Brian Russo: Okay, got it. So the $200 million increase, is that mostly the MISO transmission projects as you just kind of move forward a year and those investments pick up? Or is there a scenario where the supplemental IRP is driving incremental utility investments versus the prior IRP?
Todd Wahlund: Yeah. So the $1.3 billion versus the $1.1 billion in the previous plan is driven primarily by the addition of the solar, and then also the additional MISO transmission, bringing in that year 2028 where we’ve got a little more spend.
Brian Russo: Okay, great. And the scenario that you just discussed in response to the question on the 5% to 7% growth with the accelerated rate-based growth, is that why you’re forecasting 7% utility EPS growth in 2024 versus a rate-based growth of 8.5%, or is there something else driving that?
Todd Wahlund: Yeah, I would say overall, over the long term, we tend to be closer to that one-to-one. We do have some variations by year, whether it be because of weather or just timing on recovery. So the 7% is just driven by a number of factors and I would expect we would be closer to the one-to-one ratio as we go over the long term.
Brian Russo: Okay, great. And just curious, was Coyote coal plant dispatched this past January with the well below average temperatures?
Chuck MacFarlane: Yeah Brian, Coyote is dispatched at a fairly high level all the time, so.
Brian Russo: Oh, okay. Understood. And switching to Plastics, so the new normalized earnings of $45 to $50 million versus I think your prior normalized earnings of $36 million to $41 million, does that include the Vinyltech capacity expansion, the second half of this year?
Chuck MacFarlane: That includes both the Phase 1 and Phase 2 expansions at Vinyltech.
Brian Russo: Okay, so you might…
Chuck MacFarlane: In fact, within our volume projections as well as forecasted resin and the spreads, and the volume projection does include the expansion.
Brian Russo: Okay, got it. So in the 65-35 utility and then unregulated earnings mix, that’s – the 35%, that’s where the $45 million to $50 million of Plastics normalized earnings are included, correct?
Chuck MacFarlane: That is correct.
Brian Russo: And do you think that normalized earnings will be realized for full year of 2025 or just given kind of the trajectory you’re conveying on PVC prices, that margins might stay elevated through year-end 2024 and into 2025?
Chuck MacFarlane: Yeah, at this point, we see the gradual decline in the spread over 2024 and into 2025. So ultimately, based upon our current projection, we wouldn’t realize that normal level of earnings until 2026. So 2025 currently in our projections is elevated. If you look at the midpoint of our guidance, it would be about $2.72 for Plastics in 2024. A $45 million to $50 million of earnings would be about $1.10. So we expect it will gradually decline between ‘24 and ‘26.
Brian Russo: Okay, great. Thank you very much.
Operator: Thank you. Our next question comes from the line of Sophie Karp with KeyBanc. Your line is now open.
Sophie Karp : Hey, guys. Good morning. Congrats on the results and thank you for taking my question.
A – Chuck MacFarlane: Hey Sophie.
Sophie Karp : I have three. The first question I have is I wonder if you have any opinion on the EPA, the new proposed rule to – or is the initiative to replace lead pipes in the next 10 years. Would that be beneficial to your PVC business? And what do you think are the odds of this kind of taking shape?
A – Chuck MacFarlane: Hi, Sophie. This is Chuck. What we look at is most of the lead pipe issues in the EPA are service lines. We do very little PVC on service lines. But we think that a lot of municipalities will look at the economics of having to replace service lines on an aged main, water main in the street if you will, and that we anticipate some impact, not a lot, some impact of just overall water system upgrades, including main and service laterals, which are the lead pipes, are the homes from the main to the service. We do see that the IIJA had about $55 billion in funds associated for wastewater improvement. Our feeling is that has not yet made its way into the actual projects yet. A lot of that money has not been allocated to the states yet. So we anticipate that that will have some support in the out years, but we’re not looking at it as a major increase in PVC volumes.
Sophie Karp : Got it. Got it. Thank you. And then my other question was, could you – like your regulatory lag or I guess lack of regulatory lag is very impressive here. Could you remind us just how much of your CapEx is going through riders, trackers and like other mechanisms like that, as opposed to rate cases?
A – Todd Wahlund: Well, the five-year plan, about 50% of it is planned to be through riders, and only about 10%, actually under 10% is projected to be recovered through rate cases.
Sophie Karp : Got it. Got it. Thank you. And then lastly, a little bit of an open-ended question, but maybe could you describe what kind of distribution and opportunities are you seeing in your five-year plan? So I guess we understand the generation and MISO transmission, but when it comes to distribution plans, given the specifics of your service territory, what are you focusing your attention on?
