Earnings Call: Q2 2018

Aug 1, 2018

Greetings, and welcome to the FirstEnergy Corp. 2nd Quarter 2018 Earnings Conference Call. As a reminder, this conference is being recorded. It now my pleasure to introduce your host, Irene Prezel, Vice President, Investor Relations for FirstEnergy Corp. Thank you, Ms. Frizzell. You may begin. Thanks, Sherry. Welcome to our Q2 earnings call. Today, we will make various forward looking statements regarding revenues, earnings, performance, strategies and prospects. These statements are based on current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from those indicated by such statements can be found on the Investors section of our website, under the earnings information link and in our SEC filings. We will also discuss certain non GAAP financial measures. Reconciliations between GAAP and non GAAP financial measures can be found on the FirstEnergy Investor Relations website along with the presentation which supports today's discussion. Participants in today's call include Chuck Jones, President and Chief Executive Officer Steve Strah, Senior Vice President and Chief Financial Officer and several other executives in the room who are available to participate in the Q and A session. Now, I'll turn the call over to Chuck. Thanks, Irene, and welcome, everyone. Hot weather and strong operational performance across our company led to great second quarter results. Our earnings exceeded the guidance we provided to the investment community and I remain very proud of our FirstEnergy team's record of consistently meeting or exceeding the estimates we have provided to you over the last three and a half years. We're entering the second half of the year with tremendous momentum on our customer focused regulated growth strategy. Looking at the balance of the year, we are currently tracking near the upper end of our 2018 operating earnings guidance range of $2.25 to $2.55 per share, and we are pleased to affirm that range today. For the Q3, we are introducing an operating earnings guidance range of $0.65 to $0.75 per share. We are also affirming our long term operating earnings growth projection of 6% to 8% through 2021. This includes the impact of the amended settlement agreement in the FES bankruptcy case to include the FES and Unsecured Creditors Committee. This final comprehensive settlement defines and quantifies all of FirstEnergy's obligations with respect to FES and PhenoC and is a milestone development as we move forward as a fully regulated company. I will touch on the significant updates to the April agreement and principle. You can find more details on these items along with other non economic terms in the appendix of the quarterly highlights presentation that is published on our website. First, we will provide a credit for 9 months of the 2018 shared services costs on behalf of FES of up to $112,500,000 In addition, we have agreed to extend the right for FES to purchase shared services from the end of this year to June 30, 2020. 2nd, we have increased the cash payment by $88,000,000 and third, we have agreed to cover certain FES employee benefit related costs with an expected value of $18,000,000 including a voluntary enhanced retirement program if offered by FES. In terms of timing, we expect FES to file the agreement with the bankruptcy court by the end of August for approval in September. Reaching this settlement only 4 short months after the bankruptcy filing is a tremendous accomplishment and it represents an outstanding effort by our restructuring working group and everyone else involved. In addition, by completing this effort squarely in mid-twenty 18, we are fulfilling the commitment we made to you when we announced our timing to exit competitive markets. With the resolution of this milestone step in the bankruptcy process for FirstEnergy, we look forward to entering 2019 with our focus on the continued successful implementation of our regulated growth strategies. Let's switch gears and discuss our 2nd quarter results and other developments. In our distribution business, weather was the dominant driver, but it wasn't the only positive development. In our residential segment, we saw growth in both customer count and weather adjusted usage in the second quarter and we are hopeful these results signal an improving economy in our service territory. We also continue to see growing demand from our industrial customers with their less electric usage increasing by 2%, marking the 8th consecutive quarter of growth in that customer class. Turning to regulatory activity. In New Jersey, severe coastal weather systems and nor'easters are a difficult reality for our JCP and L customers as well as our utility infrastructure. Recently, our JCP and L team conducted a detailed analysis of the distribution system and assessed lessons learned from restoration's efforts following severe weather events. From that analysis, we developed JCP and L Reliability Plus, an infrastructure investment plan that is designed to improve customer service by reducing the frequency and duration of power outages for our New Jersey customers, particularly those related to severe weather. This 4 year $400,000,000 plan was filed with the BPU last month. These targeted incremental investments include nearly 4,000 enhancements to help the reliability and resiliency of JCP and L's overhead and underground distribution lines, new equipment to minimize outages and additional tree work to reduce the impact of storms. We requested BPU approval by the end of the year. In Maryland, later this month, we plan to file the 1st base rate case for Edison in nearly 25 years. The request will address the impact of federal tax reform on customer rates as well as recovery of investments made in our Maryland distribution system to ensure continued safe and reliable service. In Ohio, our application for a $450,000,000 distribution platform modernization plan is pending at the PUCO. As we have discussed, the 3 year plan seeks approval to redesign and modernize portions of our distribution system, which will help our Ohio utilities restore power faster, strengthen the system against adverse weather conditions and enhance system performance by allowing remote monitoring of real time grid conditions. In our transmission business, in May FERC approved our settlement agreement establishing a forward looking formula rate for MATE with an implementation date for new rates of July 1. Our customer focused Energizing the Future program is driving significant improvements in the performance of our transmission infrastructure. Since 2014, we have completed between 60700 transmission projects per year. These have been focused on upgrading or replacing aging infrastructure, building a smarter, more secure transmission system and adding operational flexibility, so grid operators can quickly adjust to changing conditions in the grid. We have replaced or rebuilt more than 1200 miles of transmission lines across our service territory and we have a rigorous process in place to continue identifying projects that can reduce transmission outages and enhance reliability for our customers. In 4 years since we launched this program, these efforts have resulted in a 37% reduction in transmission equipment related outages in our ATSI zone, which serves our Ohio Edison, Cleveland Electric Illuminating and Toledo Edison utilities in Ohio, as well as Penn Power customers in Western Pennsylvania. We remain on track to invest more than $1,100,000,000 this year on transmission upgrades growing to $1,200,000,000 per year from 2019 through 2021. We continue expanding the program eastward. We fully expect to achieve similar results in our MATE region, which encompasses our Med Ed and Penelec service areas in Pennsylvania. In addition to our strong progress on these regulated growth strategies, we are making headway in our effort to align our cost structure and workforce for the future through our FE tomorrow initiative. In June, we offered voluntary severance and early retirement packages to approximately 600 employees, predominantly in our shared services organization, which includes groups such as IT, communications, finance and legal. The offers were accepted by nearly 500 individuals. These employees will begin departing this month with most retiring by the end of the year. In addition, in July, we extended the retirement package to eligible members of our executive team with Jim Pearson and Layla Vespoli both accepting their offers. Layla will retire on April 1, 2019 and Jim will retire no later than that date. I'd like to personally thank Jim, Leila and all of the other employees who are retiring from our company for the many valuable contributions they've made over their careers. These departures roll into our FE Tomorrow initiative where we continue our work to identify the optimal organization and properly line our corporate costs and systems to support our efficient regulated growth company going forward. While we don't have any financial projections related to FE tomorrow to share with you yet, we expect that the initiative will offset the nearly $30,000,000 related to depreciation for common systems shared with FES, which we previously disclosed in our guidance. We expect to be in a position to provide more details on these activities during our Q3 call. Had a great first half of the year and we are committed to executing the plan we've already laid out. Now, I'll turn it over to Steve for a review of the quarter and other financial developments. Thanks, Chuck, and good morning, everyone. Last night, we reported very strong second quarter results. Our GAAP earnings were $0.28 per share and our operating earnings were $0.62 per share. This exceeded the top end of our 2nd quarter guidance. As a reminder, to provide you with a comparative view of our performance, we continue to present all of our operating results and projections on a fully diluted basis in light of the January equity issuance. This allows us to show all of the preferred shares as fully converted and excludes the impact of conversion timing. While it does not impact our presentation, I'll note that preferred shareholders did begin to convert these shares in July. You can find reconciliations and other detailed information about our results in the Q2 consolidated report to the financial community, which is posted on our website. Before we move into operating earnings drivers, I'd like to with the redemption of long term debt at Allegheny Energy Supply and Allegheny Generating Company. You'll recall that we used the proceeds from the sale of the Bath hydroelectric plant, which closed during the quarter and the earlier sale of gas fired plants to redeem this debt. And second, GAAP earnings results include a $0.17 per share benefit related to 2 regulatory actions. The first of those actions, FERC approved a settlement that reallocated previously incurred costs of certain transmission projects across utilities and PJM, which will result in a refund to our Ohio utilities. This benefited our 2nd quarter GAAP earnings by 10%. The second action, in the wake of the Ohio Supreme Court's decision regarding costs incurred to secure renewable energy credits in Ohio, We recognized a $0.07 per share benefit from the reversal of a reserve recorded in 2013. I'll note that the accrued carrying charges on the balance were also reversed, but were not included as a special item because that expense was always part of our operating earnings. This appears as a $0.03 per share benefit to operating earnings in our distribution business and was not part of our original guidance. Now moving on to other key operating earnings drivers in our distribution business. Earnings benefited by 0 point $9 per share from stronger distribution revenues associated with higher weather related usage, increased industrial load, and a true up of previous deferrals resulting from rate orders that were issued in the Q2 of 2018. Cooled temperatures in April followed by hot weather in May June resulted in a 4% increase in total distribution deliveries compared to last year's mild second quarter. Sales to residential customers increased 8.6%, while commercial deliveries increased 1.6%. Heating degree days were 33% higher than the Q2 of 2017 and 5% above normal, while cooling degree days were 22% higher than 2017 and 30% above normal. On a weather adjusted basis, commercial sales were down 1.4%, but residential sales were up 1.4%. As Chuck said, we saw growth in both residential customer count and weather adjusted average usage. We are cautious about reading too much into the short term improvements, but nonetheless we're encouraged by these results. Another bright spot is the industrial sector where deliveries increased 2%. We have now recorded 8 consecutive quarters of sales growth with a 1 year growth rate of 2.3%. In our transmission business, earnings continue to benefit from our Energizing the Future investment program, including a higher rate base at our MAIT and ATSI subsidiaries and higher revenues at JCP and L. And in our corporate segment, 2nd quarter results reflect slightly higher interest and operating expense. This was offset by increased commodity margin at the Pleasant Power Station, driven by higher wholesale prices due to hot weather this quarter. We continue to expect the earnings contribution from Pleasant's to be insignificant for the year. I'd also like to share this brief update on where we stand with regard to passing tax reform savings on to customers. As you know, on January 1, we began deferring the full amounts in each jurisdiction as a net regulatory liability as we work through the regulatory process. In our utilities, we delivered customer savings in New Jersey on April 1st and in Pennsylvania on July 1st. In Maryland, we plan to address tax reform in the upcoming rate case filing. In Ohio, we delivered customer savings related to various riders and we continue to work with regulators in both Ohio and West Virginia to determine next steps regarding the balance of tax reform. In our transmission business at ATSI, Trail and MAIT, rates will automatically be lowered in connection with the normal formula rate process. And for the Allegheny transmission assets, we filed a proposed 6.7% reduction to stated transmission rates during the quarter I'm sorry, during the Q2, which is pending before FERC. We'll need to keep you updated on our progress. So clearly, we're very pleased with our financial performance and operating performance during the quarter for the first half of the year. We're making excellent progress on our commitments to the investment community and the implementation of our regulated strategies. And we're positioning our company for stable, predictable and customer service oriented growth to benefit our shareholders, customers and employees. Well, I do want to make a correction. The special item related to the FERC settlement helped our GAAP earnings by $0.10 per share. I misspoke when I said 10%. My apologies. Thank you for your time. Now let's take your questions. Our first question is from Greg Gordon with Evercore ISI. Please proceed. Thanks. Good morning. Congratulations on the quarter and on the settlement. Thanks, Greg. You reiterated your short and long term earnings guidance notwithstanding the increase in the agreed upon remuneration to the debtors and the creditors at FES. Is it that there's some offsetting aspects of better performance in your core business that eat through that potential incremental cash outflow? Or is it just simply that it's bounded by the range that you've already articulated? I would say it's just simply bounded by the range that we already articulated, Greg. Okay, thanks. My second question is a bit off the beaten path, but I think pretty important. You're going to be cleaned up sort of across the Rubicon here on separating RefES later this year. The dividend was cut from $2.20 a share to $1.44 a share several years ago. It's been unchanged since then. The payout ratio that I'm looking at on your earnings growth aspirations would seem to indicate there's some opportunity for consideration of resuming some type of dividend growth. At what point will you bring to the Board for their consideration a change in the dividend policy? Well, I think as we get this separation done, I will be having conversations with the Board, but I think it's too early to go there. But clearly, I think if we're going to be expecting to be valued as a fully regulated company, we're going to have to have a dividend policy that matches what other fully regulated companies do in the very near future. Okay. So not right away, but at some point in the near future? So got to get this FES fully behind us, which we this was a huge milestone and it gives us the ability to now quantify what the fully regulated company looks like going forward. And that puts me in a position to have more meaningful discussions with the Board than we were able to have up until now. Thank you, Chuck. Didn't mean to put the cart before the horseback, just getting a little excited on you resolving all this stuff. Take care. We're excited too. Our next question is from Stephen Byrd with Morgan Stanley. Please proceed. Hi, good morning. Hey, Stephen. I just wanted to touch on your FE tomorrow update, very positive update. And again, maybe this falls in the cart before the horse category too, but you mentioned in your remarks that you expect the initiative would offset the $30,000,000 in depreciation for common systems. As you look at the scope of possibilities around continued cost cuts, Is that the general ballpark level we should be thinking about? Or is there a series of initiatives that could significantly exceed that $30,000,000 Here's what I'd say. We started planning for this exit over a year ago with FE tomorrow. We had a lot of that groundwork done in advance. We've obviously implemented this voluntary early retirement program to facilitate that. We're working through redesigning our entire corporate structure to fit what we need to be a regulated utility business going forward. That's a work in progress. It's going to result in savings, but we're not ready to communicate what that total amount means and how it's going to look going forward. Internally, there are lots of people involved and we're taking into account the feelings and emotions and everything else that goes into what we're putting this corporate structure through right now. At the appropriate time, we'll tell you what the financial impacts are. Totally understood. And then at a high level, just thinking about your financing plan, you've laid out some incremental CapEx opportunities. I just wanted to level set and check-in again in terms of just making sure I understand how you would approach financing incremental CapEx needs to the extent that you do get approval? Steve, this is Steve Staub. So from a financing plan perspective, we would use internally generated cash flow as well as debt issued at the utility. So we have no incremental equity needs through our planning period through 2021. Great. That's all I had. Thank you. Our next question is from Chris Turnure with JPMorgan. Please proceed. I appreciate the details on the tax reform process, especially in the appendix that you provided today. But I was hoping you could give us a little bit more color on the process in Ohio right now, where you stand on the tax benefits outside of the riders and if you're deferring them currently and what the next steps are? This is Steve. Thanks for the question. We continue to work with regulators and staff in Ohio. We are currently deferring the full impact of the number of tax savings dollars there beyond the riders that we've already trued up. So we're working with them just as other utilities are working with them through the process. And once again, we're following the lead of regulators also in West Virginia, as an example, where we have filed as asked and we'll work through the process with them. And is the process in Ohio going kind of as you expected it to go at this point? I think we're within the expectation level that we had. It's a two way dialogue. It's very clear that we've returned roughly $40,000,000 through the rider process for the DMR and DCR riders. The remainder is to be worked out. Great. And then separately for the distribution business this quarter, I think you were clear that you guys did include a $0.03 benefit from the Ohio decision in adjusted EPS. But were there any other items that were non recurring or unusual in nature in adjusted EPS for the distribution business? And then I was also hoping you could quantify weather versus normal and normalized load growth impact on an EPS basis as well? There were no other one time adjustments to the quarterly earnings. The weather impact was about $0.03 compared to last year. And did you guys have that on a versus normal basis as well? The total weather adjusted experience that we had is roughly 1% above normal when you look at it on a year to date basis. Okay. But for the quarter specifically, we don't have the EPS impact of weather versus normal or normalized load growth versus normal? Yes, Chris, this is Jim. Yes, we are about 0 point associated with weather during the quarter. This is Steve again. As I said in my opening remarks, we had a cool April, but we had a very warm May June that got us to that $0.03 number. Great. Thanks guys. Our next question is from Claire Zhang with Bank of America. Please proceed. Hey, good morning. I'm still being in for Julian here. Good morning. Hey, good morning. Congratulations again on the great update. I just had two quick questions, not necessarily in FES here. The first is in terms of ROEs in Ohio. So they're trending upwards. Just wanted to confirm any details about the seat test and your thoughts there. So, as of this point in time, we have not even triggered the 1st threshold under the seat test. So, I think all is good with regard to ROEs in Ohio for the moment. Okay, got it. I know this is a little forward looking. There is a change in the commission potentially with the election. Just wanted to get your thoughts on the seat test going forward. If there's anything you can say now or if this is much more far away of a topic? Well, that is way forward looking and I don't know that there's I think probably there are some commissioner spots that are coming due next year, but we have no idea who the governor is going to be at this point. It's too premature to even think about that. And with regard to the seat test, the seat test is statutory. So, that's not something that the commission is allowed to just ignore. That's fair. Okay. And then my second question was just, I know you didn't have any commentary on the nuclear assets. I know that since you guys are totally out of FBS now that it's not really related to your ongoing business, but just curious if you had any thoughts on support for those nuclear assets and your thoughts there? So any thoughts around the future of those assets are now questions to be posed to FES. I would say that from my perspective, I continue to feel that the market policies in our countries have severe flaws that closing perfectly good nuclear plants in the long run is not going to be a good thing for our country. In the long run, it's not going to be a good thing for the 6,000,000 customers that I'm paid to look out for, because I think having a diverse mix of generation provides the most secure future for those customers from both a physical security, grid resiliency and an economic stability perspective. So to the extent my voice matters in this process, I'm going to continue to be a loud advocate for it. I do believe that the Department of Energy is still very seriously looking at this issue and we're hopeful that they intend they will eventually step forward and do something to stabilize it. I appreciate that. Thank you. Our next question is from Andrew Weisel with Scotia Howard Weil. Please proceed. Thanks. Good morning, everyone, and congratulations to Jim and Leila. I want to quickly first follow-up on the comment about no incremental equity needs through 2021. Was that meant to indicate that your internal cash flow and small incremental leverage would be a limiting factor on CapEx? So in other words, if you were successful, it would be the approvals for the Ohio DPM, the New Jersey IIP, potentially some transmission projects. Would you not spend if you needed equity or would you raise equity if those opportunities came up? This is Steve again. So our forecast with or without those capital programs, we would generate enough internally generated cash flow and be able to fund the difference in debt issued at our regulated companies. Okay, great. Thanks for clarifying. Next one, given the strong start to the year so far and a little bit of help from weather, Do you see any opportunity to maybe accelerate O and M from P19 into 2018? Is that part of why you didn't raise guidance for the full year? No, we didn't raise guidance for the full year because we're halfway through the year and a cold August and a warm December would result in reversing everything that we've seen. So I think I've said before, I'm not going to take credit for good weather, but I'm also not going to plan on it either. So, there's just nothing we are on track with our plan as we laid it out for 2018 with basically the only difference being the Supreme Court ruling and the weather in this quarter. Understood. Then lastly, just to clarify, given the progress made with the FES and the settlements, should we think of the work of the restructuring working group is basically done at this point or is there anything more that they'd be working on that we can look forward to updates on? I would say you can think of it as basically done, but not done. We still have work to get definitive agreements in place and get the courts to approve it, but I'm not planning to use the restructuring working group to advise me on anything but the bankruptcy. Great. Thank you. Our next question is from Charles Fishman with Morningstar Research. Please proceed. Good morning. Chuck, a couple of years ago, when you first started your appeal about the importance of the 3 nuclear plants. Notwithstanding the grid reliability and resiliency issue, One of the arguments you made was that the closure of those facilities would require investment material investment in the transmission system. You've now moved to the upper end of your transmission guidance for 2019 through 2021. There was just I think the guidance was just the unlocking the future slides earlier this year. Does that have you started including anything in there? Are you going to wait till we get closer to the retirement dates that FES has set? Or could that go higher, I guess is my question? So first, I've talked generically about the costs that are imposed on the transmission system when existing power plants close. Generally, that's not around the nuclear plants though. The nuclear plants are very heavily networked as a result of the need to ensure multiple sources of off-site power for reactor coolant, so that the nuclear plants themselves don't generate a lot of transmission costs. I've spoken about the costs we did incur when we closed the lake plants and as well as costs that have occurred throughout the markets as other power plants have closed. But inside our plan, we include all of the RTEK projects that PJM identifies for our footprint. And those go up and down each year. So, but they are included within our plan. So I wouldn't anticipate any significant change from the $1,200,000,000 that we talked about over the next 4 years after this year. Okay. Thank you. That's all I had. Our next question is from Steve Fleishman with Wolfe Research. Please proceed. Yes. Hi, good morning. So just the shared services agreement with FES that you they have a right to extend, is that something where it's pretty much done at your cost, so you don't have to worry about it's not an issue for FE if it's extended? That is correct. Our financial ties to FES will end this year, so that we can focus on being a fully regulated company starting in 20 19. Any shared services that they may want after that, they will pay for at the appropriate costs. Okay, great. And then just the Potomac Edison, what kind of returns and I might have missed an answer on this, but what kind of returns has that subsidiary been earning? So that subsidiary this is Leila has been earning returns in the 5.6% range. And so obviously through our rate case, we are seeking to put that in a proper place, which is also the reason we are hoping to take care of the tax issue associated with that because we've been under earning for a substantial period of time. Our next question is from Praful Mehta with Citi Research. Please proceed. Thanks so much. Hi, guys. Hi. So, well, congrats on further movement on the FES settlement. As that movement happens and as you clean up the purely regulated story, just wanted to understand from a strategic perspective, how you're thinking about your story? Do you feel like you have the right size? Is there any need to increase or decrease operations just as you look at your portfolio today or I guess portfolio post FES? Anything from a strategic direction perspective that we should be thinking about? From a strategic direction, we're committing to 6% to 8% growth over the next 4 year period. And beyond that, there's nothing that I would comment on. I would just say, any inquiries we would take seriously and look at and we're going to always do what's right for our shareholders. But strategic plays for growth in this industry today are very complex, especially if you take a company like ours where we have 5 regulatory jurisdictions. So that would imply 6 or more likely regulatory jurisdictions. They're just very complex. And right now, I think we're just focused on what we said. We've got 6,000,000 customers across 5 states, 10 distribution utilities, 3 Transco's now. And we're looking at how we deliver the value that our Fair Fair enough. That's good color. But as you look at any opportunities that do come your way, how should we think about the criteria apart from obviously getting the right premium or right returns for your shareholders? Are there anything else that we should be thinking about as you kind of evaluate these opportunities? I have no comment, Praful. All right. Fair enough. I at least tried. I guess one more specific question on the economic lease for Pleasant. As a part of this restructured settlement, just wanted to get little bit more color for this economic lease by FES for Pleasants beginning no later than January 2019. Can you just provide any more a little bit more color on that? It fulfills what I said earlier that starting in 2019, any financial exposure to the commodity markets is gone. And the financial lease for Pleasants will move all of that to the FES. The transmission investment cycle, meaning the $1,100,000,000 $1,200,000,000 range. Do you kind of view that as kind of a long run normalized run rate? Or do you think and if you don't mind maybe touch on specific geographies. Is there an uptick coming in one of the geographies, a downtick coming in others? You talked a little bit about this over the years, but just kind of curious trying to get your kind of multiyear view on where transmission spend heads? So for the next 4 years, it's going to be $1,200,000,000 So $1,100,000,000 this year, dollars 1,200,000,000 for the next 4 years. We are moving it around our system. That's the clear benefit that we have of having a 5 state territory with almost 25,000 miles of transmission. We can move it around. I've talked about the benefits already at 37% reduction in equipment related outages on our ATSI system. That's a direct result of the investments we've been making. We're now moving more into the make part of our system. And I'm sure down the road, we'll look at the Allegheny transmission that is currently still in stated rates and see if it makes sense to move to a forward looking Transco for those. But think for now, for the next 4 years, it's going to be $1,200,000,000 We're doing 600 to 700 projects a year and we have to be cognizant of the execution risk. And as I've talked before, there's not an unlimited workforce out there in our country today for transmission line and substation projects, given that a lot of our other peers are focusing on this area too. Got it. And one quick follow-up. If you think about the next 3 to 5 years and what may be on your long term regulatory wish list? Meaning, is there a state in your various service territories where you think there's opportunities to upgrade or improve the regulatory mechanisms that would A, potentially increase investment in that state distribution, whatever and B, help reduce the lag that impacts your company? Well, I don't have anything specific to talk about, but clearly we have a good track record of working with our regulators to come up with different mechanisms other than traditional rate base type of rate making. So, whether those are our writers or formulas or trackers in Pennsylvania, we have that as IAP in New Jersey is a helpful addition to how we do business there. We've had the DCR in Ohio. And so anything that is transferred to investors, So that you understand when we're making investments, what the returns are for you that is constructive for customers. And obviously, if we can reduce lag, all of those are goals that we would like to achieve. Got it. Thank you, Chuck. Much appreciated. We do not have another question. I'm sorry. Okay. Well, thank you all. As I said earlier, this settlement is a big milestone in our evolution to be in a fully regulated company. We thank you for your support and I look forward to seeing you all in between now and the Q3 call and then talking to you again at the Q3. Take care. Thank you. This concludes today's conference. You may disconnect your lines at this time and thank you for your participation.