Shahriar Pourreza : Just wanted to — Patti, if it’s okay, just start off on the dividend, especially as we’re getting closer to that eligibility threshold. I guess, what adjustments should we be thinking about beyond non-GAAP to get to that $6.4 billion net income threshold? And then more importantly, just in terms of timing, how long do you kind of anticipate it would take after meeting the threshold to actually kind of initiate the dividend? So if you meet the threshold in 3Q, would you have a tentative plan in place for framework, Board approval, et cetera? Or is there more back and forth that you anticipate as we think about the actual payment date?
Carolyn Burke : Yes. Sure. This is Carolyn. I’ll take that question. So we’ve been pretty consistent, as you know, that we would — we do expect to meet that eligibility in the third quarter. Our current plan suggests — continues to suggest that. On the adjustments, so our plan of reorganization has a very specific calculation for the dividend eligible earnings. And it is different from what we report as non-GAAP core earnings. There are some very specific line item adjustments. And our IR team would be happy to walk through that methodology with you separately. But I just want to make sure that you know that it is separate. It is different. On a practical matter, we want to have our audited financial statements to be able to support the eligibility of that calculation.
So the earliest our Board would have the opportunity to declare a dividend would be with our third quarter earnings call. So that’s the expectation at this point in time. Of course, it is subject, I will just say, to the GRC decision, some various regulatory decisions that we’re expecting in the third quarter.
Patricia Poppe : Yes. And Shar, this is Patti. I’ll just pile on here with Carolyn, our capital allocation decisions are always about investing in the system, making sure that our priority is to make the system safer, faster, meet the needs of our customers. And so we’re going to continue to balance that as we factor in the decision about size and pacing of growth.
Shahriar Pourreza : Got it. And then just on the — now that the undergrounding program is in place, PMO is engaged. I guess, how are your thoughts evolving around longer-term undergrounding plan? Any expectations for that filing? And do you see any constructive variances versus the last update in the GRC.
Patricia Poppe : Yes. We’re getting excited as we continue to make progress and build out this program. It’s such an exciting part of the company, and the team leading it is just doing an incredible job learning new things and getting best practices from across other utilities and getting started. And so we’re excited to file that 10-year plan. We expect that the 10-year plan will very much reflect our GRC and the four years that were included in our GRC. And just to remind that, that pending filing shows us doubling our mileage here in 2023 getting to 350 miles, ramping up to 450 miles in 2024, 550 miles in 2026 and then 750 miles in 2026 — 550 miles, sorry, in 2025 and 750 miles in 2026. That ramp will be consistent with what we filed in our 10-year plan.
And so based on the timing of that 10-year plan, we are waiting on feedback from OEIS on when they will receive that plan. We’re ready to file that when they are ready to receive it. They’re staffing up so that they can receive it. But I do think it’s important for people to know that the first four years, including this year — or the next four years, including this year, are reflected already in our GRC, including, obviously, the cost recovery associated with that. And so depending on the timing of the OEIS’ availability to receive our 10-year plan has little bearing on the initial years of our undergrounding program.
Operator: And we’ll go next to Julien Dumoulin-Smith at Bank of America.
Julien Dumoulin-Smith: Let me start off with this. I mean, you guys have this Analyst Day coming up, and I want to call out, you have your earnings growth rate through ’26, and you guys have been very careful to acknowledge the specific discrete growth rates in each year. You have your rate base growth through ’27, how are you thinking about addressing if at all, some of the earnings considerations at the upcoming Analyst Day? I know that you’ve really placed an emphasis here on understanding the core of what you guys are doing, specifically in undergrounding at this Analyst Day. But I just wanted to call out that discrepancy between RAB and earnings growth, for instance, heading into this Analyst Day, if there were any expectations to set.
Patricia Poppe : Well, Julien, we take great pride in giving you multiple years’ forward expectations on earnings. I would suggest that there are some — especially with the GRC coming out late after Investor Day that it’s unlikely that we’ll forecast any further than 2026, but we’re pretty proud of the fact that we’re giving you guidance through 2026.
Julien Dumoulin-Smith : No. I hear you. I just wanted to test that. I appreciate it though. I very much appreciate the considerations they’re in. separately and related here, can we talk about the Pacific Gen sale, and I understand and saw in your prepared remarks here some of the tweaks and timing with the ALJ, et cetera. But can you specifically address a little bit more your expectations today, where the conversations are with potential buyers and any of the consternation that might be coming up through the process as well from the regulatory side?
Carolyn Burke : Yes. No, I’ll take that. This is Carolyn. We’ve actually seen pretty robust inbound interest in the asset. And so we do expect a fairly competitive process. I will say that the opportunity seems to be most interesting to those long-term infrastructure investors, but we have seen a wide range of interest. The portfolio, obviously, is pretty unique in that it offers exposure to the full cost of service, regulated clean generation in California and without the direct risk of wildfires. So it’s pretty attractive. And timing, as we’ve already mentioned, I mean it’s really — we do — we’ve updated that. We’re going to be going to market with investor — with our process coming up in June is the expectation, so early summer. And then we would still expect that process to go forward through the balance of the year, simultaneous with the regulatory process and wouldn’t expect to be closing until the first half of 2024.
Operator: We’ll go next to Anthony Crowdell at Mizuho Securities.
Anthony Crowdell : Just hopefully two quick questions. One on the cost of capital triggering mechanism. I believe that utility is going to file if rates stay where they are for an increase in cost of capital for 2024. Do you expect parties to follow for a waiver, similar to, I think, what the utility sale for a waiver for in 2022 for the mechanism not to get reset lower? Is there an expectation that you do get parties also filing for a waiver?
