Paul Zimbardo: First, I just wanted to get a little bit more clarity. If you could briefly comment on that SEC matter that you disclosed in the earnings results that you just out, does this fully resolve that legacy SEC investigation?
Jeanne Jones: Hey, good morning Paul, it’s Jeanne. So, the SEC investigation is still ongoing, but we did reach a point where a loss contingency was probable. So, we did book that. You can see it’s treated similarly to how we had treated the initial DPA amount. It’s a non-operating one-time nonrecurring item that is in non-operating earnings. So, it’s continuing, but it is related to the investigation that began in 2019, so the same original investigation.
Paul Zimbardo: Okay. Great. Yes. I just wanted to clarify that’s original stream.
Jeanne Jones: Yes.
Paul Zimbardo: Okay. Great. And then second, just as we think about the long-term, I know you reaffirmed that expectation midpoint or better 2023 plus, just interest rates keep ticking up stubbornly like 50 basis points even since the last update. Could you discuss some of the areas of offsets, whether cost or otherwise, to kind of combat those higher parent costs? Thanks.
Calvin Butler: Yes. Well, I will start and then I will turn it over to Jeanne. As you have alluded to is that we are seeing – our customers aren’t immune to the higher-cost commodity prices that are going on across the country. But we have always, as a company, been very aggressive in managing our costs, and that didn’t change upon the separation. Our first and foremost priority was ensuring that our costs didn’t go up as a result of that separation. But let me tell you some of the things that we have done. We have realigned our real estate portfolio, creating flexible work arrangements to rationalize our office footprint. We have automated – we continue to look for ways to automate our work processes and really becoming more efficient and nimble in response to our customers’ needs.
And we have centralized our transmission operations to harness best practices on organizational efficiencies. And it’s important to note that over the course of our – since 2016 with the course of our plan, our O&M CAGR has only gone up 1.7%. And the year-over growth is just over 1% in 2023. I say that to you to say that costs continue to be a primary focus of the organization and affordability for our customers. Having said that, we are not done. We are just scratching the surface as a leadership team to really look at how we are going to operate as one Exelon, as a pure transmission and distribution utility company. And we continue to focus on that. So, that is what our focus is on day-in and day-out. Jeanne?
Jeanne Jones: Yes, I think that’s well said and all of that helps to reduce the O&M and preserve the cash, which minimizes the amount also that we need to finance in terms of our investments, so getting that cash and redeploying it back into the business. The only other thing I will add is on the interest rates, how we do as a whole – at the operating companies, we are stepping into new – sort of new rate cases, so the ability to recover the incremental interest there is important. But at the parent company, we do engage in reinsurance hedging and so being able to lock in with certainty ahead of time heading into a year what that interest expense is, is important. So, we will continue those practices that helped us heading into ‘23, and you can expect us to do that for future issuances as well.
Paul Zimbardo: Okay. Great. Thank you for the color team. I appreciate it.
Calvin Butler: Thank you, Paul.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Jeremy Tonet from JPMorgan Securities, LLC.
Unidentified Analyst: Hi. Good morning. This is actually David Kelly [ph] on for Jeremy. Just wondering, would you be able to outline your current credit metrics relative to thresholds and plan targets? And how could this ultimately contribute to your 425 remaining equity?
Jeanne Jones: Sure. It’s Jeanne. So, on the current credit metrics, I think S&P and Moody’s just recently published kind of the prior 12 months, those were at 13%. And as we show in our slides and as I talked about in the script, as we look at our ‘23 through ‘26 time period, we expect to be at that average of 13%. And as a reminder, our downgrade threshold is 12%. And that 12% is afforded to us and we don’t take it lightly, that’s why we have that cushion. But it’s a reflection of our low-risk platform, right, diversity, scale, forward-looking rate mechanisms, 75% decoupled revenues. So, all of that put together, no generation, all of that results in a very low risk profile. But we like to manage at that 100 basis points or 200 basis points above that.
