Jonathan Reeder: Okay. And then last, you mentioned the pension costs for ’24 and figuring that out, but do you have much exposure on that, or do most of your key states now have tracking mechanisms for pension?
John Griffith: We have trackers and deferral accounts in certain states, Jonathan, and we can go through that with you in detail. So there’s a mix there of what we pick up already and what would need to be picked up in the future.
Jonathan Reeder: Okay. Thanks for taking my questions this morning.
Operator: [Operator instructions] The next question comes from Gregg Orrill with UBS. Please proceed.
Gregg Orrill: Good morning. I think you mentioned you’re working on an acquisition in Pennsylvania of $104 million to close in late 2024-2025. How do you think about, when you go into acquisitions, sort of the reasonable timeline for getting approvals? How do you think about that?
Susan Hardwick: John, you want to comment on that? I think the one you’re referring to in particular is a little more complicated. I wouldn’t say it’s sort of a traditional process, the Towamencin acquisition. I recall we stepped into that arrangement when NextEra decided to exit the opportunity. So that one’s just a little more complicated, but, John, you want to talk sort of typically how we think about the process around acquisitions?
Gregg Orrill: Yeah. And, Greg, it varies state to state, but since you mentioned Pennsylvania, there’s a process you go through to file an application. The application has to be deemed complete, and then that starts a statutory clock and so in the case of Pennsylvania, there’s a six-month statutory clock that runs through and then either you’re settling your approval or you’re litigating your approval, but all within that six-month statutory timetable and so what’s different about this situation?
John Griffith: Well, Towamencin is one where there’s opportunity based on precedent in Pennsylvania. We’ll see how the post-PUC approval plays out, but we’re just allowing a little bit of latitude in the event that there’s any follow-up to the PUC approval from interveners.
Operator: The next question comes from Aditya Gandhi with Wolfe Research. Please proceed.
Aditya Gandhi: Good morning, Susan, Cheryl and John. Can you hear me?
Susan Hardwick: We can. Good morning.
Aditya Gandhi: Thanks for taking my questions. I just wanted to start on PFAS. I’m curious to hear your latest thoughts around two specific topics. How are you thinking about the protection of water systems from any PFAS-related financial liability under CERCLA? Do you see risk if a final rule is released and it doesn’t contain any protections and then the second topic is, can you maybe give some color on what portion of the $50 million additional annual O&M qualifies for [indiscernible] or expense mechanisms?
Cheryl Norton: I can take those questions. This is Cheryl. As far as protections around the SOCLA, we have been really engaged in that process, and we have been pushing really hard to ensure that water and wastewater utilities are protected in that space. And so we’re going to continue to fight that battle. Right now, you’re right, there is a little bit of vulnerability out there, but we feel pretty confident that we’re going to be able to manage through that and that we’re going to be able to impact how we’re treated in that space. So more to come on that, but rest assured, we’re going to fight like crazy to make sure that we are protected there. And as far as the $50 million, I don’t have an exact breakdown, and we haven’t talked about an exact breakdown from state to state.
But whether or not that would be recovered through mechanisms just depends on the type of mechanisms that a state would have. So if they have a mechanism that would allow them to recover their production costs, any kind of tracker in that space would be really helpful in those costs. In some cases, we have environmental riders that include capital improvements. Some of them include capital and operating improvements, so that would allow them to recover those costs as well. So there’s going to be a portion that we’re going to be able to recover right up front, but the rest of them will just recover through a general rate case with very little lag, I would anticipate, as far as those costs are concerned.
Susan Hardwick: Yeah, and the only thing I would add to that is where we don’t have an existing mechanism or an approach to ensure timely recovery, we’re going to work to design one. Our view here is that these are federally mandated costs, and we are taking care of a problem created by someone else and because of that federal mandate and the federal rule behind it, we think we’ll have a great argument to make around recovery and timely recovery. So we’ll be looking for where we don’t have existing solutions, we’ll be looking to create a new opportunity to do that. So there’ll be a lot on the regulatory front here to do once we have a final rule and know how this plays out.
Cheryl Norton: Yeah, Susan, I would just add that that three-year implementation period that we have to put treatment in place gives us time to do those kinds of things and make those regulatory improvements.
Aditya Gandhi: Right. Got it. That’s super helpful color. Thank you. And just one question for John, on the equity needs, you mentioned it’s in the middle of your new ’24 through ’28 plans. So sort of in the ’26 time frame. You’re also going to have proceeds from the HOS note come in. I believe they’re due at the end of 2026. Just can you add a little bit more color on timing and the form of equity? Is this just going to be like a straight block, or is this going to be some sort of forward where you’ll maybe draw down on the forward over a couple of years? How should we think about that?
John Griffith: Yeah, I would say that we’re not close enough yet in terms of time to have made the decision on the exact form of equity. You’re right on the timing of the HOS note proceeds, but as we approach the more immediate timing, then we’ll develop our thinking closer to that point, but certainly, we’ll look and do what’s best for shareholders there. I’d say that you’ve seen us issue the straight equity as we did this year with the $1.7 billion. We issued the convert this year for $1 billion, and so we’re willing to look at everything, but I’d say that’s a decision we’ll make as that time approaches.
