David Ruud: This is Dave Ruud. Yes. We did see some strong growth in — for those businesses this year. Advantage, we had 3 new RNG projects, a new custom energy services project commenced the growth that we expected. There also is some onetime things in there, as we mentioned, some optimistic steel contracts that we did this year, too. So we look forward on Vantage. We will be growing that off the 2023 original guidance but still seeing some great growth there and some great opportunity this year. Trading also, like as you saw, is having a great year and we’ve increased the guidance there to a lot of that favorability that we’ve seen has been through contracted elect full requirement services and also in our gas business. And we’ve seen some of these higher margins on these contracts.
And we’ll be looking at what that means for 2024. But right now, I’m not increasing any of the guidance but we’ll give you a full update. As Jerry mentioned earlier, we’ll give you a full update on that in December.
Operator: Your next question comes from the line of Durgesh Chopra with Evercore ISI.
Durgesh Chopra: I really appreciate all the detail that you provided around the cost mitigation impacts. And so thank you for that. Listen, I just wanted to kind of think through the implications of any year like this a pretty aggressive year on storms to your go-forward earnings profile. Can you remind us, so this year, right, when you add all those numbers together, it’s $150 million in impact which is roughly 10% of your earnings, normalized earnings power this year. Can you remind us what level of allowance or costs are baked in for storms in this current ongoing rate case and going forward?
David Ruud: Yes. In the — in our rates, there’s about $55 million pretax that’s in there for storms right now. But we budget differently than that, been building some contingents as well.
Durgesh Chopra: Okay. Are there other opportunities like trackers or deferrals that you could pursue? Or would that be more legislative?
Gerardo Norcia: I think those trackers and deferrals have been pursued in the past, Durgesh and can be pursued in the future. Like as a matter of fact, I think our sister utility is pursuing some of that as well in their current rate case.
Durgesh Chopra: And is that part of your current request as well, like are you asking for in this case?
Gerardo Norcia: It is not in our current rate case at this point in time. But as Dave said, typically, we budget for one standard deviation and weather variances that deal with weather variances as well as storm activity variances. I think what was unusual this year is that we had a much cooler than normal summer lineup with excessive storm activity which is very unusual and very anomalous. And beyond our planning scenarios, certainly. When we think about the totality of it, we had about 30% our earnings challenged and we responded with a 21% response and so a pretty significant response in light of extraordinary challenges. So we view it as a very anomalous year.
Durgesh Chopra: Got it. Okay, perfect. I appreciate the color. And then maybe just quickly hit on storm investigation. I know the Liberty Consulting Group was hired. What do you expect as next steps there? And when could we see sort of a final recommendation time line there?
Gerardo Norcia: So there’s been a very positive set of interactions with Liberty. The exchanges have been very collaborative. They are requesting information which we’re providing. I think the next series of steps is they’ll conduct some field work as part of their tabletop exercise and we expect a report sometime next summer final report.
Operator: Your next question comes from the line of Jeremy Tonet with JPMorgan.
Jeremy Tonet: I think the question has been touched on a number of different ways but I just wanted to be very precise and very clear here. As we think about the base business, as we think about going forward, there’s a rate case, it’s going to have some impact on 2024 unknown at this point. But if you think about the base business past 2020, ’24, does DPE still grow 6% to 8%?
Gerardo Norcia: Jeremy, we’re going to have to finalize all those details. I know everybody is anxious to get those details. But again, we certainly don’t want to get in front of the regulatory process. What I will say at the highest level is all of the opportunities that we’ve discussed before that supported the long-term growth of our company are all there today. And what we need is strong support from the regulatory construct to support ’24 and beyond for that matter. So we’re waiting for a strong signal and we’ll continue to move forward and execute these great investments for our customers. What I will tell you is that the governor, our customers our commission, legislators, every mayor I talk to are clamoring for these investments.
This is something that our customers want. And the rate relief that we’re requesting is not extraordinary. If you look at just the capital that we’re deploying, some of the interest expense that we have to recover as well as the correction in the sales figure since May of 2020, we’d be looking at an increase of roughly 1.6% per year, well below national inflation rates of 5.5% since that period in time and well below some of our peers where they’ve seen over 5% bill growth since that period of time since 2020. So, we feel like we’re delivering a very compelling and what I would say, competitive package to pursue for the commission and we’re confident that we get strong support for the investments we need to make for our customers.
Jeremy Tonet: Got it. Understood. Maybe pivoting a little bit here. As we look forward, there’s been just a change in regime in rates being — rates moving up a lot recently. And we’re kind of tracking holdco refinancing risk in note that DTE has a number of hedges in place to mitigate some of this risk. I was wondering if you could provide specific details on those hedges as far as what the refi looks like? Is this something that’s just kind of a short-term hedge? Is this the longer-term hedge? What type of levels — just trying to get a sense for how much of a headwind refinance risk at the holdco could be?
David Ruud: Jeremy, this is Dave. Yes. So I’ll first say at the highest level, incorporated these increasing interest rates in our plan and had considered it and contemplated and had the flexibility in our plans prior to this. So we’re monitoring this and we’ll continue to manage the interest expense increase through timing and structure and tenor of our future debt. Now you’re referring to the parent debt that we have that will come due at the end of ’24. We have put in hedges for over a quarter, 25% of that through the year and we’ll continue to look for opportunities, monitor the market for additional opportunity for that as well.
