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MarketScreener Homepage  >  Equities  >  Nyse  >  Avangrid Inc    AGR

AVANGRID INC

(AGR)
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AVANGRID : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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08/01/2019 | 04:09pm EDT
You should read the following discussion of our financial condition and results
of operations in conjunction with the condensed consolidated financial
statements and the notes thereto included elsewhere in this Quarterly Report on
Form 10-Q and with our audited consolidated financial statements as of
December 31, 2018 and 2017, and for the three years ended December 31, 2018,
included in our Annual Report on Form 10-K for the year ended December 31, 2018,
filed with the Securities and Exchange Commission, or the SEC, on March 1, 2019,
which we refer to as our "Form 10-K." In addition to historical condensed
consolidated financial information, the following discussion contains
forward-looking statements that reflect our plans, estimates, and beliefs. Our
actual results could differ materially from those discussed in the
forward-looking statements. The foregoing and other factors are discussed and
should be reviewed in our Form 10-K and other subsequent filings with the SEC.
Overview
AVANGRID is a leading sustainable energy company with approximately $33 billion
in assets and operations in 24 states. AVANGRID has two primary lines of
business - Avangrid Networks and Avangrid Renewables. Avangrid Networks owns
eight electric and natural gas utilities, serving approximately 3.2 million
customers in New York and New England. Avangrid Renewables owns and operates 7.8
gigawatts of electricity capacity, primarily through wind power, with a presence
in 22 states across the United States. AVANGRID supports the achievement of the
Sustainable Development Goals approved by the member states of the United
Nations, and was named among the World's Most Ethical companies in 2019 by the
Ethisphere Institute. AVANGRID employs approximately 6,500 people. Iberdrola
S.A., a corporation (sociedad anónima) organized under the laws of the Kingdom
of Spain, a worldwide leader in the energy industry, directly owns 81.5% of
outstanding shares of AVANGRID common stock. AVANGRID's primary business is
ownership of its operating businesses, which are described below.
Our direct, wholly-owned subsidiaries include Avangrid Networks, Inc., or
Networks, and Avangrid Renewables Holdings, Inc., or ARHI. ARHI in turn holds
subsidiaries including Avangrid Renewables, LLC, or Renewables. Networks owns
and operates our regulated utility businesses through its subsidiaries,
including electric transmission and distribution and natural gas distribution,
transportation and sales. Renewables operates a portfolio of renewable energy
generation facilities primarily using onshore wind power and also solar, biomass
and thermal power.
Through Networks, we own electric generation, transmission and distribution
companies and natural gas distribution, transportation and sales companies in
New York, Maine, Connecticut and Massachusetts, delivering electricity to
approximately 2.3 million electric utility customers and delivering natural gas
to approximately 1.0 million natural gas public utility customers as of June 30,
2019.
Networks, a Maine corporation, holds our regulated utility businesses, including
electric transmission and distribution and natural gas distribution,
transportation and sales. Networks serves as a super-regional energy services
and delivery company through the eight regulated utilities it owns directly:
•          New York State Electric & Gas Corporation, or NYSEG, which serves
           electric and natural gas customers across more than 40% of the upstate
           New York geographic area;


•          Rochester Gas and Electric Corporation, or RG&E, which serves electric
           and natural gas customers within a nine-county region in western New
           York, centered around Rochester;


•          The United Illuminating Company, or UI, which serves electric
           customers in southwestern Connecticut;


•          Central Maine Power Company, or CMP, which serves electric customers
           in central and southern Maine;

• The Southern Connecticut Gas Company, or SCG, which serves natural gas

           customers in southern Connecticut;


Connecticut Natural Gas Corporation, or CNG, which serves natural gas

           customers in Connecticut;


•          The Berkshire Gas Company, or BGC, which serves natural gas customers
           in western Massachusetts; and


•          Maine Natural Gas Corporation, or MNG, which serves natural gas
           customers in several communities in central and southern Maine.


Through Renewables, we had a combined wind, solar and thermal installed capacity
of 7,839 megawatts, or MW, as of June 30, 2019, including Renewables' share of
joint projects, of which 7,087 MW was installed wind capacity. Approximately 66%
of the capacity was contracted as of June 30, 2019, for an average period of 9.1
years, and 14% of installed capacity was hedged. Being among the top three
largest wind operators in the United States based on installed capacity as of
June 30, 2019, Renewables strives to lead the transformation of the U.S. energy
industry to a sustainable, competitive, clean energy future. Renewables
currently operates 58 wind farms in 21 states across the United States.

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Summary of Results of Operations
Our operating revenues decreased by less than 1%, from $1,402 million for the
three months ended June 30, 2018 to $1,400 million for the three months ended
June 30, 2019.
Networks business revenues decreased mainly due to decreased purchased power and
gas driven by lower commodity prices and volumes in the period. Renewables had
an increase in revenues mainly due to an increase in wind generation along with
favorable mark to market, or MtM, changes on energy derivative transactions
entered into for economic hedging purposes in the period.
Net income attributable to AVANGRID increased by 3% from $107 million for the
three months ended June 30, 2018 to $110 million for the three months ended
June 30, 2019, primarily due to the sale of the gas business which was
contributing losses in the corresponding period of the prior year.
Adjusted net income (a non-GAAP financial measure) decreased by 22% from $128
million for the three months ended June 30, 2018 to $101 million for the three
months ended June 30, 2019. The decrease is primarily due to a $13 million
decrease in Networks driven by increased non-deferrable minor storms and staging
expenses and $11 million decrease in Corporate mainly driven by higher interest
expense.
For additional information and reconciliation of the non-GAAP adjusted net
income to net income attributable to AVANGRID, see "-Non-GAAP Financial
Measures".
See "-Results of Operations" for further analysis of our operating results for
the quarter.
Legislative and Regulatory Update
We are subject to complex and stringent energy, environmental and other laws and
regulations at the federal, state and local levels as well as rules within the
independent system operator, or ISO, markets in which we participate. Federal
and state legislative and regulatory actions continue to change how our business
is regulated. We are actively participating in these debates at the federal,
regional, state and ISO levels. Significant updates are discussed below. For a
further discussion of the environmental and other governmental regulations that
affect us, see our Form 10-K for the year ended December 31, 2018.
NYSEG and RG&E rate cases
On May 20, 2019, NYSEG and RG&E filed rate cases with the New York State
Department of Public Service, or NYDPS, for new tariffs. The effective date of
new tariffs, assuming an approximately 11-month suspension period, will be April
20, 2020. The proposed rates facilitate the companies' transition to a cleaner
energy future while allowing for important initiatives such as vegetation
management, hardening/resiliency and emergency preparedness. The companies are
requesting delivery revenues to be based on a 9.50% ROE and 50% equity ratio.
The below table provides a summary of the proposed delivery rate increases,
delivery revenue percentages and total revenue percentages for all four
businesses:
                  Requested Revenue Increase      Delivery Revenue     Total Revenue
Utility                   (Millions)                     %                   %
NYSEG Electric   $                      156.7             20.4 %             10.4 %
NYSEG Gas        $                        6.3              3.0 %              1.4 %
RG&E Electric    $                       31.7              7.0 %              4.1 %
RG&E Gas         $                        5.8              3.3 %              1.4 %


NYSEG and RG&E expect a decision in the rate cases at the end of the first
quarter in 2020. We cannot predict the outcome of this matter.
CMP rate case
On January 14, 2019, the Maine Public Utility Commission, or the MPUC, issued an
Order and Notice of Investigation initiating an investigation of CMP's metering
and billing practices and initiating a separate investigation of the audit of
CMP's customer service and communication practices and incorporating such
investigation into the general rate case. On February 22, 2019, the MPUC issued
the MPUC staff Bench Analysis, or BA on all revenue requirement issues in this
case, including customer service issues. The BA includes, among other things, a
proposal to reduce CMP's existing distribution rates by $2.0 - $3.6 million,
inclusive of one-time items from July 2018, and implement a management
efficiency adjustment as part of the rate setting process to reduce the MPUC
staff recommended "unadjusted" ROE of 9.35% by 75 to 100 basis points. On April
12, 2019, CMP filed rebuttal testimony to the Bench Analysis and intervenor
testimony. On June 17, 2019, the MPUC Staff issued its Reply Bench

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Analysis in response to CMP's rebuttal testimony, which includes a reduction of
the "unadjusted" ROE recommendation to 8.75% based on current market conditions,
maintains the proposed management efficiency adjustment of 75 to 100 basis
points and proposes to maintain the current cap of $31.4 million on the shared
service costs provided to CMP until a management audit on the cost effectiveness
of such services is completed. The Maine Public Advocate for utility issues
filed a motion to delay CMP's rate order decision to allow incorporation of the
results of the separate metering and billing investigation. CMP did not oppose
this motion. We expect the MPUC to rule on the motion in August.We cannot
predict the outcome of this matter.
Transmission - ROE Complaint
Following various intermediate hearings, orders and appellate decisions, on
October 16, 2018, the Federal Energy Regulatory Commission, or FERC, issued an
order directing briefs and proposing a new methodology to calculate the NETOs'
ROE that is contained in NETOs' transmission formula rate on file at the FERC,
or the October 2018 Order. The FERC proposes to use this new methodology to
resolve Complaints I, II, III and IV filed by the New England state consumer
advocates. Pursuant to the October 2018 Order, the NETOs filed initial briefs on
the proposed methodology in all four Complaints on January 11, 2019, and replies
to the initial briefs on March 8, 2019. We cannot predict the outcome of this
proceeding.
New York State Department of Public Service Investigation of the Preparation for
and Response to the March 2017 Windstorm
On May 18, 2018, NYSEG and RG&E filed a settlement joint proposal and investment
joint proposal before the NYPSC to settle potential penalties and avoid
litigation related to the March 2017 windstorm, pursuant to which, among other
things, NYSEG and RG&E have agreed to make $4 million in investments designed to
increase resiliency and improve emergency response in the areas impacted by the
storm. The investments will not be reflected in rate base or operating expenses
in establishing future delivery rates. On April 18, 2019, the NYPSC approved the
joint proposals.
New York State Department of Public Service Investigation of the Preparation for
and Response to the March 2018 Winter Storms
In March 2018, following two severe winter storms that impacted more than one
million electric utility customers in New York, including 520,000 NYSEG and
RG&E customers, the NYPSC initiated a comprehensive investigation of all the New
York electric utilities' preparation and response to those events. The
investigation was expanded to include other 2018 New York spring storm events.
On April 18, 2019 the NYDPS staff issued a report (the 2018 Staff Report) of the
findings from their investigation. The 2018 Staff Report identifies 94
recommendations for corrective actions to be implemented in the utilities
Emergency Response Plans (ERP). The report also identified potential violations
by several of the utilities, including NYSEG and RG&E.
Also on April 18, 2019, the NYPSC issued an Order Instituting Proceeding and to
Show Cause directed to all major electric utilities in New York, including NYSEG
and RG&E. The order directs the utilities, including NYSEG and RG&E, to show
cause why the NYPSC should not pursue civil penalties, and / or administrative
penalties for the apparent failure to follow their respective ERPs as approved
and mandated by the NYPSC. The NYPSC also directs the utilities, within 30 days,
to address whether the NYPSC should mandate, reject or modify in whole or in
part, the 94 recommendations contained in the 2018 Staff Report. On May 20,
2019, NYSEG and RG&E responded to the portion of the Order to Show Cause with
respect to the recommendations contained in the 2018 Staff Report. The
Commission granted the companies an extension until August 2, 2019 to respond to
the portion of the Order to Show Cause with respect to why the Commission should
not pursue a penalty action. The companies and the Commission's counsel have
commenced settlement discussions. We cannot predict the final outcome of this
matter.
NYPSC directs Counsel to commence Judicial Enforcement Proceeding against NYSEG
On April 18, 2019, the NYPSC issued an Order Directing Counsel to the Commission
to commence a special proceeding or an action in New York State Supreme Court to
stop and prevent ongoing future violations by NYSEG of NYPSC regulations and
orders. As of the date hereof, a special proceeding or an action has not been
commenced; however, related to the Winter Storm Order to Show Cause, the
companies and the Commission's counsel have commenced settlement discussions. We
cannot predict the final outcome of this matter.
Power Tax Audits
In 2015, we implemented power tax software to track and measure deferred tax
amounts for CMP, NYSEG and RG&E. In connection with this change, we identified
historical updates needed with deferred taxes recognized by CMP, NYSEG and RG&E.
We increased our deferred tax liabilities in 2015, with a corresponding increase
to regulatory assets, to reflect the updated amounts calculated by the power tax
software. Since 2015, the NYPSC and MPUC accepted certain adjustments to
deferred taxes and associated regulatory assets for this item in recent
distribution rate cases, resulting in regulatory asset balances of approximately
$155 million and $157 million, respectively, for this item at June 30, 2019 and
December 31, 2018.

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In 2017, audits of the power tax regulatory assets were commenced by the NYPSC
and MPUC. On January 11, 2018, the NYPSC issued an order opening an operations
audit on NYSEG and RG&E and certain other New York utilities regarding tax
accounting. The audit report is expected to be completed during 2019. In January
2018, the MPUC published the power tax audit report with respect to CMP, which
indicated that the auditor was unable to verify the "acquisition value" of the
power tax regulatory assets. The audit report requires that CMP must provide
support for the beginning balance of the regulatory assets or will be unable to
recover the value of the assets, which is approximately $10 million. CMP
responded to the audit report in its rate case filing and noted that it could
reconcile 99% of the tax values and therefore requested full recovery of the
power tax regulatory asset. In its BA, the MPUC staff indicated that it was
hiring an outside auditor to review CMP's calculations. MPUC staff has
recommended the Power Tax regulatory asset remain deferred until the outside
auditor completes its review. We cannot predict the outcome of this proceeding.
Yankee Nuclear Spent Fuel Disposal Claim
CMP has an ownership interest in Maine Yankee Atomic Power Company, Connecticut
Yankee Atomic Power Company and Yankee Atomic Electric Company, or the Yankee
Companies, three New England single-unit decommissioned nuclear reactor sites,
and UI has an ownership interest in Connecticut Yankee Atomic Power Company.
Pursuant to the statute of limitations, the Yankee Companies file a lawsuit
periodically to recover damages from the Department of Energy, or DOE, for
breach of the Nuclear Spent Fuel Disposal Contract to remove spent nuclear fuel
and greater than class C waste as required by contract.
From 2012 to 2016 the Yankee Companies filed three claims against the DOE (Phase
I, II and III) for the years from 1995 to 2012 and received damage awards, which
flow through the Yankee Companies to shareholders (including CMP and UI based
percentage of ownership) to reduce retail customer charges. On May 22, 2017, the
Yankee Companies filed their next case (Phase IV) in the Federal Court of
Claims, or Court, seeking damages for the period from January 1, 2013 through
December 31, 2016 and submitted their claimed Phase IV damages to the DOE in
late August 2017. The Court issued its decision on the Phase IV trial on
February 21, 2019, awarding the Yankee Companies a combined $103 million
(Connecticut Yankee $41 million, Maine Yankee $34 million and Yankee Atomic $28
million). The damage awards are returned to customers either through customer
refunds or by reducing future costs. Refunds or reductions in costs are
reflected in the Yankee Companies billings to shareholders, including CMP and
UI. CMP and UI will receive their proportionate share of the awards that flow
through based on percentage of ownership. On April 23, 2019, the notice of
appeal period expired and the Phase IV trial award became final.

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Results of Operations
The following tables set forth financial information by segment for each of the
periods indicated.
                                         Three Months Ended                                    Three Months Ended
                                            June 30, 2019                                         June 30, 2018
                           Total      Networks     Renewables      Other(1)      Total      Networks     Renewables      Other(1)
                                                                       (in millions)

Operating Revenues $ 1,400 $ 1,093 $ 307 $ -

    $ 1,402     $  1,105     $      297      $      -
Operating Expenses
Purchased power,
natural gas and fuel
used                         259          197             62             -         279          229             50             -
Loss from assets held
for sale                       -            -              -             -          10            -              -            10
Operations and
maintenance                  573          478             97            (2 )       533          438             91             4
Depreciation and
amortization                 222          135             87             -         215          128             87             -
Taxes other than
income taxes                 139          128             12            (1 )       143          127             14             2
Total Operating
Expenses                   1,193          938            258            (3 )     1,180          922            242            16
Operating Income
(Loss)                       207          155             49             3         222          183             55           (16 )
Other Income (Expense)
Other income (expense)         2            1              5            (4 )       (20 )        (19 )            -            (1 )
Earnings (losses) from
equity method
investments                    1            2             (1 )           -           5            4              1             -
Interest expense, net
of capitalization            (76 )        (66 )           (2 )          (7 )       (70 )        (65 )           (7 )           2
Income (Loss) Before
Income Tax                   134           92             51            (8 )       137          103             49           (15 )
Income tax expense
(benefit)                     29           25            (18 )          22          27           23            (24 )          28
Net Income (Loss)            105           67             69           (30 )       110           80             73           (43 )
Less: Net (loss)
income attributable to
noncontrolling
interests                     (5 )          1             (6 )           -           3            1              2             -
Net Income (Loss)
Attributable to
Avangrid, Inc.           $   110     $     66     $       75      $    (30 )   $   107     $     79     $       71      $    (43 )



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                                            Six Months Ended                                      Six Months Ended
                                              June 30, 2019                                         June 30, 2018
                             Total      Networks     Renewables      Other(1)      Total      Networks     Renewables      Other(1)
                                                                         (in millions)
Operating Revenues         $ 3,242     $  2,697     $      549      $     (4 )   $ 3,267     $  2,657     $      581      $     29
Operating Expenses
Purchased power, natural
gas and fuel used              822          723             99             -         855          747            106             2
Loss from assets held
for sale                         -            -              -             -          15            -              -            15
Operations and
maintenance                  1,126          946            184            (4 )     1,060          874            177             9
Depreciation and
amortization                   444          269            175             -         418          246            172             -
Taxes other than income
taxes                          302          273             29             -         294          263             27             4
Total Operating Expenses     2,694        2,211            487            (4 )     2,642        2,130            482            30
Operating Income (Loss)        548          486             62             -         625          527             99            (1 )
Other Income (Expense)
Other income (expense)          (5 )          -              2            (7 )       (41 )        (41 )            -             -
Earnings (losses) from
equity method
investments                      2            5             (3 )           -           7            6              1             -
Interest expense, net of
capitalization                (154 )       (135 )           (7 )         (12 )      (144 )       (125 )          (15 )          (4 )
Income (Loss) Before
Income Tax                     391          356             54           (19 )       447          367             85            (5 )
Income tax expense
(benefit)                       70           89            (17 )          (2 )        99           87            (32 )          44
Net Income (Loss)              321          267             71           (17 )       348          280            117           (49 )
Less: Net (loss) gain
attributable to
noncontrolling interests        (6 )          1             (7 )           -          (3 )          1             (4 )           -
Net Income (Loss)
Attributable to
Avangrid, Inc.             $   327     $    266     $       78      $    (17 )   $   351     $    279     $      121      $    (49 )

__________________________

(1) Other amounts represent Corporate, Gas and intersegment eliminations.



Comparison of Period to Period Results of Operations
Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Operating Revenues
Our operating revenues decreased by $2 million, or less than 1%, from $1,402
million for the three months ended June 30, 2018 to $1,400 million for the three
months ended June 30, 2019, as detailed by segment below:
Networks
Operating revenues decreased by $12 million, or 1%, from $1,105 million for the
three months ended June 30, 2018 to $1,093 million for the three months ended
June 30, 2019. Electricity and gas revenues increased by $13 million, primarily
due to the impact of increased customer rates in the three months ended June 30,
2019 compared to the same period of 2018. Electricity and gas revenues changed
due to the following items that have offsets within the income statement:
decreased by $32 million due to decreased purchased power and purchased gas
(offset within purchased power), transmission revenues decreased by $15 million
compared to the same period in 2018 due to a lower revenue requirement from
lower recoverable operating expenses (offset in operating expenses), $11 million
decrease due to recoverable pension expenses which are offset in other expenses,
offset by $5 million increase due to a change in intercompany billing which is
offset in operating expenses and $27 million due to a change in pass-through
components which is offset in operating expenses.
Renewables
Operating revenues increased by $10 million, or 3%, from $297 million for the
three months ended June 30, 2018 to $307 million for the three months ended
June 30, 2019. The increase in operating revenues was primarily due to an
increase of $11 million from wind generation output increasing 220 GWh,
favorable MtM changes of $36 million on energy derivative transactions entered
into for economic hedging purposes and a $5 million increase in other revenues,
offset by a decrease of $42 million from lower overall average prices in the
period.

                                       56
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Purchased Power, Natural Gas and Fuel Used
Our purchased power, natural gas and fuel used decreased by $20 million, or 7%,
from $279 million for the three months ended June 30, 2018 to $259 million for
the three months ended June 30, 2019, as detailed by segment below:
Networks
Purchased power, natural gas and fuel used decreased by $32 million, or 14%,
from $229 million for the three months ended June 30, 2018 to $197 million for
the three months ended June 30, 2019. The decrease is primarily driven by a $30
million decrease in average commodity prices and an overall decrease in
electricity and gas units procured due to a decline in degree days combined with
a $2 million decrease in other power supply purchases in the period.
Renewables
Purchased power, natural gas and fuel used increased by $12 million, or 24%,
from $50 million for the three months ended June 30, 2018 to $62 million for the
three months ended June 30, 2019. The increase is primarily driven by an
increase of $4 million in additional gas purchases and unfavorable MtM changes
on derivatives of $13 million due to market price changes in the current period,
offset by a decrease of $5 million mainly from power purchases in the period.
Operations and Maintenance
Our operations and maintenance increased by $40 million, or 8%, from $533
million for the three months ended June 30, 2018 to $573 million for the three
months ended June 30, 2019, as detailed by segment below:
Networks
Operations and maintenance increased by $40 million, or 9% from $438 million for
the three months ended June 30, 2018 to $478 million for the three months ended
June 30, 2019. The increase is primarily due to an increase in non-deferrable
minor storms and staging expenses of $10 million, and an increase of $12 million
due to electric distribution operation and business costs which are comprised of
operation and maintenance expenses required prior to the commencement of certain
capital projects. Operations and maintenance expense changed due to the
following items that have offsets within the income statement: $5 million
increase driven by a change in intercompany billing (offset in revenues), $27
million increase in pass through components (offset in revenue), offset by $15
million of lower transmission expenses during the second quarter of 2019 (offset
in revenue).
Renewables
Operations and maintenance expenses increased by $6 million, or 7%, from $91
million for the three months ended June 30, 2018 to $97 million for the three
months ended June 30, 2019. The increase is primarily due to $16 million of
increased costs resulting from headcount increases and higher maintenance costs,
offset by a $10 million decrease driven by revised asset retirement obligation
adjustments in the current period.
Depreciation and Amortization and Loss From Assets Held for Sale
Depreciation and amortization and loss from assets held for sale for the three
months ended June 30, 2019 was $222 million compared to $225 million for the
three months ended June 30, 2018, representing a decrease of $3 million. The
decrease is primarily due to a loss of $10 million from remeasurement of assets
held for sale driven by final purchase price negotiations and certain related
working capital adjustments of Gas business recorded in the second quarter of
2018, offset by increase of $7 million in depreciation expense as a result of
plant additions in Networks in the period.
Other Income (Expense) and Earnings (Losses) from Equity Method Investments
Other income (expense) and equity earnings (losses) increased by $18 million
from $(15) million for the three months ended June 30, 2018 to $3 million for
the three months ended June 30, 2019. The increase is primarily due to a $5
million gain from sale of transmission rights in Renewables and $11 million of
favorable pension and other post-retirement expense in the period in Networks
driven by revised actuarial studies which is offset in Networks revenue.
Interest Expense, Net of Capitalization
Interest expense for the three months ended June 30, 2019 and 2018 was $76
million and $70 million, respectively. Networks had $2 million increase in
interest expense due to a higher average outstanding balance of debt in the
period and $4 million increase from carrying costs on regulatory deferrals.
Other added $4 million of interest expense from new debt issued in 2019. This is
offset by interest expense decrease in Renewables of $5 million due to lower
average debt balances in the current period.

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Income Tax Expense
The effective tax rate, inclusive of federal and state income tax, for the three
months ended June 30, 2019, was 21.6%, which is higher than the federal
statutory tax rate of 21% primarily due to unfavorable discrete income tax
adjustments recorded in the period, partially offset by production tax credits
associated with wind production. The effective tax rate, inclusive of federal
and state income tax, for the three months ended June 30, 2018 was 19.7%, which
is below the federal statutory tax rate of 21%, primarily due to discrete tax
adjustments recorded during the period, offset by the recognition of production
tax credits associated with wind production.
Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
Operating Revenues
Our operating revenues decreased by $25 million, or 1%, from $3,267 million for
the six months ended June 30, 2018 to $3,242 million for the six months ended
June 30, 2019, as detailed by segment below:
Networks
Operating revenues increased by $40 million, or 2%, from $2,657 million for the
six months ended June 30, 2018 to $2,697 million for the six months ended
June 30, 2019. Electricity and gas revenues increased by $23 million, primarily
due to the impact of increased customer rates in the six months ended June 30,
2019 compared to the same period of 2018. The increase in operating revenues was
also due to $24 million of favorable regulatory mechanisms. Electricity and gas
revenues changed due to the following items that have offsets within the income
statement: decrease of $24 million in purchased power and purchased gas in the
same period (offset in purchase power), $13 million increase due to a change in
intercompany billing (offset in operating expenses), $25 million decrease in
recoverable pension expense (offset in other expenses), and $29 million increase
in pass-through components, which are offset in operating expenses.
Renewables
Operating revenues decreased by $32 million, or 6%, from $581 million for the
six months ended June 30, 2018 to $549 million for the six months ended June 30,
2019. The decrease in operating revenues was primarily due to a decrease of $21
million from wind generation output decreasing 404 GWh, a decrease of $60
million from lower overall average prices in the period, offset by favorable MtM
changes of $10 million on energy derivative transactions entered into for
economic hedging purposes, an increase in thermal revenue of $30 million driven
by higher average prices in the period and a $9 million increase in other
revenues.
Purchased Power, Natural Gas and Fuel Used
Our purchased power, natural gas and fuel used decreased by $33 million, or 4%,
from $855 million for the six months ended June 30, 2018 to $822 million for the
six months ended June 30, 2019, as detailed by segment below:
Networks
Purchased power, natural gas and fuel used decreased by $24 million, or 3%, from
$747 million for the six months ended June 30, 2018 to $723 million for the six
months ended June 30, 2019. The decrease is primarily driven by an $18 million
decrease in average commodity prices and an overall decrease in electricity and
gas units procured due to decline in degree days combined with a $5 million
decrease in other power supply purchases in the period.
Renewables
Purchased power, natural gas and fuel used decreased by $7 million, or 7%, from
$106 million for the six months ended June 30, 2018 to $99 million for the six
months ended June 30, 2019. The decrease is primarily driven by a decrease of
$13 million in power purchases and MtM changes on derivatives of $12 million
that were favorable due to market price changes in the current period, offset by
an increase of $18 million in thermal purchases driven by the increase in volume
and unit cost in the period.
Operations and Maintenance
Our operations and maintenance increased by $66 million, or 6%, from $1,060
million for the six months ended June 30, 2018 to $1,126 million for the six
months ended June 30, 2019, as detailed by segment below:
Networks
Operations and maintenance increased by $72 million, or 8% from $874 million for
the six months ended June 30, 2018 to $946 million for the six months ended
June 30, 2019. The increase is primarily due to $11 million increase in
non-deferrable minor storms and staging expenses, $10 million increase due to
reduced regulatory deferrals and an increase of $6 million due to electric
distribution operation and business costs which are comprised of operations and
maintenance expenses required prior to

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the commencement of certain capital projects. Operations and maintenance expense
changed due to the following items that have offsets within the income
statement: $13 million increase driven by a change in intercompany billing
(offset in revenue) and a $29 million increase in pass through components
(offset in revenue).
Renewables
Operations and maintenance expenses increased by $7 million, or 4%, from $177
million for the six months ended June 30, 2018 to $184 million for the six
months ended June 30, 2019. The increase is primarily due to $19 million of
increased costs resulting from headcount increases and higher maintenance costs,
offset by a $10 million decrease driven by revised asset retirement obligation
adjustments in the current period.
Depreciation and Amortization and Loss From Assets Held for Sale
Depreciation and amortization and loss from assets held for sale for the six
months ended June 30, 2019 was $444 million compared to $433 million for the six
months ended June 30, 2018, an increase of $11 million. The increase is
primarily due to increases of $23 million as a result of plant additions in
Networks in the period, offset by a loss of $15 million from remeasurement of
assets held for sale driven by final purchase price negotiations and certain
related working capital adjustments of Gas business recorded in 2018.
Other Income (Expense) and Earnings (Losses) from Equity Method Investments
Other income (expense) and equity earnings (losses) increased by $31 million
from $(34) million for the six months ended June 30, 2018 to $(3) million for
the six months ended June 30, 2019. The increase is primarily due to a $5
million gain from sale of transmission rights in Renewables, and $25 million of
favorable pension and other post-retirement expense in the period in Networks
driven by revised actuarial studies which is offset in Networks revenue.
Interest Expense, Net of Capitalization
Interest expense for the six months ended June 30, 2019 and 2018 was $154
million and $144 million, respectively. Networks had a $5 million increase in
interest expense due to a higher average outstanding balance of debt in the
period and $8 million increase from carrying costs on regulatory deferrals.
Other added $4 million of interest expense from new debt issued in 2019. This is
offset by an interest expense decrease in Renewables of $8 million due to lower
average debt balances in the current period.
Income Tax Expense
The effective tax rate, inclusive of federal and state income tax, for the six
months ended June 30, 2019 is 17.9%, which is below the federal statutory tax
rate of 21% primarily due to the recognition of production tax credits
associated with wind production. The effective tax rate, inclusive of federal
and state income tax, for the six months ended June 30, 2018 was 22.1%, which is
higher than the federal statutory tax rate of 21% primarily due to the
recognition of additional income tax expense of $21.6 million resulting from the
disposal of the Gas business, in addition to other discrete tax adjustments
recorded during the period, which were partially offset by the recognition of
production tax credits associated with wind production.
Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with
U.S. GAAP, we consider adjusted net income and adjusted earnings per share as
non-GAAP financial measures that are not prepared in accordance with U.S. GAAP.
The non-GAAP financial measures we use are specific to AVANGRID and the non-GAAP
financial measures of other companies may not be calculated in the same manner.
We use these non-GAAP financial measures, in addition to U.S. GAAP measures, to
establish operating budgets and operational goals to manage and monitor our
business, evaluate our operating and financial performance and to compare such
performance to prior periods and to the performance of our competitors. We
believe that presenting such non-GAAP financial measures is useful because such
measures can be used to analyze and compare profitability between companies and
industries by eliminating the impact of certain non-cash charges. In addition,
we present non-GAAP financial measures because we believe that they and other
similar measures are widely used by certain investors, securities analysts and
other interested parties as supplemental measures of performance.
We define adjusted net income as net income adjusted to exclude restructuring
charges, mark-to-market adjustments to reflect the effect of mark-to-market
changes in the fair value of derivative instruments used by AVANGRID to
economically hedge market price fluctuations in related underlying physical
transactions for the purchase and sale of electricity, loss from held for sale
measurement, accelerated depreciation derived from repowering of wind farms,
income from release of collateral, impact of the Tax Act and adjustments for the
non-core Gas storage business. We believe adjusted net income is more useful in
understanding and evaluating actual and projected financial performance and
contribution of AVANGRID core lines of business and to more fully compare and
explain our results. The most directly comparable U.S. GAAP measure to adjusted
net income is net income. We also define adjusted earnings per share, or
adjusted EPS, as adjusted net income converted to an earnings per share amount.

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The use of non-GAAP financial measures is not intended to be considered in
isolation or as a substitute for, or superior to, AVANGRID's U.S. GAAP financial
information, and investors are cautioned that the non-GAAP financial measures
are limited in their usefulness, may be unique to AVANGRID, and should be
considered only as a supplement to AVANGRID's U.S. GAAP financial measures. The
non-GAAP financial measures may not be comparable to other similarly titled
measures of other companies and have limitations as analytical tools.
Non-GAAP financial measures are not primary measurements of our performance
under U.S. GAAP and should not be considered as alternatives to operating
income, net income or any other performance measures determined in accordance
with U.S. GAAP.
The following tables provide a reconciliation between Net Income attributable to
AVANGRID and Adjusted Net Income (non-GAAP) by segment for the three and six
months ended June 30, 2019 and 2018, respectively:
                                             Three Months Ended June 30, 2019                             Six Months Ended June 30, 2019
                                   Total         Networks      Renewables      Corporate*       Total        Networks      Renewables      Corporate*
                                                      (in millions)                                                (in millions)
Net Income Attributable to
Avangrid, Inc.                  $    110       $       66     $      75       $     (30 )    $    327       $     266     $      78       $     (17 )
Adjustments:
Mark-to-market adjustments -
Renewables                           (20 )              -           (20 )             -           (23 )             -           (23 )             -
Restructuring charges                  2                -             -               2             2               -             -               2
Accelerated depreciation from
repowering                             5                -             5               -            10               -            10               -
Income tax impact of
adjustments (1)                        3                -             4               -             3               -             3               -
Adjusted Net Income (2)         $    101       $       66     $      64       $     (29 )    $    319       $     267     $      69       $     (16 )


                                             Three Months Ended June 30, 2018                                            Six Months Ended June 30, 2018
                          Total         Networks        Renewables      Corporate*     Gas Storage      Total      Networks      Renewables     Corporate*     Gas Storage
                                                       (in millions)                                                              (in millions)
Net Income
Attributable to
Avangrid, Inc.          $   107       $        79     $       71       $     (25 )    $       (18 )   $   351     $     279     $     121      $     (30 )    $       (19 )
Adjustments:
Mark-to-market
adjustments -
Renewables                    3                 -              3               -                -          (1 )           -            (1 )            -                -
Restructuring charges         -                 -              -               -                -           1             1             -              -                -
Loss from held for
sale measurement             10                 -              -               -               10          15             -             -              -               15
Income from release
of collateral -
Renewables                   (7 )               -             (7 )             -                -          (7 )           -            (7 )            -                -
Impact of the Tax Act         7                 -              -               7                -           7             -             -              7                -
Income tax impact of
adjustments (1)               7                 -              1               -                6          17             -             2              -               15
Gas Storage, net of
tax                           2                 -              -               -                2         (11 )           -             -              -              (11 )
Adjusted Net Income
(2)                     $   128       $        79     $       68       $     (18 )    $         -     $   371     $     280     $     115      $     (23 )    $         -

(1) Income tax impact of adjustments: 2019 - $5.1 million and $6.0 million from

MtM adjustment, $(0.4) million and $(0.5) million from restructuring charges,

$(1.3) million and $(2.6) million from accelerated depreciation for the three

and six months ended June 30, 2019, respectively; 2018 - $(0.7) million and

$0.3 million from MtM adjustment, $1.9 million and $1.9 million from release

of collateral, $0 and $(0.3) million from restructuring charges, $6 million

and $15 million from loss from held for sale measurement for the three and

six months ended June 30, 2018, respectively.

(2) Adjusted Net Income is a non-GAAP financial measure and is presented after

excluding restructuring charges, loss from held for sale measurement,

accelerated depreciation derived from repowering of wind farms, the impact

from mark-to-market activities in Renewables and Gas storage business, income

from release of collateral and impact of the Tax Act.



* Includes corporate and other non-regulated entities as well as intersegment
eliminations.
Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Adjusted net income
Our adjusted net income decreased by $28 million, or 22%, from $128 million for
the three months ended June 30, 2018 to $101 million for the three months ended
June 30, 2019. The decrease is primarily due to a $13 million decrease in
Networks

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driven by increased non-deferrable minor storms and staging expenses and $11
million decrease in Corporate mainly driven by higher interest expense.
Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
Adjusted net income
Our adjusted net income decreased by $52 million, or 14%, from $371 million for
the six months ended June 30, 2018 to $319 million for the six months ended
June 30, 2019. The decrease is primarily due to a $46 million decrease in
Renewables as a result of a decline in wind generation and lower average prices
in the period and a $13 million decrease in Networks driven by increased
non-deferrable minor storms and staging expenses.
The following tables reconcile Net Income attributable to AVANGRID to Adjusted
Net Income (non-GAAP), and EPS attributable to AVANGRID to adjusted EPS
(non-GAAP) for the three and six months ended June 30, 2019 and 2018,
respectively:
                                            Three Months Ended                 Six Months Ended
                                                 June 30,                          June 30,
(in millions)                              2019             2018             2019             2018
Networks                              $        66       $        79     $       266       $      279
Renewables                                     75                71              78              121
Corporate (1)                                 (30 )             (25 )           (17 )            (30 )
Gas Storage                                     -               (18 )             -              (19 )
Net Income                            $       110       $       107     $       327       $      351
Adjustments:
Loss from held for sale measurement
(2)                                             -                10               -               15
Mark-to-market adjustments -
Renewables (3)                                (20 )               3             (23 )             (1 )
Restructuring charges (4)                       2                 -               2                1
Accelerated depreciation from
repowering (5)                                  5                 -              10                -
Income from release of collateral -
Renewables (6)                                  -                (7 )             -               (7 )
Impact of the Tax Act (7)                       -                 7               -                7
Income tax impact of adjustments                3                 7               3               17
Gas Storage, net of tax                         -                 2               -              (11 )
Adjusted Net Income (8)               $       101       $       128     $       319       $      371


                                            Three Months Ended               Six Months Ended
                                                 June 30,                        June 30,
                                           2019             2018            2019            2018
Networks                              $      0.21       $     0.26     $      0.86      $     0.90
Renewables                                   0.24             0.23            0.25            0.39
Corporate (1)                               (0.10 )          (0.08 )         (0.06 )         (0.10 )
Gas Storage                                     -            (0.06 )             -           (0.06 )
Net Income                            $      0.36       $     0.35     $      1.06      $     1.13
Adjustments:
Loss from held for sale measurement
(2)                                   $         -       $     0.03     $         -      $     0.05
Mark-to-market adjustments -
Renewables (3)                              (0.06 )           0.01           (0.07 )          0.00
Restructuring charges (4)                    0.01                -            0.01               -
Accelerated depreciation from
repowering (5)                               0.02                -            0.03               -
Income from release of collateral -
Renewables (6)                                  -            (0.02 )             -           (0.02 )
Impact of the Tax Act (7)                       -             0.02               -            0.02
Income tax impact of adjustments             0.01             0.02            0.01            0.05
Gas Storage, net of tax                         -             0.01               -           (0.03 )

Adjusted Earnings Per Share (8) $ 0.33 $ 0.41 $

1.03 $ 1.20

(1) Includes corporate and other non-regulated entities as well as intersegment

eliminations.

(2) Represents loss from measurement of assets and liabilities held for sale in

    connection with the committed plan to sell the gas trading and storage
    businesses.



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(3) Mark-to-market adjustments relate to changes in the fair value of derivative

instruments used by AVANGRID to economically hedge market price fluctuations

in related underlying physical transactions for the purchase and sale of

electricity and gas.

(4) Restructuring and severance related charges relate to costs resulted from

restructuring actions involving initial targeted voluntary workforce

reductions and related costs in our plan to vacate a lease, predominantly

within the Networks segment and costs to implement an initiative to mitigate

costs and achieve sustainable growth.

(5) Represents the amount of accelerated depreciation derived from repowering of

wind farms in Renewables.

(6) Relates to cash collateral released in excess of outstanding receivables from

a bankruptcy proceeding with a Renewables customer regarding two power

purchase agreements.

(7) Represents the impact from measurement of deferred income tax balances as a

result of the Tax Act enacted by the U.S. federal government on December 22,

2017.

(8) Adjusted net income and adjusted earnings per share are non-GAAP financial

measures and are presented after excluding restructuring charges, loss from

held for sale measurement, accelerated depreciation derived from repowering

of a wind farm, the impact from mark-to-market activities in Renewables and

Gas storage business, income from release of collateral and impact of the Tax

Act.



Liquidity and Capital Resources
Our operations, capital investment and business development require significant
short-term liquidity and long-term capital resources. Historically, we have used
cash from operations and borrowings under our credit facilities and commercial
paper program as our primary sources of liquidity. Our long-term capital
requirements have been met primarily through retention of earnings and
borrowings in the investment grade debt capital markets. Continued access to
these sources of liquidity and capital are critical to us. Risks may increase
due to circumstances beyond our control, such as a general disruption of the
financial markets and adverse economic conditions.
We and our subsidiaries are required to comply with certain covenants in
connection with our respective loan agreements. The covenants are standard and
customary in financing agreements, and we and our subsidiaries were in
compliance with such covenants as of June 30, 2019.
Liquidity Position
At June 30, 2019 and December 31, 2018, available liquidity was approximately
$2,631 million and $2,447 million, respectively.
We manage our overall liquidity position as part of the group of companies
controlled by Iberdrola, or the Iberdrola Group, and are a party to a liquidity
agreement with Bank of America, N.A. along with certain members of the Iberdrola
Group. The liquidity agreement aids the Iberdrola Group in efficient cash
management and reduces the need for external borrowing by the pool participants.
Parties to the agreement, including us, may deposit funds with or borrow from
the financial institution, provided that the net balance of funds deposited or
borrowed by all pool participants in the aggregate is not less than zero. The
balance at June 30, 2019 was zero. Any deposit amounts would be reflected on our
condensed consolidated balance sheets under cash and cash equivalents because
our deposited surplus funds under the cash pooling agreement are highly-liquid
short-term investments. We also have a bi-lateral demand note agreement with a
Canadian affiliate of the Iberdrola Group under which we had notes payable
balance outstanding of $0 at June 30, 2019.
We optimize our liquidity within the United States through a series of
arms-length intercompany lending arrangements with our subsidiaries and among
the regulated utilities to provide for lending of surplus cash to subsidiaries
with liquidity needs, subject to the limitation that the regulated utilities may
not lend to unregulated affiliates. These arrangements minimize overall
short-term funding costs and maximize returns on the temporary cash investments
of the subsidiaries. We have the capacity to borrow up to $2.5 billion from the
lenders committed to the AVANGRID Credit Facility and $0.5 billion from an
Iberdrola Group Credit Facility, both of which are described below.
The following table provides the components of our liquidity position as of
June 30, 2019 and December 31, 2018, respectively:
                                   As of June 30,     As of December 31,
                                        2019                 2018
                                               (in millions)
Cash and cash equivalents         $         166      $              36
AVANGRID Credit Facility                  2,500                  2,500
Iberdrola Group Credit Facility             500                    500
Less: borrowings                           (535 )                 (589 )
Total                             $       2,631      $           2,447



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AVANGRID Commercial Paper Program
AVANGRID has a commercial paper program with a limit of $2 billion that is
backstopped by the AVANGRID Credit Facility (described below). As of June 30,
2019 and July 31, 2019, there was $535 million and $759 million of commercial
paper outstanding, respectively.
AVANGRID Credit Facility
AVANGRID and its subsidiaries, NYSEG, RG&E, CMP, UI, CNG, SCG and BGC have a
revolving credit facility with a syndicate of banks, or the AVANGRID Credit
Facility, that provides for maximum borrowings of up to $2.5 billion in the
aggregate.
Under the terms of the AVANGRID Credit Facility, each joint borrower has a
maximum borrowing entitlement, or sublimit, which can be periodically adjusted
to address specific short-term capital funding needs, subject to the maximum
limit contained in the agreement. AVANGRID's maximum sublimit is $2 billion,
NYSEG, RG&E, CMP and UI have maximum sublimits of $400 million, CNG and SCG have
maximum sublimits of $150 million and BGC has a maximum sublimit of $40 million.
Under the AVANGRID Credit Facility, each of the borrowers will pay an annual
facility fee that is dependent on their credit rating. The initial facility fees
will range from 12.5 to 17.5 basis points. During 2019, we extended the maturity
date for the AVANGRID Credit Facility by one year to June 29, 2024.
Since the facility is a backstop to the AVANGRID commercial paper program, the
amounts available under the facility as of June 30, 2019 and July 31, 2019, were
$1,965 million and $1,741 million, respectively.
Iberdrola Group Credit Facility
AVANGRID has a credit facility with Iberdrola Financiacion, S.A.U., a company of
the Iberdrola Group. The facility has a limit of $500 million and matures on
June 18, 2023. AVANGRID pays a facility fee of 10.5 basis points annually on the
facility. As of both June 30, 2019 and July 31, 2019, there was no outstanding
amount under this credit facility.
Capital Resources
On January 15, 2019, UI, CNG, SCG and BGC issued $195 million in aggregate
amount of notes/bonds with maturity dates ranging from 2029 to 2049 and interest
rates ranging from 4.07% to 4.52%.
On April 1, 2019, NYSEG issued $12 million of Indiana County Industrial
Development Authority Pollution Control Revenue Bonds in a private placement
maturing in 2024 with a 2.65% interest rate.
On May 16, 2019, we issued $750 million of senior unsecured notes maturing in
2029 at an interest rate of 3.80%.
On June 3, 2019, CMP issued $240 million aggregate principal amount of first
mortgage bonds with maturity dates ranging from 2026 to 2034 and interest rates
ranging from 3.87% to 4.20%.
Capital Requirements
We expect to fund our capital requirements, including, without limitation, any
quarterly shareholder dividends and capital investments primarily from the cash
provided by operations of our businesses and through the access to the capital
markets in the future. We have a revolving credit facility, as described above,
to fund short-term liquidity needs and we believe that we will have access to
the capital markets should additional, long-term growth capital be necessary.
We expect to incur approximately $1.3 billion in capital expenditures through
the remainder of 2019.

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Cash Flows
Our cash flows depend on many factors, including general economic conditions,
regulatory decisions, weather, commodity price movements and operating expense
and capital spending control.
The following is a summary of the cash flows by activity for the six months
ended June 30, 2019 and 2018, respectively:
                                                                Six Months Ended
                                                                    June 30,
                                                                2019         2018
                                                                 (in millions)
Net cash provided by operating activities                    $    817       $ 983
Net cash used in investing activities                          (1,452 )      (606 )
Net cash provided by (used in) financing activities               764       

(366 ) Net increase in cash, cash equivalents and restricted cash $ 129 $ 11



Operating Activities
The cash from operating activities for the six months ended June 30, 2019
compared to the six months ended June 30, 2018 decreased by $166 million,
primarily attributable to a $40 million decrease from the settlement of the
interest rate swap during the period and a decrease of $63 million in
non-current liabilities primarily due to a decrease in other long-term
liabilities and changes in long-term regulatory assets/liabilities.
Investing Activities
For the six months ended June 30, 2019, net cash used in investing activities
was $1,452 million, which was comprised of $1,337 million of capital
expenditures and other investments and equity method investments of $143
million, partially offset by $21 million of contributions in aid of construction
and $5 million of cash distributions from equity method investments.
For the six months ended June 30, 2018, net cash used in investing activities
was $606 million, which was comprised of $751 million of capital expenditures,
partially offset by $136 million of proceeds from the sale of assets and $23
million of contributions in aid of construction.
Financing Activities
For the six months ended June 30, 2019, financing activities provided $764
million in cash reflecting primarily an issuance of notes/bonds with net
proceeds of $1,188 million, contributions from non-controlling interests of $131
million and a net decrease in non-current debt and current notes payable of $248
million, offset by distributions to non-controlling interests of $10 million,
payments on capital leases of $25 million and dividends of $272 million.
For the six months ended June 30, 2018, financing activities used $366 million
in cash reflecting primarily an issuance of Pollution Control Revenue Bonds at
NYSEG and RG&E with net proceeds of $325 million, contributions from
non-controlling interests of $220 million, partially offset by a net decrease in
non-current debt and current notes payable of $604 million, dividends of $267
million, distributions to non-controlling interests of $22 million and payments
on capital leases of $12 million.
Off-Balance Sheet Arrangements
There have been no material changes in the off-balance sheet arrangements during
the six months ended June 30, 2019 as compared to those reported for the fiscal
year ended December 31, 2018 in our Form 10-K.
Contractual Obligations
Upon adoption of ASC 842, certain land easements that we previously classified
as a lease do not meet the definition of a lease. As a result, our operating
lease obligations as of December 31, 2018 will be categorically separated
between operating leases and land easements. The new lease accounting standard
is discussed further in Notes 3 and 8 to our condensed consolidated financial
statements. These changes did not result in material changes to the quantitative
amounts of our contractual and contingent obligations during the six months
ended June 30, 2019 as compared to those reported for the fiscal year ended
December 31, 2018 in our Form 10-K.
Critical Accounting Policies and Estimates
The accompanying financial statements provided herein have been prepared in
accordance with U.S. GAAP. In preparing the accompanying financial statements,
our management has applied accounting policies and made certain estimates and
assumptions that affect the reported amounts of assets, liabilities,
stockholders' equity, revenues and expenses and the disclosures

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thereof. While we believe that these policies and estimates used are
appropriate, actual future events can and often do result in outcomes that can
be materially different from these estimates. The accounting policies and
related risks described in our Form 10-K are those that depend most heavily on
these judgments and estimates. As of June 30, 2019, the only notable changes to
the significant accounting policies described in our consolidated financial
statements as of December 31, 2018 and 2017, and for the three years ended
December 31, 2018, are with respect to our adoption of the new accounting
pronouncements described in the Note 3 of our condensed consolidated financial
statements for the six months ended June 30, 2019.
New Accounting Standards
We review new accounting standards to determine the expected financial impact,
if any, that the adoption of each such standard will have. As of June 30, 2019,
the new accounting pronouncements that we have adopted as of January 1, 2019,
and reflected in our condensed consolidated financial statements are described
in Note 3 of our condensed consolidated financial statements for the six months
ended June 30, 2019. There have been no other material changes to the
significant accounting policies described in our consolidated financial
statements as of December 31, 2018 and 2017, and for the three years ended
December 31, 2018.

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           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains a number of forward-looking
statements. Forward-looking statements may be identified by the use of
forward-looking terms such as "may," "will," "should," "would," "could," "can,"
"expect(s)," "believe(s)," "anticipate(s)," "intend(s)," "plan(s),"
"estimate(s)," "project(s)," "assume(s)," "guide(s)," "target(s),"
"forecast(s)," " are (is) confident that" and "seek(s)" or the negative of such
terms or other variations on such terms or comparable terminology. Such
forward-looking statements include, but are not limited to, statements about our
plans, objectives and intentions, outlooks or expectations for earnings,
revenues, expenses or other future financial or business performance, strategies
or expectations, or the impact of legal or regulatory matters on business,
results of operations or financial condition of the business and other
statements that are not historical facts. Such statements are based upon the
current reasonable beliefs, expectations, and assumptions of our management and
are subject to significant risks and uncertainties that could cause actual
outcomes and results to differ materially. Important factors are discussed and
should be reviewed in our Form 10-K and other subsequent filings with the SEC.
Specifically, forward-looking statements include, without limitation:
•        the future financial performance, anticipated liquidity and capital
         expenditures;

• actions or inactions of local, state or federal regulatory agencies;

• success in retaining or recruiting our officers, key employees or directors;

• changes in levels or timing of capital expenditures;


•        adverse developments in general market, business, economic, labor,
         regulatory and political conditions;

• fluctuations in weather patterns;

• technological developments;

• the impact of any cyber breaches or other incidents, grid disturbances,

acts of war or terrorism or natural disasters;

• the impact of any change to applicable laws and regulations affecting

operations, including those relating to environmental and climate

change, taxes, price controls, regulatory approval and permitting;

• the implementation of changes in accounting standards; and

• other presently unknown unforeseen factors.



Should one or more of these risks or uncertainties materialize, or should any of
the underlying assumptions prove incorrect, actual results may vary in material
respects from those expressed or implied by these forward-looking statements.
You should not place undue reliance on these forward-looking statements. We do
not undertake any obligation to update or revise any forward-looking statements
to reflect events or circumstances after the date of this report, whether as a
result of new information, future events or otherwise, except as may be required
under applicable securities laws. Other risk factors are detailed from time to
time in our reports filed with the SEC, and we encourage you to consult such
disclosures.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in our market risk during the six months
ended June 30, 2019, as compared to those reported for the fiscal year ended
December 31, 2018 in our Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer, or CEO,
and our Chief Financial Officer, or CFO, has evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d-
15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as
of the end of the period covered by this Quarterly Report on Form 10-Q. Based on
such evaluation, our CEO and CFO have concluded that as of such date, our
disclosure controls and procedures were effective.
Changes in Internal Control
There has been no change in our internal control over financial reporting
identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d)
of the Exchange Act during the period covered by this Quarterly Report on Form
10-Q that materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives. In addition, the design of disclosure controls and procedures must
reflect the fact that there are resource constraints

                                       66
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and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

                                       67

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© Edgar Online, source Glimpses

Stocks mentioned in the article
ChangeLast1st jan.
AVANGRID INC 0.78% 49.27 Delayed Quote.-1.64%
IBERDROLA 1.27% 9.246 End-of-day quote.31.75%
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Financials (USD)
Sales 2019 6 445 M
EBIT 2019 1 167 M
Net income 2019 688 M
Debt 2019 7 642 M
Yield 2019 3,60%
P/E ratio 2019 22,3x
P/E ratio 2020 20,2x
EV / Sales2019 3,55x
EV / Sales2020 3,60x
Capitalization 15 225 M
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Technical analysis trends AVANGRID INC
Short TermMid-TermLong Term
TrendsNeutralNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus UNDERPERFORM
Number of Analysts 11
Average target price 50,05  $
Last Close Price 49,27  $
Spread / Highest target 11,6%
Spread / Average Target 1,58%
Spread / Lowest Target -6,64%
EPS Revisions
Managers
NameTitle
James P. Torgerson Chief Executive Officer & Director
Anthony Marone President & Chief Executive Officer-UIL
José Ignacio Sánchez Galán Chairman
Douglas K. Stuver Chief Financial Officer & Senior Vice President
John L. Lahey Independent Non-Executive Director
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