Paul Patterson: Okay. Well, thanks so much.
Jeff Guldner: Yes.
Operator: Thank you. Your next question is coming from Shar Pourezza from Guggenheim Partners. Your line is live.
James Ward: Hi guys. It’s James Ward on for Shar. How are you?
Jeff Guldner: Great. Good Jim.
Andrew Cooper: Hi James.
James Ward: Hey. Just a quick one on the pension front; just leaving 2023 aside for the moment. If we were to assume that the final order reflects the pension-related adjustments from your rebuttal testimony; just thinking about the roughly $20 million or so improvement there. What impact would you expect that to have going forward on pension-related EPS drag, just thinking about the amortization outside of the corridor rule from last year’s impact really?
Andrew Cooper: Yes, James, so just to step back, we do have that drag now from the end of 2022 when we took into account the rapid increase in interest rates in 2022, which affects both our fixed income portfolio as well as the interest costs associated with our pension. So we have that drag which year-over-year is in the 30-some-odd range, and you see it this quarter as you’ve seen in prior quarters. And so one of the things we did say to the investment community is we wanted to reduce the lag associated with the pension expense and more properly reflect the test year expense because we didn’t know those numbers when we filed our direct case. And so on rebuttal, as you alluded to we did file to take better account of what the testers should be based on averaging the mark-to-market end of 2021, mark-to-market end of 2022.
And as you said, that’s about a $20 million benefit. When it comes to the impact there, that isn’t going to be something that flows through pension accounting. That’s something that’s going to flow through the revenue requirements and through customer charges. So that will be – if it is approved, and we’re going to continue to advocate for it through the case, staff did not express support from it and there’s a remodel testimony, but it’s something we’re going to continue to push for. That would just be reflected in the revenue requirement like everything else. However, at the same time as we do every year, at the end of the year, we’re going to have to reevaluate our pension expenses based on expected market returns where discount rates are at that point.
And what may, as you said, pass through the corridor and be considered material from the perspective beginning to amortize. But the drag from 2022 will remain, and the key is to reduce regulatory lag on the recovery of that through the adjustments and normalization requests that we made on rebuttal.
James Ward: Got it. Perfect. Thank you, Andrew. Appreciate the color.
Andrew Cooper: Sure. Thanks James.
Operator: Thank you. [Operator Instructions] Your next question is coming from Julien Dumoulin-Smith from Bank of America. Your line is live.
Dariusz Lozny: Hey guys, its Dariusz back on. Just one quick follow-up, if I could. I just wanted to ask about the change in your guidance relative to the effective tax rate. It looks like it ticked up a little bit. And now there’s a band versus previously it was a point estimate. Just wondering what drove that?
Andrew Cooper: Yes. It did, Dariusz very perceptive. So what happened is in the first quarter, when we set guidance slightly below 11% effective tax rate now we’re at this 12% to 12.5%. And when – if you recall, when we set that lower effective tax rate, it was based on our anticipated in-service date of projects that generate production tax credits, namely the [indiscernible] (0:29:52) project, and so the higher tax rate now reflects our better estimate of the in-service date of the project.
Dariusz Lozny: Okay. Great. Thanks so much for clarifying.
Andrew Cooper: Yes. Thanks Dariusz.
Operator: Thank you. That completes our Q&A session. Everyone, this concludes today’s event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.
