Julien Dumoulin-Smith: Yeah, absolutely. Maybe just to tie that together here, if we look at your FFO metrics all together, you raised the rate base growth up to 7.5% now through the five-year period. I get it’s not exactly apples to apples across the years, but it doesn’t seem like there’s incremental equity versus the original plan, per se. So, how do you think about your metrics through this outlook? Are you actually intact net-net-net, given the various factors we just elaborated on? Are you seeing a slight uptick prior to reflecting some of these other pieces, if you will? Just how do you think about where you land?
Rejji Hayes: We feel very good about the credit metrics thing in that mid-teens area, which we have targeted for some time now to preserve the solid investment grade credit rating we’ve had for many years now, and that’s with a longstanding dialogue with the rating agencies. The OCF generation, coupled with the equity needs, up to $350 million, as well as the monetization of tax credits, and again, just a very disciplined dividend policy, all of that allows us to maintain our credit metrics in that mid-teens area. And again, yes, we’ve increased the utility CapEx plan. We’ve held on to the equity needs, and those supporting factors allow us to stay in that level. And certainly, there may be opportunity longer term, but we feel very good about the metrics where they are today and don’t intend to deviate from our current credit ratings. I don’t think that’s the implication in your question, but just wanted to say that for the avoidance of doubt.
Julien Dumoulin-Smith: Just through the plan outlook here, just given all the focus on legislation, can you just clarify what is the sort of expected bill impact or commitment here rather, given all to come on what that means for customers as best you guys are going to try to target this?
Garrick Rochow: Julien, to be clear, this is with respect to the new energy legislation?
Julien Dumoulin-Smith: Yeah. As you think about what is on the come, is there any kind of commitment you guys are making on trying to level that out for customers in any specific pace?
Garrick Rochow: Needless to say, as we’ve always talked about when we prepare, not just this five year plan or prior plans, but future plan, the key governors will be affordability, balance sheet, and can we get the work done. And as it pertains to new energy legislation, yes, it does create additional opportunities, whether that’s on the capital investment side or on contracts with the financial compensation mechanism. But, trust, we will not turn a blind eye to affordability. And what makes us really excited about the opportunity going forward is when you think about our current energy mix and how we’re sourcing energy, we have about $1.5 billion that we spend each year on a combination of PPAs as well as open market repurchases that we’re paying a pretty high levelized cost of energy on a weighted average basis.
And so, with the new energy law going into effect and the opportunities associated there with, we think there’s a lot of headroom to get economics on energy going forward without increasing customer bills. Now, there’s a lot more process left, as Garrick noted, but we do think there’s a lot of headroom already in bills for us to potentially deliver on that triple bottom line where there’s nice economic opportunity for investors, but, again, not doing that to the detriment of customers.
Operator: The next question comes from Andrew Weisel with Scotiabank.
Andrew Weisel: Two questions. Just to elaborate on your earlier comments, first, 2023 CapEx fell short of your target, $3.3 billion versus $3.7 billion planned. Can you just talk about what happened there? I think some of that might have been the solar delays. And then, what happened to that $400 million? It sounds like that was not part of the $1.5 billion increase. So can you just help explain what happened there?
Garrick Rochow: It’s expected in the context of a year that you’re going to have projects. Andrew, I have 25 years in this business and no project goes exactly as you planned. And sometimes they shift and move. And particularly, with the solar piece, as Rejji mentioned in his prepared remarks, it’s really not the supply chain at this point. We’ve got a lock in on panels and the like. It is really about local entities and siting and permitting. Now we work through that. It just means we might move to a different community or there might be different setbacks that we have to work through. All that is doable, but it does create some shifts in the context of the year. The key pieces, it’s not moving. We still have to deliver on 2030 50% renewables, so you have to be at 60% by 2035.
That doesn’t change. And so, if it’s not in this year, it just moves to a different year. And we’ll continue that project. So there’s a bit of shifting that ends up moving on the capital plan. So hopefully that helps. Rejji’s got a comment as well.
Rejji Hayes: Andrew, what I would add, I think you’re sort of reflecting on Shahriar’s question and my response to that, to be clear, we do have some of that spend that we did not achieve in 2023. Some of that is certainly pushed into this new five year plan. It’s just the vast majority of the increase in this five year plan versus the prior is driven by reliability related investments. So there certainly is a portion of those deferrals being pushed into 2024 and beyond. But, again, the biggest driver of this new five year plan is reliability.
Andrew Weisel: A quick follow up on that. In the page 24, you give spending by year. The number for 2028 at $3.1 billion is actually the lowest of the next five years. Directionally, I would have expected the opposite. I personally assume you’ll be increasing that as you go through these regulatory processes. But maybe you can just talk about why the trend is dipping down rather than going up every year.
Rejji Hayes: Andrew, this is Rejji. I’ll take that. So what you’re seeing here in that 2024/2025 timeframe is just we do anticipate a pretty big increase in reliability-related investments. And so, that’s what’s driving a lot of that. Obviously, that’s going to be subject to regulatory outcomes. And so, we’ll toggle the plan as needed. And I think Garrick’s earlier point is well taken that, these plans, you see capital projects come in and out, some get pushed in, some get pushed out. And so, we do anticipate that smoothing out over time. And so, the composition over this five year timeframe may change, but we feel very good about the quantum overall of $17 billion. And so, you may see some of that lumpiness go in and out – sorry, smooth out over time.
Operator: Next question comes from Durgesh Chopra with Evercore ISI.
Durgesh Chopra: Rejji, can you quantify for us, of that $13 billion in operating cash flow, how much of that is tax credits monetization?
Rejji Hayes: It’s about $0.5 billion of tax credit monetization that’s incorporated, a little over $0.5 billion. And that really drives a good portion of the vintage over vintage difference. In the prior vintage, I think we were saying, call it, almost $12.5 billion of aggregate cash flow, operating cash flow generation. And this one, we’re kind of 13 and change. So, a good portion that’s driven by the tax credit monetization, which, again, is over $0.5 billion.
Durgesh Chopra: That’s like over the five year period, so $100 million a year, roughly speaking.
Rejji Hayes: I wouldn’t say it’s as linear as that. Or as flat as that. I would say it’s going to be a little lower in the front end and then it’s going to grow over time.
Durgesh Chopra: And a quick follow-up. Any update on the storm review process? What’s going on there? I know we’re expecting a report out, I think in September this year, just any anything you could share there.
Garrick Rochow: As I’ve shared in previous calls, Durgesh, we’re working on proven reliability. You can see that in the capital investment plan. You can see that in the reliability roadmap. We’re focused on and the Commission is focused on it, the audits underway, good process audit, and I look forward to the results and would anticipate we’re going to incorporate in the future rate cases. From a process perspective, still looks like we’re on track for a September timeframe.
