Brian Tierney: Thanks, Jeremy.
Operator: Due to time constraints, we ask to you please limit to one question. Our next question comes from Michael Lonegan with Evercore ISI. Please proceed with your question.
Michael Lonegan: Hi. Good morning. Thanks for taking my question.
Brian Tierney: Good morning, Michael.
Michael Lonegan: So you’ve talked about some sustainable O&M you’ve taken out of your business and a larger increase this year and then have to that account for less than 2% increases over time. Given the significant ramp-up in CapEx over the years of your planning period, presumably, you’d have to expand your workforce or use of contractors is my guess to work on complete all those projects. I was just wondering, how are you planning on managing your O&M within that 2% increase level? Is there room to take out more existing costs out of the business?
Brian Tierney: So I’ll say this. A lot of what we talked about is actually CapEx that we’re increasing. So it’s not directly related to O&M. We recognize there’s an O&M tail that’s associated with any incremental CapEx, but we’re going to be very, very focused on continuous improvement. And it’s going to be part of our story that we’re going to tell every time we’re getting together going forward about how — what we’ve been able to do and how we’ve been able to reduce O&M through continuous improvement. And it’s just going to be part of our story going forward like it was in 2023. And you see well-functioning premium utilities are always talking about what they’re doing in that regard. And we’ve had success here in our recent past doing that, and we anticipate that going forward.
Michael Lonegan: Great. Thank you very much.
Brian Tierney: Thank you, Michael.
Operator: Our next question comes from Angie Storozynski with Seaport Global. Please proceed with your question.
Angie Storozynski: Good morning.
Brian Tierney: Good morning.
Angie Storozynski: Good morning. Just a bigger picture question. So investors seem excited about the load growth accelerating loan growth associated with data centers, the obvious way to play this trend, this through generation companies, but also through vertically integrated utilities that actually own generation. You guys except for Virginia, a wires-only business. And I’m just wondering if you do expect to have this secondary benefit associated with the load growth, again, translating into either higher T&D CapEx, or maybe improved affordability because of higher volumes. I mean, you name it. Just wondering if you see that benefit accruing to you as well.
Brian Tierney: Thank you for the question, Angie. We absolutely do. And you’re right, being mostly a wires company, certainly in four of our five states. We don’t have as much of the generation opportunity. But I mentioned in my remarks, or in answer to an earlier question, the opportunity that we had associated with the PJM Open Window 3 for incremental transmission investment over $800 million. I had the pleasure of going out to our Maryland service territory late last year and got to go see what’s going on at that quantum loophole data center development, it is unbelievable what’s going on out there. They are recreating something that’s on the scale of the data center footprint in Northern Virginia, out kind of in the hills of Western Maryland.
And it’s at a site of a former aluminum smelter out there. So you have these high-voltage transmission lines that go and just stop in the middle of space where the smelter used to be and where they’re investing, they’re turning dirt, they’re moving ground right now, to build one of the largest data center complexes in the world. So we’re seeing it in Maryland. It’s going to be coming to Pennsylvania, in Ohio for us as well, and we’re hopeful for New Jersey and West Virginia over time. So, it’s coming, and it’s real, and it does create incremental investment opportunities for us.
Angie Storozynski : And then just one last follow-up. So you mentioned affordability. Your rates are obviously so much lower than your peers. Your assets seem underinvested when you look at rate base per customer. But I’m just wondering because all of these investments or acceleration of investment happens in a low power price environment, given the load growth, the low power price environment is not sustainable. So, I’m just wondering what happens to that investment plan when power prices go up meaningfully. And so the customer bill meaningful increases because of that commodity component.
Brian Tierney: So it’s a good question, Angie. I think we’ve already seen some of that associated with things like the war in Ukraine and the like. And we saw that in some of the polar prices that we have when we went out for auctions during the period when we thought prices were going to be really, really high because of what’s going on in Europe. And some of those price spikes went through to our customers, really in Ohio, beginning like the day I started on June 1 of last year. So we saw some of those price spikes go through to customer rates, and now they’re coming off. As John mentioned earlier, we’re having auctions that are printing lower prices and those lower prices are passing through to our customers. So I don’t see that as being a big concern.
There are some things that are moderating that impact. And again, our prices are so low. The share of wallet is so low for us that electricity still represents a significant value to customers in all five of our states.
Angie Storozynski : Great. Thank you.
Brian Tierney: Thank you, Angie.
Operator: Our next question comes from Paul Patterson with Glenrock Associates. Please proceed with your question.
Paul Patterson: Hey guys. Congratulations.
Brian Tierney: Good morning Paul.
Paul Patterson: Just wanted to sort of touch base again, I apologize, on this this single-digit increase, is that rates or is it bills? And can you be a little bit more specific in terms of what that means — obviously, there’s a big range there, right? Just a little bit more elaboration as to what you see sort of the rate trajectory range being associated with the with what you’re planning long-term?
Jon Taylor: Paul, so this is Jon. So, I would tell you that as we think about the cases that we filed this year, the increases since the last rate case are single-digits, like low, low single digits. So, on average–
Paul Patterson: New Jersey was 3.4%.
Jon Taylor: Yes. But on an average basis since the last rate case, it’s probably less than 1% a year.
Paul Patterson: And that’s what you see going forward? Is that — when you — low single-digits is what you guys been?
Jon Taylor: Well, I think you got to think of it this way, we haven’t been in for a rate case in Pennsylvania for quite some time. Ohio, we haven’t been in almost over a decade. So, I do think there’ll be some increases there. But when you average it out since the time of the last rate case, it’s very manageable.
Paul Patterson: Okay. And then finally, on Grid Mod, do you see any settlement possibility? I know you guys sort of had thought about that before. There was sort of a delay in staff testimony. It looks like you’re now talking about hearings. You expect that to be fully litigated at this point?
Brian Tierney: Look, we’re always open to the settlement option and think that’s always preferable. If we’re going to go to hearing like we have in ESP 5, we’re okay with that. We think we’ll get positive outcomes. And in any regard, Paul, the settlement discussions that we have start to frame people’s positions for where they’ll be at the table at a hearing. And so we view it as being a constructive process even if we have to go to hearing.
Paul Patterson: Okay. I’ll leave it there. Thanks so much guys. Have a good weekend.
