Earnings Call Transcript - CWT Q1 2024

Operator, Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the California Water Service Group First Quarter 2024 Earnings Call. This call is being recorded. I'd like to turn the call over to Jim Lynch, Senior Vice President, CFO and Treasurer. Please go ahead.

James Lynch, CFO

Thank you, Ellie. Welcome, everyone, to our first quarter 2024 results call for California Water Service Group. With me today is Marty Kropelnicki, our Chairman and CEO, and Greg Milleman, Vice President of Rates and Regulatory Affairs. Replay dial-in information for this call can be found in our quarterly results release, which was issued earlier today. A replay of the call will be available until Monday, June 24, 2024. As a reminder, before we begin, the company has a slide deck to accompany the earnings call today. The slide deck was furnished with an 8-K and is also available at the company's website at www.calwatergroup.com. Before looking at the first quarter 2024 results, I'd like to take a few moments to cover forward-looking statements. During the course of the call, the company may make certain forward-looking statements. Because these statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the company's current expectations. Because of this, the company strongly advises all current shareholders, as well as interested parties, to carefully read and understand the company's disclosures on risks and uncertainties found in our Forms 10-K, 10-Q, press releases, and other reports filed from time to time with the Securities and Exchange Commission. And now I will turn the call over to Marty.

Martin Kropelnicki, CEO

Thank you, Jim. Good morning, everyone. Thanks for joining us today to talk about our Q1 2024 results. We have a number of topics to cover today starting with our strong operational performance, which is fully highlighted by the final resolution of the 2021 general rate case. After going through the delays, which stretched out over 2023, it's nice to see the arrows all going in the right direction. Big kudos to Jim and the team for booking everything and getting it all set up here as we wrap up Q1. In addition, we'll want to talk about the implications of the water cost of capital adjustment mechanism, which sets our return on equity for 2024 at 10.27%. We were able to secure an additional $83 million of COVID funds from the state of California to help our customers with past-due balances accrued during our COVID times, and then talk about where we are with PFOS and the EPA's new regulation and our plans to be in compliance with that. Finally, we'll wrap up by discussing the commitment we made recently to reduce our Scope 1 and Scope 2 emissions. But prior to going into some of these more operational phases, I'm going to turn it back over to Jim to review the financial results for the first quarter of 2024. Jim?

James Lynch, CFO

Thank you, Marty. As Marty mentioned, our first quarter results benefited from the conclusion of our 2021 general rate case. Operating revenue for the quarter increased 106.5% to $270.7 million compared to the prior year first-quarter revenue of $131.1 million. The implementation of two regulatory mechanisms authorized by the 2021 GRC decision had a significant impact on revenues, with the Interim Rate Memorandum Account, or IRMA, adding $80.7 million and the Monterey-Style Water Revenue Mechanism, or M-WRAM, adding $31.7 million. Recorded IRMA and M-WRAM revenue included $70.2 million and $17.6 million, respectively, related to fiscal year 2023. The revenue increase also included $13.9 million related to the recognition of Water Revenue Adjustment Mechanism or WRAM revenue that was deferred in previous reporting periods. First quarter 2024 operating expenses increased $192.9 million compared to the first-quarter total operating expenses of $148.6 million. The increase was primarily driven by $9.2 million in higher water production costs associated with the company's new incremental cost balancing account, or ICBA, higher other operations expenses primarily due to $11.4 million in deferred costs associated with the recognized deferred WRAM revenue and a $21.2 million increase in income taxes related to higher pretax earnings. Net interest expense increased 25.5% to $15 million during the first quarter as compared to $12 million for the first quarter of 2023. The increase was primarily due to higher short-term borrowing rates and higher balances on our outstanding lines of credit. Reported net income for the first quarter was $69.9 million, up nearly 415% compared to a loss of $22.2 million in the first quarter of 2023. Turning to the earnings per share, first quarter 2024 diluted earnings per share was $1.21 compared to the first quarter 2023 loss of $0.40 per share. The significant increase in EPS was driven by resolution of our 2021 general rate case, coupled with rate increases and the reversal of previously deferred WRAM revenue. These increases were partially offset by increased expenses, including higher water production expenses related to the new ICBA regulatory mechanism, higher production expenses due to the reversal of WRAM-related deferred production costs, and interest expense. We continue to make significant investments in our water utilities to help ensure the delivery of safe and reliable water service. We invested just under $110 million in capital improvements during the first quarter of 2024, which was an increase of approximately 34% over the first quarter of 2023. For the year, we anticipate making approximately $380 million in capital investments, which includes an estimated $20 million in developer-funded projects. Depreciation for the first quarter of 2024 was $32.8 million or approximately 30% of first quarter capital investment expenditures. Our overall rate base grew to an estimated $2.2 billion by the end of 2023, an increase of 15.4% over 2022. Further, based on our current planned capital expenditures and subject to regulatory approval, we estimate the rate base will grow to $2.36 billion by the end of 2024 and $2.47 billion by the end of 2025. We increased the annual dividend 7.7% from $1.04 to $1.12 per share, marking our 57th consecutive annual dividend increase. And yesterday, we declared a quarterly dividend of $0.28 per share for shareholders on record as of May 6, 2024, this being our 317th consecutive quarterly dividend. We continue to maintain a strong liquidity position. As of March 31, 2024, the company maintained cash and cash equivalents of $88.3 million, of which $45.4 million was classified as restricted. Further, we had additional short-term borrowing capacity on our lines of credit of $320 million. Lastly, we are pleased to report that subsequent to the end of the quarter, we received approximately $83 million under the state of California extended arrearage program designed to provide financial assistance to customers with past due balances that accrued during the COVID-19 pandemic. Marty will provide additional color on the program in a few minutes. With that, I'll turn the call over to Greg to give an update on our 2021 General Rate Case decision. Greg?

Greg Milleman, VP of Rates and Regulatory Affairs

Sure. Thanks, Jim. I'm going to walk through some of the highlights of the decision for our 2021 GRC decision that we received March 7, 2024. Overall, the decision was financially very positive for the company. As Jim indicated, the decision increases adopted revenues after correction for 2023 by approximately $41.5 million retroactive back to January 1, 2023. The decision also adopted 95% of the requested operating expenses. It adopted a very favorable water mix for groundwater versus water that provides the company financial protection. It authorizes Cal Water to invest $1.2 billion, which meets 86% of our request from 2021 through 2024 in our water system infrastructure projects, including approximately $160 million of infrastructure projects that may be submitted for recovery via the PUC's advised setup process. In fact, we've already filed an advice letter for 145 projects capitalized at $39 million for a $5.8 million increase in annual revenues. The decision provides a very progressive rate design that provides financial stability while benefiting low income, low water using customers. Finally, and most importantly, when voting out the decision on March 7, the commission agreed that the process took too long, and I’m hopeful that the decision on our '24 case will come out more timely. Back to you, Marty.

Martin Kropelnicki, CEO

Great. Thanks, Greg. Just echoing your comments, every commissioner did remark on that issue when we were in the hearing room. We think that's a good sign that they recognize the problems this was causing, not only for us but also for our customers which could have a compounding effect on the rates. I'm going to be on Slide 10. I want to come back to the extended arrearage management program for the State of California. Many of you know we have been extremely proactive, our government affairs team in Sacramento, in looking for ways to help our customers who are still suffering from the lingering effects of the pandemic. If you recall, the state of California had an original arrearage management program that covered half of the COVID time and then it was discontinued. For that first part, the company was able to secure a little over $20 million that was applied to our customer balances during the COVID period. We worked with the state to take some of the unspent federal dollars allocated to the states and created a second arrearage management program. We worked with the state to appropriate approximately $300 million to $400 million of unspent federal dollars and reopened the window to allow utilities and water companies to apply for further funds to offset the past-due balances from June 16, 2021, through December 31, 2022. I'm happy to report that our application was accepted, and we received the entirety of our request, which is the $83 million that Jim mentioned. That money has been received, and during the second quarter, we'll be allocating those dollars to those past-due balances from June 16, 2021, through December 31, 2022. These funds will benefit both current and past-due customers because all customers ultimately bear the cost of uncollectible accounts. Moving on to Slide 11, I want to take a moment to update everyone on where we are with the PFAS regulations, also known as forever chemicals. We believe we are well-positioned to meet the EPA's new guidelines. Across our portfolio, we have a rigorous and coordinated water quality assurance program with protocols in place to test and monitor the water we deliver to our customers. As many of you know, in investing in investor-owned water utilities, we prioritize public health. We have extensive experience with PFO and PFAS in California and Washington. Our utilities have been compliant with the previously issued PFAS guidelines from state regulators. On April 18, the California Public Utilities Commission dismissed our application requesting authorization to modify a previously approved PFAS expense balancing account to improve capital investments related to PFAS compliance. The CPUC indicated we would need to file for recovery of the capital components of PFAS treatment later in the process. This means that I was disappointed they dismissed it without prejudice, but it allows us to file a separate application or include it in the 2024 general rate case. Greg, our plans are to file as a separate application?

Greg Milleman, VP of Rates and Regulatory Affairs

That is correct.

Martin Kropelnicki, CEO

Despite the commission's shortsightedness in recognizing the urgency needed for PFAS treatment, the company released a press release reaffirming our commitment to investing $215 million expeditiously to implement PFAS treatment for approximately 100 wells in all the states in which we operate. Overall, we have a project director managing the implementation in all of our states. That project director reports to the management committee on a regular basis, and we are actively making progress. We plan to spend between $12 million and $20 million this year on PFAS treatment, and that will ramp up as we go into the implementation period over the next couple of years.

Greg Milleman, VP of Rates and Regulatory Affairs

Marty, before you move on, you mentioned the PFAS balancing account…

Martin Kropelnicki, CEO

It's a memo account. Thank you. It is a memo account. It's outside the rate case. We're incurring the cost. It goes to the P&L, but we're allowed to track those costs and we asked the commission to allow us to modify that memo account to pick up the capital components, which was denied. Our capital projects in the ratemaking world do approve an AFUDC allowance for funds used during construction, and that will prove throughout the process until we put that plant in service. Moving on to Slide 12, when we talk about greenhouse gas and Scope 1 and Scope 2 reduction targets, as we worked on our decarbonization strategy and our ESG strategy over the last 5 years, we recently made our commitment to reduce absolute Scope 1 and Scope 2 greenhouse gases by 63% by 2023 from our baseline 2021 year. Our targets are science-aligned, which the team has done a very good job working with a third-party adviser to pull that data together. We expect to achieve these reductions through a multi-pronged approach consisting of the electrification of fleets, water conservation, installing on-site solar where it makes sense, and looking at renewable electricity procurement. In other words, ensuring we are capped on the green side of the grid with the power we use. As many of you may recall, water production and distribution consumes a lot of energy. The more green energy we can utilize, the more it helps us drive towards that target and the other components in our multi-prong strategy. Just as an FYI, the group may evolve its decarbonization strategy if warranted due to changes in the industry, working with our regulators and other operational factors that may arise, including SEC rules. Overall, we are fully committed to delivering value to our customers and stockholders while pursuing these reduction targets as we address climate change. So just to recap, I'm very pleased with the start of 2024 and getting the 2021 rate case behind us. The numbers may be a bit confusing, obviously. When we publish the 10-Q later this week, there'll be more information so you can distinguish between what was a retroactive piece and what was the actual piece for the quarter itself. We are now turning our focus on implementing our infrastructure improvement plans. As Greg mentioned, we have a lot of capital to deploy in addition to PFAS. The guidance that Jim provided does not include the $215 million commitment for PFAS treatment that we've made to our customers. That will be incremental. Also, to note, we have our state Supreme Court date on May 8, which pertains to our oral arguments on the land decision from the commission. We're looking forward to hopefully having a decision from the State Supreme Court probably three months after oral argument or so. We believe that decoupling is absolutely essential for the state of California’s work on climate change, resiliency, and sustainability. I want to thank everyone for your patience through the delays in the 2021 general rate case. I want to extend my gratitude to the rates and accounting teams for their hard work. Not only did we have to close out the year, but immediately after the year we had to post everything— the team did a fantastic job getting that posted to the general ledger. Now we'll move forward with our 2024 plan, investing in infrastructure, addressing PFAS treatment, and filing our rate case for the State of California around July 1. Ellie, let's open it up for questions, please.

Operator, Operator

Our first question comes from Michael Gaugler from Janney Montgomery Scott.

Michael Gaugler, Analyst

Good morning, everyone. Just wondering if you could update us on order supply and water production costs. I noticed they were rather high in the quarter. I know Jim touched on it a little bit. And maybe how we should think about that for the remainder of the year.

James Lynch, CFO

Yes. From a water supply perspective, Michael, the state of California is doing very well. I believe our snowpack for the second consecutive year was higher than our 20-year average. I think it's the first time in a long time that we've experienced two consecutive years of exceeding that average. Our situation looks good, and we've had good opportunities for replenishment of some of our underground aquifers throughout the state of California. I think our other states are also similarly well positioned in terms of actual water supply. We do have some operations in Texas. Most of our utilities down there are wastewater utilities, and we have not seen the current water situation in Texas put any stress on those operations. Regarding expenses and water expenses, we do have the new ICBA in California with the new rate case, which offers us some protection against cost increases in our water production. We'll be relying on that new mechanism as we become more familiar with it. Additionally, I would like to point out we had an increase in other production expenses, which I mentioned earlier, primarily related to the recognition of the deferred WRAM revenue. I view those as something that will continue to reduce as we unwind those deferred revenue costs.

Martin Kropelnicki, CEO

Yes. One thing I would add is that the snowpack looks very good. Water supply within the state of California is performing well. California is still in a stage 2 drought. If you remember the trajectory towards a stage 3 drought, the governor then scaled that back. We're still in a stage 2 drought, and I expect the governor to either maintain stage 2 or potentially downgrade to stage 1, considering the long-term sustainability issues within the state owing to climate change and fluctuations in weather patterns. Overall, for 2024, we believe we're in good shape across all of our districts.

Operator, Operator

Next question comes from Jonathan Reeder from Wells Fargo.

Jonathan Reeder, Analyst

I got a couple of questions here if you don't mind. First would be how should we think about the timing of the cash recovery of the retroactive 2023 GRC revenues?

Greg Milleman, VP of Rates and Regulatory Affairs

Jonathan, this is Greg Milleman. We will be focusing on implementing the new rates and getting those into effect first, calculating what the lost revenue or IRMA amount, and the M-WRAM amount will be so we can book that. We will file in the third quarter for recovery of those back amounts. We need to go through May 31, when we're planning to have the new rates fully in effect and close out the IRMA accounts, but we will need some time to put together that filing and start requesting it. We plan to start requesting it in the third quarter. It is based on a per CCF surcharge. I would estimate in the summer, it will be a bit higher and then decrease in the winter months, fluctuating over 12 to 24 months.

Jonathan Reeder, Analyst

Okay. It sounds like those revenues aren't going to really come in, in 2024. It will likely be more '25 and '26?

Greg Milleman, VP of Rates and Regulatory Affairs

The revenues were booked in the first quarter. I thought your question was related to cash.

Jonathan Reeder, Analyst

No, exactly, you are. The cash flows won't come in until '25 and '26, I apologize.

Greg Milleman, VP of Rates and Regulatory Affairs

Yes. The one thing I would point out, though, is that with the new rates coming into effect, we will start to experience a positive cash uptick related to those new rates as we enter our traditionally busy season. We were pleased to be able to implement the rates effective as of June 1.

Jonathan Reeder, Analyst

Got you. And then how should we think about the $83 million arrearage payment program, cash recovery potentially offsetting 2024 external equity needs?

Martin Kropelnicki, CEO

Yes. If you remember during COVID, we were decoupled. The revenue was all accounted for through the decoupling mechanisms from the State of California. This piece essentially becomes cash flow. Customers with balances that are still past-due from June 16, 2021, through the end of 2022 will see those dollars applied to their accounts. We'll also be applying some of these amounts to the existing WRAM balances for those customers as well. That will all work its way into cash flow but won't impact revenue. It will influence the aged receivables still outstanding from COVID, and you'll see an increase in cash flow. Undoubtedly, this helps the company avoid the need to go to the market to issue equity immediately. Given that water utility stocks were down over 20% in 2023, we aren't raising funds in the market anytime soon. Jim is not throwing any paper at me for saying that. The reality is, with this rate case and our restructuring of the rate design, moving from variable to more fixed recovery, that will all help us throughout this year.

Jonathan Reeder, Analyst

Okay. So in terms of the absolute size of annual equity needs, that's still to be determined at this point?

Martin Kropelnicki, CEO

Yes, I think so, Jon. The good news is that the recognition of the 2023 impact of the 2021 decision has brought us back to where we had hoped we would be in regard to our capital structure, aligning very closely with our authorized capital structure. There isn't a pressing direction for us to pursue specific capital options at this time unless necessary. Right now, we have substantial availability on our lines of credit. We recognize that interest rates remain high, so we'll be reviewing short-term versus long-term debt as we advance. However, it's only with the booking of the current rate case results that we can forecast our capital needs for the remainder of the year. Higher ROE effective January 1, at 10.27, is also contributing positively to our cash flows.

Jonathan Reeder, Analyst

Yes, sure. I'm glad you brought up the ROE. It leads into my next question: Given the GRC final outcome and the recovery of some of the CapEx or advice letter recovery process, where do you expect your earned ROEs in '24 and '25 to come in relative to the allowed levels?

Martin Kropelnicki, CEO

That's a very good question. '25 is certainly a little harder to discuss. But from a budgeting perspective, we strive to meet that ROE target. Delays in rate cases can throw everything off balance. For 2024, we expect to meet or potentially exceed that ROE. However, for 2025, we may encounter regulatory lag, which could start to influence our results. Concerning Michael Gaugler's questions about production costs, in Northern California, electricity time-of-use rates have soared to $0.40 to $0.50 per kilowatt hour, among the highest in the U.S. That will impact our operations, and it, unfortunately, lays the groundwork for next rate filings. So, for 2024, we are confident, and we will work hard to maintain our ROE. For 2025, we will budget accordingly.

Jonathan Reeder, Analyst

Okay. And lastly, I know you filed for $39 million of the advice letter recovery projects already. How much do you expect to file in total in 2024? And what about in 2025?

Martin Kropelnicki, CEO

That is still to be determined, Jonathan. If anyone listened in to the rate proceeding, I found it fascinating because the commission focused on the 335 projects that the company didn't complete or only completed five out of. However, during this three-year span, we completed around 5,000 to 6,000 total projects that went unnoticed. The rate-making process in California fails to recognize that certain projects go through multiple rate case cycles now. For example, procuring land, designing the well, obtaining treatment sign-off, constructing the treatment, and conducting tests can take longer than three years. Additionally, the commission overlooks that as projects become more complex and extend over time, the contingency levels escalate. These two issues are challenges Greg will address in the 2024 rate case. We're adept at achieving our capital commitment figures and implementing capital, but the rate-making process needs to improve efficiency.

Jonathan Reeder, Analyst

Okay. But will you complete all 160 million projects in 2024 and 2025? Or might some fall into the next rate case cycle still?

Martin Kropelnicki, CEO

Yes, we currently have a focused effort to reassess those projects from two perspectives: confirming their necessity and ensuring that these weren't projects for which we subsequently found alternatives. Moreover, we are looking to identify the timeframe for the completion of the remaining projects out of the $160 million. At this point, we are still underway in that assessment, and we hope to have a clearer sense of timing in the next few weeks.

Operator, Operator

Our next question comes from Angie Storozynski from Seaport Research Partners.

Agnieszka Storozynski, Analyst

First, you alluded to the 10-Q, which will have more information about the other retroactive impacts on the first quarter earnings. But can you just give us a sense, roughly what it is from an EPS perspective versus the 21 that you reported?

James Lynch, CFO

We haven't broken it down from an earnings per share perspective, but relatively speaking, there was approximately $90 million of revenue included in the 2024 first quarter that related to the decision, in addition to about $8.5 million of incremental expenses related to the decision.

Agnieszka Storozynski, Analyst

Okay. I mean, you don't have guidance, so that's actually important for us to have a basis to extrapolate from, right? Again, we would really appreciate it going forward. Secondly, on the PFAS spending, will you be booking AFUDC earnings associated with this CapEx? Will it flow through the income statement?

James Lynch, CFO

Yes, we are eligible to use the AFUDC mechanism as we move forward with those expenditures. As for your question, we will reduce our interest expense for the year at AFUDC to the extent that we are making expenditures related to those projects.

Agnieszka Storozynski, Analyst

And just in general on PFAS, we're witnessing losses against investor-owned utilities concerning the expectation that utilities weren't actively seeking to remove these forever chemicals from distributed water previously. How can you protect yourself? Is there anything in California that would allow you to limit litigation risk and, more importantly, limit earnings impact?

Martin Kropelnicki, CEO

Yes. From a liability standpoint in California, we have part well, which is our well decision stating that if we're operating in accordance with the rules established by our regulator, we have protection. I'm not too concerned about California compared to what we're seeing on the East Coast around product liability linked to water. From an earnings perspective, as Jim said, we will accrue AFUDC on capital projects. Most of the treatment will be capital-related. Out of the 1,170 wells we oversee, it's only about 100 that will require intervention. We will accrue AFUDC on that and manage operating costs through the memo account for recovery down the line. We've been tracking litigation against polluters and believe we could recover some funds to help offset the implementation costs and capital expenses for PFAS treatment.

Agnieszka Storozynski, Analyst

Okay. Lastly, you mentioned the underperformance of water utility stocks and the timing of your future equity. With your recent 7% dividend increase, do you think that going forward, depending on stock performance, you'll consider adjusting dividend growth downward if you have higher equity needs? Is dividend growth a lever in this high-interest-rate environment? Again, what is this 7% growth linked to?

Martin Kropelnicki, CEO

Certainly, if we review our dividend growth over the last five years, it has outpaced inflation. We aim for a payout ratio between 55% and 65% and manage within that range. I believe that the compound annual growth rate of dividends positively influences equity valuation in the marketplace. As Jim mentioned, we've grown our dividend consistently for the last 57 years. I see no reason to divert from that trend. When the board assesses our capital needs, we consider macroeconomic conditions, dividend growth rates in the utility sector, and our financial requirements to keep everything in balance. However, for me, dividend growth is essential for our investors, and they appreciate the stability that comes with a water utility. During the challenging year of 2023, I emphasize that ensuring water quality remains our top priority, continuously investing at a depreciation rate of three times, and maintaining dividend growth allows us to create value for stockholders in the long run.

Operator, Operator

Our next question comes from Davis Sunderland from Baird.

Davis Sunderland, Analyst

On that PFAS question, but typically has the PFAS business created any opportunities for you guys to be more aggressive or interested in systems that may have difficulty reaching compliance?

Martin Kropelnicki, CEO

You know, Davis, we lost part of your audio there, you were cutting out. Did you want to try that again?

James Lynch, CFO

I think I can summarize your question. It sounded like you asked if the PFAS situation has influenced our business opportunities or made us more cautious around potential liabilities in systems we might look to acquire, and how we view those opportunities as they come about?

Martin Kropelnicki, CEO

Yes, that's correct. The cost of capital has risen significantly. From a business development perspective, we’ve seen a slowdown regarding new pipeline interests. However, our business development team is still very active, as Jim mentioned, with initiatives in Texas and other ventures in different states. In terms of PFAS, smaller systems will struggle to meet compliance standards. We are well-prepared to handle PFAS treatment efficiently, considering the investment of $215 million across 100 wells. We operate with speed and strive to keep overhead low. On the other hand, smaller systems may lack capital or technical resources to implement necessary treatments, jeopardizing their compliance.

James Lynch, CFO

As a result of Marty's observations, we think that as new regulations come into play, they'll create financial stress on some systems, which might present us with opportunities.

Martin Kropelnicki, CEO

Moreover, whenever we take over a system, we have a liability AMI. For instance, in New Mexico or other acquired troubled systems, we closely collaborate with the regulator to ensure rates are established upfront before acquisition; this is crucial to have an implementation timeline to avoid penalties for non-compliance. We hold ourselves accountable to the highest standards because investor-owned utilities are often seen as the deep pockets for enforcement.

Davis Sunderland, Analyst

I apologize for the audio. Appreciate your time, guys.

Martin Kropelnicki, CEO

Jim, incredible ears! That was impressive that you could decipher that.

Operator, Operator

Thank you. As of right now, we don't have any raised hands, so I would like to hand back over to management for their final remarks.

Martin Kropelnicki, CEO

Alright, Ellie, thank you. Thanks for joining us today, everyone. There's plenty underway, but at least one major matter is behind us: the 2021 General Rate Case. There's still much work ahead regarding tariffs and filing the necessary documentation with the commission to kick off the collection of the retroactive component, but we will be in a better position on our next earnings call to elaborate on that. In the meantime, we will be preparing for our 2024 general rate case and gearing up for the State Supreme Court oral arguments on May 8. Thank you again for joining us, and we look forward to speaking with everyone very soon. Have a great day.

Operator, Operator

Thank you all for attending today's conference call. We hope you have a wonderful day. You may now all disconnect your session.