Brian Tierney: So, like capital projects and other things, we don’t want to put forecast growth in until we’re seeing it and we’re seeing it at about that 1% range. As things develop and go forward, like you’ve seen data centers in PJM and the like, we think we’re going to get that here. You’re seeing it to the south of us, you’re seeing it to the east of us, and I think that migration will continue into our service territory. In fact, we fully believe it will. And then as you see other things like electrification of transportation and the like, I think there is some upside in the loan growth, we just don’t want to bake it into the plan until we’re seeing it in our confident that it’s coming.
Nicholas Campanella: All right. Thanks a lot. Have a great day.
Brian Tierney: Thank you, Nicolas. You too.
Operator: Our next question is from Michael Sullivan with Wolfe Research. Please proceed with your question.
Michael Sullivan: Hi, everyone. Hey, guys thanks for all the new disclosures. Just in terms of — you mentioned milestones on the regulatory front. How should we think about Grid Mod II and the ESP playing out over the next couple of months? And how, if any, that can inform the base rate filing coming in May in Ohio?
Brian Tierney: Yeah. So, we’re working those regulatory processes, and you’re going to see that from us. You’re going to see certain things are in flight and certain things are coming, and look for us to be making progress on what’s in flight, and that will foreshadow what’s coming down the road. ESP V and Grid Mod II, we’re working through those regulatory processes. I was reviewing last night, and we’ll file today, our post-hearing briefing on ESP V, and we expect a constructive outcome there as we do in Grid Mod II. But regulatory tends not to move very fast. These are months long processes. And we think that the processes in both ESP V and Grid Mod II are constructive. And we anticipate it will be the same, but an actually longer process for our base rate case, which we’ll file in April of this year. So we’re just moving along. Things are happening as they should, and we’re getting these constructive outcomes.
Michael Sullivan: Okay. Great. And then just on pension and limiting volatility there. Can you just give a sense on where we go forward, how much more lift out can potentially be done? And then just how you’re feeling about ability to implement mechanisms? I know there were some language around that in some of the cases you already had, but nothing too prescriptive, I don’t think. So, yeah, just the path forward on limiting pension volatility? Thank you.
Jon Taylor: Yeah, Michael. So we have another $700 million of former generation pension liabilities that we’re looking at right now as to whether or not we should execute a lift-out transaction, something that we’ll likely do this year if the market conditions warrant that. And then on the regulatory front, as we talked about before, some of these things take a couple of bites at the apple before we can get them in place. We did get authority to at least make a filing in West Virginia and New Jersey as part of the settlements. And we’ll be thoughtful once we go through that process and get a final order on the cases as to the next steps there.
Michael Sullivan: Okay. Great. Thanks. Just last one, maybe a little more philosophical, but just seeing how the reporting season has gone so far, I think we’ve seen a lot of your peers going the other direction in terms of dividend payout and growth. And I know you’re coming from a different starting point, but maybe just how you think about that in the context of the sector not trading well, and just other levers that you have, how you thought about continuing to grow the dividend with earnings and the payout where you have it?
Brian Tierney: Yeah. So we are at a different place than our peers. Announcing the increase that we did in September, the first in over three years, it’s time to start rewarding our shareholders with dividend increases. And we felt that now is the time to do that. So September and anticipated in 2024, increases there as well. It’s time for us to treat our shareholders the way utility companies traditionally do. And we’re in a place where we’re going to be growing the dividend with earnings over time. Our balance sheet is healthy. We don’t have the equity needs that some of our peers do because of the transactions that we’ve done over the last three years or so. So we’re in a different place and where some of our peers are, and we think it’s a really good place.
Michael Sullivan: Great. Thank you.
Brian Tierney: Thank you.
Operator: Our next question is from Jeremy Tonet with JPMorgan. Please proceed with your question.
Jeremy Tonet: Hi. Good morning.
Brian Tierney: Good morning, Jeremy. How are you today?
Jeremy Tonet: Good, good. Thank you. Just wanted to dive in a little bit more on the guide here, talking about rate-based CAGR of 9% relative to 6% to 8% EPS CAGR without additional equity needs. So it’s just looking to kind of marry those two data points, given the stronger pace of rate-based growth there. If there’s anything else we should be thinking about, especially the signal peak and pension OPEB become a smaller part of the equation?
Brian Tierney: It’s really the things that we mentioned in our remarks. It’s going in for base rate cases and updating rate base, updating returns, cost structure, and those things that haven’t been done in some time. You know, the three cases, Maryland, New Jersey, and West Virginia that we’ve just been in, Pennsylvania and Ohio coming up this year, it’s a significant amount of updating the regulatory process and recovery, and then increasing, as we’ve announced today with Energize 365, the CapEx that we’re going to be investing in our regulated properties going forward. So it’s the way utility operations should work. And I repeat this over and over again internally. You invest in your properties and your people. You operate safely, reliably, affordably.
You go in for recovery. And if you’ve done invest and operate well, the recovery component goes better when you’re in front of our regulators. And then we come before investors and we tell them the story that we put together on those first three components and financing the companies easier as well. So we’re in a place where we’re at the beginning of what I call that virtuous cycle and the success that we’ve had and the rate cases that I discussed in my prepared remarks show that we’re getting those fair and constructive outcomes, and we anticipate that going forward in the plan as well. It all holds together as a credible story where we’re having success at the beginning point of that.
Jeremy Tonet: Got it. Maybe to rephrase the question slightly, just if the rate-based CAGR is 9%, are there any other drags besides lag to make EPS growth only 6% to 8%? Or is that a degree of conservatism?
Jon Taylor: So Jeremy, I would say it this year, just as you saw in 2024, the 2024 guide, you saw the step down in signal peak from $0.24 to $0.12. You’ll see another step down from 2024 to 2025, but at the same time, that’s when we’re truing up these rate bases that I mentioned in my prepared remarks, the $7 billion this year, the $12 billion that we’ll file in Pennsylvania and Ohio for this year. And then after that, it’s more traditional rate base growth, a little bit of regulatory lag, but we’re going to do everything we can to minimize any difference between our earned returns and our allowed returns.
Brian Tierney: I think it’s important to note that the part that Jon mentioned about pension and Signal Peak decreasing, as they decrease and as the traditional regulatory component of our growth increases, our earnings quality improves, and that happens really, really quickly in our plan. So that’s also a benefit. It’s not just growing earnings, it’s a reduced risk profile as well.
Jeremy Tonet: Got it. Thank you for that. Very helpful. And then I just wanted to go back, I guess, to customer bill impacts. And I think you quoted some helpful numbers there as far as share of wallet that the bill will represent in New Jersey. But I just want to see, I guess, in Pennsylvania, Ohio, is it kind of similar share of wallet expectations over the forecast period? Or any color you can provide there?
Jon Taylor: It is. That was — the numbers that I gave you of share of wallet was an average across our five states. So — and it’s not significantly different in any one of those, but it’s very, very low.
Jeremy Tonet: Got it. Very helpful. I’ll leave it there. Thanks.
