California Water Service Group (CWT) 2013 Q3 法說會逐字稿

Good morning ladies and gentlemen. Welcome to the California Water Service Group third quarter 2013 earnings result conference call. This call is being recorded. I would now like to turn the meeting over to Thomas Smegal, VP, Chief Financial Officer and Treasurer. Please go ahead.

Thank you, Jennifer. Welcome everyone to the third quarter 2013 earnings call for California Water Service Group. Again, my name is Thomas Smegal. I am VP, CFO and treasurer for California Water Service Group. With me today are Martin Kropelnicki, President and CEO; and Paul Townsley, Vice President of Regulatory Matters and Corporations. A replay of today's proceedings will be available beginning today, November 6, 2013 through January 6, 2014 at 1-888-203-1112 or 1-719-457-0820 with a replay pass code of 9201217.

Before looking at this quarter's results, we would like to take a few moments to cover forward-looking statements. During the course of the call, the Company may make certain forward-looking statements. Because these statements do with future events, they are subject to various risks and uncertainties and actual results could differ materially from the Company's current expectations. Because of this, the Company strongly advises all current shareholders, as well as interested parties to carefully read and understand the company's disclosures on risks and uncertainties found in our Form 10-K, 10-Q and other reports filed from time to time with the Securities and Exchange Commission.

Now, let's get into this quarter's forward-looking statements. I am going to go over the revenue and income statement and then move onto some of the other speakers. On the revenue side for the quarter, we recorded revenue of $184.4 million. That is up 3.5% or $6.3 million from the similar period last year. Our year-to-date consumption is 90% of adopted, our purchase water offsets increased revenue by $2.3 million and general rate increase added $1.2 million. The effect of our pension and conservation balancing accounts decreased revenue by $1.2 million and our usage net of the WRAM and in CBA increased $4 million primarily due to two factors. Increased unbilled revenue accrual of $1.1 million and increased recognizable WRAM MCBA activity of $2.9 million primarily due to the effect on revenue of higher purchase water cause.

Our production costs were $70.6 million for the quarter, that is up 6.2%, $4.1 million. Primary drivers here are increased wholesale water prices and increases in the quantity of water produced. These costs are booked to the MCBA and as a guide, as percentages of total production our purchased water increased from 44% of our total production of 47%. Local surface water decreased from 6% to 4% and well production decreased from 50% to 49% as compared to the same period last year. On the ANG side, we showed $24.7 million for the quarter, up 3.5% or about $800,000; primarily this is due to increased health care costs, which were $800,000 for the quarter, and which are up $3.4 million on a year-to-date basis.

On other operations, we have $17.7 million for the quarter that is unchanged from the third quarter of 2012. For maintenance, we showed $4.6 million for the quarter, that is up 4.5% or $0.2 million, primarily due to variance in main and service repairs. Our depreciation for the quarter was $14.5 million, that is an increase of 5.7% or $800,000 and that is additive for 2012 capital additions and consistent with our prior quarters in 2013. For income taxes, as a reminder, under our regulation, federal taxes are normalized and state taxes follow the flow-through method. Changes to state income taxes can impact earnings and the periods where they are realized.

During the third quarter of 2013, the Company recorded $4.4 million of state of California enterprise zone credits for sales and use taxes and hiring incentives for the period to 2008 to 2013 based on analysis of all district operations. The Company's analysis of state of California enterprise on credits, as of September 30, 2013, also resulted in recognition of $0.6 million regulatory liability -- excuse me, liability for unrecognized taxed benefits. This is a reminder, a tax credit is a dollar-for-dollar decrease in same income tax payments. Also in the third quarter, the US Department of the Treasury and IRS issued final and reproposed tangible property regulations with effective date of January 1, 2014. These final regulations provide the Company with additional repairs and maintenance deductions for equipment such as fire hydrants, pumps, meters, and carbon filters. The Company has estimated 2013 equipment repairs and maintenance deductions of $5 million and recorded the estimate as of September 30, 2013.

Just as a comparison with these tax items this year, last year the Company recognized the repairs and maintenance regulation for mains in the third quarter and that reduced our state income tax expense $6.2 million on a net basis in that quarter. That is one of the big differences for the quarter to quarter comparison. The Company estimates that it's full year effective tax rate for 2013 will be between 32% and 35%. We expect to finalize our current year credits for enterprise zones and repair seductions in the fourth quarter. At this time we do not expect any material changes to earnings resulting from the final analysis.

Moving onto net income, are net income was $29.2 million for the quarter, compared to $29.8 million in the same period last year. Again, the major difference there is the difference in the tax credits and tax deductions we received this year compared to the taxed deductions that effected our income last year. In earnings per share, we showed $0.61 per share on a fully diluted basis for the quarter. That is down 14.1% from the $0.71 in the third quarter of 2012. And substantial majority of that difference is related to the dilutive effect of the stock offering completed in March of 2013.

Now, I'd like to turn it over to Paul Townsley to give us an update on Cal Water general rate case.

Thank you, Tom. As management has previously reported, on July 5, 2012, the Company filed it's general rate case application with the California Public Utilities Commission. Remember, this particular rate case application covers rates during the three year period of 2014, 2015 and 2016. I am pleased to report that on October 30, we filed a settlement agreement with the California Public Utilities Commission. This settlement agreement was signed by Cal Water, the Office of Ratepayer Advocates and by 10 other parties that participated in the settlement negotiations. The agreement provides rate relief for Cal Water to invest $447 million of completed capital projects in years 2013, 2014 and 2015. Anticipated revenue increased as a result of the settlement agreement are $45 million in 2014, and $10 million in 2015 and $10 million in 2016. There is an additional $19 million of anticipated revenue based on specific advice letter filings during the period.

Among the many issues that were settled in the settlement negotiations, I did want to comment on establishment of healthcare balancing account that provides for sharing of healthcare cost increases between the Company and its customers. Really, the major issues in this particular rate case for Cal Water were included capital projects which are always an issue in every case. In our 25 operating districts, the declining used by customers resulting conservation and the need to reallocate fixed cost of running the utility and affordability concerns. Especially for customers in our the higher cost districts and for low-income customers and all of our districts. The settlement agreement itself is over 600 pages long. After briefing, will be reviewed by the administrator -- administrative law judge assigned to the case and ultimately will be voted on by the California Public Utilities Commission.

I want to emphasize that this settlement has not yet been adopted by the Commission so it is not final until the commission's decision. We do not expect a decision from the Commission until sometime in early 2014 but we do anticipate that interim rates will be in effect on January 1, 2014. Overall, I believe we are doing well in executing on our rate case strategy here in California. That is my report.

Thanks, Paul. Now I'm going to cover, very quickly, a couple of items on the balance sheet. Our net utility plant was $1.505 billion for 2013 in the third quarter as compared to $1.443 billion in September quarter of 2012. Our cash position is good, we have $48.7 million in cash at the end of the quarter, and total borrowings on our line of credit of $11.5 million, that is on the groups line of credit. Cal Water's line of credit is fully paid down -- at the end of August during the period.

In our regulatory assets, I want to mention in particular, the WRAM, MCBA balance, cause that's been a concern for us for several years. The combined balance is $48.9 million. It is up $2.9 million from $46 million at the end of 2012. Our collections on the accounts are strong with $28 million of collections year-to-date compared to $18 million in the first three quarters of 2012. However, purchased -- higher purchased water costs have increased the MCBA balance in 2013. The increase in the balance is due to a lag in purchased water offset rate increases. Any significant change in the WRAM balances will likely be achieved after adoption of 2012 rate case settlement which reflects sales forecast more inline with our recent sales we have seen in 2011 and 2012.

Right now, I'd like to turn to Marty for some thought on the quarter.

Thanks, Tom. I got four areas that I want to comment on this morning. One, our quarter and our position going into Q4 and year-end. Two, talk about the general rate case and our next steps. Three, and perhaps most importantly, share with you some of our lessons learned in the general rate case process, that Paul and his team went through this year. Lastly, talk about the 2014 and what it means having the PD come out, hopefully, in Q1, what is the effect on the Company -- first half of the year.

First and foremost, let's talk about the quarter. Operationally, the quarter came in as expected and we got a nice boost from continued good work of our tax team as we work on maximizing our tax efficiency within the Company. The $0.61 this year versus $0.71 last year, $0.09 of that is based on deletion and then you have some other increased costs; particularly healthcare, that we've been able offset with operational efficiencies. So, $0.61 for the end of Q3. Overall very happy with the organization's ability to hit their budget targets despite increased costs in certainty areas such as healthcare.

We are entering Q4 with year-to-date earnings of $0.90 a share. Frankly, that's a little bit ahead of plan driven by the good work of the task team. Overall, we're closing quarter in good shape going into year-end, especially given the fact it's the third year of general rate case and this is when we feel regulatory lag the most, right now. We're currently seeing that in a few of our cost lines.

Moving on, looking at the general rate case settlement. As Paul talked about, it was 25 weeks of settlement discussions. The 10 parties plus the offices rate per advocate signed this settlement as well as Cal Water. We were very happy do see that. It was a very long complex process that required thousands of hours of efforts by Cal Water employees. Not just Paul and his rates team but a lot of engineer efforts etc.

That will have an effect on the capital program, we think we will probably come in about $10 million shy on our CapEx for the year. Originally we were anticipating $120 million to $130 million. We think we're probably around $110 million right now, would be our best guess. So Happy that we got it settled; we're little bit behind, but as Paul said, it was a complex process and we're gaining a little bit of momentum right now. The $447 million in capital -- our proposed capital for the next three year period, that's a big number. We didn't get 100% of what we asked for. We didn't anticipate getting 100% of what we asked for, but we believe that gives us the capital funding adequately to maintain and continue to improve our infrastructure here in the state of California.

Certainly, very happy with the healthcare balancing accounts. The healthcare numbers, Tom and I have mentioned to the streak before. We believe well be $3.5 million to $5 million over what we have in rates, and we're tracking to that number so that healthcare balance account will certainly make a big difference in going forward. Overall we believe it is a fair settlement for all of the parties and it gives us the capital we mean need to move forward.

In terms of our next steps with the rate case, as Paul mentioned, we filed the signed settlement October 30. Opening comments on the settlement will be on November 13, with reply comments and opening briefs on November 27, and then reply briefs on January 6. So, we would like to anticipate or we think we anticipate proposed decision sometime before the end of Q1 and, as Paul mentioned, we applied for interim rates already.

Moving on and looking at a couple key lessons learned. There's a couple of things that jumped out to the management team here going through the process. First and foremost, given how are rate making it works, we essentially have 28 rate making districts in the state of California, though you set a rate case up for each one. In that process, there were 2,555 capital projects submitted of which 1,912 got approved. It is a very can't very, very cumbersome process. Frankly, we've got to do a better job at coordinating and planning our capital projects.

Concurrently with that, and this is point number two, we need to consider more programmatic approach to capital. I'm sure Paul would agree with me on this, when you are reviewing 2,500 plus capital projects, down at the $20,000 level, it takes a lot of time and you lose sight of the big picture. So, the Company will maybe make an effort to adjust more programmatic approach for large programs such as main replacement, well replacement, etc. in hope that we can bring argument up a little bit higher level and improve efficiency going into the next rate case.

Three, we need to continue efforts on affordability for our customers and operational efficiently. Some of our smaller districts have been the hardest hit with rate increases and as water continues to be more expensive, affordability becomes more of an issue. We need to do everything on our side keep our rates reasonable. Concurrently with that, we need to continue invest in areas that allow us to improve operational efficiency and help us minimize our cost. So, continue on affordability and continue on operationally efficiency.

Lastly, our community outreach, our brand, we do a lot of work on this area during the rate case process, but it is something we've got to do year round. Most people do not understand economics of water and we need to continually be in front of the cities and counties and customers that we serve, educating them on what water costs and what we're doing to improve their infrastructure. Looking at 2014, as we work and set are operating budget for 2014, we will be in a holding pattern until the GRC gets approved. We are hopeful we will have that proposed decision by the end of Q1 and new rates shortly thereafter. in the meantime, we're going to focus on affordability, planning and community outreach to ensure we can hit targets for 2014.

In closing, quarter came in as we thought it would. We had a nice pick up from tax work by tax team, we're entering Q4 slightly ahead of plan, we believe that's a good thing, and we feel that the settlement signed by the various parties is fair and allows us capital we need to maintain our system.

Tom, with that, I will turn it over back to you.

Great. Thanks, Marty. Thank you all, for your continued interest in California Water Service Group. We look forward to talking to you again with year-end results. Jennifer, we are ready to take questions at this time.

Thank you. (Operator Instructions)

We'll go first to Spencer Joyce with Hilliard Lyons.

Good morning, guys. Thanks for taking my call.

Good morning, Spencer.

First thing I want to touch on a little bit are the enterprise zone tax credits. I was looking back at last year, and you won't reference the roughly $0.15 or so in special credits being nonrecurring. How much of the $0.09 this year should we think about as recurring? I guess there was catch-up last year. I just want to make sure that we're not excluding some earnings that maybe we should think about as being a driver going forward.

As I mentioned, Spencer, the enterprise zone credits are a one-time for that five-year period, 2008 to 2013. That was, I believe $3.8 million; and that's a tax credit. So that goes straight to the net income. The other item that is in our taxes for the quarter relates to -- I'll say the expansion of the repairs and maintenance deductions beyond what we had before, which was mains and looking now to meters and hydrants and carbon filters and some of those things as they come into the final regulation. That seems to be a substantially smaller amount than the mains deduction was. If you go back, the entire impact of that was $6.2 million -- third quarter of last year.

We're seeing a much smaller impact of that continuing deduction, probably around $300,000 that's rolling into this quarter. There may be a minor effect going forward as we continue with these repairs deductions, but I don't believe it's going to be terribly significant on a go-forward basis.

Okay. One thing I would add to that, Spencer -- the Company has always been very good at tax compliance. Over the last couple of years we've been building up our efforts on tax planning and looking forward. So, tax laws change all the time and we have a very good tax team that is always looking at the changes in laws. Of course, we're going to look at things we can do to enhance the Company's position and our tax position going forward.

Sorry, Spencer. Just to continue the answer, just one final thought on this is, remember that we do have the rate case going forward and these tax items do get recognized in rate cases. As we go to the 2014 adoption of the 2012 rate case, that has in it compensation to the ratepayers for the federal and state tax deductions for the mains repairs. That is going to be included in rates on a go-forward basis.

That part makes sense. I know you all referenced then, effective tax rate expected for this year of 32% to 35%. If I'm thinking correctly, that number should trend a little bit higher in 2014 based on what you said about the recurring nature -- or nonrecurring nature of some of this stuff.

That's right. At this point we would expect 2014 to be normal tax year with about a 39% to 42% tax rate.

Okay. Fantastic. Switch gears here just for a second.

Can you talk a little bit about what is going on in Hawaii, Washington, or New Mexico? I know we've all been real focused on California and the rate case here over the past couple of quarters. But just in a broad sense, talk about some of the growth opportunities or what may be going on in some of those other jurisdictions.

Sure. Paul, do you want to give an update on Hawaii?

I can give an update on the regulatory issues in Hawaii. We currently have four separate rate cases in process in Hawaii. One of them is for Pukalani district on Maui, and three of them or for Waikoloa district on the Big Island. Of those four, we've been making good progress. We've been negotiating with a consumer advocate out there on settlements.

At this point we have two of those four cases have been settled. We are awaiting commission approval on those. The other two cases are still in process of settlement negotiations. We've got a team working on it. I think we're making good progress on those.

Yes. In terms of the other states -- New Mexico, which is, as a percent of our total business, is small; they have a mechanism in New Mexico somewhat like a [disc], where we can essentially raise rates about 7% a year. We have to file and if no one contests it, they go into effect.

Right now we're in the process of doing our planning for 2014. For New Mexico and Washington we have to see where they are from a rate relief perspective and then we will determine next steps there. The big one for us has really been Hawaii -- one of the benefits, or one of the things we were interested in when we hired Paul, is that Paul was actually born and raised in Hawaii. So he helps us bring local presence to the rate cases over there.

Okay. Thanks guys. That is all I had.

Thanks, Spencer.

The next question is from Jonathan Reeder with Wells Fargo.

Good morning, gentlemen.

Just following up on that first tax question a little bit; getting that ongoing earnings number. Tom, it sounded like just taking out then the $3.8 million that is related to the enterprise zone tax credit, or about $0.08, is what you would say as far as normalizing, is that correct?

John, I think that is a fair way to do it. I think we are going to true-up all of these tax estimates at the end of the year. There may be more information as we go forward, but right now I don't think that's too far off.

Okay. And then what was the unrealized gain associated with the non-qualified retirement plan in the quarter? I thought you said it was lower year over year, but what was the absolute gain there?

I believe that was at $500,000. Just looking at my notes. Yes, it was $600,000 in the quarter, and it was $600,000 in the same quarter last year. Very similar to what we saw last year.

Okay. Congrats on the constructive and balanced settlement you were able to reach in California.

I guess your next item to tackle after getting the approval is going to be the cost of capital filing next year. Can you give us the initial thoughts and potential strategy as you think about that?

Jonathan, we have been doing our initial approach to that, and have been talking with the other companies. As everyone probably knows, we had adopted a 9.99% return on equity in the last cost of capital; and then due to the interest rates on the Moody AA utility bond index going down, we triggered the water cost to capital adjustment mechanism and have ended up now in 2013 with return on equity at 9.43%.

We are still really in the initial stages of that. We have filing due on March 31. That would be for all of the publicly traded California companies -- ourselves, Golden State, California American, and NSA Water. So, can't really give a lot of insight on to where it might go. Interest rates have come up a little bit since the time that, that index triggered, but I think they have not come up a great deal in the last few months. Nothing too concrete to report on that.

And, thanks -- Jonathan, it's Marty.

The interest rates were up almost 90 basis points but then they lulled back down again. Yesterday -- I believe it was yesterday -- the Federal Reserve released some information. They've had a target -- they've introduced this concept of targets to manage inflation and when do they pullback quantitative easing. The unemployment rate target they've been using has been 6.5%. This week they announced they are thinking about dropping after 6%. I think that is clearly a sign of the intent to keep the interest rate market soft, probably for another year or two.

Some of the experts are saying now it's 2017 before you start seeing a meaningful rise in interest rates. I'm just putting on my economist hat right now. Interest rates right now for the foreseeable future look like they're going to stay pretty soft.

Right, yes. That was kind of my thought, and I just didn't know if there is a way to potentially extend the agreement? If you have to go through the full proceeding? Things along that line. Given, like you said, that recent pullback and the more tepid forecast than what was previously thought.

Yes. I don't think anything like that is contemplated at this point. There are, obviously, ways to make exceptions to the regulation in California. But there has been no filings. We don't anticipate doing anything like that at this point.

Okay. Yes. I believe there's little bit of precedent on the electric side, that they did something along those lines, extending it by two years. That is the thought process there.

Right; I do recall that they did extend it by two years. We are aware of that. There is that provision in the plan, that one could do that; but nobody has filed for that yet.

Okay. Great. Thanks so much for the additional details.

Thanks, Jonathan.

Next Hasan Doza with Water Asset Management.

Good morning.

Hello, Hasan.

Two quick questions -- on the healthcare balancing account -- its constructive mechanism, definitely. I wanted to understand, mechanically, how it's going to work. So, Marty or Tom, if you have actual healthcare expenses above what you have in rates, how does that flow through with the mechanism and the impact on your P&L, if any?

Typically, Hasan, with our balancing accounts that are authorized by the commission, we will book those balancing accounts. We have done that with the pension balancing account, WRAM and MCBA and with the conservation balancing account. We would expect to do that here as well, so there would not be a P&L impact.

We create a balance sheet item for the liability or the asset. What we're talking about, Paul, is 85% balancing account, that is the sharing mechanism that is in it. Of the change in expense, 85% of it would be tracked in the balancing account, up or down; and 15% of it would be our at our risk.

And we would book that on a monthly basis, the same way we book the WRAM or MCBA.

That's correct.

So, for example, in your comments about your healthcare expenses being up, say $3 million to $4 million above what's in rates, when this mechanism is implemented, 85% of that $3 million, $4 million would basically get deferred onto the balance sheet? So there will not be an impact on any movement above what you have in rates on the income statement?

That is correct. Do remember that the rate case will adopt the new value for the healthcare cost starting in 2014. I don't have that in front of me and I don't imagine Paul does. That estimate for 2014 recognizes some of the impact of the increases that we have seen in 2011 through 2012, 2013 timeframe.

Right. Then this mechanism, at least on the healthcare front, should help your ROE because then any increase in healthcare cost above what you have in rates should not impact your ROE going forward when you have that mechanism implemented.

Certainly, if healthcare costs continue to increase, especially if they do at the rate that they have year to date in 2013, I will point out, once again, that we have a self-insured health care plan that is claims-based. What that means is -- part of why we have seen higher costs in 2013 is we've had more claims, or more expensive claims. So, it is very possible, and it has occurred in the past, where healthcare costs could actually decline in a year. I don't want to presume this is simply a one-way mechanism for us to capture the costs that are above what's in rates; it also would give back to our customers costs that are lower than what's adopted in rates.

That's a fair point.

The second question I have is, based on the settlements, you gentlemen feel pretty confident that the actual level of consumption that is built into your rate going forward will be more in line with the consumption levels you are seeing in your jurisdiction?

Let me take a first crack at that. If we look at our consumption for 2011 and for 2012, in most of the areas, certainly in all of the big areas that we have, we feel very confident that are our adopted sales forecast is consistent with those recent years. Nobody can predict exactly what water consumption is going to be in future years. That is why we continue to have the WRAM and the MCBA balancing accounts. Looking at past years, it looks to be much a more appropriate number that what we had adopted in the last rate case, with the 2011 effective date.

Right. Going forward, there should be less drag on cash and, hopefully, less accumulation of your WRAM balances if your consumption forecast is in line with actual consumption levels.

Yes. That is a big point for me.

If we've got, right now, around a $50 million balance, and you think of us collecting on a surcharge basis around, say, I think I said $28 million year to date. So if we collect $35 million or so on an annual basis, you can see where, if we don't have the inputs into that account -- in other words; if the sales forecasts are appropriate -- we should be bringing that balance down quite a bit in the next couple of years. I'm looking forward to that and getting that cash to use for other operational and investment purposes.

Tom, one thing I would add to that, to your point about the $20 million -- that receivable is turning. A problem we had a couple of years ago was just growing and growing and growing, with minor turns of receivable. The receivable is turning now, and with the rate case, with the trued up consumption forecast, it should help turn it even faster.

Yes.

Perfect. Thank you, guys.

Thank you, Hasan.

We do have a follow-up from Jonathan Reeder with Wells Fargo.

One quick follow-up in terms of the cash discussion. Where do you see financing needs as you are looking out over this increased CapEx budget? Are you seeing equity needs over the 2014 to 2016 period, given the higher CapEx?

Let me give a little bit of a shorter-term analysis for you, because I don't think we are prepared to look out too far on it. What we have are two things going on. We have a higher equity/debt ratio than is adopted right now. Though I think if you were to presume that we were going to try to meet the regulatory target for debt/equity ratio, our next financing is very likely to be debt financing rather than equity financing.

The second thing is, we have in California, a limitation for drawing on our line of credit for Cal Water, which is a 12-month limitation. What that means is we cannot be out on that line longer than 12 months, even though the line has capacity to finance for longer than that, without triggering the commission thinking that is long-term debt.

So, right now, as indicated, we're not on the Cal Water line. Assuming that we do go on the line in the fourth quarter or in the first quarter, I think it is then the clock is ticking for us on when we would have to do a debt offering. Unless we can, again, get off of the line, maybe in the summer of next year -- and that's going to be dependent upon a lot of things, like WRAM balance and sales and those sorts of things -- we would be looking probably at debt offering sometime in that 12 month period, just as a mechanical item. So, those are factors to consider.

But in terms of equity, towards the end of that 2014 to 2016 period, is it a reasonable assumption, given the pretty significant jump up in the CapEx budget, that you might need something to balance out?

Yes, John, it's Marty.

We certainly could. We look at debt and equity all the time. As Tom said, our goal is to come in when we have a cost of capital proceeding at the right equity ratios. The Company has good cash flow with this WRAM receivable turning. That has become a source of cash for us as well.

I think we just have to evaluate it as we go. I think Tom is right. I think the next round of financing, and maybe the next two, would be debt-related, especially if we maintain and we stay in a low interest rate environment. But for right now, in the short-term, equity -- we are fine.

Okay. Thank you very much.

Thanks, Jon.

We will next go to Heike Doerr with Robert W. Baird.

Good morning.

Two quick questions on data points I may have missed in your prepared comments -- did you share with us what the allowed rate base would be in the settlement? And can you tell us what CapEx spending to date has been?

Yes. I don't know that we can answer the first question at this point. It is in the settlement document, I suspect.

They are not public yet, though, are they?

I've been looking for them on the Commission's website; it will definitely be a public document. But it's a large item to get uploaded, I think, onto their website. So, I would anticipate them getting it uploaded this week; I don't know what the holdup is for them.

As far as the year-to-date CapEx can't were showing $87 million on the year-to-date.

And we're still thinking about $125 million this year, right?

That was something that you missed. Marty? Do you want to mention that again?

One of the things I mentioned, Heike, with the nuances and the complexity of the rate case, we had 2,555 capital projects that we reviewed on a project-by-project basis, all the way down to a $20,000 threshold. So we had a lot of engineering time tied up in the 25 weeks of settlement discussion. That is going to affect our ability to hit our target this year for capital. I mentioned earlier that we think the range is probably realistically between $110 million and $120 million. It is probably come down about $10 million.

Okay. I misunderstood. I thought you were talking about how to manage the 2014.

Okay. Thanks. Appreciate the help.

Thanks, Heike.

At this time there are no further questions.

All right. Thanks, everyone, for your interest in the company and we look forward to talking to you again, I think, in February, with our year-end results and further update on the rate case. Thanks a lot.

This does conclude today's conference. We thank you for your participation.