Charles Zebula: Yes, you did ask a question, I do want to address, right, what’s the data asking, of course, we’re not going to reveal anything like that in a public forum, but we are pleased with the response we received in some of the early results. that are indicative of course, but the process kind of goes on. Greg Hall and his team are leading that effort. There are in the queue remaining this year the typical process of management meetings and moving on to final bids either late this year or early next year. So the reality is, right, that’s going to take some time to progress. I expect to complete that in the first half of next year. and the other sales processes are just shortly behind that.
Carly Davenport: Great. That’s helpful. And then I appreciate the color on the drivers on O&M heading into 4Q and for the full year. I guess how are you thinking about managing O&M into 2024? Should we expect to see an uptick that kind of offset some of the efficiencies that you’ve driven this year that have addressed the mode weather and allow you to continue to execute on the earnings guidance for 2023?
Charles Zebula: Yes. So that’s a good question. I can tell you what the discussion amongst the executive leadership team here are really focused on prioritizing O&M spend and spending both capital and O&M dollars that benefit and provide value to our customers. So we’re really targeting the prioritization. We’ll be giving guidance on O&M for next year in our waterfall at EEI, but expect us to be conservative, right? We’re going to manage O&M to the levels, right, that are needed to run our business, right, but begin to eliminate things that are what we may consider to be discretionary going forward. .
Operator: Your next question comes from the line of David Arcaro with Morgan Stanley.
David Arcaro: I think thanks again for the disclosure around the [indiscernible] into the first quarter of 2021, and you’ve touched on this a little bit, but I was just wondering how you see that metric track after that point from getting to the range as a stable to rising from there and kind of staying within the target range going forward when you look at the core business outlook?
Charles Zebula: Yes. We absolutely plan to target and be in that 14% to 15% range. I will tell you that the introduction of large projects on a year-to-year basis, right, may swing that around some. So as you add renewable projects, in particular, if they come at the end of the calendar year, right? You have the financing costs related to that, but you don’t have the FFO. The rating agencies are very well of that pattern. But absolutely, when you pro forma that, right, 14% to 15% is where we intend to be.
Operator: Your next question comes from the line of Anthony Crowdell with Mizuho.
Anthony Crowdell: Welcome back, Chuck. Great to hear from you again. Just only two quick ones. I think Nick touched on it earlier on recent S&P had revised their outlook on the holding company. I’m just curious I guess your discussions with the rating agencies. We appreciate the detail you provided in the slide deck specially on your credit improvement. But have you been in discussion how you unveil that previously to S&P prior to their rating to or their outlook change?
Charles Zebula: Yes. So Anthony, I talked to all three rating agencies since it’s coming in and as well as our treasury team obviously talks to them all the time. I don’t think the S&P move to negative outlook was a particular surprise, given the downgrade threshold and are rating a split, right? They’re at a higher rating, right, than Moody’s and Fitch currently. So it wasn’t a surprise. We continue to work with the agencies to explain our business risk because we think as we continue to execute on exiting the unregulated businesses, our business makes sure to improve. And they should begin to reflect that in their evaluations. So not a surprise. If and when it is downgraded, their ratings would be on par with Moody’s and Fitch. .
Anthony Crowdell: Great. And then just lastly, you laid out the two scenarios regarding West Virginia fuel cost recovery. One is an amortization over 2 years. The other one is the securitization, which also includes accelerating coal plant closures, Given, I guess, the impact of the balance sheet and all the other moving pieces, does the company have a preferred path in West Virginia? And then also, when do we get resolution on that from the regulator?
Julia Sloat: Yes, I appreciate that question. And let me just clarify the question as well right out of the gate here. To the extent that we’ve included securitization as an option, that does not assume an acceleration of coal plant closures, just to be very clear on that. We have those embedded in rates today going through 2040. So that is the current plan of thinking. So the idea of using securitization was entirely driven by how do we minimize the impact on customer rates. Period. And so that was the spirit of why we even contemplated the utilization of the securitization. And that second scenario option that I mentioned where we not only securitize the fuel, but we have, I think, a little bit of storm cost in there as well as those plant balances would effectively render customer rates neutral.
So no impact, okay, de minimis. And then the other alternative was just a 3-year smoothing of those deferrals — or those deferred costs. And that was to the two, I want to say it was maybe 12% increase in customer rates associated with that subject to check. So as far as our preference would be, our preference is to get it recover. Our preference is to be able to work with all the different stakeholders, which is precisely why we put out the different options and listen to the different stakeholders in the case just with complete appreciation sensitivity to the customers in West Virginia that the general median household income tends to be a bit lower than most definitely the national average, but even across AEP’s footprint, it’s lower. So we need to be incredibly sensitive to those wallets.
As far as preference. Our preference simply is to work with it in the stakeholders and get it done. And as far as when we might be able to get that done, our expectation is that we get that done here in the fourth quarter. So tic tok, any time here, okay?
Operator: Your next question comes from the line of Andrew Weisel with Scotiabank.
Andrew Weisel: Good morning, everybody. Good morning. A lot of information already. So I’ve only got one less if you can clarify here. I want to ask about the three moving pieces between equity asset sales and CapEx. And I know you’re going to talk about this at a couple of weeks, but my question is that if equity needs are generally going to be consistent, how do we think about how you’ll finance incremental CapEx? You typically roll forward the CapEx plan, it tends to go up most years. It’s currently $40 billion. Does that mean that cash proceeds from these asset sales should help to finance whatever upside there is on the CapEx plan? Or will you have additional equity until the asset sales are announced? How do you think about that bouncing act?
