Gale Klappa: Xia?
Xia Liu: Nothing more to add. We appreciate the opportunity to sit down with them and talk through the details.
Anthony Crowdell: Well, great. Looking forward to seeing you guys in Phoenix. Thanks for the time.
Gale Klappa: All right. Thank you. Take care.
Operator: Your next question comes from the line of Ofri Mott [ph] with Ladenburg. Your line is open.
Gale Klappa: Greetings, Ofri.
Unidentified Analyst: Yes. Not to beat a dead horse, but roughly where — with the new investment program and the additional equity, do you land in terms of FFO to debt? Are you sort of in that 14% to 15% range that you’ve targeted?
Xia Liu: No. We — it’s part of the package I think we included. So we are targeting 15% to 16% by S&P and Moody’s.
Unidentified Analyst: Right. So do you fall within that range then in terms of — with the additional equity and the additional investment?
Xia Liu: Yes, absolutely.
Gale Klappa: Yep.
Unidentified Analyst: Okay.
Gale Klappa: That’s the whole idea.
Unidentified Analyst: Great. I just wanted to sort of confirm that. And then, in terms of the coal exit, even though, it’s not sort of in your power of the future contract, it likely will have a bill impact on customers. So what sort of communication do you need to have with the existing commissioners?
Gale Klappa: Well, go ahead Scott.
Scott Lauber: So when we look at it, we really don’t see much of a bill impact because when you look at it, we’re going to get the same output from the plant. You just won’t have the O&M associated with running with the coal. So the real change is going to be — you eliminate coal, but what is the price of natural gas? If natural gas would go up to $10, that’s a whole different game, but that’s more of a fuel issue. And the same thing with coal. So when you look at the operations, I don’t think — there’s not a lot of capital investments that we’re doing to do the conversion. There’s smaller capital projects to just put in new burners. In fact, we’re doing some this fall and next spring we’re putting in some new burners also.
Gale Klappa: And just to add on to what Scott’s mentioned to you, this plan to convert from coal to natural gas at our newer Oak Creek units is one that’s been in the making for at least a couple of years now. So we’ve had extensive ongoing discussions with the commissioners. They understand what we’re trying to achieve. They understand the importance of continuing to cost effectively reduce CO2 emissions. And remember, our goal, which we’re on track to achieve, is an 80% reduction in CO2 emissions by the end of 2030. So this is not a new concept to anyone in the state.
Scott Lauber: Yeah. And when you think about the EPA rules going forward, if it was on coal, you’d have to put in carbon capture or do something with hydrogen, and carbon capture would be extremely expensive. And where do you put the carbon, what you capture? So we looked at what’s efficient in the long-term.
Gale Klappa: And one more fact, I think it’s very important to remember how critical an asset those new Oak Creek units are on most days in the Midwest operator footprint, because of the efficiency of those units and because of their incredible connection to the transmission network, those units help keep the lights on, not only in Wisconsin, but across the Midwest. So very important asset. We’re on track to do what we need to do to continue with the life of that asset for a long period of time with much lower emissions.
Unidentified Analyst: Great. Thank you very much.
Gale Klappa: You’re welcome. Thank you.
Operator: Your last question today comes from the line of Paul Patterson with Glenrock Associates. Your line is open.
Gale Klappa: Greeting, Paul.
Paul Patterson: Greetings. So just back to the whole — back to the rate question. I guess with the new outlook that you guys have regarding rate base growth, obviously interest rates, inflation, et cetera. What is your expectation in Wisconsin and Illinois in terms of what base rate changes customers might see? Has it changed or?
Gale Klappa: Not really, but let’s kind of take it state by state. In Illinois, what we’re proposing in our current rate review is really no change in the level of investment in upgrading the pipe system, the natural gas pipe delivery system under Chicago. So we’ve been averaging about $280 million a year of investment in upgrading that aging corroding pipe network. We’re about 35%, 36% complete with the upgrades, and we’re proposing to continue at about $280 million a year. That’s about the pace that we can do to get work done inside the city of Chicago. So — and remember in our current rate review proposal in Chicago, even with the rate increase if fully approved, coupled with the decline in commodity costs of natural gas, we’re expecting flat customer bills for this coming winter in Illinois.
So essentially this plan really doesn’t change the underlying fact pattern in Illinois. And with the load growth, the demand growth that we expect to see in Wisconsin, again, we’ve been saying we think inflation related rate increases in Wisconsin and — that’s, at least to me, seems to still be the case.
Scott Lauber: Yeah. And we’ll see as we continue to roll out the plans here and look at the timing of it. So I think it’ll be inflation, approximately inflation as you go forward.
Gale Klappa: Hope that responds, Paul.
Paul Patterson: No, no, that — that’s helpful. Okay. Appreciate it. Thanks so much.
End of Q&A:
Gale Klappa: All right. Thank you. All right, sports fans. Well, this concludes our conference call for today. Thanks so much for your questions. Thanks for participating. If you have any additional questions, feel free to contact Ms. Straka. She can be reached at (414) 221-4639 and we look forward to seeing you all in Phoenix in just a couple of weeks. Take care everyone.
Operator: This concludes today’s conference call. You may now disconnect.
