% of the worst case of the cost overruns.
It would be like 220% of the expected case.
Yes, that's correct.
We think it's possible to get PUCO staff onboard.
Very much so.
Yes.
Obviously, <UNK>, time's running out but we continue to have an open dialogue and open door and expect something to be figured out sooner.
We're certainly open to that.
Again, because these are ongoing businesses we never talk about them before it's closed.
But what I would say is look at what we've said is our strategy in terms of derisking the portfolio, reducing our carbon intensity.
Those are the type of assets that we have sold and will continue to sell.
Obviously, with a number of $500 million we have specific in mind, which is advanced, for us to feel confident in terms of giving this guidance.
That's as far as I can go.
But I'd say that, as we've always said, we'll continue to churn our assets and invest them in better risk-adjusted returns.
Okay.
Taking the first one, that was basically we had a legal case which we had, let's say, the possibility of getting it funded and we took a reserve against that.
We don't want to get into more detail about that.
It's certainly a closed case which there shouldn't be anything more going forward.
Regarding the wind in Brazil, this is Renova's assets.
These are 18-year contracts in reals indexed to CPI.
I think we're buying them at a very attractive price.
We'll remind people that in the past when Brazil was really booming we never bought anything at those prices that we didn't think was attractive.
Now we see this as being at attractive prices.
I also think that it's very important to get Tiete to be growing again.
We're utilizing 100% of local financing for this project.
So it's an attractive acquisition and it really is a milestone for Tiete.
Absolutely not.
Shut case.
It's a shut case.
I think it's really anchored in the projects that we know.
Southland is in these projects.
The energy storage of Southland is there, as well.
We have the completion of OPCG-2 and the completion of Alto Maipo in 2019.
Besides that, we do have the growth of sPower that I talked about, 500 megawatts ramping up to one gigawatt towards the end of that period.
We also have some growth in terms of distributed energy, as well, around 200 megawatts a year.
Other than that, it's basically redeploying that cash.
There will be other acquisitions that could be smaller ones, add-ons, and there could be some additional energy storage projects, again, modest energy storage project besides that growth.
So, that's what's embedded in those numbers.
I think it's reasonably conservative.
I do think if some markets really pop, like energy storage and third-party sales or something, it could be superior to that.
We have other things that we're looking at from de-sal to other applications.
I think it's reasonably conservative, is the right approach to it.
I wouldn't say it's the most conservative.
That's a great question.
What we see is we'll continue our strategy of simplifying the portfolio.
I always said that we don't need to be in 20 countries to really have the advantages of a diversification.
We do see having a strong footprint in the US because it gives us stable cash flows.
It's also the most technologically advanced market in all regards, whether it be energy storage, whether it be in the commercial sense.
And then we really see ourselves being the bridge from that to faster growing markets, and with a big emphasis in Latin America and a big emphasis to the extent we can get dollar-denominated contracts.
So that's where we see the AES of the future.
Now, we do see conventional energy as being an important part of this.
We really see that as a great advantage to the extent you can integrate renewables into your product and service offerings to final clients.
So there is a greening of the portfolio in large part because we're just seeing energy prices from renewables come down so much.
Also, it's because you can get long-term contracts up for renewables.
And finally it's because that's the part of the market that's growing.
Last year, almost 60% of new adds in the world are renewables.
So, in virtually all of our markets that's the segment that's growing.
We want to be there.
On the other hand, we see the advantages of AES as being able to integrate that into existing platforms.
So, platform expansion continues to be an important part of our strategy.
It's one of the things we like very much about sPower, that they have a platform expansion strategy.
No.
And I'd say the following reason.
Brazil is its own market, it has its own relations, it has its own regulatory structure.
So, we think it will have to continue to be managed in that way.
Tiete is also a publicly listed company.
We're very happy to start Tiete growing again because I think that will have a good impact on local investors and the multiple we get for Tiete.
But, remember, our SBUs are basically organized around markets.
So, what we would like is the teams there face similar clients, similar regulators, similar financial institutions.
We've always said that Argentina had significant upside potential and we're seeing that this year ---+ or, actually started seeing it last year.
Argentina, we sold out of the distribution businesses, which were very, I would say, difficult, but we were left with a very solid, excellent technically, generation business, which has made money pretty much every year.
We had he three years where we weren't able to pay dollar dividends.
Argentina's part of the Andes SBU.
There's some synergies and some interconnections with the Chilean market.
We're seeing tremendous progress in Argentina, tremendous progress in our business.
I think it's very much in line with what we were telling everyone before, is that Argentina had significant upside potential and some of that upside potential is being realized.
I think there's even more potential going forward.
I think if we did anything in Argentina it would be using local leverage capacity, like we're doing in Brazil, like we're doing in the Dominican Republic.
In the past we talked about proportional free cash flow and how we were paying down sub-debt and creating opportunities.
I think between DPP and Tiete, are two excellent examples of how we can lever the local business, 100% levered, and come up with attractive, in both cases very carbon-friendly projects with long-term contracts.
No, we really aren't.
We're in negotiations now and we think we'll reach a settlement but we can't give anymore color.
That's right, yes.
You're right.
Okay.
So, I think with this we conclude today's call.
And we thank everybody for joining us on this call.
As always, our IR Team will be happy to answer your questions.
Thank you and have a nice day.
