Neil Kalton: Okay. That was my question. That is all. Thank you.
Gale Klappa: Terrific. Thanks Neil. Hang in there.
Operator: Your next question comes from the line of Jeremy Tonet with JPMorgan. Your line is open.
Gale Klappa: Afternoon, Jeremy.
Jeremy Tonet: Hi. Good afternoon. Happy Halloween there.
Gale Klappa: Happy Halloween to you.
Jeremy Tonet: Thanks. I was just looking maybe to quantify transferability a little bit more. And if you could walk us through the role of IRA track — tax credit transferability in your financing plans, specifically, kind of with the $16.5 billion to $17.5 billion in cash from operations, how much is tax credit there? And any sense as to how much incremental debt this allows you to take on?
Gale Klappa: Sure. We will ask Xia to give you the details. I will say that there’s a significant amount of cash coming in from transferability of the tax credits. And it’s a very positive thing overall for our cash sources. Xia?
Xia Liu: Yeah. So in the five-year plan, we expect between $1.6 billion to $1.8 billion tax credits either we will use for our own tax appetite or sell to a third — to some third-party. And that’s part of the — to your point, that’s part of the FFO.
Jeremy Tonet: Got it. That’s helpful there. Thank you for that. And then just kind of continuing on, I guess with equity funding in general, thank you for all the color that you provided here earlier. But just wondering, as you look forward through the plan, are your balance sheet metrics getting stronger or the metrics the same? Is this — kind of looking to offset higher rates? Just wondering how this all comes together.
Gale Klappa: Getting stronger by the day.
Xia Liu: Yeah. We feel good about the — hitting the target credit metrics. We’re looking forward to sitting down. Scott and I are visiting the rating agencies next week. We look forward to the conversation with them.
Jeremy Tonet: Got it. Thank you for that. And then maybe just a real quick last one and kind of better than expected results, as we look forward into to 4Q here, how we think about, I guess, O&M? Should we expect you to realize the full $40 million in nonrecurring O&M expenses from 4Q 2022 as we lap that, I guess that positive variance there, and how does this impact your O&M outlook into 2024?
Gale Klappa: Well, Jeremy — and we’ll let Scott and Xia give you their view. Q4 last year had a lot of moving pieces that won’t be repeated in Q4 this year. So I think you’ve got to look at it as a whole. There were close to $70 million of one time or different initiatives or different levers that came to pass in Q4 of 2022, that were already in 2023 here, folks. So again, I would look at — I mean, I think the O&M numbers were a bit distorted because of things that happened that deliberately, the actions that we took in the fourth quarter last year. So again, I would look at it a little bit more holistically. We’ve been projecting all year a very strong fourth quarter, and in our minds, that’s still very much intact. Xia?
Xia Liu: Yeah. Not much to add. I think we have a little bit of — last fourth quarter, a little bit unfavorable weather, so hopefully that’s a tailwind. We have rate base increase. We have fuel upside. We have a very large O&M upside in the fourth quarter, so we feel very good about the fourth quarter projections.
Jeremy Tonet: That’s helpful. I’ll leave it there. Thank you.
Gale Klappa: Terrific. Take care, Jeremy.
Jeremy Tonet: Thanks.
Operator: Your next question comes from the line of Anthony Crowdell with Mizuho. Your line is open.
Gale Klappa: Anthony, rock and roll.
Anthony Crowdell: Good afternoon. Rock and roll. Happy Halloween.
Gale Klappa: Happy Halloween. Have you got your dog dressed up in name for the Halloween night here?
Anthony Crowdell: Deferred asset. No, no, no, no, no pets. The four daughters are overwhelmingly enough. So just — I guess maybe just some quick housekeeping. Slide 21, great detail. And just curious, the footnote excludes ATC capital, when we think of the growth going on at ATC capital to Scott’s comments earlier, is that self-funded, or does that also require funding by Westcon — by WEC?
Xia Liu: It’s self — it’s more than self-funded. So we excluded the cap, the $3 billion in the uses. But in the sources, we also netted out the cash they send us versus what we send down to them. The net-net is a net positive. So they’re self-fund — self-funding, but more than self-funding themselves.
Gale Klappa: Yeah. We get cash distributions back from ATC. So Xia is exactly right, it’s self-funding plus cash back to the owners.
Anthony Crowdell: Great. And I’m sure you’re not looking to front run your meeting with the rating agencies, but if I could focus on, I think S&P right now has you on negative outlook. Is your assumption that the current plan will resolve their concerns? I’m assuming so. I just wanted to double check with you there.
Gale Klappa: Well, a couple things. First of all, just to clarify, the parent is on negative outlook. The utilities are stable, so I just wanted to make sure everybody remembers that. And then secondly, we think, and we’ll let Xia and Scott give you their view, but we think the fact that we’re going to be issuing equity to support this growth plan, will be viewed quite favorably. Again, we’ve not issued any new shares since 2015 when we did the acquisition of Integrys. Scott, your thoughts?
Scott Lauber: You’re exactly right, Gale, and we’ll sit down with them next week. They haven’t seen the plan yet, so we just thought it made sense when we roll out the plan and then walk them through it year by year, and until they actually see it, it’s hard to judge the decision. But I think we really compliment it well with our capital growth and the credit metrics overall.
