Public Service Enterprise Group Inc Q2 FY2022 Earnings Call

Ladies and gentlemen, thank you for standing by. My name is Kyle, and I am your event operator today. I would like to welcome everyone to today's Conference, Public Service Enterprise Group's Second Quarter 2022 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded today, August 2, 2022, and will be available for replay as an audio webcast on PSEG's Investor Relations website. I'd now like to turn the conference over to Carlotta Chan. Please go ahead.

Thank you, Kyle. Good morning, everyone. PSEG's second quarter 2022 earnings release, attachments, and slides detailing operating results by company are posted on our IR website, and the 10-Q will be filed shortly. The earnings release and other matters discussed during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. We will also discuss non-GAAP operating earnings, which differs from net loss as reported in accordance with generally accepted accounting principles or GAAP in the United States. We include reconciliations of our non-GAAP financial measures and a disclaimer regarding forward-looking statements on our IR website and in today's earnings material. On today's call are Ralph Izzo, Chair, President, and Chief Executive Officer of PSEG; Dan Cregg, Executive Vice President, and Chief Financial Officer. Following their prepared remarks, Ralph LaRossa, currently our Chief Operating Officer and our next CEO, will join Ralph and Dan to take your questions. Ralph?

Thank you, Carlotta. Good morning, everyone, and thanks for joining us for a review of PSEG's second quarter 2022 results. For the second quarter, PSEG reported net income of $131 million or $0.26 per share compared to a net loss of $177 million or $0.35 per share in the second quarter of 2021. Non-GAAP operating earnings for the second quarter of '22 were $320 million or $0.64 per share compared to non-GAAP operating earnings of $356 million or $0.70 per share in 2021 second quarter. Just a reminder that the second quarter 2021 included the results from our divested Fossil assets and Solar Source. PSEG is on track to achieve our 2022 non-GAAP operating earnings guidance of $3.35 to $3.55 per share based on results through the first six months of 2022. This is largely driven by ongoing rate-based growth from regulated investments and lower costs due to the aforementioned sale of generation assets on the carbon-free infrastructure side of the business. Utility earnings for the first half of 2022 are up 4% over the last year. The majority of 2022's earnings at the carbon-free infrastructure and other side of the business have been realized as of June 30th. For the balance of 2022, the utility will continue to be the main driver of PSEG's growth profile, which results remain within our guidance range. I'm very encouraged by the proposed Inflation Reduction Act that includes production tax credit provisions for existing nuclear and new offshore wind resources. We hope to see it move on to the Senate's floor this week, but more on that later. I know many of you have been following the potential for an impact on our pension results in 2023 due to the significant declines in equity and fixed income markets since the beginning of the year. Should market conditions remain stressed on our December 31st measurement date, we would anticipate non-cash pension headwinds related to these market declines. December 31st is the single date that will determine the pension impact for 2023. So instead of continually updating a number as our dynamic market changes on a daily basis, we would rather assure you that in the interim we are actively developing plans to counteract the potential near-term headwinds should they remain at year-end. I want to emphasize that our pension remains very well funded and does not require any cash contributions for the foreseeable future. From a funding perspective, our pensions were approximately 95% funded at year-end 2021. Rest assured that we will work tirelessly to mitigate the potential future headwinds including pension, supply chain, and general inflationary pressures. I hope you will see through these near-term challenges and recognize what we see that the underlying fundamental utility growth story of PSE&G remains intact, and that our valuation will reflect the improved business mix and overall derisking that continues, all of which gives us the confidence to reiterate our multi-year 5% to 7% EPS CAGR from the midpoint of 2022 non-GAAP operating earnings guidance to 2025. We remain focused on improving our system reliability and resiliency, further derisking the business overall and maximizing affordability for our customers. The statewide moratorium on shutoffs for residential electric and gas service was lifted in mid-March 2022, and collections and shutoffs have since restarted. However, New Jersey passed legislation after the moratorium ended that provided protection from shutoffs to customers who applied for payment assistance programs by June 15th of '22. Applicants for assistance are protected from shutoffs while awaiting their application determination. As a result, PSE&G continues to experience higher accounts receivable aging, which we expect will take the next several years to reset to historical levels. PSE&G's electric distribution bad debt expense is recoverable through its societal benefits clause mechanism and has deferred incremental gas distribution bad debt expense to future recovery, which will likely take place in our next distribution base rate case. Our regulatory framework in New Jersey continues to be constructive. Working with the BPU staff and Rate Counsel, we reached a settlement to begin work this quarter on the infrastructure advancement program. The BPU approved the settlement in June. Over the next four years, we will invest $500 million to extend reliability improvements, inclusive of the last mile of our distribution system as we prepare the grid for the rapid transition to electric vehicles and enable greater integration of renewable energy resources. Turning to our efforts on the environmental, social, and governance or ESG front, we are continuing our internal preparations to finalize company-wide emission reduction goals, and we will be submitting those targets to the United Nations backed Science Based Targets initiative for validation that they are consistent with the objectives of the Paris Agreement to limit the global temperature increase to 1.5 degrees Celsius or less. We have until September of 2023 to finalize and submit our targets for validation. Let me turn now to commodity markets, where we've seen a continued increase in electric and natural gas prices during the second quarter. Although some PJM prices have moderated recently, prices remain at high levels. With gas and electricity supply costs comprising approximately 40% to 45% of a typical residential gas and electric bill, we are keenly focused on controlling costs to minimize the impact of rising commodity costs on these customer bills and maximizing affordability. On the electric side, PSE&G contracts for its default Basic Generation Service on a three-year rolling basis, where each year, one-third of the load is procured for a three-year period. New BGS rates went into effect June 1st. Despite the rise in costs, due to a decline in actual versus assumed capacity costs, electricity bills actually declined. On the gas side, PSE&G is permitted to recover the cost of hedging up to 80% of its annual residential requirements through the BGSS tariff. We recently filed for our anticipated BGSS costs to go into effect in rates before the upcoming winter season that will reflect current market prices at the time and be trued up for actual costs over subsequent time periods. In the nuclear side of the business, we remain fully hedged in 2022 and 2023 and a little more than half hedged in 2024. With our ratable base load hedging program in effect, we should begin to see higher prices layer in as we continue to incrementally sell power forward into 2024 and 2025 assuming prices remain at today's higher levels. The uncertainty of power prices highlights the critical need for longer revenue visibility to safeguard the economic viability of existing nuclear plants, which are increasingly recognized as an irreplaceable source of carbon-free domestic energy supply. We continue to observe a positive shift in public sentiment and support for preserving these nuclear plants. Most recently, the proposed Inflation Reduction Act of 2022 includes the nuclear production tax credit we have advocated for over the last two years, effective from January 24 through 2032. This pricing floor for nuclear generation addresses our need for longer-term revenue visibility. The bill also includes transitioning to a technology-neutral ITC beginning in 2025 for new carbon-free resources. There is also a 15% corporate minimum tax on net book income that would impact us and our customers. We are analyzing all aspects of the bill, including the many provisions that will help address climate change. We are hopeful that these provisions will pass Congress. If the Senate approves the measure, the House would likely return from the August recess to vote on it. We continue to have policy-level discussions with New Jersey state legislators who are currently in summer recess to discuss a longer duration alternative to the current zero emission certificate framework for nuclear should the price floor prove elusive. Now let me turn to an update on our offshore wind opportunities, which we continue to advance on a number of fronts. The timing of New Jersey's decision on its state agreement approach to transmission offshore is expected this October. On Ocean Wind 1, development efforts are ongoing as we approach the upcoming Financial Investment Decision date in the coming months. We continue to have conversations around co-investing with Ørsted, and due diligence continues in earnest in this regard. As I step down from my CEO duties on September 1st, PSEG is well poised to enter its 120th year of serving New Jersey with essential energy services that help to power the economic engine of the state and advance its energy policy leadership. In my role as Executive Chair of the Board through the end of '22, I will continue to advocate on behalf of PSEG in key policy arenas. Now later, you'll hear from Ralph LaRossa, who I must say is the most well-prepared CEO elect in the history of our company. With Ralph at the helm, PSEG will further advance its powering progress vision of a future where people use less energy that is cleaner, safer, and delivered more reliably than ever. PSEG's dedicated workforce will continue the public service heritage that recently earned us the 2022 Edison Award from The Edison Electric Institute, the Electric Utilities highest industry honor and recognition of PSEG's infrastructure monetization programs focusing on protecting our customers and communities from extreme weather conditions. That concludes my prepared remarks, and I will now turn the call over to Dan for more details on our operating results. Then Dan, Ralph and I will be available for your questions.

Thank you, Ralph. Good morning, everybody. As Ralph mentioned, for the second quarter of 2022, PSEG reported net income of $0.26 per share and non-GAAP operating earnings of $0.64 per share. We've provided you with information on Slides 9 and 11 regarding the contribution to non-GAAP operating earnings by business for the second quarter and year-to-date periods ended June 30th. Slides 10 and 12 contain waterfall charts that take you through the net changes quarter-over-quarter and first half 2022 over first half 2021 and non-GAAP operating earnings by major business. We'll start with PSE&G, whose second quarter net income was relatively flat compared to the second quarter of 2021, reflecting rate base additions from our investment programs and our gas system monetization, which was largely offset by the IRLM in the quarter, much of which was timing-related. Compared to the second quarter 2021, transmission margin was flat as growth in rate base and other positive adjustments were offset by the August 2021 implementation of a new transmission formula rate, including our base return on equity moving to 9.9% plus the 50 basis point add. For distribution, gas margin improved $0.02 per share over the second quarter of 2021, reflecting the scheduled recovery of investments made under the GSMP and a true-up from the SIP. Electric margin rose $0.02 per share compared to the second quarter of 2021, driven by the scheduled recovery of Energy Strong 2 investments and the SIP. Other margin primarily related to service also added $0.01 per share compared to the second quarter of 2021. O&M expense was $0.04 per share unfavorable compared with the second quarter 2021, reflecting higher costs from customer settlement proceedings as courts reopened and higher electric operation expense and gas tariff work. Interest expense was $0.01 per share unfavorable, reflecting higher investment. The impact of PSEG's $500 million share repurchase program had a $0.01 per share benefit on second quarter 2022 results. Flow through taxes and other items had a net unfavorable impact of $0.01 per share compared to the second quarter of 2021, driven by the use of an annual effective tax rate that will reverse over the remainder of the year. Summer weather during the second quarter of 2022, measured by the temperature humidity index, was warmer than normal but cooler than temperatures during the second quarter of 2021. With the SIP in effect, variations in weather, positive or negative, have a limited impact on electric and gas margins, while enabling the widespread adoption of PSE&G's energy efficiency program. For the trailing 12 months ended June 30th, weather normalized electric and gas sales reflected lower residential sales, both electric and gas lower by approximately 3% and higher commercial and industrial sales, higher by 2% and 3%, respectively as more people return to work outside the home. Growth in the number of electric and gas customers remain positive by approximately 1% over the trailing 12-month period. PSE&G invested approximately $741 million during the second quarter and approximately $1.4 billion year-to-date through June 30th, and we are on track to execute our planned 2022 capital investment program of $2.9 billion. The 2022 capital spending program includes infrastructure upgrades to transmission and distribution facilities, as well as the continued rollout of the Clean Energy Future investments in energy efficiency, energy cloud and smart meters, electric vehicle charging infrastructure, and the new investments that will begin this quarter. PSE&G's forecast of net income for 2022 is unchanged at $1.510 billion to $1.560 billion. Moving on to carbon-free infrastructure and other, where we reported a net loss of $174 million or $0.35 per share for the second quarter of 2022, driven by our nuclear decommissioning trust and mark-to-market impacts and non-GAAP operating earnings of $15 million or $0.03 per share. This compares to a second quarter 2021 net loss of $486 million and non-GAAP operating earnings of $47 million, which included the results of the divested fossil and solar assets. For the second quarter of 2022, electric gross margin declined by $0.25 per share, primarily due to the sale of the 6,750-megawatt Fossil portfolio this past February, and the sale of the Solar Source portfolio in June of '21. This reduction in gross margin includes recontracting approximately 8 terawatt hours of nuclear generation at a $3 per megawatt hour lower average price. Lower margins at gas operations also resulted in a $0.01 decline in gross margin versus the second quarter of 2021. Year-over-year, second quarter cost comparisons were better by $0.22 per share due to the divestitures, driven by lower O&M depreciation and interest expense that will mainly benefit first half 2022 results. Current activity was a $0.01 per share unfavorable compared with the second quarter of 2021 as a result of higher interest expense, and taxes and other were $0.01 unfavorable compared to the second quarter of last year. Nuclear generating output increased by over 3.7% to 7.5 terawatt hours in the second quarter of 2022, reflecting the absence of a refueling outage at Hope Creek in the year earlier quarter. PSEG is forecasting generation output of 14 to 16 terawatt hours for the remaining two quarters of 2022, and is hedged approximately 95% to 100% of this production at an average price of $28 per megawatt hour. For 2023, we're forecasting nuclear baseload outlook of 30 to 32 terawatt hours with 95% to 100% hedged at an average price of $31 per megawatt hour. For 2024, we're forecasting nuclear baseload output of 29 to 31 terawatt hours, which is 55% to 60% hedged at an average price of $32 per megawatt hour. The forecast of non-GAAP operating earnings for carbon-free infrastructure and other is unchanged at $170 million to $220 million for 2022, excluding financial results from the divested fossil assets. With respect to recent financing activity and collateral postings, PSEG remains on solid financial footing. As of June 30th, the PSEG money pool, including PSEG and Power, had available liquidity, including cash on hand of $3.7 billion. In April and May of 2022, we entered into a 364-day variable rate term loan agreement totaling $2 billion. Also in the quarter, Power entered into two $100 million letter of credit facilities expiring in April '24 and April '25 respectively. In July of '22, PSEG repaid a $1.25 billion short-term loan that was due later this month. Our net cash collateral postings of $2.5 billion at June 30th are related to out-of-the-money hedge positions as energy prices rose during the second quarter. Collateral postings have increased subsequent to June 30th, and at the end of July, Power had net collateral postings of approximately $2.5 billion, most of which are associated with hedges in place through the end of 2023. As Ralph mentioned, we are reaffirming PSEG's 2022 non-GAAP operating earnings guidance of $3.35 to $3.55 per share, with regulated operations contributing approximately 90% of the total. For the full year of 2022, PSE&G's net income is forecasted at $1.51 billion to $1.56 billion. Looking beyond 2022, regarding the pension item Ralph referenced earlier, we have outlined several items in our current 10-K that will influence the pension impact in 2023, including updating the discount rate and interest costs, and the expected return on planned assets for 2023. Last, we've completed our $500 million share repurchase through open market purchases at an accelerated share repurchase program in May of 2022. That concludes my prepared remarks, and with this being Ralph's last earnings call as CEO, I'll give him an opportunity to make some closing remarks before taking your questions.

Actually, Dan, I think I'll wait until later, sorry about that. Why don't we go right to the questions, Kyle?

The first question is from Shar Pourreza with Guggenheim Partners.

So Ralph, let me just, if it's okay, start on the pension side. Can we maybe just get a little bit more details on the potential offsets that you're thinking about implementing? I mean everyone has estimates out there on what the drag could be, so whether it's $0.20, $0.30, $0.40, whatever it ends up being. Do you feel like you could offset that kind of drag and how does that potentially factor into a rate case filing in '23?

So Shar, of course, we like to think of the fact that we're always mindful of our O&M expense. But you can always do more; there's a cost versus quality consideration that we'll have to take into account. So there's no doubt we can offset some of the headwinds. We're just not going to get into a conversation today about how easy it is to offset $0.05 versus $0.30 versus $0.20. Believe me, we've seen numbers dance around that whole range over the past six years. We're not going to do anything that compromises the long-term service quality of the customers. We're going to look at every part of our cost structure to see what is a good short-term decision and what is a good long-term decision. The utility does have a rate case that starts January 1, 2024. We view this as a short-term headwind that's not quantifiable on August 2nd and can only be quantified on December 31st, but we're looking at a whole litany of potential cost reductions, with each one coming with some risk. We'll draw the line where we feel comfortable that the short-term risks are manageable, but we do nothing to jeopardize the long-term health of the company. I know that's not a quantitative answer to your question. But I think it will drive people crazy to every day look at what markets are doing and what congressional leaders are visiting what island nation and what it's doing to equity markets and things that are simply not within our control over the next few months.

And then just Ralph, on the strategy side with generation, there’s obviously improved visibility on nuclear, which is one of the things you mentioned would be a trigger point potentially to assess whether you want the assets within the portfolio or not, so any updates there? And then just around offshore wind, there's some very healthy valuation marks on the land lease values, with your neighbor looking to provide another maybe data point soon. Any thoughts there on whether you would reassess value here as well? So how are you thinking about potential trigger points to exit the remaining generation business you have?

I think you hit the nail on the head in terms of important data points, Shar. Look, if the Inflation Reduction Act passes as proposed, there are some technical amendments that we're working with bill sponsors to make sure are considered because of some language that is inconsistent with what people have told us they're trying to achieve. The nuclear energy price is $44 a megawatt-hour, give or take a few pennies, as long as power prices in the market don't drop below $25 and don’t exceed $44. The nuclear assets begin to look like a rate-based return infrastructure with a steady and attractive cash flow, making them economically viable. There’s a lot of work that needs to be accomplished between now and making that a reality. If it's interpreted the same way we interpret it, it serves the state of New Jersey very well, serves the company very well, serves the planet very well. On offshore wind, we've got another important data point coming up that you alluded to. There is another company that is in a strategic review process and we'll carefully monitor the outcome while pursuing all due diligence efforts. New Jersey is going to build 7.5 gigawatts of offshore wind, and that will have a significant impact on tower markets, bill headroom and opportunities to grow earnings per share. We want to ensure we are taking a long view in terms of the role to play in that.

What was the test year for the rate case that you guys are going to file, is it '23?

The test year for the rate case that you will file is from July of '23 to June '24, so it does include '23 and it will be filed on January 1 of '24.

Our next question is from Nick Campanella with Credit Suisse.

Just acknowledging that you reiterated the long term 5% to 7% EPS CAGR. When we consider the mitigation strategies you're targeting, and this 5% to 7% CAGR, is this a long-term CAGR or do you still have visibility on 5% to 7% growth in '23?

So Nick, as you know, in a regulated world with test years and rate cases, we never said the 5% to 7% CAGR applies to every year. It’s the midpoint of the '22 guidance and you look at where we are in '25— the CAGR over that timeframe is 5% to 7%. We never broke out what '23 would be or what '24 would be.

And then just regarding the minimum 15% tax, how does that kind of affect your business, if at all, and what are the offsets?

The layout right now is similar to what's in Build Back Better. Your first consideration is the size of the earnings from the company to determine whether or not you're subject to it. It will likely deemphasize things like depreciation and give you a lower rate in exchange. So as an industry, we're all exploring where this is going. I know some in Washington had challenges against this type of increase in the first go-round, but it currently looks similar to what's in Build Back Better.

And if I can just squeeze one more in, I think folks are wondering, so I’ll ask. Just any thoughts on an Analyst Day this year?

Nick, right now, we're planning to do an Analyst Day in the first quarter of '23. I think Ralph has laid out a bunch of mileposts that would lead us to say that there's enough moving parts that it makes sense for us to have that conversation in the first quarter of '23.

Our next question is from Steve Fleishman with Wolfe Research.

Ralph, I just want to wish you the best in case this is your last earnings call. First, on the pension, how should we think about how the pension is roughly split between regulated and nonregulated parts of PSEG?

You probably have 75% to 80% of it that's going toward the regulated piece.

And then when you think about your confidence in the 5% to 7% CAGR, is most of that because it will be adjusted in the rate case regardless of the pension performance? Can you just rely on a normal return, or are you expecting the market to recover?

Think about it more in terms of the latter, Steve. You're going to have the effect of markets on equity and debt returns for your asset return within the trust. With a bigger part of the pension on the utility side, you're going to have a regulatory aspect in play.

So it's not like you're counting on the markets to come back or anything like that?

Right.

And then Ralph Izzo, unfair question to end things up. You've been very involved in working on this IRA law. Just curious your best judgment on the likelihood it passes.

I was a little worried about Senator Sinema, but the tax provisions don't seem to be a big number. It’s hard to believe that it would result in having to worry about one more renegade Senate vetoing the bill. There's a good chance the Senate could retain a Democratic majority. Many feel this is a critically important climate change initiative and that makes it all the more important to get it over the finish line. I’d say the odds are looking quite good at this point.

I had one last question I forgot about. Offshore wind transmission, the bidding for that. Is there any update on the process there?

The RFP, I think, is going to come out in the first quarter of next year.

It’s an October date, Steve, for when we're supposed to be hearing back on that. There's been work ongoing on it. I know PJM put out a piece related to some risks and constructability. Ultimately, it sits within the BPU's jurisdiction with PJM providing technical support. October is still when we're supposed to hear back.

The next question is from Durgesh Chopra with Evercore ISI.

Just on the pension topic. One of the discussions that we've had with investors relates to your earned ROEs versus authorized. Obviously, pension has been somewhat of a tailwind in past few years, and it looks like it's going to be a going forward. Can you comment on your earned versus authorized returns at the utility currently? And how are you modeling that going forward in your 5% to 7% target?

If you want to think about what we would anticipate going forward, it would be earning our allowed return. You're going to have tailwinds and headwinds from various items—pension is certainly one. There are other items that also come into play. We anticipate working to earn our allowed return.

40% of rate base is transmission, which is basically trued up exactly every year.

I wanted to return to the strategic review on offshore. How critical is being involved with the offshore generation side to winning some of these offshore transmission opportunities? You indicated roughly over $1 billion in opportunity, and we'll hear about it in October. How critical is that involvement, or do you think those are independent?

I think those are two independent things. I don't think it's critical at all.

The next question is from David Arcaro with Morgan Stanley.

Could you talk a little bit about the hedging environment for 2024 right now for Power? Is there any update on your ability to take advantage of the current commodity backdrop to accelerate some hedging from here?

There's more liquidity out there, David. We couldn't close out the entire position in a very short term, but there's liquidity to continue to do what we anticipate—staying on a ratable path. Our market environment has higher pricing than we've historically seen. There's a backwardated curve that provides some conflicts. That construct will continue.

Just wondering how you'd redeploy capital and how the strategic considerations might unlock cash flow?

The infrastructure advancement program recognizes that we need to invest in the last mile since there was much to do with the higher voltage part of the system. Investments at the level of resiliency and reliability are in demand from customers. There’s a long runway of utility investment needs.

Our next question is from Julien Dumoulin-Smith with Bank of America.

I want to come back to the 5% to 7%. Dan, what's the expectation of this persisting beyond '23? Does that include the latest net pension headwinds in Power mark-to-market?

I think it's consistent with what we've been saying. We're not going to know the number until December 31. Given variability, we may see some movement there. We will drive through the initiatives that we've laid out, and determine where we land within 2023.

So you expect the utility to grow 5% to 7% specifically?

We provide a rate base CAGR for the utility. It’s important to note that we don’t break out the CAGR for each business separately. The utility earnings should equal rate base minus O&M minus regulatory lag plus new customer growth.

Why only hedge 5 percentage points of '24 at this point? Is it just the federal support and uncertainty that holds you back?

It's just about being consistent with how we're thinking about the ratable program. We want to stay in line with a ratable range in the near future.

The next question is from Ross Fowler with UBS.

I want to clarify the dynamic between the nuclear PTC at the federal level and the ZECs in New Jersey. Is it correct that if I have hedged at a certain price, it could be above the PTC?

You're absolutely right. The PTC serves as a floor, and realized prices can exceed that floor and impact revenue accordingly.

The next question is from Michael Lapides with Goldman Sachs.

Dan, regarding the collateral postings, how should we think of that cash returning over the next 18 months?

You're thinking about it exactly right. As collateral comes back, we'll reduce our draws on credit facilities, which in turn reduces short-term debt.

If I applied the Inflation Reduction Act to the minimum tax requirement for 2022, how would that impact cash flow materially?

It would depend on various year-over-year factors. It could result in some onetime items affecting cash flow, but the delta with accelerated depreciation will be significant.

As it relates to the IRA and its potential passage, how would this impact your financing strategy and agency thresholds?

The IRA introduces several variables that could alter our financing strategy. The nuclear PTC would provide flexibility on cash flow, potentially easing agency views.

Any takeaways from the IAP process, particularly as related to future extensions of CEF and GSMP programs?

The IAP process serves as a signal for the need to invest in the last mile of the system proactively.

It's been a genuine honor and privilege to be with this company for 15 years. I extend my sincere thanks for all the conversations and probing questions you've offered over those years. I will miss those interactions. The company is in great hands with Ralph, Dan, and the entire senior team. They will do a far better job than I was able to do. I’m encouraging our leadership team to take a long-term view and gather important information before rushing into decisions with potential short-term appeal but long-term consequences.

Thank you, Ralph. I want everyone to know how excited I am for our future. We are very well positioned by our Power and Progress vision, and I look forward to continuing the work that we have started. Thank you for your industry leadership on addressing climate change issues.

Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.