Pedro Blazquez: If I can make a comment, I really want to say thank you to the leadership in the public commission, senior staff, administration in New York. I think when you see the decisions they have taken, they are fixing many things, which come from the past, okay? This is not something that is an issue now. And that’s why I think this probably puts on the table New York as a very, very predictable regulatory environment. I think we hear many times that people say, “Well, this state that one.” I think in New York, this is a very, very stable and predictable regulatory environment. There are other things still that we have to deal with, and that’s why we continue working with the public commission, but I think as Patricia said, this is not just this 1 time.
This allows for the future similar situations to be dealt with, which I think is very, very positive, because it becomes recurrent. I think this help. But there are more things that we’re working with the public commission. And again, congratulations to the team, but also thank you to the leadership to be able to fix things that come from the past. I will remind people, the previous rate case, we had a 2% rate increase and we’re now acknowledging by the public commission that impact, which it was the wrong thing to be done at that time. I think when you see right now, we are not only going forward, but going backwards getting ’22 investments, they were still not being allowed. So many things that I think the leadership in the public commission, the senior staff understand the settlement rate.
The parties that agree the settlement when you conclude something is you have the right to do so and you need to be compensated, I would encourage many of you to read the comments by the commissioner. So if anybody thinks New York is an unpredictable regulatory environment that’s not true. I think they should get all the credit, because I think the leadership in the administration on the [indiscernible] and senior staff at the public commission, they are doing a terrific job right now.
Richard Sunderland: Great. Thank you for the time today.
Operator: Thank you. We’ll go next now to Michael Sullivan at Wolfe Research.
Michael Sullivan: Hey. Good morning. I wanted to just start where we left off there on uncollectibles. So when you were excluding from non-GAAP COVID costs the past couple of years, was there anything for uncollectibles in there that was being pulled out as well?
Patricia Cosgel: No. This is not at all related to COVID. And it is really just about exactly what I said about the reserve amount that we set aside a portion of your uncollectibles as part of our normal business practice you set aside, but as they age, what you think you might need to write off in the future and you put a reserve there. And we get to collect that reserve. But in the interim, it’s impacting our earnings. With this new order, where we get to do is put the regulatory deferral in place for the recovery of those and so that has a neutral impact on our earnings. It’s not at all related to any specific type of uncollectibles like COVID, et cetera.
Michael Sullivan: Okay. And then just wanted to understand some of the moving pieces coming out of this New York case. It looked like a few things moved around. So just in the waterfall for the year to go, I think that went up about $0.05 from the slides last quarter. And then like in your fact book, I think the CapEx went up, but the rate days actually went down. So can you just give a little more color on what kind of moved from last quarter?
Patricia Cosgel: I think the — from the earnings perspective, it’s really just a better handle on — with the implementation of the rate cases going forward. And as we get closer to the end of the year, we can have better information on what we expect to achieve through the end of the year. In terms of the rate base, when we did a forecast of CapEx and rate base as part of our long-term outlook in the past, that included more generic items as we go through the rate case and work with the commission in determining what the projects are that we need to in place and what the prioritization of those projects are. Some of them have different time lines for construction and for COD. So that doesn’t impact our rate base.
Catherine Stempien: Yeah. I’ll just remind you that our CapEx spend right now included in the rate case has to do with CLCPA Phase 1, which are transmission projects that are going to be multiyear projects and won’t go into rate base until outside of the current rate year in the GPA. So as Patricia said, it’s kind of just a matching up of the CapEx that we’re spending and win items to actually go into rate base. But along with CLCPA Phase 1 and the $2.3 billion for CLCPA Phase 2 that we will start spending this year up until 2030. There’s a significant amount of CapEx that we will be deploying in New York for future recovery.
Michael Sullivan: Okay. I appreciate that. That’s helpful. Also — and then just another one on the gain assumed in the guidance for the rest of the year. So that $0.24 to $0.28 has stayed the same since you initially gave that out. Is that being like actively refreshed based on where things are going? Or is that kind of something you just put out in the beginning and we’re not really sure? Does it still have to be Kitty Hawk or are there other options? Just trying to understand what’s kind of evolved since you initially put that out?
Pedro Blazquez: I think when you put some number as a guidance is based on specific potential transactions you are considering. So this is not a number that you cannot explain. And the answer in divestitures right now is very simple. If we get the right value, we’ll go ahead and those are the numbers we’re targeting. And if not, we will now go ahead. So I think again, since for ’24 and ’25, we don’t need any gains. These were just what we thought it was important for this year from a cash point of view, and then that was coming with a gain. I think we had opportunities this year to sell specific assets. We decided not to with what it was better to go from a bigger transaction, which involves a massive amount of cash in order to go forward because of the CapEx. I think Catherine just mentioned the example of CLCPA.
I mean we have almost $3 billion additional CapEx we didn’t have in the projections last year. So that’s why we need to work on all those things going forward. I think in the case of the gain, if it happens this year, fine. If it doesn’t happen, we don’t need it for next year, that’s okay as well. But we are working to try to see if we can get that done this year in the amounts. If there was to be a variation in the valuation of those potential transactions and basically, we were not to achieve those valuations, we will not go ahead. We will just wait because we don’t have any rush to do it.
Michael Sullivan: Okay. Thank you.
Operator: We’ll go next to now to Sophie Karp at KeyBanc.
Sophie Karp: Hey, guys. Thank you for taking the question. I wanted to ask you about Connecticut, like any color on the regulatory environment there, the way you see it and if there is a path to sort of improve it or for it to get improved anytime soon?
Pedro Blazquez: I would love to say yes, but it doesn’t depend on us. I think what we can do, and that’s why perhaps with this, I’d like to say thank you to the employees, trade unions, suppliers, many other people very relevant that they have some support because of the change in precedent, changing past practice, noncompliance with law of the decision we suffer. I think the only thing we can do is to work. I mean, keep in mind that, as from an accounting point of view, because of the strong legal opinion is not having a lot of impact, but I think what our base case is, we need to turn around that regulatory decision, because we don’t agree with that from a legal point of view. Some people try to take this into like personal matters in attacking people, no, we don’t do that.
