Clearway Energy, Inc. (CWEN.A) Q1 2019 Earnings Call Transcript

Clearway Energy, Inc. (CWEN -1.20%)
Q1 2019 Earnings Call
May 7, 2019, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Clearway Energy first quarter 2019 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 be given at that time. If anyone should require assistance during the conference, please press *0 to reach an operator. As a reminder, this call is being recorded. I would now like to turn the call over to Christopher Sotos, President and CEO.

Christopher Sotos -- President and Chief Executive Officer

Thank you. Good morning. Let me first thank you for taking time to join today's call. Joining me this morning is Chad Plotkin, our Chief Financial Officer, as well as Craig Cornelius, President and CEO Clearway Energy Group. Craig will be available for the Q&A portion of our presentation. Before we begin, I'd like to quickly note that today's discussion will contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this day. Actual results may differ materially. Please review the safe harbor in today's presentation as well as the risk factors in our SEC filings. In addition, we 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 4, as many of you are aware, renewable energy resources were weak across most geographic regions in the first quarter, and Clearway was not immune to this dynamic. Chad will provide details, but the impact on our results for the full year are within our sensitivity ranges. Additionally, the projects impacted by the PG&E bankruptcy continue to perform, and our dialogue on forbearance with lenders continues to be constructive, albeit a slow process.

As such, we are maintaining our 2019 CAFD guidance of $270 million, which continues to be based on our full-year P50 energy production estimates. In addition, we are announcing a second-quarter dividend of $0.20 a share, the same dividend as last quarter. This is consistent with our view that until CWEN attains additional visibility around the PG&E bankruptcy and has full access to its project distributions, dividends paid to shareholders will be aligned with the available corporate liquidity and our target payout ratio. Our pro forma CAFD outlook of $295 million remains on track, with our first funding for the Hawaii Solar Phase I project partnership and with additional investment in the DG partnerships. In addition, our Mylan Labs project remains on schedule, with anticipated COD of June 2019.

While working through the PG&E situation, we continue to drive toward achieving growth in the platform while minimizing capital needs. As such, we raised approximately $11 million in incremental capital available for investment through the refinancing of the non-recourse debt at the Tapestry Wind portfolio. We then were able to quickly redeploy those proceeds toward our newest growth project of the thermal segment, the acquisition of Duquesne University's district energy system, which I will talk about later in the presentation.

In addition, we are continuing to advance the repowering partnership with Clearway Group, which we initially formed last August, and which covers 283 megawatts of our existing wind projects. We are targeting a binding equity commitment in the second quarter and will provide you an update on this transaction when the terms are closed definitively, but we assure you that this opportunity will be accretive to shareholders. Finally, Clearway Group continues to make progress on its development portfolio, planting the seeds for further growth, especially for when the PG&E situation reaches a conclusion and we can proceed with normal operations.

Turning to Page 5, we want to provide an overview of the growth we have made at the thermal segment in the past year, including the most recent acquisition at Duquesne University. Our thermal business stands out for its ability to create growth opportunities near or adjacent to the existing platform. In Pittsburgh in particular, you can see evidence of the strategy. Our UPMC project came online in 2018 and adds $4 million in CAFD on a five-year average basis. Importantly, it also allowed us to achieve strong economics for the recently acquired Duquesne asset due to the operational leverage we can achieve by having the facilities so close to each other.

Similarly, we believe that our Mylan investment in Puerto Rico, which had come online in the second quarter of this year, will lead to other opportunities to build a substantial portfolio in Puerto Rico over time. With these investments, plus the acquisition of Tulare in California, we have added approximately $8.3 million in CAFD on a five-year average basis to the thermal business, all at highly accretive economics supporting CAFD-per-share growth. I am very positive about the momentum the thermal division has been able to achieve. We expect continued growth there over time.

Duquesne in particular is an excellent opportunity, built upon a 40-year energy services agreement with the university, which is a strong, investment-grade counterparty. While the total capital requirements were approximately $107 million, through accessing on a non-recourse basis the tax-exempt financing market, the amount of steel and capital required was approximately $13.5 million. The project produces approximately $1.8 million of CAFD on a five-year average for a strong yield of 13.3%, again emphasizing the highly accretive benefits in the platform. I will now turn the call over to Chad to discuss results. Chad?

Chad Plotkin -- Chief Financial Officer

Thank you, Chris. Turning to Slide 7, for the first quarter, Clearway Energy is reporting adjusted EBITDA of $191 million and cash available for distribution, or CAFD, of negative $13 million. As previously discussed, projects or investments impacted by the PG&E bankruptcy are currently restricted from making distributions to the company despite operating in the normal course. This includes being current on all post-petition receivables. Assuming this continues -- and, as we indicated on our last earnings call -- we will report on CAFD as if cash distributions would have been received, which in the first quarter included $7 million from unconsolidated projects.

During the quarter, weak renewable energy conditions prevailed across both the wind and solar portfolio, negatively impacting business performance. These conditions were quite poor, not only in the western part of the country, where our largest assets are located, but also through the Midwest and East Coast. This is evidenced by the chart in the Appendix section of the presentation, where you can see that the wind and solar portfolios were off 13% and 15% respectively relative to median production expectations.

Though these results are disappointing, variability in weather is expected over the lifecycle of the portfolio, and it's something we have observed in the company's past results, including within any given year. While we won't predict weather for the balance of 2019, 2018 was a good example of this dynamic, with renewable production also below expectations in the first quarter, with a recovery over the balance of the year that was materially close to our median expectations.

In part driven by the weather in the quarter, offsetting this weakness was a timing shift in O&M expense and capex across not only the renewable segment, but also the thermal segment. Additionally, the quarter benefited from higher distributions from unconsolidated projects, which we anticipate will normalize through the year. Given these timing differences -- and, as noted in the seasonality table -- CAFD results were near the midpoint of the company's quarterly sensitivities. However, if not for these timing differences, CAFD results for the quarter would have been at the low end of the company's seasonality and sensitivity range. In that regard -- and, in pointing to these sensitivities -- we continue to maintain the company's $270 million in full-year CAFD guidance, which, among the other variables noted on the slide, assumes P50 median expectations for the entire year.

As Chris discussed, last week, the company successfully refinanced the non-recourse project debt of the Tapestry Wind portfolio, which provided approximately $11 million in new capital available for growth investments. Because this amount materially covered the capital needs for the acquisition of the Duquesne University district energy system, our corporate liquidity remains roughly the same as our prior expectations, including the revolver that is completely undrawn. This provides us the same flexibility as previously discussed to execute on the revised capital allocation plan implemented in February, pay our adjusted dividend to shareholders within our payout ratio targets, and keep us on track to achieve the pro forma outlook CAFD of $295 million. I'll now turn the call back to Chris for his closing remarks.

Christopher Sotos -- President and Chief Executive Officer

Thank you, Chad. Turning to Page 9, our focus for the year is to continue to execute on growing and strengthening the platform as the PG&E process evolves. We are meeting our commitments and maintaining our 2019 guidance, and are also on schedule to finalize the remaining transition and integration requirements post-closing of the GIP transaction. During this time, we are adhering to the revised capital allocation program presented to you in February, including the funding of our committed growth investments, as evidenced by Mylan, Hawaii Solar Phase I, and the DG partnerships.

We are also not sitting still, as we are finding new, accretive growth opportunities like Duquesne while securing new capital sources through internal means with the refinancing of Tapestry Wind. In addition, we continue to work with Clearway Group to source future opportunities for Clearway Energy, as well as closing on our repowering partnership anticipated in the second quarter. Thank you. Operator, please open the lines for questions.

Questions and Answers:

Operator

Ladies and gentlemen, if you'd like to ask a question, please press *1. If your question has been answered and you'd like to remove yourself from the queue, please press #. Once again, that's *1 to ask a question. Our first question comes from Julien Dumoulin-Smith of BAML. Your line is open.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Hey, good morning!

Christopher Sotos -- President and Chief Executive Officer

Good morning.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

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

Christopher Sotos -- President and Chief Executive Officer

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

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

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

Christopher Sotos -- President and Chief Executive Officer

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

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

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

Christopher Sotos -- President and Chief Executive Officer

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

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

All right, excellent. Thank you very much. I'll leave it there.

Operator

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

Colin Rusch -- Oppenheimer & Co. -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

Sure. Craig, if you don't mind answering that, you're much closer to the development cycle on those than I am.

Craig Cornelius -- President and Chief Executive Officer, Clearway Energy Group

Yeah, sure. Hi, Colin. For our utility-scale assets today, the structure of the contracts that we're signing with load-serving entities put the dispatch of the battery energy storage systems under the control of the load-serving entity, who has the ability to dispatch the battery components within a certain range with a certain frequency that's defined so that we can be compensated for the evolution of the technical components therein.

We don't underwrite a separate stream of ancillary revenues for ourselves in these instances, and the expectation that we have with those load-serving entities in California is that they're using those as resources to handle load shape in the later hours of the day. In Hawaii, the dispatch is slightly different because of the difference between coincidence of renewable resources and load in Oahu, but similarly in that instance also, the load-serving entity has the ability to dispatch the battery energy storage system, inclusive of the attributes that can deliver ancillary support at their own discretion.

Colin Rusch -- Oppenheimer & Co. -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

Chad, why don't you go ahead?

Chad Plotkin -- Chief Financial Officer

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

Colin Rusch -- Oppenheimer & Co. -- Managing Director

Perfect. Thanks so much, guys.

Christopher Sotos -- President and Chief Executive Officer

Sure.

Operator

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

Abe Azar -- Deutsche Bank -- Director

Thank you. Good morning.

Christopher Sotos -- President and Chief Executive Officer

Good morning.

Abe Azar -- Deutsche Bank -- Director

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

Christopher Sotos -- President and Chief Executive Officer

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

Chad Plotkin -- Chief Financial Officer

Yeah. I think the convention we've used is the same one we've used over the past few years. Rather than us be in a position where we feel like we want to adjust our annual perspective in any given quarter where production may be higher than/lower than P50, as I indicated in my comments, if you roll forward production in the first quarter and you assume P50 for the rest of the year, yes, we're at the low end of our quarterly sensitivity, so I would be hard pressed to say that we would deliver on the $270 million. But, I think the point is that we have the point estimate, we've given you the sensitivities around that, and then you're able to determine what the annual number would otherwise look like if we don't get the recovery for outperformance in another part of the year.

Abe Azar -- Deutsche Bank -- Director

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

Christopher Sotos -- President and Chief Executive Officer

Sure. We don't really have a minimum cash and liquidity target. I think it would be predominantly through the revolver and cash on hand. Our revolver is basically undrawn at this point, with, I believe, $41 million in LCs outstanding, plus or minus. Once again, in terms of size, Abe, I'd rather -- once everything is put together -- put all numbers collectively in front of you. I'd prefer to wait until then.

Abe Azar -- Deutsche Bank -- Director

Sure. Thank you.

Operator

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

Michael Lapides -- Goldman Sachs -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

Sure. A couple different parts to that question, Michael, so I'll try to unpack it a bit. To your question if thermal is core or not, I think from our view, it is a core part of the business, and to expound upon that why, basically because it is not really correlated with wind and solar production and shortfalls, like we might have in the first quarter given resource. From our perspective over the years, we look at diversification as a real strength of the CWEN portfolio, A). In terms of the ability to produce stable CAFD because you do have a diversified portfolio that's not entirely dominated by wind and solar production, but B). Also areas that you can invest in to create CAFD-per-share growth in the long term. If all we did was only wind or solar, then if those markets got overheated, you have to invest in those markets to continue to grow, so in general, that's how we think about thermal on a macro basis from that perspective.

To your second question around the sponsor, while it is true that GIP and CEG don't have thermal assets to "drop down," that's why we have thermal development at the Clearway Energy, Inc. box, to basically help produce opportunities like the Mylan opportunities and Duquesne. So, I think from that perspective, that's where we see that growth.

To the third part of your question around diversification, we don't really worry about diversification really getting out of hand from that perspective because I think the rate agencies and credit market in general look at diversification in terms of what I talked about before for stability of CAFD generation as a positive. It's not as though that we have defined goals -- that we want wind to be 33%, conventional to be 33%, et cetera -- but we do view that a mix between the different asset classes is a strength of CWEN. Hopefully, that answers your question.

Michael Lapides -- Goldman Sachs -- Managing Director

No, that helps. The other thing is when you look across your growth opportunities, whether it's the thermal and doing more of the projects like the Duquesne one versus the wind versus the solar, where do you see better returns? Where do you get better cash on cash?

Christopher Sotos -- President and Chief Executive Officer

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

Michael Lapides -- Goldman Sachs -- Managing Director

Got it. Thank you, guys. Much appreciated.

Operator

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

Steve Fleishman -- Wolfe Research -- Managing Director

Yeah, hi. Just clarify...what would you say the impact of below-normal conditions were on the quarter EBITDA?

Chad Plotkin -- Chief Financial Officer

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

Steve Fleishman -- Wolfe Research -- Managing Director

Okay. So, you take the midpoint of the negative 3-11% and just assume you're at 11%?

Chad Plotkin -- Chief Financial Officer

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

Steve Fleishman -- Wolfe Research -- Managing Director

Okay. How were April conditions?

Chad Plotkin -- Chief Financial Officer

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

Steve Fleishman -- Wolfe Research -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

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

Steve Fleishman -- Wolfe Research -- Managing Director

Okay. Lastly, have you had any of your own contacts with leadership people in the state on their views of the contracts, and also looking at future growth projects?

Christopher Sotos -- President and Chief Executive Officer

The question is do we have contact with the upper levels of the state government? I apologize. I don't understand the question.

Steve Fleishman -- Wolfe Research -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

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

Steve Fleishman -- Wolfe Research -- Managing Director

Okay, thank you.

Operator

Once again, if you'd like to ask a question, please press *1. Our next question comes from Greg Gordon of Evercore ISI. Your line is open.

Greg Gordon -- Evercore ISI -- Managing Director

Hey, good morning, guys.

Christopher Sotos -- President and Chief Executive Officer

Good morning.

Greg Gordon -- Evercore ISI -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

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

Greg Gordon -- Evercore ISI -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

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

Greg Gordon -- Evercore ISI -- Managing Director

When does it start contributing?

Christopher Sotos -- President and Chief Executive Officer

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

Greg Gordon -- Evercore ISI -- Managing Director

Okay, fantastic. And then, third question -- this goes out a little bit over the horizon, but if we're in a scenario where we have -- obviously, a lot of your CAFD is being trapped at the project level because of the PG&E situation, but that situation is ultimately resolved. Not only would you get an uplift in your actual usable CAFD from the ongoing -- the release of cash, which, on an ongoing basis, had previously been trapped, but wouldn't there also be a lump sum release of cash?

And, if there was, at that point in the future, should we think about that as cash that you would return to your shareholders, or would that just create a war chest for you to reinvest in the business, take drops, and further enhance the reestablished higher level of dividends through more investment? How are you thinking about -- I know you're probably thinking about what's right in front of your nose now in terms of trafficking through the year, but in terms of the long term and the positive resolution of this situation, how do you think about that dynamic?

Christopher Sotos -- President and Chief Executive Officer

Sure. A couple different questions there, so, Part 1: It wouldn't necessarily result in an uplift in CAFD because as Chad's noted, we're reporting CAFD under the assumption that that cash is eventually distributed to us, so Part 1, in terms of a reported CAFD, it wouldn't really change that number. Part 2, to your point, we would, however, expect a lump sum release when that's done as the different distribution accounts within the project financings release that cash that's been built up over time.

To your third question, whether we would use it for return of capital to shareholders or for different investment purposes, I think consistent with what we've said before, we view it much more as a reinvestment in future growth prospects than necessarily returning to shareholders for that period of time. Once again, depending on availability of growth investments -- but, we think they'll be there -- we'd probably much more put those into growth investments than a special one-time dividend or something like that. We think that creates a lot more lasting value.

Greg Gordon -- Evercore ISI -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

Yes, that correct. Let me walk it through to make sure I answer your question appropriately. In the event that the contracts were assumed, there would A). Be a distribution of a lump sum, so to speak, cash from the distribution accounts that have been pent up during the period of the bankruptcy, B). Once again, given the new CAFD level, we would reinstate the dividend much more in line with previous levels given the CAFD over time that would be reinstated, and C). We intend to use that lump-sum cash to invest in future growth investments versus a special one-time dividend or something like that.

Greg Gordon -- Evercore ISI -- Managing Director

Perfect. Succinct. I appreciate it. Thank you.

Christopher Sotos -- President and Chief Executive Officer

No problem.

Operator

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

Angie Storozynski -- Macquarie Capital Partners -- Analyst

Thank you. So, we've seen quite an increase in RA prices in California. It seems like RA prices are around $4.00 per kilowatt-month, or even higher. I understand your Marsh Landing contract doesn't end until 2023, but in light of those prices, if you were to refinance or recontract those plans for $4.00 per kilowatt-month, is that enough to make this a viable project going forward? Is that price enough already -- again, for Marsh Landing to continue operations beyond 2023? Thank you.

Christopher Sotos -- President and Chief Executive Officer

So, you're asking beyond 2023 -- Angie, maybe one way to think about it is -- and, we've talked about this in the past -- beyond 2023, those projects are, at that point, unlevered. So, as you know, given the way we've sized the project financing on those assets, the amount of cash that is otherwise used for debt service, both P&I, is pretty significant. The way we've always described it is you could almost take a two-thirds reduction in revenue and have an equivalent amount of cash flow -- excuse me, a two-thirds reduction in EBITDA and have an equivalent amount of cash flow to see if...

At $4.00 a kilowatt-month, if you apply that, and you assume you could get RA on Marsh Landing, a 720-megawatt facility, that obviously builds up a certain amount of revenue that otherwise could be supportive of continued operations. Naturally, at that point in time, you also have to think about dispatching and your own fuel costs, but I think that's starting to get to a point where you could economically operate an asset beyond the contract period, principally because it's an unlevered project at that point in time. To your second question, I don't know if we'd be able to relever it based solely on RA. That might be a little bit of a push, but I would take Chad's former point.

Angie Storozynski -- Macquarie Capital Partners -- Analyst

Okay. And, secondly, we have another public yield product pursuing a strategic review. We don't really know what it entails, but would you potentially be open to a combination with another public entity, a public [inaudible]?

Christopher Sotos -- President and Chief Executive Officer

That's kind of an M&A-type question, so with historical practice, we really wouldn't comment on M&A.

Angie Storozynski -- Macquarie Capital Partners -- Analyst

Okay, thank you.

Christopher Sotos -- President and Chief Executive Officer

Sure.

Operator

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

Shar Pourreza -- Guggenheim Partners -- Managing Director

Hey, good morning, guys.

Christopher Sotos -- President and Chief Executive Officer

Good morning.

Shar Pourreza -- Guggenheim Partners -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

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

Chad Plotkin -- Chief Financial Officer

Not really. Shar, like I always try to remind folks, I know you've got Clearway and a number of other public entities that own projects. I'm mindful that many of our project lenders -- I forget the number of projects that PG&E indicated it has contracts with, but you can assume a significant amount of those are in likely similar situations where they all have project financing, so the lender groups overall -- they are significantly exposed.

And, I think what we've been reassured with with the lenders is that obviously, if anybody wanted to try to exercise a remedy, it'd likely rise as something we would be disclosing. We're operating in the normal course, but for lenders and forbearance, naturally, facts are important on the ground, so I think our dialogue is constructive, our relationships are strong, but when there's uncertainty on the ground, obviously, it's reasonable to assume a lender is going to want to move at a pace they believe is prudent for their own obligations.

Shar Pourreza -- Guggenheim Partners -- Managing Director

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

Christopher Sotos -- President and Chief Executive Officer

Sure.

Operator

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

Christopher Sotos -- President and Chief Executive Officer

Thank you. Thank you for everyone's time, and we look forward to talking with everyone the next quarter. Thanks, everyone.

Operator

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

Duration: 36 minutes

Call participants:

Christopher Sotos -- President and Chief Executive Officer

Chad Plotkin -- Chief Financial Officer

Craig Cornelius -- President and Chief Executive Officer, Clearway Energy Group

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Colin Rusch -- Oppenheimer & Co. -- Managing Director

Abe Azar -- Deutsche Bank -- Director

Michael Lapides -- Goldman Sachs -- Managing Director

Steve Fleishman -- Wolfe Research -- Managing Director

Greg Gordon -- Evercore ISI -- Managing Director

Angie Storozynski -- Macquarie Capital Partners -- Analyst

Shar Pourreza -- Guggenheim Partners -- Managing Director

More CWEN.A analysis

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.