Alex Mortimer : Okay. Understood. And then, can you discuss the linearity of your earnings outlook? I mean, you mentioned the confidence of being within your 5% to 7% in ‘25 and beyond. But do you expect to be within that range. Every year do you expect maybe some volatility as you work through regulatory proceedings to get this incorporated get this spend incorporated.
Steve Morris : Yeah, no, it’s a great question, Alex. We would expect that beginning in ’25, each of those years as I’ve noted and if you look at the CapEx schedule little regulatory lag because much of this is rider-based. So we expect cost recovery riders must lag due to needed rate cases.
Alex Mortimer : Okay. Understood. Thank you so much.
Bethany Owen : Thanks, Alex.
Operator: Thank you. Our next question comes from the line of Sarah Akers with Wells Fargo. Your line is now open.
Sarah Akers: Hey, good morning.
Bethany Owen : Good morning, Sarah.
Sarah Akers: Just to follow-up on the 14% rate base CAGR and then combined with comments that there should be minimal regulatory lag. Just what’s driving the delta between that 14% in the 5% to 7% EPS CAGR.
Steve Morris : Yeah, good morning, Sarah. It’s Steve Morris. My favorite question, of course, we still have regulatory approvals and RFPs to win. So we have some, obviously, risk there. But and then, we do have some capital needs beginning in 2025. So more insight into that later on once we get those.
Sarah Akers: Got it. And then, looking at the industrial sales outlook, I’m seeing 7 million megawatt hours in ‘23. And then the guidance for ’24 is 6.2. So that 11% decline in industrial volumes for ‘24 just what are the assumptions that are driving that expectation down?
Frank Frederickson : Hey, good morning, Sarah. Frank Frederickson here. And thank you for that question. So, as we’re looking ahead at our forecasts, we focus on kind of an overall average level of taconite sales of right around 35 million tons. And there is variability in which facilities that comes from which is also one of the key reasons that were pursuing rate stabilization mechanism and in this current rate proceeding to really adjust for that and track that on a fair and balanced method. But what you’re seeing in that outlook is just more of an average level of production coming across the six different facilities that produce taconite in our region and balancing out. And as we look historically, it can come from a different mix of facilities and it can come at a different overall total tonnage, as well. So that’s why you’ll see a little difference between different historical years, ’21, ’22, ‘23 versus our 2024 outlook.
Sarah Akers: Okay. And then, last one on O&M. It sounds like that the key driver with some increases in ’24. Can you give us a sense of the magnitude of the O&M increase that we should be taking about for ‘24 versus ‘23?
Steve Morris : Yeah, it’s about a 6% increase over ’23, Sarah.
Sarah Akers: Great. Thank you very much.
Bethany Owen : Thanks, Sarah.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Brian Russo with Sidoti. Your line is now open you.
Brian Russo : Yeah, hi. good morning.
Bethany Owen : Morning, Brian.
Brian Russo : Hey, just a follow-up on the industrial sales. That’s total industrial sales, right? So it’s taconite, paper and Pulp and in the pipelines and industrials. I think according to the 10-K, tons produced with 35 million at taconite and that’s the same assumption for 2024. So should we assume a similar megawatt hour sales out of the taconite and lower sales out of paper pulp and pipe lines? Just curious there.
Frank Frederickson : Yeah, thank you. Frank Frederickson here again. So, just a little more detail on that is, you’re right. It is all of our industrial sales including taconite and pulp and paper and pipeline. Our variability largely comes out of the taconite production. So I would say, in what we’re trying to forecast and portraying also as a forecast in our 2024 test year by rate cases is an average level and spread across the facilities. So again, you’re going to see a little bit of a difference depending on what facilities produce the tons historically versus a total average of what we’re projecting in that old crop megawatt-hour sales in 2024. So, I wouldn’t – I would really say it’s in the taconite assumption.
Brian Russo : Okay, got it. And can you share what the large power customer nominations are for the first four months of 2024?
Frank Frederickson : The first four months, our nominations largely came in, in line with our 2024 outlook. So slightly less than full operations, which is reflective of that operating paper mills and also a little bit right around that 35 million ton outlook for the year. It’s early, but they reflect that general pace.
Brian Russo : Okay, great. And then, just switching to Ace and the Caddo issues. Is the cost to that you plan on – that you expect to incur in the fourth – in the first quarter of 2024 similar to what you expected in the fourth quarter of ‘23, which I think was $0.10 for the substation outage.
Jeff Scissons : Morning, Brian. This is Jeff. Yeah that’s correct. We do expect similar impact.
Brian Russo : Okay, great. And then anymore any more detail on the Whitetail sale? Is it a sale to a regional utility? Or anyone else? And is there a gain or a loss embedded in the guidance assumptions?
Jeff Scissons : Yeah, Brian, the project is making good progress on the permitting side and getting close to notice to proceed within the budget. There would be a gain I think you can use Red Barn, which is a slightly larger project as kind of a guideline on that.
Brian Russo : Okay, great. So I guess the assumption is the cash proceeds from that sale will help support your financing needs in 2024?
Jeff Scissons : Correct.
