Essential Utilities, Inc. (NYSE:WTRG) Q3 2023 Earnings Call Transcript

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Dan Schuller: I think you generally covered it Chris, but I would add and maybe just to clarify the reason that we’re still under our prior ROE or rate case ROE, if you will is because we had a litigated outcome in that case. So then that trumps the DSIC ROE that’s been stated here by the commission. But as you know, it’s a bit of a tail of two cities on these DSIC ROEs, because on the gas side, the ROE is nicely above 10%. I think it’s 10.15% whereas that water ROE has been dropped. So as we go into the gas rate case for a DSIC ROE of 10.15%, I think we feel pretty good about our ability to achieve a nice outcome in terms of ROE in this upcoming case.

Ryan Connors: Yes. Okay. That’s very helpful color. And then, sticking with the gas side Dan, so West Virginia divested, what about Kentucky? Is that any shift in the thinking there? Or is that Kentucky piece big enough where you consider that to be core?

Dan Schuller: Yes. The Kentucky piece is — it’s a nice subsidiary. It’s like any of our water subsidiaries and we view that to be core to the business that we have.

Chris Franklin: And I was just in Kentucky last week Ryan, and we think the commission is a constructive commission down there. We met with all the commissioners and we would actually like to grow in the water business down there. And so, it’s a relatively new state for us, but I think there’s opportunity for some growth down there as well.

Ryan Connors: Yes. Okay. And then finally, just — I appreciate your comments Chris on the strategic incident. It must be very tough for everybody involved. But — in terms of what that says about the big picture for gas, I know — it’s one of the ironies is you mentioned earlier, the gas trade at a discount to water in terms of the stock price but rate base growth is actually faster than water. I mean I would imagine that even though that’s — the company is not culpable that that really heightens the focus on many investments that need to be made and the type of thing that can happen if those investments aren’t made. So I mean does that kind of just reinforce the rate base growth outlook that’s above — it’s above water? And just what are your thoughts on that in terms of just that rate base growth in gas relative to electric?

Chris Franklin: Yes. Listen, as a general theme, I think that’s right. This specific case as determined by the fire marshal was — work being done inside a home and not our equipment or our pipe. So, I just want to make that clarification. But generally, yes, the safer the system and the more environmentally friendly the system is, the better off we all are as a society, better off we are as a company and the better off our customers are as well. That’s why we continue to be laser-focused on meeting our LTIP work as outlined by the PUC and implementing the miles and miles of pipeline replacement that we’ve already accomplished and that we plan to do in our upcoming three to five years. That work coupled with some other work we’re trying to do around hydrogen and other innovative ideas. I think will come together and hopefully make it even more environmentally friendly in the future and safer.

Ryan Corners: Got it. Thanks for your time today.

Chris Franklin: You got it. Thank you.

Dan Schuller: Take care.

Operator: Thank you. With this I’d like to hand the call back over to Chris Franklin for any additional or closing remarks. Over to you, sir.

Chris Franklin: As always we’re available for follow-up. I really appreciate your time and questions today. But Brian, Renee, Dan and myself are all available for follow-up questions that you’re convenience. Have a great day.

Operator: Thank you. This concludes today’s conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.

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