Avangrid(AGR) - 2022 Q4 - Annual Report

Investment and Capacity - Networks invested $8.9 billion over the last five years to enhance its delivery network, improving capacity, reliability, and sustainability[31] - As of December 31, 2022, Networks served a total of 2,310,881 electricity customers and delivered 36,870,000 MWh of electricity[32] - The total rate base for the company increased to $12.658 billion in 2022, up from $11.733 billion in 2021, representing a growth of approximately 7.9%[40] - The total installed capacity of Networks' electricity generation facilities is 61.4 MW from hydroelectric sources and 8.3 MW from diesel turbines as of December 31, 2022[101] - Networks' regulated utilities have a total of 97,832 miles of distribution lines, including 86,155 miles of overhead distribution lines and 11,677 miles of underground lines as of December 31, 2022[103] - Networks' electricity transmission and distribution activities include 8,710 miles of transmission lines and 23,559 miles of natural gas distribution pipelines as of December 31, 2022[104] Renewable Energy Projects - Renewables produced 19,683,719 MWh of energy through wind power generation in 2022, with onshore wind representing about 95% of its installed capacity[41] - The company has a pipeline of 25,584 MW of future renewable energy projects, including 19,645 MW onshore and 5,939 MW offshore[41] - Vineyard Wind 1 project, an 806 MW offshore wind project, is expected to generate clean energy for over 400,000 households and reduce carbon emissions by over 1.6 million tons annually[45] - The average price for the Vineyard Wind 1 project’s 20-year PPAs is $88.77/MWh, with prices starting at $65/MWh and escalating 2.5% annually[45] - The Park City Wind project, an 804 MW project, has an average price of $79.83/MWh for its 20-year PPAs, starting at $62.50 and escalating 2.5% annually[46] - Commonwealth Wind project has signed 1200 MW contracts with Massachusetts electric distribution companies at an average price of $76.06/MWh, starting from $59.60 and escalating at 2.5% annually[47] - Renewables operates two thermal generation facilities with a combined capacity of 636 MW, including the Klamath Plant with 536 MW capacity[49] - Renewables has five solar photovoltaic facilities with an installed capacity of 324 MW, producing over 317,580 MWh of renewable energy in 2022, accounting for 2.0% of total renewable energy generation[50] - The total installed capacity of wind projects in Renewables' portfolio is 1,200 MW as of December 31, 2022, with various projects located across multiple states[106] Regulatory and Environmental Compliance - The company is subject to numerous federal, state, and local environmental regulations, including the National Environmental Policy Act (NEPA) for environmental impact assessments[74] - Networks' projects must comply with the federal Toxic Substances Control Act and Resource Conservation and Recovery Act regarding hazardous waste management[75][76] - The company aims to achieve carbon neutrality for Scopes 1 and 2 by 2030, with specific goals for renewable electricity and emission-free generation capacity[91] - Networks is required to report greenhouse gas emissions, with SCG and CNG exceeding the threshold of 25,000 metric tons per year[86] - A consent order mandates UI to investigate and remediate environmental conditions at the English Station site, with costs potentially exceeding $30 million[90] - The company is continuously evaluating regulatory risks related to climate change and greenhouse gas emissions, which may affect operational costs[87] Financial Performance and Risk Management - Total debt outstanding was $9,024 million at December 31, 2022, with $1,146 million having a floating interest rate[477] - A change of 25 basis points in the floating interest rate would result in an annual fluctuation of approximately $3 million in interest expense or income[477] - The average Value-at-Risk (VaR) for 2022 was $13.6 million, compared to an average of $11.3 million in 2021, indicating increased risk exposure[474] - Approximately 97% of energy management counterparty credit risk exposure is associated with companies that have investment grade credit ratings[482] - The company has established risk management policies to monitor and manage market risks, including commodity price, interest rate, and credit risks[470] - Long-term supply contracts are utilized to reduce exposure to market fluctuations in energy prices[471] - The estimated fair value of long-term debt at December 31, 2022, was $7,991 million, compared to a book value of $8,627 million[477] Workforce and Diversity Initiatives - As of December 31, 2022, AVANGRID employed 7,579 employees, with 91.5% based in five states: Connecticut, Massachusetts, Maine, New York, and Oregon[119] - The total employee turnover rate for the year ended December 31, 2022, was 13.5%, with voluntary turnover at 7.6%, involuntary turnover at 1.1%, and retirement at 4.8%[120] - AVANGRID aims for women to represent 35% of executive positions and 50% of senior leaders by 2030, alongside a 40% reduction in employee accident rates by 2030[119] - Approximately 46.0% of employees are represented by a collective bargaining agreement, with no union contracts set to expire in 2023[119] - In 2022, AVANGRID launched several mental health initiatives, including the Daylight anxiety management program and the Sleepio sleep improvement app[124] - The company completed over 17,000 safety observations in 2022 as part of its safety culture initiatives[123] - AVANGRID's diversity initiatives included 87% of employees completing unconscious bias training in the past 24 months[121] - The company hosted over 50 events in 2022 through its Business Resource Groups to promote diversity and inclusion[122] Security and Technology Investments - AVANGRID has established a comprehensive physical and cyber security program to protect its assets and infrastructure[115] - The company continues to invest in technology and security measures to mitigate operational risks related to cybersecurity and physical security[117] Supply Chain and Operational Control - Renewables maintains operational control over wind and solar farms through tax equity financing structures, allowing investors to receive tax benefits until a negotiated return is achieved[48] - The company relies on key turbine suppliers like Siemens-Gamesa and GE Wind, which supplied 70% of Renewables' installed wind capacity as of December 31, 2022[47] - Renewables utilizes advanced meteorological equipment for accurate pre-construction energy production estimates, enhancing project investment confidence[52] - The DPU approved Commonwealth Wind's contracts on December 30, 2022, despite the company's motion to dismiss due to economic challenges[47] - Renewables focuses on ensuring solar projects deliver the lowest cost of energy, supported by a network of experienced industry consultants[52] - Renewables has a robust development pipeline and strong relationships with suppliers and clients, which are key competitive advantages[98] - Renewables competes for long-term renewable energy PPAs and participates in competitive energy markets, which may be affected by energy legislation and regulation[98]