Carolyn Burke: Yes. And I’ll just remind you that we also just — we did record an offsetting receivable for that — for the state wildfire fund for that accrual?
Nicholas Campanella: Yes. Thank you for the clarification and [Indiscernible] thanks.
Carolyn Burke: Thanks, Nicholas.
Operator: The next question is from Julien Dumoulin-Smith with Bank of America. Your line is open.
Julien Dumoulin-Smith: Hey good morning, team. Thank you very much guys. Appreciate the time. Just first off here, on the undergrounding and the timing-related matter here. I mean, obviously, sort of for the purpose of efficiency, you want to keep this going in a more linear fashion and you guys are up and going here. Do you want to talk about sort of funding and ensuring consistency and execution through the near term, barring whatever comes out in some subsequent process here on longer-term undergrounding. Obviously, you’ve carefully negotiated the — with the various contractors in the medium term here, if you don’t mind.
Patti Poppe: Yes. Well, first and foremost, let me be clear, we won’t do work that the commission didn’t fund. And so our plan right now is the most efficient plan we agree. We have done negotiations with contractors. We’ve developed a workforce. As I mentioned in the script, I’ve got 2,000 people right now today, doing undergrounding and those people are skilled and qualified — boy, I don’t want to tell them that they have to step off the job. But the reality is we’ve got 350 miles planned for this year, and we’ve got engineering in the hopper to prepare us for next year’s 450-mile target. And then we’re focused on 550 miles in 2025 and 750 miles in 2026, but all of this is contingent upon regulator approval.
So if the CPUC decides we should do less undergrounding or to slow down the path, it will cost more for customers, but obviously, we’ll take their direction, and we’ll then file our 10-year plan and make sure that it does its best job of compelling a more favorable decision to get the scale because that’s the beauty of what we’ve observed already, just like the story of the month that I shared on the call, we are finding savings on every job. And scale is essential to realizing those savings for customers. So that’s really what’s on our mind as we move forward. We will be filing that 10-year plan when the OEIS is prepared to receive it.
Julien Dumoulin-Smith: Right. Exactly. And maybe the point is, to the extent which that has a process that could take a couple of years here. If you really want to be watching your ability and/or rather the commission’s decision tree on not just 2024 but also 2025 in terms of what’s right in the near term?
Patti Poppe: Yes, exactly. We certainly don’t want to come to a cold hard stop. Like we want to be able to keep moving and keep the acceleration of the benefits for customers rolling every mile buried as another mile of risk virtually eliminated. And so we’re really focused on these very specific miles and getting these specific miles done as soon as possible to protect the people of California, and we think we can do that at a very affordable price.
Julien Dumoulin-Smith: Excellent. And Patti, just following up on our prior conversation on SB 410 and enabling timely interconnect. I mean, do you want to talk about how that bolsters the cash flow conversation you had a second ago here on the call vis-a-vis ratings and targets?
Patti Poppe: Yes. We’re very grateful for the legislature and the great work that they did this year in recognizing that when you do a 4-year forward-looking rate making, you don’t — you can’t perfectly predict the demand that we’re actually experiencing. And so as demand increases, SB 410 allows for an annual true-up of recoveries for the work that needs to be done to enable electric vehicle transition to electrification in the state. And I’m very proud of my team. We’ve been working hard to improve our own process while we get the necessary funding. What’s important is that we are able to do our work more timely. And so here’s some news from this year we delivered a 17% increase in volume of requests this year.
So in 2022, we did 7,900 new business connections. We’re up to 9,200 here in 2023. So that’s a 17% increase. Really proud of the team, things all of our lean operating system being put to work, have deployed things like we are estimating, which is our engineering and work preparation is a critical part, but can be a bottleneck in the process. That team has gone to work reimagining how they do estimating, and they’ve reduced their cycle time from 116 days down to 71 days. I mean that’s a 50% improvement in really a 1-year focused effort. So the ability for us to improve throughput and meet the needs of customers is real. We’re starting to prove to people that we can, again, do what we said we’re going to do and the cash flow that’s enabled by SB 410 is helpful because it’s more timely, but there is still a year’s lag.
And so again, we’ve got to get these credit ratings back up into investment grade so that we can attract the debt markets at the lowest cost for customers. And this whole — the plan hangs together extremely well when we are — when we have a balance sheet to fund all this really important work that we need to do for customers.
Julien Dumoulin-Smith: Excellent. Thank you.
Patti Poppe: Thanks, Julien.
Operator: The next question is from Gregg Orrill with UBS. Your line is open.
Gregg Orrill: Yes, thank you good morning. On PacGen [Ph] I know there’s been a lot of support in the process. Could you sort of remind us about what has to happen to close the transaction from here and any sort of risks or concerns you might have around it? Thank you.
Carolyn Burke: Yes, good morning. Thanks for the question. So PacGen is on track. We’re following the process, as we’ve mentioned, that we had kicked off our Phase 1 of the sales process at the end of June and July, and we’re now in what we would call Phase 2. So we’re tracking the marketing and sales process right along with the regulatory process. I think the major milestone on the regulatory really is that the PD is due in January of are within 90 days of the record closing, which occurred on October 5, 2023. So we still expect the closing to occur in the first half of we have seen very robust interest from what we expected in terms of interest in these very unique differentiated assets, largely from infrastructure funds, but we’re pleased with the interest and still expect the time line to be as we’ve discussed in past earnings calls.
Patti Poppe: And I’ll add. This is Patti. The PacGen the whole purpose of that is for efficient financing for customers. And so this is a good example of how we’re not just counting on others. We’re not just counting on the regulators to fix our balance sheet. There are things self-action that we can take that we are taking that is really intended to help enable customers to get the value that they’re demanding, the value they deserve in this infrastructure that we have the privilege to build for them. And so this is just another example of our simple affordable model, efficient financing as a piece of the puzzle to make sure that we can invest in the infrastructure and save customers money. And so that’s what we’re up to on this transaction.
Gregg Orrill: Okay, good wishes.
Patti Poppe: Thanks, Gregg.
Operator: The next question is from Ryan Levine with Citi. Your line is open.
Ryan Levine: Good morning. As the company engages the CPUC ahead of the November 2 potential decision, is the company open to accelerating or open to committing to accelerate the undergrounding of the top 5% risk lines. And to the extent that permitting is a limitation, is there a political solution that could help advance both the company and key stakeholders’ interest on this front?
