California Water Service Group (CWT) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the California Water Service Group year end and fourth quarter earnings conference call. (Operator instructions). As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host today, Martin Kropelnicki, Vice President and Chief Financial Officer. Please begin.

Thank you, Sean. Good morning, everybody, and welcome to our year end and fourth quarter year-end conference call. I'm Marty Kropelnicki, Vice President and Chief Financial Officer, and with me today is Pete Nelson, President and CEO of California Water Service Group.

As a reminder, a replay of today's proceeding will be available from February 25 through April 26 at 1-888-258-7854, ID No. 1427079. Today's discussions are also being broadcast on the web at www.calwater.com.

Before looking at today's results, I'd like to take a few minutes to talk about forward-looking statements. In particular, during the course of this call the Company may make certain forward-looking statements. Because these statements deal with future events they are subject to various risks and uncertainty, and actual results could differ materially from the Company's current expectations. Because of this, the Company strongly advises all current stockholders as well as all interested parties to carefully read and understand the Company's disclosures on risk and uncertainties found in our Form 10-K, 10-Q, and other reports filed from time to time with the Securities and Exchange Commission.

Now, let's go through our year-end results. I'm going to cover the year-end results first, and then I'll briefly cover the fourth quarter results. For year end 2009, we had revenue of $449 million, up $39 million, or 10%, over the $410 million recorded in the previous year. Of that amount, we had $50 million in rate increases, $11 million in sales to new customers, the net effect of the WRAM MCBA was a positive $10 million, and that was all offset by a decrease in usage by existing customers of $32 million.

Going down now to SG&A, looking at water expenses, water expenses for the year increased 9%, to $159 million. Of this amount, purchased water increased 9%, or $9.9 million, to $122 million; purchased power increased 9%, or $2.3 million, to $28 million; and pump taxes increased 7.2%, or $637,000, to $9.5 million. All three of these components are covered by the MCBA, or Modified Cost Balancing Account.

Going down the line, looking at admin and general, admin and general increased $16 million, to $75.2 million. Of that amount, pension increased $8.6 million, healthcare increased $5 million, legal and outside services increased $1.3 million. Those are the three largest drivers in the admin and general line.

Going down, looking at other production cost, other production cost increased $5 million, or 11%, to $57 million. Of that amount, $1.7 million was an increase in conservation spending and $1.1 million was due to increases in water quality, which is primarily chemicals and filters used in water production.

Maintenance for the full year decreased $433,000, to $18.5 million, while depreciation increased $2.4 million, to $39.7 million. The increase in depreciation was primarily due to a net new net utility plant added during the previous years.

Income taxes increased [$300,000], to $24.8 million, while property taxes and other increased $2 million, to $16.8 million.

Total operating expenses increased 11%, or $38 million, to $391 million for the year.

Other income taxes and expense is positive $3.7 million, while interest expense is $4.1 million -- increased $4.1 million, to $21.3 million, an increase of 24%.

EPS for the full year was $1.95, up 2% from the $1.91 recorded in the previous year.

Now, moving to the fourth quarter, for the fourth quarter, revenue was up $7 million, or 7%, to $107 million. Revenue increases were from the following. Rates, new rates added $7 million. Sales to new customers added $2 million. And the WRAM MCBA had a positive effect of $4 million. This is offset by a decrease in consumption by existing customers of $6 million.

Operating expenses for the quarter were $95 million, up 7%, or $6 million, from the same period last year. Net income for the quarter was $6 million, down 12%, or $900,000 over the same period last year, and diluted earnings per share were $0.31 a share, compared to $0.35 recorded in the fourth quarter of the previous year.

With that, I'll turn it over to Pete to give you an operational update, and then I'll come back and talk about the balance sheet, CapEx spending and how our balance sheet looks going into 2010.

Pete?

Okay, Marty, thanks very much, and good morning, everyone.

As you just heard, Marty covered the current period, which would be 2009 and the fourth quarter, so I'm going to step back and focus on a little bit of the bigger picture in the finance and ratemaking areas. And I'll organize this in three groups. One, last year, 2009, we just heard the year-end totals. We had a good year, and the decoupling mechanism -- decoupling sales and revenue, the WRAM MCBA, was working as it was intended to. Then I'll talk about this year, 2010, and I'll call that a stretch year for lack of a better term, and then talk about 2011, which will be driven by our 2009 General Rate Case.

So, first, to last year, the year totals all improved across the board. You just heard $1.95 EPS. That'll be record for the Company, as well as revenue and net income will both be Company records, too. So we're pleased with those results. The WRAM MCBA decoupling mechanism did work as it was designed and intended to. We saw sales, or customer usage, drop about 10% last year, for whatever reason, the weather, focus on conservation in California, media attention to droughts and dry years, or just kind of a continuation of our trend we've seen of customers using less water per customer over the last several decades, in fact. But, notwithstanding whatever caused the drop in usage, the results were pretty good across the board in the financial area.

One subpoint here is we did ramp up our conservation programs last year, 2009, to over $3 million for the year. About two-thirds of that is expenses that are covered in rates, current rates, and about one-third of that we do expense and then record those in what's called the memorandum account and then look for recovery of those dollars in future years, for us probably starting in 2011. But that conservation program is ramping up across California.

Now, from 2009 to 2010, first a comment about Hawaii. We will be filing rate cases in Hawaii for all those systems this year. It'll be kind of a sequence filing of the cases, because there are several cases to be filed. We haven't filed any yet, so there'll be more information as the year goes on about what the magnitude is of those filings in Hawaii.

In California, this year, 2010, is what I'm calling a stretch year, but I don't really have a better description for that. But it'll stretch us for two reasons. One is that our General Rate Cases, we're going from 25 rate cases to one rate case. And this feels a little bit like having one foot on the dock and one foot on the boat, the dock being the old General Rate Case regimen of processing eight of our 24 districts each year, plus our headquarters or corporate costs every three years, for rates that go from July to June, midyear ratemaking. The boat, on the other hand, is one General Rate Case filed for all of California for all 24 districts plus headquarters or corporate costs at one time, and that's what we have in our 2009 General Rate Case. It transitions us to one rate case for new rates across the state effective January 1, 2011.

I call this is a stretch because for about a third of the Company, this means that third will be waiting four and a half years, since this last General Rate Case, for new rates. About a third of the Company will be waiting three and a half years for the new rates. And then about a third of the Company is going two and a half years between General Rate Cases. So, from a General Rate Case perspective, we have two-thirds of the Company waiting longer than we ever have before for General Rate Case relief.

The second reason I call this a stretch is our usual what I call interim or inflation rate increases, which we also call escalation, or step rate increases. And these are years two and three of a three-year rate case cycle. In our case it's years two, three, four and five on a three-year rate case cycle. These are largely dependent on inflation, and the inflation factor that's used by the Commission has yielded us very small rate increases the last couple of years, and we expect that to happen this year. July 2008 our step or escalation increases were about $3 million. That's less than 1%. July 2009 it was about $6 million, which is a little more than 1%. And then this year, July 2010, we expect less than 1% from the escalation or step rate increases.

So what does this all mean for us? 2010 will be a very tight year. Rate relief will be small. Expenses continue to rise, so expense budgets are very tight here, and we've got to manage them closely all year.

So this brings me to the third year, chronologically, is 2011, next year. The rates next year, of course, are dependent largely on the outcome of our 2009 General Rate Case, and we're about halfway through that process. You may recall that we have requested $71 million in new rates effective 2011, with an additional $25 million in the step years, 2012 and 2013, $25 million in each of those two years.

The case is processing I say pretty much on schedule. In some areas the staff is maybe a week or two late, but I'd say pretty much on schedule. We have seen the Division of Ratepayer Advocates staff report, which is their response to our filing. That's been out about two weeks. And we have a large team here working on the rebuttal testimony, which we will be filing by the end of this month, end of March -- oh, sorry, by the end of March. Then the hearings will be held probably in May, a draft decision by the administrative law judge, and then we expect a Commission decision by the end of 2010, so stay tuned for rates effective 2011.

Now I'll go back to Marty for the balance sheet.

Great. Thanks, Pete.

Yes, just echoing what Pete said, specifically in the SG&A items, where we have the pension and healthcare, while we might get a 1% or a 1.5% step increase, the fact is healthcare has been rising and it's continuing to rise at 10%. So going into that last year of our rate case cycle, we really start to see the effects of regulatory lag.

Looking at the balance sheet, I want to start talking about cash flow. Cash flow from operations for the group was a positive [$72.4] million. Investment activities for the holding company was $114.7 million. Of that amount, Company-funded CapEx was approximately $108 million, so real happy with the step-up that we got in the CapEx projects completed and closed out during the year. The Company ended the year with about $10 million in cash and cash equivalents, and that's down slightly from the $14 million from the previous year.

We ended the year with approximately $1.2 billion in net utility plant. That's up from the $1.1 billion the year before. The compound annual growth rate in the net utility plant's about $8.4 million.

The cap structure for the company at year end, we came in on target at 53% equity, 43% debt and we have filed an application with the Public Utilities Commission and are in the process of getting that approved for a new shelf of $350 million of combined debt and equity financing. We anticipate that being approved sometime early this year, potentially in the second quarter, and right afterwards we'll file that shelf with the Securities and Exchange Commission.

Overall, we continue to believe that our balance sheet is in very, very good shape. In the fall we signed a $300 million syndicated line of credit. We have almost that full capacity available on our line of credit. And for 2010 we are estimating that our capital projects, Company funded, will be between $100 million and $125 million.

So, overall, as Pete said, it was a tight year, given the economy, but overall the increases in net utility plant cash flow remains good, and we figure we're positioned well. We feel like we're positioned well going into 2010.

The other thing I would note that I think is noteworthy of our business is that we've seen a tick down in bad debt expense. As many of you know, we don't historically have a whole lot of bad expense. Prior to the recession it was about 30 basis points. Then that ticked up to about 56 basis points during 2008, and we've actually seen that come down. So we ended 2009 with about a 49 basis point bad debt expense, so that's down about seven basis points. So, as we look at the economy and signs of stability, we don't know the final outcome, but it was nice to see that bad debt expense start to tick down.

And, with that, Sean, we will open it up for Q&A, please.

Thank you.

(Operator instructions).

Our first question comes from Heike Doerr, with Janney.

Good morning.

Good morning, Heike.

I was hoping we could start in Hawaii. It's a shame we can't all go and visit the facilities you have there. Can we have a refresher on how many systems you have there and how big the customer base is, and a reminder of the last time they got a rate increase? We're not too familiar with the Hawaiian regulatory climate.

Good question. I didn't bring my book on Hawaii here, but we have nine separate systems in Hawaii, so those would be nine General Rate Case filings this year. And I don't have the customer count with me, just an indicator of the number of employees. We've got now 50 employees there. Marty's looking for the --

Yes, I actually have a number count here.

Okay.

So, and actually, just so everyone knows, our 10-K should be filed sometime this week, and you can find this information, of course, in the 10-K. So for Hawaii in 2008 we had 3,700 connections or customers, and for 2009 we ended the year at 4,200. And many of those connections, keep in mind, especially in the (inaudible) district, are hotels or condominium districts, so that one connection will feed multiple units.

And the last time you went in for rates, or the last time those systems were in for rates since you had acquired them?

2005, approximately, and one of our projects this year with the rates department is to file GRCs for our companies over there. Obviously, 2009 was a busy year integrating with the various acquisitions that we rolled up. We are just about to go live with getting the Hawaii companies on our platform on PeopleSoft. That should go live here probably in the next week. So it was a busy time integrating, getting the structure set up, getting the reporting set up. And now that we're in the final throes of doing that, we'll be filing rate cases for the Hawaii companies this year.

I guess I would characterize Hawaii as a startup for us. It's really just a couple of years old. Now it's a stable operating group, and now it's time to file for general rates. So it's ready to kind of join the system here.

And what kind of ROEs have they granted in the past? Are they higher than California has been?

I think they're about the same as California. It's a different ratemaking scheme there, but it's not that much different from California as far as the final results.

And, looking forward, would you think you would get on a two-year rate cycle, a three-year rate cycle?

In Hawaii?

In Hawaii.

Well, we don't know. We can file any time in Hawaii for those general rates. So there is no prescribed three-year cycle. So we'll just have to look at it and see how expenses and capital go there. But it's pretty flexible in Hawaii as far as when you can file for general rates.

Okay, that's helpful. And in Washington do you have any plans to get all of the Washington systems on a similar rate cycle, as well? I know you have a lot of smaller systems in that state, as well.

Yes, they're small systems, but they are on one General Rate Case cycle, so there's not -- there are statewide rates for us in Washington. There's not separate systems filing separate rate cases.

Oh, there are?

Yes, there are. It's a small subsidiary, and we filed and were granted general rates for them last year, 2009. But it doesn't move the needle much, so we don't talk about it, generally, on these calls.

Yes, we don't give those little states a lot of love. I wanted to switch to the income statement. In particular, in the fourth quarter we were a little surprised to see how much the water production costs had risen. Are those all costs that you're getting pushed through?

No, you know, a couple of things on that. Everything that's in purchased water, pump taxes and purchased power, that all flows through the MCBA. The chemicals and filters, that's all down in other production expenses. And we did see a fair amount of increase in those things, thing like citric acid. Citric acid was up about 78%. We use that a lot in Bakersfield, in our production plants down in Bakersfield. Filters were up 7%. Sodium hypochlorite was up 17%. I think orthophosphate was up about 70%. So we have seen increases that are not included in the balancing accounts but show up in the other production cost lines.

As you can hear here, we've turned Marty from a finance guy into a chemist in just four years.

So, as we look out into 2010, I know you talked about the healthcare costs that are still rising in the double-digit ranges, and I assume other administrative costs would be higher because of the General Rate Cases. Can we assume that maintenance will stay largely flat year over year?

You know, we typically budget for a modest increase in maintenance, usually about 4% every year. And part of that is just it's important to maintain the system. We want to try to avoid any rate shock by letting the system get depleted and then we have to spend a lot of money fixing it up. So, for 2010, we have a 4% increase in maintenance. Maintenance, it's a little lumpy during the year. It's a function of the weather. If we have a dry spring we'll do more maintenance early on in the year, and we'll tend to see maintenance from a budget -- variance from a budget to actual perspective. But historically by the end of the year we usually come in right around on budget from a maintenance perspective.

And we would expect depreciation to rise at a similar rate as we've seen in the last two years, correct?

That's correct.

Great. And my final question, I know consumption has been down a lot. Is that something that you're seeing? I know it won't impact you because of the WRAM, but can you maybe talk about what you've been seeing in early 2010 as far as customer consumption patterns?

You know, we really can't right now. We'll typically analyze that on the quarter. Other than I will tell you based on what we've seen with the WRAM, every quarter the WRAM has had a positive -- the net effect of the WRAM MCBA has been a positive booking, meaning conservation is happening and we're making that money up through the WRAM process. So we figure we're very lucky we implemented the WRAM when we did. It's having a positive effect on our business. Likewise, one of the cost items down in admin and general in other production costs is really conservation, and we have doubled our conservation expense this year, helping our customers save. So, while we've seen conservation happen, we think it's a good thing, and the WRAM's making us whole.

Good.

On the conservation -- oh, I'm sorry. Go ahead, Pete.

I'll add one more point, because you asked about 2010. We only have really one month of data for 2010 and it's our low usage month, so it's really hard to tell a customer usage pattern after one month, because in general conservation and water efficiency, you can see that happening in the spring, summer, early fall. January, December and February are really hard to see any kind of customer usage pattern you can predict for the year.

Yes, we had heard at NARUC from some industry contacts that they were surprised by the amount of consumption declines that they had seen in January because January is such a kind of less relevant month, so I was just trying to gauge if that's something we had been seeing across the country.

We didn't see enough to make any judgment about the year yet.

It was also a very wet month. I mean, we've had a lot of rain in late December and in January. So, clearly that has an effect on consumption, as well.

Well, that's all I had. I appreciate your time. Thanks.

Thanks, Heike.

Our next question comes from Michael Gaugler, with Brean Murray, Carret.

Good morning, everyone.

Hey, Michael, how are you?

Doing well.

Good.

I've got a question on some of Pete's earlier comments on the WRAM MCBA working as expected. When I looked at the decoupling mechanism versus the corresponding offsets, particularly on an annual basis, seems to lag substantially. Do you expect this to ever even out whereby the offsets get covered at some future point?

I'll take that one. Clearly, you have regulatory lag, right? But the lag items clearly happen and usually in SG&A. It's typically not on the revenue side for us. And the WRAM kind of smoothes that out. If you look at how we performed as a holding company for 2009, we came in about 10.0. California, our largest entity, has an authorized ROE of 10.2. So we're just shy of that. But given the increases that we've seen in the SG&A lines, really, where we're falling short of earning that ROE is really from the SG&A costs. It's not really happening on the WRAM side.

Okay. That's all I had, gentlemen. Thank you.

Thank you.

Thank you, Michael.

Our next question comes from Jim Lykins, with Hilliard Lyons.

Good morning, Pete. Good morning, Marty.

Hey, Jim. How are you?

Hi, Jim.

Doing well. How are you guys today?

Good, thanks.

First, I missed the amount. How much do you plan to file for in Hawaii?

We don't have that number yet because we're still putting those cases together. In fact, we have not filed a case yet there this year.

Okay.

So stayed tuned. Next quarter's conference call will have much more data on that.

Okay. And, regarding your decoupling mechanism, I'm wondering if you can just make some general comments about how that's been received by the regulators and what your customers might have said, and also, if you can refresh our memory, what you, or if you will have to renew that and when, if so.

Yes, I'll take the first step, just from the mechanical side of it. If you look at our balance sheet and income statement, especially focus on the balance sheet, down in the regulatory accounts, the cumulative effect of the WRAM MCBA, the net amount is a positive $12.9 million. So that means we have a receivable on the books that's been booked as a net amount of $12.9 million, and that was at the end of Q4. So we've seen that net amount grow every quarter, which means conservation's working, and people are saving water. Ultimately, we'll have to file for recovery of that $12.9 million, and we'll do that sometime early this year.

Okay. And I think there was, or you guys might have talked about earlier, a second round of the water action plan. What -- can you tell us what's going on there?

We have not seen a draft to comment on yet. We do hear that there's one being drafted by the Commission staff, and it's just we haven't seen a draft yet. But if it follows the pattern of the current one, I think it'd be good public policy. There are some things to tweak, maybe, but basically what we have now is a pretty good plan.

Okay. And the $350 million shelf that you mentioned, I believe you were looking at doing about $100 million on the debt side? Is that right? And then the difference with the equity?

Yes, that's actually a very good question. The shelf that we filed for for California is a three-year shelf. We ended the year with our debt and equity ratios in line with what our authorized ratios are. So the next round of fundraising for us will most likely be debt, and then after that it'll be equity. And, yes, I mean, typically, if we could hit our targets between $120 million and $125 million, we probably need to raise $75 million or so to cover the shortfall.

Okay. All right. Thanks, guys.

All right, thanks, Jim.

Thanks, Jim.

(Operator instructions).

Our next question comes from Garik Shmois, with Longbow Research.

Hi, Garik Shmois here. Most of my questions have been answered, but just more of a high-level question. With the production cost creeping up, I know it's covered by the MCBA, but some of the volatility on the cost side, as well as with the tightness of supply, obviously, in California, would any of this maybe move you to be even more self-sufficient in how you obtain water?

Well, that's a good question. Of course, each of our systems has a 20-year supply plan, and, on the whole in California, about half of the water supply is from wells that we own and operate. The other half is from large wholesale suppliers, the Metropolitan Water District of Southern California and the (inaudible) system up here. We're always trying to add to our supply, because in general our supply is less expensive than wholesale supply. So I think gradually we'll be able to add more to our supply, but I don't think you'll see a big difference in the near-term future.

One of the things, if you look at kind of purchased water versus our own production of water, purchased water costs have been going up, and as a result we want to be as efficient as possible. For 2009, our well production increased about 36%, or 41,000 acre feet. Well production in 2009 was approximately 117,000 -- or, excuse me, in 2008 was 117,000 acre feet. In 2009 it was approximately 158,000 acre feet. So, clearly, part of what you're seeing in the increased cost in chemicals and usages and filters is we're producing more water on our side and trying to purchase less.

Which is kind of a conundrum, because you've got -- as we move from purchased water to more of our pumped water, that impacts customers' bills. And yet the chemicals and treatment is not considered a part of the decoupling, and that increases our costs, which are then covered later in a General Rate Case.

Okay. Thank you very much. That's all I have.

Our next question comes from Jonathan Reed, with Wells Fargo.

Hey, Jonathan.

Hey, good morning. How are you all doing today?

Good. How are you?

Doing well. I was wondering, could you expand just a little bit on the nonregulated revenue line and kind of what has driven that increase?

Sure. A couple of things go into that line, in that we have a couple of nonregulated businesses. One, we offer a service line protection. That goes through there. We've had fairly good success with our service line protection plan. We also have cell site leases. We own a fair amount of property in California, and we lease a number of cell sites to various mobile carriers in our state, so that flows through there, as well. The third thing that flows through there is we have a mark-to-market adjustment associated with corporate-owned life insurance policies that go to fund some of our retirement plans. And so you may recall last year we seemed to have a volatile year, where every time it was going down, in 2009, towards the end of the year, those assets started coming back up. So you have a mark-to-market adjustment associated with those assets. And there'll be more disclosure on that available in the 10-K that gets filed here in the next 48 hours.

Was it that mark to market that was kind of driving the increase in '09, then, or --?

Yes, I mean, to give you an idea of the swing, last year your net mark-to-market adjustment you basically -- I believe it was a negative about $800,000. This year you had a positive $3 million. So the swing was pretty broad.

Okay.

And then take on top of that the success of our service line offering as well as our cell site leases and that number starts to grow pretty quick.

Okay. That makes sense. And then, just trying to understand, I guess, Q4 a little bit, so the main negative drivers there, I guess, were the interest expense and then the non-clause-related operating expense. That's correct, or --?

Yes, we did that $100 million bond offering, so we're getting the full effect of that interest rate. But, really, it's the same story that we had at the end of Q3, which is you have a couple of main drivers on the SG&A line. You have conservation. You have medical and benefit costs have gone up higher than any inflationary rate. And then legal and outside services costs are up. And so those three things have been -- was the story at the end of Q3, and we ended the year with the same three themes on our books.

Okay, and then, remind us, the interest expense, that deal last year was done, was it like May, March? I can't remember.

It was in April.

Right in between.

Yes, which was a very volatile time. The coupon on the bonds are 5.87, and that is about, I believe, 18 basis points lower than our average cost of debt.

Okay, and then just until you guys decide to actually pull off of that shelf, everything incremental and kind of going forward from that deal last year is just going to be done through your credit line?

Yes, and right now the interest costs are fairly low. We can borrow on our three-year syndicated line of credit for a rate lower than what a bond coupon would be. So that's just something we have to evaluate. Obviously there's a lot of turbulence in the market. We're always looking at credit spreads. They've bounced around quite a bit in the short term, although the long-term spreads seem to be a little bit more stable. So that's something we'll evaluate as we go throughout the year. But obviously if we see an increase in the short-term rates on the line, that gives us an incentive to do a bond offering quicker. And, overall, the demand for our AA-rated first mortgage bonds was very, very high at a time when the market was very volatile, and we were five times oversold within minutes of announcing the offering. So we're fairly confident we can place our paper pretty quick.

Okay. And then kind of last question that I have, just on the consolidated filing, can you just elaborate, like what are some of the, I guess, bigger points of contention that are out there? I mean, obviously the cost of equity and capital is separated out, so is it just a long -- the general office, what are the points that seem to be arising?

You name it, it's arisen. Of course, the Department of Ratepayer Advocates' job is to advocate for the ratepayer. And so it is a long staff report, several items. And this is normal. This is usual. And we'll rebut all of that, unless there's some kind of an error in the calculation. But it's across the board, Jonathan. It's -- they're taking shots at everything.

So, overall, though, you wouldn't characterize their shots as out of the ordinary. I mean, kind of in line with what they've done in past cases.

Pretty consistent. One thing different this time is that we are the only water company in for a General Rate Case. And so they have moved some 25, 30 people to work on our rate case from the Department of Ratepayer Advocates. So you've got a kind of a bigger force writing the staff report, and it's pretty lengthy. So it's -- they've kind of geared up on their side, and we're gearing up on our side.

Yes, I tried to go through some of the staff stuff, but there's no way I can get through it all. Just trying to catch the highlights of it, so -- okay, well, I appreciate the time today, guys.

Thanks, Jonathan, anytime.

I am not showing any other questions at this time.

Great. Thanks, Sean.

Well, everybody, thanks for riding out 2009 with us. We look forward to 2010. As Pete said, it's going to be a stretch year for us as we see some of the effects of regulatory lag. But we continue to believe we are very well positioned as a GRC year, that we're keenly focused on the General Rate Case for California as well as filing our General Rate Cases in Hawaii. And we look forward to sharing our results with you on the next quarters coming up ahead. So, thank you for your support, and have a great year. Thanks, everyone.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.