David Arcaro : Okay? Got it. And then, I was just wondering longer term, I guess the rate base growth comes down as you look, if I just look at rate base growth ‘25 to ‘28 it’s more like 5% to 7%. I know it’s early on, but and that it kind of lines up then with the EPS growth in the 5% to 7% range. Does that get tied in your mind or is the rate base growth just likely to escalade over time as new CapEx plans are identified?
Maria Rigatti : I’m not sure I quite follow what you mean by tight. Can you expand on that a little bit?
David Arcaro : Oh sure. I guess, you know, historically, you’ve had a gap between the rate base growth level and the EPS growth rate level. And I guess, at looking out further into the planned rate base growth ends up being kind of equating to EPS growth. I’m just wondering if that’s just an early stage dynamic or if we start to see a gap widening out over time?
Maria Rigatti : Thank you for clarifying. Yeah, I know we are very comfortable with that 5% to 7% EPS growth in combination with that 5% to 7% rate base growth. So, those things that have been happening here in the next five years is different than the last five years, right? And so, in the past, you’ve seen the gap actually widen out because of the things that, we were dealing with going from a lower amount of debt. For example, wildfire claims got to a higher amount having the interest rate environment on us during that period. As we get into the ‘25 through ’28 period, things have stabilized. We have now – at the end of this quarter, we had $6 billion outstanding on Wildfire claims that. So everything is baked in and that period.
If you think about even what we’re refinancing around Wildfire claims debt during that five-year period, that debt was actually issued in the more recent interest rate environment. So the average of that average rate for the debt that we’re refinancing is already about 4.6%. So you are seeing a lot of things sort of stabilize. I think the other thing you are going to start to see is, at the parent company we’re obviously seeing our costs increase at a slower rate now and we will be looking to refinance through the – some of the outstanding maturities with more efficient vehicle that as you saw us do that earlier this year. Like for as an example, when we needed equity content securities, we moved away from preps into junior subordinated notes.
And I think the one other thing that kind of drives the ability to have those two numbers EPS and rate base growth move together and as you’ll see that the AFEDC is increasing quite strongly over that period. And that also makes difference.
David Arcaro : Got it. Thanks. Very helpful. And just – sorry if this is a little repetitive, but just on operational variances, I see that AFEDC is rising from the ‘25 to ’28 period. Do – is there much change in the rest of the operational variances bucket between the ‘25 level where you have to find it versus where it’ll end up in ‘28?
Maria Rigatti : Yes, so we’ve also included a sensitivity there to depreciation. We talked about those depreciation variances before. And you can see where we now call that out for folks. So you can actually do a little bit of the investigation yourself. As we modify CapEx and we go from our request case to our range case, you can see that we’ve made a lot of simplifying assumptions. So at a minimum, in the lower CapEx cases, you need to make a 15 – you may – you need to have an assumption about a $0.15 depreciation adjustment. So that variance is additive to some to the other numbers that you would get in terms of rate base growth. I think, as we look out in time, the other things that we’ve talked about in terms of timing and regulatory proceedings and O&M efficiencies, we just don’t see them as big drivers as we get out to 2028.
