Brian Buckham: Yes. I don’t have a good sense of the magnitude at this point other than we’re seeing some increases in costs across the board, inflationary costs associated with capital projects, not unanticipated. We’re also seeing just an increase in the number of projects that we’re working on, on transmission, distribution and generation. And then off of the 2024 batteries that we’re installing in the system are included in that as well. So we’re currently going through the capital budgeting cycle, and that’s just an early indicator that we’ve seen of capital increasing relative to what you saw in February when we published our last outlook on CapEx through the next five years.
Paul Zimbardo: Okay. Great. Thank you. And congrats again. I appreciate it.
Operator: Next, we’ll go to Chris Ellinghaus with Siebert Williams. Your line is open.
Chris Ellinghaus: Brian, you sort of talked about this. The irrigation seems kind of odd considering what the conditions were in the quarter, do you have any sense of why that might be?
Brian Buckham: A little bit of indication on that. What we saw early on in the irrigation season was mild temperatures, and then we saw a lot of precipitation. That reversed itself pretty heavily later on in the irrigation season. There were a lot of factors that influenced it even things like wind, which can dry out crops can result in additional irrigation. We also saw a slight increase in irrigation customers and then also the crops that were planted, given that we had a high water supply this year. Water-intensive crops were planted by some of the ag customers in the area, so additional irrigation there.
Chris Ellinghaus: Okay. When you say in the guidance you’re anticipating normal weather for the rest of the year, does that include the seemingly pretty hot and dry July?
Brian Buckham: That does include our relatively hot July, yes.
Chris Ellinghaus: Okay. Have you seen any pickup in irrigation in July?
Brian Buckham: We don’t yet have July irrigation numbers. So I’m not sure how they turned out. I would say based on hot temperatures, it should be beneficial. If you look year-over-year at irrigation, we had a pretty bad irrigation season last year, and that was met the same this year, almost exactly. Some of those July high temperatures and just lack of precipitation over the last month may actually benefit irrigation sales, but we do have that built into our plan going forward and into our guidance, just for July.
Chris Ellinghaus: Okay. That 5% decline in industrial usage, do you know how much of that was that co-gen customer?
Brian Buckham: This is Brian again. I don’t have an exact number, but it was a fairly significant driver of that 5% reduction. It’s a sizable cogeneration at one of our industrial customers. So not an exact number, but significant. And that’s a usage for a customer issue rather than a total industrial use perspective. Total industrial use wasn’t down much. That was just use per customer. There’s also a little bit of an economic slowdown for some of our customers and some of it may be cyclical that contributed to it as well.
Chris Ellinghaus: Okay. And you didn’t really add or at least I didn’t catch you were talking about the headwinds and the tailwinds for the rest of the year. Did you include weather as a tailwind?
Brian Buckham: No. Weather is just one of those things that’s so difficult to gauge. One thing that could influence that is transmission sales. So if we get really high temperatures or really cold temperatures that can influence our transmission wheeling volumes, and that can impact it. Really, the — if you look at headwinds, it’s depreciation and interest expense, any O&M pressures that are out there. The third quarter of last year was really hot and that might not repeat itself. It repeat itself in July so far, but we’re only three days into August, and we have ways to go on what the impact of that will be for the rest of the year. The irrigation season does tend to slow down and effectively end near the end of September. So that’s time limited at this point. But we also have some tailwinds for us as well, including customer growth that we just continue to see and it’s driving a lot of our business and a lot of our rate base growth.
