Good morning ladies and gentlemen and welcome to the Clearway Energy Inc. Fourth Quarter 2010 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the conference over to your host, Mr. Chris Sotos, President and CEO of Clearway Energy.

Thank you. Good morning. Let me first thank you for taking the time to join today's call. Joining me this morning is Chad Plotkin, our Chief Financial Officer; Akil Marsh, our Investor Relations Manager and Craig Cornelius, President and CEO 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 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 four, first before I begin, I want to say thank you to all our colleagues across the Clearway enterprise and to our partners for navigating through 2020 and making the past year a success for the company. Whether it was managing through the PG&E bankruptcy or the impacts of the global pandemic, the company executed across the platform and further positioned Clearway for long term growth. Financially, Clearway achieved full year CAFD of $295 million which included the effect of COVID. We invested or commit to invest approximately $880 million in growth projects and execute our $1.4 billion in capital formation. Clearway also has resumed the growth in its dividend with now a 1.9% increase to $0.324 per share in the first quarter of 2021, on track for the upper end of our 5% to 8% growth target for the full year. While our long term outlook is as strong as ever, certain of our projects did…

Thank you, Chris. Turning to Slide 8, where I'll provide an overview of the company's 2020 results and an update to our 2021 outlook. Starting with 2020, today Clearway is reporting fourth quarter adjusted EBITDA of $229 million and $30 million of cash available for distribution or CAFD. These results bring full year 2020 adjusted EBITDA to approximately $1.08 billion and CAFD to $295 million. During the fourth quarter, the company realized higher distributions from several of its equity method investments as well as improved operating efficiencies and lower costs across the portfolio. However, moderate weakness, primarily within the wind portfolio which persisted for most of 2020 and an outage at the El Segundo gas project during December did weigh down results. Overall, while full year results were below the company's original $310 million guidance, the variance is within expected sensitivity ranges for the portfolio. During 2020 the company continued to progress in its long term objectives through efficient capital formation and its disciplined capital allocation program. During the year, the company formed approximately $1.4 billion in capital through project level debt optimization, utilization of the ATM program, additional green bond issuances, and through the disposition of nonstrategic assets. Additionally, the company was able to gain access to $168 million in cash that had been trapped due to the PG&E bankruptcy. Through these efforts, Clearway has maintained its commitment to its balance sheet targets and was able to allocate the excess capital to its growth investments in a manner leading to CAFD per share accretion. This provided support in our ability to reset the dividend upon the resolution of the PG&E bankruptcy and has the company on a trajectory to reach to achieve the upper end of our 5% to 8% dividend growth target through the end of this year.…

Thank you, Chad. Turning to Page 11 and recapping 2020, Clearway Energy had a very strong year. We delivered on our plans or commitments with CAFD within our sensitivity range and reset our dividend and growth trajectory following the resolution of the PG&E bankruptcy. In 2020 Clearway made nearly $900 million investments and executed on $1.4 billion of capital formation through the combination of refinancing nonrecourse debt, additional corporate capital and recycling of nonstrategic assets. These investments allow Clearway to enhance our pro forma CAFD outlook supporting our EPS growth in line with our long-term targets. Looking forward to 2021, we are targeting to deliver on our 2021 CAFD guidance taking into account the February Texas weather event, while achieving dividend per share growth at the upper end of our range. We will look to continue to grow our $1.80 pro forma CAFD per share outlook through further opportunistic M&A as well as continue to work with our Clearway Group colleagues to invest in our portfolio of at least 1.1 GW with 2021 through 2023 closing dates during the first half of 2021. Finally, as we have discussed over the years, 2021 is an important year in positioning our gas fleet in California in 2023. We are targeting reducing risk and optimizing value on these assets going forward. As the previous years' demonstrate the value of these assets, through the importance to the grid during constrained periods and the addition of black start to mars landing our gas fleet is a valuable we will work to optimize during 2021. We look forward to updating you on our progress during the year. Thank you. Operator, open the lines for questions, please.

[Operator Instructions] And your first question comes from Julien Dumoulin Smith with Bank of America.

Hi, can you hear me?

Yes. Good morning, Julien.

Hi good morning team. Thanks for the time. I just wanted to chat about hedging here. How do you think about Texas and the impact of events there in terms of your thoughts on the hedged portfolio, and perhaps changing how you guys do engage in PPAs versus hedges going forward?

Thanks, Julien. I think there's always a preference for PPAs versus hedge. Don't get me wrong, but sometimes the market has certain constraints on it in terms of what's available. I think from our view, we want to do is really look from a risk management and plant design perspective, to A, make sure that we have increased winterization and the like for ice sharing technology and some of those ERCOT assets, where you actually have a fixed physical delivery, versus a PPA take or pay type of obligation and then also, establish weather routers, predictors and train equipments with procedures to mitigate those type of events. So I think it's from an operational side. From risk management, I think we want to incorporate liability tracking around these obligations to make sure we understand them, but I think, for all that's said and done, it was as everyone's aware, a pretty unprecedented effect in ERCOT, but I don't think people would see happening on a regular basis. But those are some of the mitigating factors we look to do going forward.

Got it and then just quickly if you can, how do you think about retrofitting to de-risk Texas going forward? I know this has been a sort of nascent conversation that you can talk about that, obviously, there's some various assets for operational level retrofits that could be pursued here as well.

Yes, you broke up a little bit there Julien. I think you asked about what retrofits we could kind of do at the at the projects in Texas. Craig, any particular news there?

Yes, sure. Glad to address that. Yes, so our wind machines in Texas in general, were rated for operation down to ambient temperatures, like those that were observed in this event. But like many other operators, I think we find that there are certain supplemental deployments that would be useful in particular in conditions like those that produced the ice that was observed in Texas during this event. And those include hydrophobic coatings for blades, a change to the specification in fluids and lubricants that we use in machines, and supplemental heater elements within the cell that will help assure that machines stay out of faults during an event like this. What we were pleased to see about the machines that we do have in Texas was that we were able to bring them back very quickly after icing began to shed during the return to above freezing temperatures. So by way of example, Julien, within hours of temperatures exceeding freezing we had brought all of our central Texas assets back up online and within 24 hours they were producing at nameplate. So with a well calibrated operations, workforce, and machines that are ready to run, and the supplementation of the specs that we have there at those plants with the types of coatings or fluid changes or heaters that we've deployed, we are hopeful that we would be able to mitigate comparable operational risks in a future event.

Got it. And no costs as yet?

No, it’s…

He was asking if there's a process of it – too early.

Understood. Thank you.

Your next question comes from Michael Lapides with Goldman Sachs.

Hi, guys, thank you for taking my question. I have two totally unrelated to each other. One, can you just remind us what the planned equity financings or equity light financing do you have or will likely have over the next year or so? And then two, given what happened in California last year, a price hike be probably enhanced value for existing fossil generation, how are you thinking about the avenues for potentially re-contracting the assets over a longer term versus being on short term RA arrangements?

Sure, I'll kind of take your second question first Mike, and then hand it to Chad the equity side. So I think in terms of looking at re-contracting, I do think that, it does. What happened to the situation in California last year, I think does make it more conducive to longer term contracts. However, I want to be fair to your question. That probably doesn't mean 15 years, that probably means maybe somewhere between five and 10 in a positive sense. And so I think that's one thing that kind of yet, once again, we want to make progress on this year. I think, Michael, we've talked a lot over the years. I think even Back in 2016, I told you the utilities would probably want to talk about re-contracting, one to two years at a contract expiration, we're there, and so to me, that's kind of consistent with what we've indicated. And I think, over time, once again, we hope to get something at least for part of the fleet, more on the five to 10 year range. I think, if you're saying, hey, 15, I think that's a little bit aggressive, to be fair to your question.

Sure. And then Michael, on your comment with respect to equity capital needs, I think maybe I'll take it in two steps. If you go back to where we were in the third quarter, what we had intimated at that time is the capital formation that we had executed, inclusive of the cash that had come from the PG&E projects, were sufficient to fund all capital needs for the growth that we had executed through that call. So effectively, when you think about the announcement today, there's three investments I would point to, which is Agua Caliente, the co-investment in the partnership, and then now Mount Storm. So let’s call it about a little over $500 million of total capital needs in which we would need to form permanent capital around. If you look at how we've presented it, if we're consistent with how we've generally financed our business, and we use our normal kind of target leverage ranges, which is in line with our rating targets, we would seek to lever those at the corporate level between 4 to 4.5 times. So if you look at our slide that we presented on Slide 8, you see that imputes roughly $213 million of corporate debt. Now again, this is somewhat prescriptive, and I'm not going to tell you things don't move around a little bit, but just using that as a proxy. So that intimates about around about $300 million of equity that is ultimately required to fund those transactions. So I think as it relates to the equity needs, I would tell you that we're going to continue similar to how we've historically done things, whether or not it's utilizing our ATM program, whether or not it might be occasional smaller block type of transactions or as we even did this past year incremental capital that may come from optimization of project level debt. The disposition of projects, net of whatever we need to do to maintain our leverage targets, those are sort of the way that we would sort of fund the equity needs. I think the main point I'd raise is, we're going to do things consistent with our balance sheet targets and continue to do things the way we've done, which is to maintain flexibility by keeping a revolver that is relatively undrawn, so that as we're funding new growth, we can sort of be pretty pragmatic with the timing of when we place that permanent capital.

Got it. Okay, thank you, Chad. Much appreciate it. And just coming back to California a little bit, can you remind us, are there any environmental either regulation or constraints regarding continued operation of your fleet out there in the gas fleet?

No, not that I'm aware of.

Got it. Thank you so much. I much appreciate it guys.

Your next question comes from Colin Rusch with Oppenheimer.

Thanks so much, guys. Historically you've talked about not retrofitting existing projects that are under PPAs with energy storage or any sort of kind of voltage management, incremental investments. I'm wondering if that thought process is starting to change, as you see some of the instability on the network?

I think that really depends. I think that the type of retrofits that question has typically been is kind of a little bit more all encompassing, in terms of what you might have to do to take projects off line, versus kind of taking a wind turbine at a time and putting in some of the elements that Craig talked about. So I think, in terms of adding battery storage in a retrofit situation and taking turbans or panels offline to do that, I still think we have high dollar value PPAs, that math is tough to do if I'm understanding your question correctly.

Yes, I'll take it offline with you guys right, but I think that's the end of the heart of the matter. The second question is, are you guys thinking about changing the P50 standard at all, given some of the variability in the network at this point in terms of estimation, and how you're operating the business, and guiding us with your fleet performance?

Sure, a simple answer is no. Any P50 adjustments we normally take as part else, kind of our guidance that we give in our November call. So we can typically go through the year, we look how the P51 during the year and make adjustments at that time. So to your question it is not as though anything that's occurred would make us move our P50 capacity [ph].

Just to add though on that Colin is, you're aware, when we produce an energy estimate for a project, we also take into account expectations of the grids performance and outage time and so on. So I think, when we're underwriting new projects, I think we've demonstrated that our ability to incorporate expectations for those types of great outage events has been reasonably on par. So we take that into account. And just on your other question with respect to California, at least there are opportunities outstanding now for utilities to consider contracting for storage capacity that is incorporated as a supplement to existing operating assets. And so where we've got the ability to offer something, we're making plans to try to be able to make those offers and we'll compete in the marketplace to see if utilities want to take us up on it.

Okay, I appreciate it, guys.

[Operator Instructions] Now at this time, there are no further questions.

All right. Well, thank you all for joining and I look forward to talking to you in May. Take care.

That concludes today's conference. Thank you for your participation. You may now disconnect.