Before we got to stick a bucket truck up there to see that. That’s very inefficient. Now with drones, with the ability to automatically pull from a picture to see that little D, we’re able to find that find those victor insulators and be very strategic about replacing them. So I’m excited about the technology we’re bringing to bear as well. And so those are just a few examples. There are hundreds of examples like we are not satisfied with our reliability performance. We are going to make it better. We’ve seen the improvement over 2022. We continue to be on good pace this year even with the storms. And so — and we’re going to keep the — sorry with the analogy, we’re keeping the foot down on the floor on the accelerator on this.
Nicholas Campanella: All right. I appreciate it. Thank you.
Operator: Our next question today is from the line of Travis Miller of Morningstar. Travis, please go ahead.
Travis Miller: Good morning everyone. Thank you. On the distribution plan, I wondering if you could talk a little bit about what you expect the timing of the regulatory review on that to be?
Garrick Rochow: It’s going to be — those will get woven into electric rate case filings. And so the plan by itself will get some comment, but that’s not a contested filing. What will happen is those — that will be the — it’s truly a road map. It’s really a vision of where we’re headed and the important pieces that have to come together for that. And so, those get brought into electric rate case filings and then with commission support they can be approved. I would just highlight one thing, one announcement we’ve had here in the last couple of weeks though Department of Energy grant of $100 million. That really jump starts some of this important work. And so, again to the previous question, we’re not waiting around. We see some opportunities to put this to work immediately. But again the regulatory process is through the rate cases.
Travis Miller: Okay. So that suggests you probably continue that annual type run rate of electric rate cases and even potentially gas rate cases, but especially the electric. Is that roughly correct?
Garrick Rochow: Yes, you should expect an annual rate case type filing and I would just offer to in these particularly with the interest rates the way they are 10-month rate cases and forward-looking test years and the kind of the annual strategy really eliminates some of that drag that you get with higher interest rates. And so, there’s a lot of benefits of that approach.
Travis Miller: Okay. And then just real quick with the investment recovery mechanism change that timing at all, or still even if you get that still kind of a 1-year sort of rate.
Garrick Rochow: It will still be a one-year approach. The IRM is not big enough at this point. It’s a starting spot. And over time, we’d look to enhance that. The first step is to get it in place which is part of this current electric rate case.
Travis Miller: Okay. Very good. That’s all I had. Thanks.
Garrick Rochow: Thank you, Travis.
Operator: Our next question today is from the line of Sophie Karp with KeyBanc. Sophie, please go ahead.
Sophie Karp: Hi, good morning. Thank you for taking my questions. A lot of questions have been answered but I wanted to ask you about the cost of capital and like the ROEs, right? So a bit of a push-pull in Michigan as in many other states right now. I’m just kind of curious how the conversations about the need for higher ROE lending with the stakeholders at the commission. Like I’m not sure a few people are catching on to how fast the rates have risen and that really needs to you’re going to have some adjustment to how they are as viewed I guess in the last few years. So any color on that would be helpful.
Rejji Hayes: Yes, Sophie, it’s Rejji. I appreciate the question. Let me just start by saying we’re certainly making the case and have made the case really for the last few years around the need to have higher ROEs just given the changing cost of capital environment. I think treasuries probably a couple of hundred basis points higher than where they were when we first had 9.9% established as the prevailing ROE across our electric and gas businesses and DTs and parity as well. And so we’re certainly making the case. And I think the case becomes stronger and stronger every day as we see continued hawkish monetary policy. So I think if – to give you any confidence I think it’s – we feel very good about the fact that there’s a good floor at the 9.9% prevailing ROE but we’re going to continue to make the case that it should be higher.
As Garrick noted, we’re seeking 10.25% in our pending electric case. And again, I think the data support that point of view. And we try to make the case in addition to all the different ways in which you can calculate the cost of equity. The fact is that we compete for capital against other utilities and other jurisdictions. And given the quantum of capital that we have not just in our current 5-year plan but in what we anticipate being our next and subsequent 5-year plans we do think we need to be as competitive as possible on all fronts because you can take your dollars elsewhere as investors. And so we’ve been making the case loudly and clearly I think DTE as well and hopefully we can start to see a change in the wind here with respect to ROEs.
Sophie Karp: Got it. Thank you. And then maybe if I can squeeze one more in. You’ve been doing your underground in pilots. And I’m just curious what have you learned so far from this pilot project maybe in terms of cost or approach that needs to be taken. Curious if you can provide any color on how that is going.
Garrick Rochow: Well just a point of clarification what’s introduced in the electric case is a pilot a pilot of 10 miles. And as I shared small but important so that the Public Service Commission has the opportunity to evaluate – now we do do undergrounding already. We do it in the context of subdivisions and the like and we have done a couple of trial runs. And what we’ve seen is very cost effective because of our gas business directional drilling underground is one of our specialties. We certainly have the equipment and the expertise to do that. And so we’re able to be very competitive from an underground perspective. Now our plan stays out of congested area, stays out of 3-phase construction. And so we’re talking single phase more royal construction where you have the right floor conditions and we do over much Michigan, which helps from a cost perspective.
And so we’ve shared historically – historically more current I guess in the $350,000 a mile is we think very achievable.
Sophie Karp: All right. Thank you so much.
