Operator: Our next question is from Carly Davenport with Goldman Sachs.
Carly Davenport: Maybe just on the resiliency plan filing at SPS that you expect in late ’24. Can you just remind us of the timing to getting that ultimately approved and when that spend would come into play? And then I guess any early views on kind of the sizing of that potential filing or in addition to the wildfire mitigation piece that you flagged what other buckets of spend do you think will be important there.
Brian Van Abel: As I said, we’re just looking to put that filing together, it will be late in Q4. So from a timing perspective, you probably into Q3 of the following year for it to get approved. So I think from an overall perspective, I mean, if you look at some of our kind of just distribution spend in SPS and you look at our 5-year capital plan, and what could be health report. Obviously, we’re currently focus on the Colorado WMP and we’ll take a lot of those programs and apply it to SPS, but tailored because SPS a very different geography than — Texas is very in a geography when we think about what should we be doing to have risk mitigation from wildfire perspective, and so we’ll tailor it. But I think we’ll give you more color as we get further development of that resiliency plan later this year.
Carly Davenport: That’s helpful. And then the follow-up is just on O&M, nice benefit during the quarter there. Is that just a function of kind of year-over-year timing? Or is there a potential downside to that annual guidance on O&M being up 1% to 2% for the year?
Brian Van Abel : Yes, good question. I think from our perspective, really have, as you kind of noted, we haven’t changed our guidance for the year-end even though we had a significant quarter-over-quarter change. So I look at it more from where we are from a budget perspective. which you don’t see. And we’re slightly as our budget for the first quarter. But from where we sit, I think it’s early in the year, our goal is just to land within that 1% to 2% O&M guidance range as we sit here.
Operator: Our next question is from Anthony Crowdell with Mizuho.
Anthony Crowdell: Just two quick ones. One is any major change in the company’s cost to ensure the company’s operations.
Brian Van Abel: Anthony. Yes, that’s a good question as we think about it. So I assume you’re asking specifically wildfire insurance or excess liability. I think yes, all our other programs, I would say, are relatively stable or don’t have significant challenges. And I think about wildfire insurance and just let’s lot of our insurance versus the overall access liabilities there are 2 different things. I think this is a very key industry issue, both at the state and federal level. And if you’ve been following with EEI, this is one of their top priorities this year from a federal perspective. In terms of how we think about getting a focus on damage limitations? Is there insurance backstop or solution at a federal level and think about specific criteria of law firm mitigation plans in exchange for liability protection.
So those are some of the broad buckets EEI, you think about. Obviously working from a state perspective as we look forward — our legislation sessions are wrapping up here or have already wrapped up this year. So what we will do is we’ll look to work with our policymakers in our states from here for as we think about next last session to see if there’s any state level solutions as we think about it. Now specific from a company perspective or a commercial insurance perspective, even prior to Smokehouse Creek, we were seeing or understanding that from some of the commercial carriers, they were already looking to reduce their capacity and not just for us but overall, their exposure from a wildfire insurance perspective. And so that’s going into the next policy cycle.
These are annual renewals. So our renewal is in tele Q4. So we’ll give more visibility into it, but I’ll give you some — a little bit of a sense of where we sit today as we have above $500 million of coverage, and we’re paying a lot of $40 million premium for that coverage, and that’s total excess liability, including wildfire. But I would expect that covers that capacity to come down and I expect premiums to be pressured, absolutely, like I said, we’re still a ways away from our renewal. So again, we’ll provide more color as we close to, but that’s where we sit today.
Anthony Crowdell: And then just one last one. I think, Bob, you had mentioned pursuing some proactive legislation for wildfire risk. Would you be willing to let like hey, the maybe top 3 things? Or what are your goals in getting the legislation passed, like what’s — would you like to be included in your maybe first wave of legislation pass, whether it’s limits on noneconomic liability? Or I’m just curious, any color on that you would provide.
Bob Frenzel: As Brian said, this is a big and emerging national issue. And we’ve seen pressure both on the retail side of insurance, homeowners struggling to get homeowner insurance that protects from wildfire risk, and you’re seeing it in the commercial side on the wholesale side as well. So we’ve been active at the federal level, particularly talking about sort of the national opportunity we might have here. I think about there are precedent at the federal level, you see something like where going are really important for everybody like the FDIC or FEMA for flood insurance or other type programs or even nuclear backstop insurance from the price standard connect. So there’s several precedents around protecting national goods like banking access, like access to affordable electricity.
So as I think about where the federal government could help, is this probably applies to the state level, too, which is having approved wildfire mitigation plan that can be reviewed by an agency of a same or federal level. And then if you’re in compliance and current on that plan, then you have access to some form of basop insurance program that provides protection and maybe access that data cursocarriers are providing at an attractive or an affordable cost, as that group of entities comes up to speed on risk and risk mitigation. So I think those are the big parameters that I would think about. And certainly, there’s state precedents, you can take tall or Nevada or California laws and seen programs where companies along with their regulators and legislators are coming up with programs that provide more cost-effective backstop for companies to bring down the risk.
And as I said in my prepared remarks, at the end of the day, we have an enormous energy transition that we need to fund and making sure that our cost of capital is attractive to fund that keeps the transition affordable for our customers and for the country. And so I think it’s important that we manage this risk, we manage the financial cost of this risk, and those some of the areas that I would think are most important for us to go after.
Brian Van Abel: Yes. Just to add a little bit to that. I think as Bob talked about importance of insurance tax stop and filling a WMP, I think there’s also an aspect there is if you following in times [Indiscernible] which I think is important, too, and also looking at a lipid on liability or lipid on damages.
Operator: Our next question is from Sophie Karp with KeyBanc.
Sophie Karp: So on the Texas fire, can you clarify how, I guess, the claims system and the litigation that’s been filed against you are going to well work together for [Indiscernible] who are litigating, not filing claims or can they do both? Like how does it work?
Brian Van Abel: First of all, I’ll talk about the claims process and still early, but we obviously encourage people to submit claims. We was 46 so far. But how it once is anyone can submit a claim, and when they submit that claim, they don’t waive their right to pursue a lawsuit. But if there is a claim settlement, then that absolves or release any other potential lawsuits that they could file. So that’s how it could work, but also from a — if someone files a lawsuit, it certainly could be an opportunity to settle through that lawsuit too. So — but like I said we are encouraging people to enter the claims process, and we’ve settled a couple already that are in active [indiscernible] discussions with others.
Sophie Karp: Got it. And then my other question on Colorado and gas got this clarification from the commission there that they want the utilities to pursue non-pipeline alternatives, I guess, for gas. In Colorado, could you comment on that and just sort of how that will impact your investment in that state, particularly with gas?
Bob Frenzel: Look, we’ve got a number of gas proceedings in Colorado over the last year. I think you’re referring to our clean heat plan. And we think that was an industry leading or very unique filing and proactive on the company and the commissions part to move forward that big pasture, I think they’re sitting there looking at the gas system as an effective delivery of energy but making sure that if we’ve got capacity needs from a growing customer base out there that we’re looking at something other than pipeline alternatives. And we’re actively engaged in that and something we’ve always as the company looked at. But I don’t think it’s going to affect necessarily us going forward in terms of significant changes in capital forecast for where we sit today, but maybe a more proactive approach with stakeholders and communities about finding maybe different types of solutions to solve the similar issues, whether that’s more beneficial electrification, more powering of homes for home heating and other needs.
And we’re certainly engaged in that process with them.
Sophie Karp : So the non-pipeline alternative is basically a word for electrification? Or could that be something like increasing like compression station output or something like that? Like just kind of — what is that?
Brian Van Abel: Yes. So actually, you bring up increasing compression station, certainly an opportunity. I think generally it’s thought of — what are the electrification opportunities saying, there’s going to be a new neighborhood build. What is the old protos, it’s okay, [indiscernible] gas and expansion pipeline or what are the alternatives from a electrification perspective. So that’s probably the best way to think about it. I see that [indiscernible] out there, and it’s a very important project for the governor and the geothermal [indiscernible] at a district level or a residential level or community level, exploring the possibilities of geothermal in the state are something we’re willing to work with or we’re going to work with our customers and our stakeholders in the same. So it’s not necessarily just electrification. It could be more different forms of heat for homes and communities.
Operator: Our next question is from Ryan Livine with Citi.
Ryan Levine: What role do you see PSPS having in terms of your wildfire mitigation plans? And are there any initiatives that you could take proactively to gain more stakeholder support to be able to implement that on a go forward basis?
Bob Frenzel: Ryan, it’s Bob. Certainly, we think of PSPS as a tool of last resort. But public safety is our priority in making sure that our communities are protected in volatile wind events and wildfire risk case is really important to us as well. Are there opportunities for us to gain more public support, of course, there are. And there’s ways that we can improve our own performance as we, hate to say gain more muscle here, because it’s something that I don’t love to do. But when we have to do it, I think there’s areas of improvement that we as a company have identified and are working with our Colorado Commission to do so. And that includes early notification, excellence in outage maps, something I talked about earlier on segmentation.
