Bob Sprowls: No, it’s really a function of interest rates. And if they’re flat €“ if they’re flat relative to 2022, you won’t see it grow because it’s really €“ it’s really the jump in interest rates that created that drag, not necessarily the borrowing levels. Now I want to go back to your other question if I could.
Angie Storozynski: Yes.
Bob Sprowls: Subject to check, I just did the math on the 2022 versus 2021, rate base growth, and that’s a 17.5% growth from 2021 to 2022.
Angie Storozynski: Yes. I understand. Yes. Okay, very good. But just one last one. So Eva, are you saying there’s been a change in the wording about the equity needs. So is that also a function of rising interest rates? Hence, you were signaling that there could be some need for equity beyond the next 24 months?
Eva Tang: No, not so much the rising interest rate. And we’re still waiting for the Water GRC. So it depends on the timing of when we receive the recovery of it. And also, our CapEx continues to go up and we prepare for our next GRC we anticipate the capital expenditure continue to increase. So just to support the overall capital spending for the utility and fair value, also spend a lot of money on their capital expenditures as well. So that’s really to support the capital expenditure need for the company. So we’ll continue to assess that. We’re hoping we can last for 24 months, but that the market now for sure if we’re ready to do that.
Angie Storozynski: Okay. Thank you.
Bob Sprowls: Thanks Angie.
Operator: Our next question comes from Jonathan Reeder from Wells Fargo. Please go ahead with your question.
Jonathan Reeder: Hey Bob and Eva. Just wanted to continue that last discussion on equity. Just trying to get a sense of the amount that you can need after that 18- to 24-month period that you mentioned. Can you talk about like the targets that AWR has for FFO-to-debt, debt-to-EBITDA and just the consolidated equity ratio?
Eva Tang: We definitely want to maintain the equity ratio €“ the cap ratio aligned with the CPUC authorized rate, right, Jonathan. So if you have to maintain that and the equity coming from parent need to support that. And for the parent, we would like to maintain our credit rating with the rating agencies. So we’ll continue to look at their benchmark to make sure we are meeting their requirements to hopefully maintain our credit rating at the parent level as well.
Jonathan Reeder: Okay. Do you know what those like metrics are on an FFO-to-debt basis for your A+ and everything?
Bob Sprowls: Yes. So it’s a bit of a debate between us and Standard & Poor’s, I’ll tell you that because they are €“ we’re kind of looking at the, what 20 to 25 FFO-to-debt for American States and Golden State. And one of the issues here is whether because we have the revolver at the parent, we have to look at this 20 to 25. If we had the revolver at Golden State, perhaps the FFO-to-debt would be lower the benchmark.
Eva Tang: Yes, I believe that benchmark for will appeal while it will be slower.
Bob Sprowls: Yes. As we have other things under the American States umbrella and just too states, our FFO-to-debt perhaps is a bit higher benchmarks than what you might see for a pure water facility.
Jonathan Reeder: Okay. Any thoughts on like putting a revolver or having a different revolver at the utility level than to address that or not really?
Bob Sprowls: Yes. I mean we’re thinking through that as we speak. With that S&P we’ve got the A+ rating for both parent and Golden State and with a negative outlook. And so we’re working hard to maintain our ratings there. Whenever you have a negative outlook, as you know, Jonathan, you got to work hard to try to keep your rating and so we are.
