Good day, ladies and gentlemen, and welcome to the Clearway Energy First Quarter 2019 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Christopher Sotos, President and CEO.

Thank you. Good morning. Let me thank you for taking time to join today’s 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 as of this day. 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 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. As many of you are aware renewable energy resources were weak across most geographic regions in the first quarter and Clearway was not immune to this dynamic. Chad will provide details. But the impact on our results for the full-year are within our sensitivity ranges. Additionally, the projects impacted by the PG&E bankruptcy continue to perform and our dialogue on forbearance with lenders continues to be constructive, albeit a slow process. As such, we’re maintaining our 2019 CAFD guidance of $270 million, which continues to be based on our full-year P50 energy production estimates. In addition, we’re announcing a second quarter dividend of $0.20 a 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 will be aligned with the available corporate liquidity at our target payout ratio. Our pro forma CAFD outlook of $295 million remains…

Thank you, Chris. Turning to Slide 7. For the first quarter, Clearway Energy is reporting adjusted EBITDA of $191 million and cash available for distribution or CAFD of negative $13 million. As previously discussed, projects are investments impacted by the PG&E bankruptcy, are currently restricted from making distributions to the company despite operating in the normal course. This includes being current on all post-petition receivables. Assuming discontinues and as we indicated on our last earnings call, we will report on CAFD as if cash distributions would have been received, which in the first quarter included $7 million from unconsolidated projects. During the quarter, weak renewable energy conditions prevailed across both the wind and solar portfolio, negatively impacting business performance. These conditions were quite poor not only in the Western part of the country, where our largest assets are located, but also through the West and East Coast. This is evidenced by the chart in the appendix section of the presentation where you can see that the wind and solar portfolios were off 13% and 15%, respectively relative to median production expectations. Though these results were disappointing, variability in weather is expected over the lifecycle of the portfolio and it's something we have observed in the company's past results, including within any given year. While we won't predict weather for the balance of 2019, 2018 was a good example of this dynamic with renewable production also below expectations in the first quarter, with the recovery over the balance of the year that was materially close to our median expectations. In part, driven by the weather in the quarter, offsetting this weakness was a timing shift in O&M expense and CapEx across not only the Renewable segment, but also the Thermal segment. Additionally, the quarter benefited from higher distributions from unconsolidated projects…

Thank you, Chad. Turning to Page 9, our focus for the year is to continue to execute on growing and strengthening the platform as the PG&E process evolves. We are meeting our commitments and maintaining our 2019 guidance, and also are on schedule to finalize the remaining transition and integration requirements post-closing of the GIP transaction. During this time, we are adhering to the revised capital allocation program presented to you in February, including the funding of our committed growth investments as evidenced by Mylan, Hawaii Solar Phase 1 and the DG Partnerships. We are also not sitting still, as we're finding new accretive growth opportunities like Duquesne, while securing new capital sources through internal means with the refinancing of Tapestry Wind. In addition, we continue to work with Clearway Group to source future opportunities for Clearway Energy as well as closing on our repowering partnership anticipated in the second quarter. Thank you. Operator, please open the lines for questions.

[Operator Instructions] Our first question comes from Julien Dumoulin-Smith of BAML. Your line is open.

Hey, good morning.

Good morning.

So just wanted to first kick things off, obviously, PG&E continued to garner a good amount of attention. How do you think about the opportunity to proactively renegotiate contracts and specifically to the extent to which that -- potentially that would be an option, how do you think about options bifurcated between renewable and conventional assets given the shorter duration on some of your fossil assets here?

I think …

Is there any driven …

I think part one we anticipate that the contracts as they currently exist should be assumed as part of the bankruptcy process, so that’s our operating assumption kind of going through this is that -- while it's taking time, that will be the end result. So Julien to your question, I wouldn’t necessarily differentiate between a renewable and a conventional contract. I think from our perspective both should be assumed, because they’re both binding. And you’ve seen in the statements by PG&E and others, they anticipate basically continuing their PP&A obligations.

And if you can clarify, I mean, I’m sort of curious. How are you seeing the opportunity to -- either blended and extend, just independent to the process or otherwise layer in new capacity commitments for the fossil portfolio. I know we’re a little early, but I want to fix it on this a little bit just given the evolution in procurement broadly in California and how you see that evolving?

Sure. Hopefully this answers your question. I think from our perspective we're really not looking to blend and extend those type of mechanics currently. As I said, we’re really focused on -- that the contract should be assumed as part of the bankruptcy process. Your question on conventional in terms of going forward, I think frankly we kind of need to see what happens and when in terms of that contract been assumed to really answer your question intelligently. For us to say, we’re going to procure RA in a certain way in several years, but not know the result of the assumption or lack thereof of that contract, I think is a bit premature.

Fair enough. Understood. Little bit more detailed question here on Tapestry. I noticed that it doesn’t seem like the amortization table on Tapestry evolved at all, despite the refinancing. Just -- can you give us a little bit more detail on exactly what happened with that specific financing? I know it's a very detailed.

Yes, I mean, in terms of -- I mean, basically it was kind of renewed -- as we indicated about $11 million of net proceeds to Clearway Energy. And so from our perspective it was really just kind of tweaking the financing a little, but I think the difference in debt service in the first five years is several hundred thousand dollars or it's pretty small per year. So I think from our perspective we are able to kind of maintain the CAFD -- the negative CAFD profile, so to speak of the debt. But basically get $11 million of additional capital that we could use and frankly be able to put into Duquesne in the near-term.

All right. Excellent. Thank you very much.

Our next question comes from Colin Rusch of Oppenheimer. Your line is open.

Thanks so much. You're mentioning the solar coupled with storage is standard. Can you talk a little bit about the duty cycle that you’re expecting in those systems? Are you looking at just arbitraging and time for peak power, or are you doing some ancillary services with those storage devices and if you just give us a bit more detail about what the duty cycle looks like?

Sure. Craig, if you don’t mind maybe answering that. You’re much closer to the development cycle on those than I’m.

Yes, sure. Hi, Colin. For our utility scale assets today, the structure of the contracts that we’re signing with load serving entities put the dispatch of the battery energy storage systems under the control of the load serving entity who has the ability to dispatch the battery components within a certain range with a certain frequency, that’s defined so that we can be compensated for the evolution of the technical components therein. We don't underrate a separate stream of ancillary revenues for ourselves and instances, and the expectation that we have with those load serving entities in California is that they're using those as resources to handle load shape in the later hours of the day. In California the dispatch is -- or in Hawaii, the dispatch is slightly different because of the difference between coincidence of renewable resources and load in Oahu. But similarly in that instance also, the load serving entity has the ability to dispatch the battery energy storage system inclusive of the attributes that can deliver ancillary support at their own discretion.

That’s incredibly helpful. Thank you. And then just -- this is more a housekeeping thing, but would you guys consider guiding with a P70 rating on the cash flow just for a little bit more consistency. Is that something that you are tossing around or would be under consideration at some point?

Chad, why don't you go ahead?

Yes, Colin -- it's a good question. I think on an annual basis, we always take a look at our actual results and roll that for at any time we do forecasting and up in -- looking at it on a long-term basis to sort of determine whether or not the efficacy of like our budgeting is good. And I think the deviations we're seeing any quarter or any year tend to fall out statistically relative to that long-term forecast. And I mean, even if you look at like our performance over especially our largest projects that are materially driving CAFD over the past three years, you’re almost right on top of our P50. I mean, I’m not perfect, but no more than maybe 100 basis points here or there. So I think right now I think we felt -- we continue to feel pretty good about our forecasting versus making the adjustment down.

Perfect. Thanks so much, guys.

Sure.

Our next question comes from Abe Azar of Deutsche Bank, Your line is open.

Thank you. Good morning.

Good morning.

So can you clarify your reaffirmation of the 2019 guidance. Are you essentially counting on the renewable resources being better-than-average for the balance of the year and by how much?

In essence, I will let Chad kind of add any details. But in essence, no, I think, Abe, it's kind of similar to last year where the first quarter was lower and as I talked about kind of over the years, you kind of need the year to play out to really see where the P50 comes in over the course of the full-year versus any particular quarter. So I think that -- the simple answer is kind of no. We expect our P50 production over the course of the year, not necessarily one particular quarter. But Chad, anything to add?

Yes. I think, Abe, that the convention we’ve used and I think it's the same convention we’ve used over the past few years is rather than us being in a position where we feel like we want to adjust our annual perspective in any given quarter where production maybe higher or lower than P50, I think as we -- as I indicated in my comments, if you roll forward production in the first quarter and you assume P50 for the rest of the year, yes we’re at the low-end of our quarterly sensitivity. So it would be hard press for me to say that we would deliver on the 270. But I think the point is that we have the point estimate. We give you the sensitivities around that and then you're able to sort of determine what the annual number would otherwise look like if we don't get the recovery for outperformance in the -- in another part of the year.

Got it. And then shifting topics, what size commitment do you expect for the repowering? And what will the source of financing be? And do you have a minimum kind of cash and liquidity target that we can think about there?

Sure. We only have a minimum cash and liquidity target. I think it will be predominantly through the revolver and cash on hand. Our revolver is basically undrawn at this point, what I believe $41 million in LCS outstanding, plus or minus. Obviously, in terms of size, Abe, I would rather kind of once again, once everything is kind of put together, put all numbers collectively in front of you. I would prefer to wait until then.

Sure. Thank you.

Our next question comes from Michael Lapides of Goldman Sachs. Your line is open.

Hey, guys. Just curious when I look at the asset portfolio and the continued additions at the Thermal segment, some of the tilts and other assets, do you worry about diversifying too far away from wind and solar? And whether the mix of assets longer-term kind of -- whether there are synergies across the mix of assets or maybe whether the Thermal segment is something that isn't necessarily core to the long-term growth, I mean, if I think about what’s up top at your parents and available for drop down, most of that is traditional wind and solar. I may be mistaken. So I'm just trying to think about how all the pieces of the puzzle fit together longer-term?

Sure. A couple of different parts to that question, Michael, so I will sort of unpack it a bit. A, to your question if Thermal is core or not? I think from our view it is a core part of the business. And to answer, yes -- and expand upon that why. Basically because it is not really correlated with wind and solar production and shortfalls like we might have in the first quarter given resource. From our perspective kind of over the years, we look at diversification as a real strength of the C1 portfolio. A, in terms of the ability to produce stable CAFD because you do have a diversified portfolio that’s not entirely dominated by wind and solar production. But B, also areas that you can invest into create CAFD per share growth in long-term. It's kind of all we did was only "wind or solar", then if those markets got overheated, you kind of have to invest in those markets to continue to grow. So I think in terms of how we think about Thermal, on a macro basis kind of in that perspective. To your second quarter around the sponsor, while it's true that GIP and CE don’t have thermal assets to kind of drop down, that’s why we have thermal development at the Clearway Energy Inc. box to kind of basically help produce opportunities like the Mylan opportunities, like Duquesne. And so I think from that perspective that’s where we see that growth. I think to the third part of your question around diversification, we don't really worry about diversification kind of getting out of hand or from that perspective, because I think the rating agencies and credit markets in general look at the diversification in terms of what I talked about before for stability at CAFD generation as a positive. It's not as though that we have defining goals that we want wind to be 33%, conventional to be 33% etcetera. But we do view that a mix between the different asset classes is a strength of CWEN. Hopefully that answers your question.

That helps. The other thing is when you look across your growth opportunities, whether it's at the Thermal and kind of doing more of the projects like the Duquesne one versus the wind versus the solar, where do you see the better returns? Where do you get better cash on cash?

I think it really depends on each one. I won't say on a macro basis. One is, it's probably much more predominant on the tenor of the PPA profile that determines that. So I wouldn’t characterize one is kind of always being better than the other. Also I think size is important, right? The Thermal assets and opportunities that we’ve done were quite strong, tend to be on the smaller side in terms of CAFD generation. So I think it's a little bit of an apple and orange comparison. So I would -- I would probably not make it.

Got it. Thank you, guys. Much appreciated.

Our next question comes from Steve Fleishman of Wolfe Research. Your line is open.

Yes, hi.

Hi.

Just to clarify, what would you say the impact of below normal conditions were on the quarter EBITDA?

Chad?

Yes, on EBITDA I think you could almost manifest a dollar for dollar, Steve, because if you look at the impact any reduction in revenue on the renewable fleet is going to hit EBITDA and CAFD the same. So, I mean, if you look at the numbers and if you’re saying hey, we are up -- it would have been closer to the low end where we landed -- if you look at that negative 11% of CAFD, you could almost do that -- gross that up and just say it's almost an equivalent EBITDA number.

Okay. So you take the midpoint of the three to -- yes, you take the midpoint of the negative 3 to 11 …

Yes.

… and then just assuming you’re at 11? Okay.

Yes. I mean, I’m not saying it's all the way down at that level, but the point being is that it's a good way to think about it.

Okay. How were April conditions?

April was roughly at par. So we didn’t necessarily pick up a ton, but we saw April do -- across the portfolio was more right around our expectations.

Okay. And then switching gears, so if the bankruptcy court judge for PG&E comes out and says he thinks he has the jurisdiction over deciding on PPAs, in and of itself, that doesn't necessarily mean anything, but just for your purposes do you view that as meaning anything to your contracts?

Frankly, no. I think that our view is and as we talk about kind of during the pendency of the situation, is that, right, our contracts really don’t affect the value of the bankruptcy estate because they’re passed through the ratepayers. So I think whether it's FERC has jurisdiction or the bankruptcy court has jurisdiction or how they work it out between them, I think that fundamental fact remains. So I think from our perspective if your question was, if basically kind of FERC has determined not to have jurisdiction, that’s only the bankruptcy court does that change our view as to the probability of the contracts being assumed, that answer is no.

Okay. And lastly, just if you had any of your own contacts with, I guess, leadership people in the state on their views of the contracts and also looking at future growth projects?

So, Steve, the question is do we have contact with upper levels as the State government, I apologize, I don’t understand the question.

Yes, the question is have you had your own discussions with, let's say the governor's office or regulators on their view of supporting the contracts -- existing contracts and also I guess potential growth opportunities for new renewables, particularly if the state might get more involved, yes.

Sure. I think between ourselves and CEG, we obviously talk to any entities that make sense in terms of basically assuming the contracts exist today, and I’m sure the CEG box, given their development activities, the long-term procurement of renewables in California is a critical issue. So, we’ve a wide variety of conversations along both avenues.

Okay. Thank you.

[Operator Instructions] Our next question comes from Greg Gordon of Evercore ISI. Your line is open.

Hey, good morning, guys.

Good morning.

I don’t want to beat a dead horse, but I just want to be clear, while you're not -- you’ve reiterated your CAFD guidance for the year because basically it's too early in the year to tell, but you're starting off after a weak first quarter a little bit behind the eight ball. Is that a fair summary?

Yes, the first quarter was below expectations, but once again, our P50 that we provide isn't a quarterly or daily P50, it's over the course of the year. So, similar to what occurred last year, we were down in the first quarter, but the rest of the year, the P50 basically showed up. Not that we know that will happen, but we don’t see any reason to assume that it wouldn't, either.

That’s fair. I just wanted to make sure I understood your prior responses, thanks. The second question is on Duquesne. When does that start to actually contribute to CAFD and EBITDA? And was that acquisition sort of -- I know other things in the backlog were assumed in the CAFD and EBITDA guidance for '19, but was that particular acquisition in the baseline expectation?

Sure. That answer is no. In terms of your second question, was it in our baseline expectations, we only do that when something is signed in terms of a binding commitment, which obviously only occurred recently, so it wasn't included in the $270 million or $295 million numbers we had produced previously. To your other question, in terms of -- sorry, what was your first question was? I apologize.

When does it start contributing?

I think Currently -- I think, once again, there's some CapEx we have to put in it that's included in the $107 million overall number, so we think it could kind of a be a net positive to CAFD much more in 2020 versus the 2019 timeframe.

Okay, fantastic. And then, third question, this goes out a little bit over the horizon, but if we are in a scenario where we’ve -- obviously, a lot of your CAFD is being trapped at the project level because of the PG&E situation, but that situation is ultimately resolved. Not only would you get sort of an uplift in your actual usable CAFD from the ongoing -- the release of cash, which, on an ongoing basis had previously been trapped, but there -- wouldn't there also be sort of a lump sum release of cash? And, if there was, at that point in the future, should we think about that as cash that you would return to your shareholders, or would that just create a war chest for you to reinvest in the business, take drops, and further enhance the reestablished higher level of dividends through more investment? How are you thinking about -- I know you are probably thinking …

Sure.

… about what’s right in front of your nose now in terms of trafficking through the year, but in terms of the long-term and the positive resolution of this situation, how do you think about that dynamic?

Sure. A couple of good questions there. So, part one, it wouldn't necessarily result in an uplift in CAFD because as Chad's noted, we are kind of reporting CAFD under the assumption that that cash is eventually distributed to us. So part one, in terms of like a reported CAFD, it wouldn't really change that number. Part two, to your point, we would, however, expect kind of a lump sum release when that's done as the different distribution accounts within the project financings release that cash that’s been built up over time. To your third question, whether we would use it for return of shareholders -- return of capital to shareholders or for different investment purposes, I think consistent with what we’ve said before, we view it much more as a reinvestment in future growth prospects than necessarily returning to shareholders for that period of time. So I think we would -- once again, depending on availability of growth investments, but we think they will be there, we would probably much more put those into growth investments than a special one-time dividend or something like that. We think that creates a lot more lasting value.

Right. But the -- but then -- and I -- my question was poorly stated in part, so -- but it would also allow you -- because your CAFD, even though you are reporting it as if PG&E assets were distributing, because your ongoing level of actual cash flow would then be restored, you would be able to partially or fully restore the distribution that you cut as a function of the event in the first place, correct?

Yes, that’s correct. So maybe to walk you through to make sure I answer your question appropriately. In the event that the contracts were assumed, there would: A, be a distribution of a lump sum, so to speak, cash from the distribution accounts that have been fed up during the period of the bankruptcy. B, once again, given the new CAFD level, we would reinstate the dividend much more in line with previous levels given the CAFD over time -- yes, that would be reinstated. And third, we intend to use that lump-sum cash to invest in future growth investments versus a special one-time dividend or something like that.

Perfect. Succinct. I appreciate it. Thank you.

No problem.

Our next question comes from Angie Storozynski of Macquarie. Your line is open.

Thank you. So we’ve seen quite an increase in RA prices in California. I mean, it seems like RA cost prices are around $4 per kilowatt month or even higher. I understand that your Marsh Landing contract doesn't end until 2023, but in light of those prices, if you were to refinance or re-contract those plans for $4 per kilowatt month, is that enough to make this a viable project going forward? So is that price enough already -- again, for Marsh Landing to continue operations? Thank you. Beyond 2023.

So you are asking beyond 2023, I think -- Angie, maybe one way to think about it is and we've talked about this in the past is, beyond 2023, those projects are, at that point, unlevered. So as you know, given the way we’ve sized the project financing on those assets, the amount of cash that is otherwise used for debt service, both P&I, is pretty significant. The way we’ve always described it is you could almost take a two-thirds reduction in revenue and have an equivalent amount of cash flow -- excuse me, a two-thirds reduction in EBITDA and have an equivalent amount of cash flow to effectively see it. So, at $4 a kilowatt month, and if you apply that, and you assume you could get RA on Marsh Landing a 720-megawatt facility, obviously that builds up a certain amount of revenue that otherwise could be supportive of continued operations. Naturally, at that point in time, you also have to think about dispatching and your own fuel costs, but, yes, I mean, I think that's starting to get to a point where you could economically operate an asset beyond the contract period, principally because it's an unlevered project at that point in time.

To your second question -- I don't know if we would be able to relever it based solely on RA. That might be a little bit of a push, but I would take Chad's former point.

Okay. And, secondly, so we have another public yieldco that’s pursuing a strategic review. We don’t really know what it would entail. But would you, I mean, potentially be open to, I don’t know combination with another public entity, a public yieldco?

I think that’s kind of an M&A type question, so I think similar with historical practice, we really wouldn't comment on M&A.

Okay. Thank you.

Sure.

Our next question comes from Shar Pourreza of Guggenheim Partners. Your line is open.

Hey, good morning, guys.

Good morning.

So, most of the questions were answered. Just Chris, can you just elaborate around your prepared remarks with how the conversations are going with lenders with the California projects? I think you alluded to it's constructive, but the process is slower than expected.

Sure. I think I will let Chad kind of expound upon it because he's really leading a lot of those efforts, but from our perspective because there hasn't been a ton of, let's say, new information definitive new information for lenders to get a feel for the lay of the land. I think just -- everyone is kind of operating in normal course, but kind of a true forbearance is quite tough to get because we don't have any on the ground facts for some of the questions that, frankly, this audience is asking. But, Chad, anything to expand upon?

Yes, not really. I mean, Shar, like I always try to remind folks, I know you've got Clearway and then a number of other public entities that own projects. I’m mindful that many of our project lenders -- I forget the number of projects that PG&E had indicated and how it contracts with, but you could assume a significant amount of those are in likely similar situations where they also have project financing, so the lender groups overall, I mean, they’re significantly exposed. And I think what we've been reassured with the lenders is that it's, obviously, if anybody wanted to try to exercise a remedy, it likely rise as something we would be disclosing. We are operating in the normal course, but for lenders and forbearance, naturally, facts are important on the ground. So I think our dialogue is constructive, our relationships are strong, but when there's uncertainty on the ground, obviously, it's reasonable to assume a lender is going to want to move at a pace that they believe is prudent for their own obligations.

Got it. That was it. Thanks, guys. I appreciate that. That was all my questions.

Sure.

There are no further questions. I would like to turn the call back over to Christopher Sotos for any closing remarks.

Thank you. So I think -- thank you for everyone's time and look forward to talking with you in the next quarter. So, thanks everyone.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.