California Water Service Group (CWT) 2023 Q3 法說會逐字稿

Good morning. My name is [Krista] and I'll be your conference operator today. At this time, I would like to welcome everyone to the California Water Service Group Third Quarter 2023 Earnings Conference Call. (Operator Instructions). I will now turn the conference over to David Healey, Vice President, Chief Financial Officer and Treasurer. You may begin your conference.

早安.我的名字是 [Krista]，今天我將擔任您的會議操作員。此時此刻，我歡迎大家參加加州水務集團 2023 年第三季財報電話會議。 （操作員說明）。我現在將會議交給副總裁、財務長兼財務主管 David Healey。您可以開始您的會議了。

Thank you, [Krista]. Welcome, everyone, to the 2023 Third Quarter Results Call for California Water Service Group. With me today is Marty Kropelnicki, our Chairman and CEO; and Greg Milleman, our Vice President, Rates and Regulatory Affairs Officer. Replay dial-in information for this call can be found in our quarterly results release, which was issued earlier today. The replay will be available until December 25, 2023.

謝謝你，[克里斯塔]。歡迎大家參加加州水務集團 2023 年第三季業績徵集。今天與我在一起的是我們的董事長兼執行長 Marty Kropelnicki；以及我們的副總裁、費率和監管事務官 Greg Milleman。本次電話會議的重播撥入資訊可以在我們今天稍早發布的季度業績發布中找到。重播將持續到 2023 年 12 月 25 日。

As a reminder, before we begin, the company has a slide deck to accompany the earnings call this quarter. The slide deck was furnished with the Form 8-K this morning and is also available at the company's website at www.calwatergroup.com. Before looking at this quarter's results, we'd like to take a few moments to cover forward-looking statements. During the course of the call, the company may make certain forward-looking statements. Because these statements deal with future events, they are subject to various risks and uncertainties and actual results could differ materially from the company's current expectations. Because of this, the company strongly advises 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, Form 10-Q, press releases and other reports filed from time to time with the Securities and Exchange Commission.

提醒一下，在我們開始之前，該公司有一個幻燈片來配合本季的財報電話會議。今天早上，幻燈片上附有 8-K 表格，也可在公司網站 www.calwatergroup.com 上取得。在查看本季度的業績之前，我們想花一些時間來介紹前瞻性陳述。在通話過程中，公司可能會做出某些前瞻性陳述。由於這些陳述涉及未來事件，因此受到各種風險和不確定性的影響，實際結果可能與公司目前的預期有重大差異。因此，公司強烈建議現有股東和利益相關者仔細閱讀和理解公司在我們的表格 10-K、表格 10-Q、新聞稿和其他不時提交的報告中披露的風險和不確定性與證券交易委員會。

I'm going to start by turning to Slide 4, which states our values and priorities. Moving on to Slide 5, third quarter financial highlights. As discussed last quarter, third quarter and year-to-date results primarily reflect the adverse impact of the delayed proposed decisions from the California Public Utilities Commission, or CPUC, on Cal Water's pending 2021 general rate case to set new rates, rate design and regulatory mechanisms. Once approved by the CPUC, the general rate case accumulative adjustment will be retroactive to January 1, 2023. There is one change from our last quarter's discussion.

我將首先轉向投影片 4，其中闡述了我們的價值觀和優先事項。接下來看投影片 5，第三季的財務亮點。如上季所討論的，第三季和年初至今的業績主要反映了加州公用事業委員會(CPUC) 延遲提出的決定對Cal Water 懸而未決的2021 年一般費率案的不利影響，以設定新的費費率、費率設計和監管機制。一旦獲得 CPUC 批准，一般費率案件累積調整將追溯至 2023 年 1 月 1 日。與我們上季度的討論相比，有一個變化。

The delay of the general rate case is now expected to move CPUC approval of the advice letter for the 2023 Drought Response Memorandum Account, or DREMA operating revenue into calendar year 2024. We estimate the adverse impact of the delayed general rate case on third quarter 2023 operating revenue to be in the range from $14 million to $27 million, of which $5 million to $5.5 million is related to DREMA. Our estimate is based on our -- on the current positions of the parties to the California general rate case filing and consumption-driven regulatory mechanisms.

現在預計一般費率案件的延遲將使 CPUC 對 2023 年乾旱回應備忘錄帳戶或 DREMA 營業收入的建議函的批准移至 2024 日曆年。我們估計一般費率案件延遲對 2023 年第三季的不利影響營業收入在1400萬至2700萬美元之間，其中500萬至550萬美元與DREMA相關。我們的估計是基於加州一般費率案件歸檔和消費驅動的監管機制各方的當前立場。

As noted on Slide 5, Third quarter 2023 operating revenue decreased $11.3 million to $255 million as compared to the same period last year. The decrease was primarily from the $29.6 million decrease in WRAM and MCBA revenue as those mechanisms concluded on December 31, 2022. The decrease was partially offset by $13.7 million of 2023 general rate increases and a $1.8 million reduction in revenue deferral.

如投影片 5 所示，2023 年第三季營業收入與去年同期相比減少 1,130 萬美元，至 2.55 億美元。減少的主要原因是，隨著這些機制於2022 年12 月31 日結束，WRAM 和MCBA 收入減少了2,960 萬美元。減少額被2023 年一般費率上漲1,370 萬美元和收入遞延減少180 萬美元部分抵消。

Third quarter 2023 operating expenses increased $10.1 million to $211.5 million as compared to the same period last year. The increase was in line with expectations and as noted on Slide 5, was due mostly to increases in water production costs, bad debt expense, costs from a reduction in revenue deferral, employee labor costs and depreciation and amortization expense.

2023 年第三季營運費用較去年同期增加 1,010 萬美元，達到 2.115 億美元。此成長符合預期，如投影片 5 所示，主要是由於水生產成本、壞帳費用、收入遞延減少帶來的成本、員工勞動成本以及折舊和攤提費用增加。

Moving on to Page 6. During the third quarter of 2023, net income attributable to group was $34.4 million and diluted earnings per share was $0.60 as compared to net income attributable to group of $55.9 million and diluted earnings per share of $1.03 for the quarter ended September 30, 2022. As discussed, the delayed California general rate case proposed decision had an adverse impact on net income attributable to group. As noted at the bottom of the slide, I'm pleased to report group's capital investments during the third quarter of 2023 was $96.9 million, which was a 25% increase from the same period last year.

轉到第6 頁。2023 年第三季度，歸屬於集團的淨利潤為3,440 萬美元，稀釋後每股收益為0.60 美元，而截至本季度歸屬於集團的淨利潤為5,590 萬美元，稀釋後每股收益為1.03 美元2022 年 9 月 30 日。正如所討論的，延遲的加州一般稅率案件擬議判決對歸屬於集團的淨利潤產生了不利影響。正如投影片底部所述，我很高興地報告集團在 2023 年第三季的資本投資為 9,690 萬美元，比去年同期成長了 25%。

And now I'll turn it over to Greg Milleman, to cover Slides 7 and 8.

現在我將把它交給 Greg Milleman，介紹投影片 7 和 8。

Thank you, Dave. On Slide 7, you can see, as we've discussed in prior quarters, we have 3 unrecorded California regulatory mechanisms that we are tracking. Our practice is not to record revenue until the 2021 GRC amounts are known and approved by the commission. All of these mechanisms, as Dave said, are -- go back effective to January 1, 2023. We have the largest, the interim rates memo account, tracks the difference between interim rates and our final rates. We have the Monterey-Style Water Revenue Adjustment Mechanism that tracks difference between actual residential sales revenue and residential sales revenue at a single quantity rate.

謝謝你，戴夫。在投影片 7 上，您可以看到，正如我們在前幾個季度討論的那樣，我們正在追蹤 3 個未記錄的加州監管機制。我們的做法是，在委員會了解並批准 2021 年 GRC 金額之前，不會記錄收入。正如 Dave 所說，所有這些機制均自 2023 年 1 月 1 日起生效。我們擁有最大的臨時利率備忘帳戶，追蹤臨時利率與最終利率之間的差異。我們有蒙特利式水收入調整機制，可以追蹤實際住宅銷售收入與單一數量費率的住宅銷售收入之間的差異。

And then we have the drought response memo account that tracks difference in sales revenue, sorry, tracks the difference in reduced sales revenues from conservation during a drought. This will stay open until California Governor Gavin Newsom, declares the drought over, which could happen in -- sometime in '23, '24 or depending on what happens with the weather in our state could stay open longer. Recovery from that will be by a separate filing. And as Dave indicated, those revenues will not be recorded in '23. They will be recorded when the commission approves that filing.

然後，我們有乾旱響應備忘帳戶，用於追蹤銷售收入的差異，抱歉，追蹤乾旱期間因保護而減少的銷售收入的差異。該餐廳將一直開放，直到加州州長加文·紐瑟姆宣布乾旱結束，乾旱可能會在 23 年、24 年的某個時間發生，或者根據我們州的天氣情況，可能會開放更長時間。從中恢復將透過單獨的文件進行。正如 Dave 所言，這些收入不會記錄在 23 年。當委員會批准該申請時，它們將被記錄。

Turning to Slide 8. This is -- just gives you the financial impacts of the 3 recorded regulatory mechanisms for the third quarter based, again, as Dave said, based on the current position of the parties in the '21 GRC filing, we estimate the -- an understatement of operating revenues during the third quarter to be in the range of $14 million to $27 million or $0.22 to $0.41 earnings per share. Something of note would be the -- in the -- right before the subtotal where it says MWRAM, you'll see that they are negative numbers. This is right in line with what we would expect for these memorandum account.

轉向幻燈片 8。這只是為您提供了第三季度 3 個記錄的監管機制的財務影響，正如 Dave 所說，根據各方在 21 年 GRC 備案中的當前立場，我們估計- 將第三季度營業營收低估為1,400 萬美元至2,700 萬美元，即每股收益0.22 至0.41 美元。值得注意的是，在小計前面的“MWRAM”中，您會看到它們是負數。這完全符合我們對這些備忘錄帳戶的預期。

When you go into the summer months, customers are using water in the more expensive third and fourth tiers and the single quantity rate is more in line with the second tier. And so it's basically starting to annualize the numbers that we would expect for the year. Later on in the deck, we'll come across the slide that will show this same table with year-to-date results. And you'll see with almost 3 quarters of the year being completed, the numbers are coming in line with what we would expect on an annualized basis.

當進入夏季時，客戶在更昂貴的第三層和第四層用水，並且單量費率更符合第二層。因此，基本上開始將我們今年預期的數字年化。稍後在甲板上，我們將看到一張幻燈片，該幻燈片將顯示同一張表格以及今年迄今為止的結果。您會看到，今年已完成近三個季度，這些數字與我們對年化數據的預期一致。

With that, I will turn it back to you, Dave.

這樣，我會把它轉回給你，戴夫。

Thank you, Greg. Moving to Slide 9, additional Q3 2023 highlights. As noted on this slide, 2024 operating revenue is expected to increase approximately $10 million from an increase in Cal Water's return on equity to 10.27% effective January 1, 2024. The increase was from the water cost of capital mechanism for the period from October 1, 2022 to September 30, 2023. We will discuss this in more detail later in the presentation.

謝謝你，格雷格。前往投影片 9，了解 2023 年第三季的其他亮點。如本投影片所示，自2024 年1 月1 日起，加州水務公司的股本回報率將提高至10.27%，預計2024 年營業收入將增加約1,000 萬美元。這一增長源自10 月1 日起的水資本成本機制，2022 年至 2023 年 9 月 30 日。我們將在稍後的演示中更詳細地討論這一點。

Also, Cal Water entered into an agreement with the California Department of Community Services and Development to help low-income customers access funds through the state's Low Income Household Water Assistance Program to pay monthly water bills. It's another example of our ongoing efforts to provide affordable water service to our customers.

此外，加州水務公司與加州社區服務和發展部簽訂了一項協議，幫助低收入客戶透過該州的低收入家庭水援助計劃獲得資金來支付每月的水費。這是我們不斷努力為客戶提供負擔得起的供水服務的另一個例子。

Moving to Slide 10, we present our earnings per share bridge, which details the changes from 2022 third quarter earnings per share to 2023 third quarter earnings per share. Moving on to Slide 11, year-to-date 2023 financial highlights. As discussed earlier, due to the delayed California general rate case, we estimate the adverse impact on the first 9 months of 2023 operating revenue to be in the range from approximately $60 million to $93 million, of which $16 million to $18 million is related to the DREMA. Our estimate is based on the current positions of the parties to the California general rate case filing and consumption driven mechanisms.

轉到投影片 10，我們展示了每股盈餘橋樑，其中詳細介紹了 2022 年第三季每股收益與 2023 年第三季每股收益的變化。前往投影片 11，2023 年迄今的財務摘要。如前所述，由於加州一般費率案件的延遲，我們估計對 2023 年前 9 個月營業收入的不利影響約為 6000 萬美元至 9300 萬美元，其中 1600 萬美元至 1800 萬美元與德雷瑪。我們的估計是基於加州一般費率案件歸檔和消費驅動機制各方的當前立場。

As discussed earlier, we expect CPUC approval of the advice letter for 2023 DREMA operating revenue in 2024. As noted on the slide, operating revenue for the 9-month period ended September 30, 2023, decreased $65.4 million to $580.1 million as compared to the same period last year. The decrease was primarily from a $48.8 million decrease in WRAM and MCBA revenue as those revenue mechanisms concluded on December 31, 2022, a $20 million increase in revenue deferral and a $25.3 million decrease in billed metered revenue. These decreases were partially offset by general rate increases, a change in balancing accounts and interest on the net WRAM, MCBA balances.

如前所述，我們預期CPUC 會批准2024 年2023 年DREMA 營業收入的建議函。如幻燈片所示，截至2023 年9 月30 日的9 個月期間的營業收入比2023 年9 月30 日止的9 個月期間減少6,540 萬美元，至5.801 億美元。去年同期。減少的主要原因是 WRAM 和 MCBA 收入減少了 4,880 萬美元，因為這些收入機制於 2022 年 12 月 31 日結束，收入遞延增加了 2,000 萬美元，計費計量收入減少了 2,530 萬美元。這些下降被總體利率上漲、平衡帳戶變化以及淨 WRAM、MCBA 餘額利息所部分抵消。

Third quarter operating expenses decreased $5.9 million to $538.2 million as compared to the same period last year. Overall, third quarter 2023 operating expenses were in line with expectations. The decrease was mostly due to a $16.4 million decrease in costs associated with revenue deferral and a $3 million decrease in water production costs, which was partially offset by increases of $7.7 million in employee labor cost and $3.2 million of amortization expense and $1.9 million of property and other taxes.

第三季營運費用較去年同期減少 590 萬美元，至 5.382 億美元。整體而言，2023 年第三季營運支出符合預期。減少的主要原因是與收入遞延相關的成本減少了1,640 萬美元，水生產成本減少了300 萬美元，但部分被員工勞動力成本增加770 萬美元、攤銷費用增加320 萬美元以及財產成本增加190萬美元所抵消。和其他稅費。

Moving on to Slide 12, financial results year-to-date 2023. For the 9-month period ended September 30, 2023, net income attributable to group was $21.7 million or $0.38 earnings per diluted common share compared to net income attributable to group of $76.4 million or $1.41 earnings per diluted common share for the 9-month period ended September 30, 2022. As discussed, our year-to-date results reflect the temporary absence of 2023 California general rate case -- rate relief and revenue adjustments from regulatory mechanisms. As noted at the bottom of Slide 12, group invested $274.1 million in infrastructure investments during the 9-month period ended September 30, 2023, which was a 23.4% increase from the same period last year.

接下來看投影片12，2023 年迄今的財務表現。截至2023 年9 月30 日的9 個月期間，歸屬於集團的淨利為2,170 萬美元，即每股稀釋普通股收益0.38 美元，而歸屬於集團的淨利潤則為0.38 美元。截至2022 年9 月30 日的9 個月期間，每股攤薄普通股收益為7,640 萬美元，即每股稀釋普通股收益為1.41 美元。正如所討論的，我們年初至今的表現反映了2023 年加州一般利率案例暫時缺失—監管部門的利率減免和收入調整機制。如投影片 12 底部所示，截至 2023 年 9 月 30 日的 9 個月期間，集團在基礎設施投資上投資了 2.741 億美元，比去年同期成長了 23.4%。

Moving to Slide 13 and which is the year-to-date unreported California regulatory mechanisms details. It breaks out the revenue by the different regulatory mechanisms. And Greg pretty much covered the details of these. So I'm going to move on to Slide 14, which is our year-to-date earnings per share bridge, which details the changes from year-to-date September 30, 2022 earnings per share to year-to-date September 30, 2023 earnings per share.

轉到幻燈片 13，這是今年迄今尚未報告的加州監管機制的詳細資訊。它透過不同的監管機制對收入進行了細分。格雷格幾乎涵蓋了這些細節。因此，我將繼續看幻燈片 14，這是我們年初至今的每股收益橋樑，其中詳細介紹了從年初至今 2022 年 9 月 30 日每股收益到年初至今 9 月 30 日每股收益的變化， 2023年每股收益。

And now I'll turn it over to Marty to cover Slide 15.

現在我將把它交給 Marty 來介紹投影片 15。

Thanks, Dave. Good morning, everyone. As we kind of go through the fog of the delayed rate case and certainly having $60 million to $90 million of revenue we can't record or $0.93 to $1.45 a share that we can't recognize, we're waiting for the rate case to be approved, makes things complicated. There are certainly some additional highlights I'd like to talk about for the quarter.

謝謝，戴夫。大家，早安。當我們經歷了延遲利率案例的迷霧，並且肯定有 6000 萬到 9000 萬美元的收入我們無法記錄，或者每股 0.93 到 1.45 美元我們無法識別時，我們正在等待利率案例獲得批准，會讓事情變得複雜。我當然想談談本季的一些額外亮點。

First, as Dave just mentioned, our capital investment program. Year-to-date, we're at a new high. We are on track going into the fourth quarter to have a record capital investment year for group for 2023. And I just want to remind everyone that is really the basis and the foundation for which we grow future earnings. That continues to be strong. We've had a fairly, fairly mild summer out on the West Coast, along with a mild summer fire season, believe it or not, has been fairly mild as well with the exception of the fires that were experienced in West Maui.

首先，正如戴夫剛才提到的，我們的資本投資計畫。今年迄今為止，我們正處於新高。進入第四季度，我們預計在 2023 年實現集團資本投資創紀錄的一年。我只想提醒大家，這確實是我們未來收益成長的基礎和基礎。這仍然很強勁。我們在西海岸度過了一個相當非常溫和的夏天，還有一個溫和的夏季火災季節，不管你信不信，除了西毛伊島發生的火災之外，也相當溫和。

But overall, we have about another 4 weeks of fire season so far, knock on wood, out on the West Coast. Things have been fairly tame and we look forward to getting fire season wrapped up this year and then planning for the 2024 fire season. Looking at the West Maui fires, albeit the amount of acreage burned, it was 6,753 acres, which is not much at all, especially in California when we dealt with wildfires that have been in excess of 400,000 acres burned, they were very devastating because it was an island in Maui, the fires that took place in early August, there were really a series of 3 fires that were started.

但總的來說，到目前為止，西海岸的火災季節還有大約 4 週。情況相當溫和，我們期待今年的火災季節結束，然後為 2024 年的火災季節做好規劃。看看西毛伊島的大火，雖然燒毀的面積有6,753英畝，這根本不算多，特別是在加州，當我們處理燒毀面積超過40萬英畝的山火時，它們的破壞性非常大，因為毛伊島的一個島嶼，8月初發生的火災，確實連續發生了3起火災。

And it was really the kind of a perfect storm between a drought that they were having in the Hawaiian Islands, climate change, it's just been more dry and more arid and then, believe it or not, you had the remnants of a hurricane and hurricane winds that came in that caused these fires to really take off. In the upcountry, you had the Kilauea and the [Alinda] fire and those were close to our Pukalani system. In Central Maui, you had the Pulehu and Kihei fires. They burned about 3,200 acres. And then on the west side, you had the Lahaina fire, which was about 2,100, 2,200 acres.

這確實是夏威夷群島的乾旱和氣候變遷之間的完美風暴，只是變得越來越乾燥，然後，不管你信不信，你會看到颶風和颶風的殘餘。吹來的風導致這些火災真正爆發。在內陸地區，有基拉韋厄火山和[阿林達]大火，它們靠近我們的普卡拉尼系統。在毛伊島中部，發生了普勒胡和基黑火災。他們燒毀了約 3,200 英畝的土地。然後在西側，發生了拉海納火災，面積約為 2,100、2,200 英畝。

And while none of our systems were directly affected, we do own the Ka'anapali, the Kalaeloa and the Pukalani systems. Things are very, very chaotic. And I'm very happy to report that our employees followed their training. We do a lot of training for wildfire and wildfire readiness. Our water systems performed very, very well. We've never lost pressure in our systems during the fire. And we did our job in terms of helping our customers protect their property by keeping their systems wet and the fire hose going for the fire department as they battled these fires.

雖然我們的系統沒有受到直接影響，但我們確實擁有 Ka'anapali、Kalaeloa 和 Pukalani 系統。事情非常非常混亂。我很高興地向大家報告，我們的員工接受了他們的訓練。我們進行了大量的野火和野火準備訓練。我們的供水系統表現非常非常好。在火災期間，我們的系統從未失去壓力。我們的工作是幫助我們的客戶保護他們的財產，在他們與這些火災作鬥爭時，保持他們的系統濕潤，並為消防部門提供消防水龍帶。

Likewise, we were the only potable water provider on the west side of Maui for a number of days after the fire. So I just want to pause and give kudos to the team for following their training and doing an amazing job during a very chaotic and confusing time. And I think we've all read in the press about the response from local government, which added to the confusion but kudos to the team in Maui for doing such a great job.

同樣，火災發生後的幾天裡，我們是毛伊島西側唯一的飲用水供應商。因此，我只想暫停一下，向團隊表示敬意，感謝他們在一個非常混亂和混亂的時期遵循了他們的訓練並做了出色的工作。我想我們都在媒體上讀過當地政府的回應，這增加了混亂，但對毛伊島團隊所做的出色工作表示讚賞。

And liquidity in the company remains strong. We maintained $69 million of cash, of which $34 million is restricted. We have short-term borrowing capabilities of $485 million. That's significant, while we're waiting for the general rate case decision. There's no crunch on liquidity at the company. And certainly, with our capital program, the way it's going, we don't see that slowing down anytime soon. We did not sell any shares in the at-the-market or ATM program that we currently have in place. And we don't anticipate really selling shares probably for the rest of the year and we'll see what the needs are as we go into 2024.

公司的流動性依然強勁。我們持有 6,900 萬美元現金，其中 3,400 萬美元是受限制的。我們的短期借款能力為 4.85 億美元。在我們等待一般利率案件決定的同時，這一點意義重大。公司的流動性不存在緊縮情況。當然，按照我們的資本計劃的進展情況，我們認為這種情況不會很快放緩。我們沒有出售我們目前實施的市場或 ATM 計劃中的任何股份。我們預計今年剩餘時間可能不會真正出售股票，我們將在進入 2024 年時看看需求是什麼。

We've increased cash and cash equivalents from 32 -- excuse me, increased to $32.8 million from the collection of WRAM and MCBA balances. We wanted to point that out because there were some analysts that were concerned about the collectibility of the WRAM when it went away. We have continued to collect that cash. And clearly, that has helped enhance our cash position year-to-date and during the third quarter.

我們將 WRAM 和 MCBA 餘額的現金和現金等價物從 32 增加到 3,280 萬美元。我們想指出這一點，因為有一些分析師擔心 WRAM 消失後的收藏價值。我們繼續收取這些現金。顯然，這有助於增強我們今年迄今和第三季的現金狀況。

The other noteworthy item in the quarter is when you look at the third quarter of 2022, we had a $9.3 million unrealized loss on nonqualified benefit plan investments. And then this year for the same period, that was a positive $700,000. So you see the market go from what was really bad last year to where these assets have stabilized and then have now become more productive and added $700,000 in the other income and expense.

本季另一個值得注意的事項是，當您查看 2022 年第三季時，我們的不合格福利計畫投資有 930 萬美元的未實現損失。今年同期，這一數字為正 70 萬美元。所以你會看到市場從去年非常糟糕的情況轉變為這些資產已經穩定下來，然後現在變得更加富有成效，並在其他收入和支出中增加了 70 萬美元。

Going onto Slide 16. As Dave mentioned earlier, the cost of capital adjustment mechanism performed as it's designed. The marked period is from 10/1, so October 1 to September 30 in a given year and it tracks the Moody's utility bond index and the changes in that bond index. And when a bond index changes more than 100 basis points, we're allowed to file for an adjustment to our ROE, 50% of the change. So essentially, the change from September -- excuse me, October 1, 2022 to September 30, 2023, was 140 basis points. So we have filed for a 70-basis point adjustment to our return on equity, which brings us to a 10.27% and an increase in our rate of return up to 7.46% overall rate of return, ARR as the variable is in ratemaking.

轉到投影片 16。正如 Dave 之前提到的，資本成本調整機制按照其設計執行。標記期間為 10/1，即給定年份的 10 月 1 日至 9 月 30 日，它追蹤穆迪公用事業債券指數以及該債券指數的變化。當債券指數變動超過 100 個基點時，我們可以申請對 ROE 進行調整，調整幅度為 50%。因此，從本質上講，從 2022 年 10 月 1 日到 2023 年 9 月 30 日的變化是 140 個基點。因此，我們申請對股本回報率進行 70 個基點調整，使我們的股本回報率達到 10.27%，並將整體回報率（ARR 作為利率制定中的變數）提高至 7.46%。

That's a Tier 2 advice letter that's been filed on October 13. We expect to get that approved here in, sometime in early November. And then that gives us the remaining time of the year to program the changes into the tariffs and have it effective for October 1. As Dave mentioned, this will add approximately $10 million to our income going into 2024.

這是 10 月 13 日提交的 2 級建議函。我們預計在 11 月初的某個時候獲得批准。這樣我們就可以在一年中剩餘的時間裡對關稅變化進行規劃，並於 10 月 1 日生效。正如 Dave 所提到的，這將為我們 2024 年的收入增加約 1000 萬美元。

Speaking of regulatory updates, I'm going to hand over to Greg Milleman to give you an update on the California general rate case. Greg?

說到監管更新，我將請格雷格·米勒曼 (Greg Milleman) 向您介紹加州一般費率案例的最新情況。格雷格？

Okay. Just for clarification, the cost of capital adjustment that Marty mentioned, he said effective October 1, it will actually be effective January 1. I think he unintentionally mentioned that (inaudible).

好的。澄清一下，馬蒂提到的資本調整成本，他說從 10 月 1 日起生效，實際上將於 1 月 1 日生效。我認為他無意中提到了這一點（聽不清楚）。

Moving right along with the California general rate case. The main point here is, as you know, from the second quarter that a second judge was added to our case. And we have been getting information requests from the judges that are clearly demonstrating that they're working on the case and proceeding forward with hopefully the deadline that's currently set, to complete it by December 31, 2023.

與加州一般利率案例一起向右移動。如您所知，這裡的要點是，從第二季度開始，我們的案件中增加了第二名法官。我們一直收到法官們的資訊請求，這些資訊清楚地表明他們正在處理此案，並預計在目前設定的截止日期前繼續推進，即在 2023 年 12 月 31 日之前完成。

Moving to Slide 18. These are the other regulatory matters that we are proceeding with. As you can see, we have a application in, to increase our ability to raise capital by $1.3 billion to fund our capital program. We also are seeking recovery of expenditures that we incurred related to the drought through -- those expenditures through the end of 2022. And then finally, we completed -- filed and completed a rate case in Washington to increase our company revenues by $2.1 million that became effective. I believe it was July 28, 2023.

轉向投影片 18。這些是我們正在處理的其他監管事項。正如您所看到的，我們有一份申請，旨在提高我們籌集 13 億美元資金的能力，為我們的資本計劃提供資金。我們也正在尋求收回與乾旱相關的支出，直到 2022 年底。最後，我們在華盛頓完成了一項費率案件，以使我們公司的收入增加 210 萬美元，變得有效。我相信那是 2023 年 7 月 28 日。

Moving to Slide 19, again, back to you, Marty.

再次轉到幻燈片 19，回到您這裡，馬蒂。

Yes. Thanks, Greg. In terms of PFAS regulation and what's happening, certainly, there's been a ton of press over the last quarter about the settlement discussions that have been underway with the polluters and while no final settlement has been reached, there clearly has been a lot of activity. For us, there's really no change in our PFAS kind of program. We have a memo account on file with the commission that allows us to track our incremental costs associated with PFAS testing. And then we've filed an application to modify that advice letter to allow us to track capital as well.

是的。謝謝，格雷格。就 PFAS 監管和正在發生的事情而言，當然，上個季度有大量關於與污染者正在進行的和解討論的媒體報道，雖然尚未達成最終和解，但顯然已經有很多活動。對我們來說，我們的 PFAS 計劃實際上沒有任何變化。我們在委員會備案了一個備忘帳戶，使我們能夠追蹤與 PFAS 測試相關的增量成本。然後我們提交了修改該建議信的申請，以便我們也可以追蹤資本。

The significance of that is, it allows us to start to work early, make the investments and when the regulations ultimately come into play and get approved, we can apply for recovery. I also would like to point out that the $200 million that we estimate as being our capital needs to treat PFAS and the systems that we operate is incremental to the capital program that we talk about. So the slides that we put in this deck is part of the rate case capital that we planned during the ordinary course of business. Something like this and we have a change in regulation that requires incremental capital, it's just bad. It's incremental to the capital spending that we show in the rate case. Hence, we track it through the advice letter process.

這樣做的意義在於，我們可以儘早開始工作，進行投資，當法規最終發揮作用並獲得批准時，我們可以申請恢復。我還想指出，我們估計需要 2 億美元的資金來處理 PFAS 和我們營運的系統，這對我們所談論的資本計畫來說是增量的。因此，我們放在這副投影片中的投影片是我們在正常業務過程中規劃的利率案例資本的一部分。像這樣的事情，我們的監管發生了變化，需要增量資本，這很糟糕。它是我們在利率案例中顯示的資本支出的增量。因此，我們透過建議信流程對其進行追蹤。

Moving to Slide 20. You'll see where we are kind of year-to-date at $274 million. Again, that's a new 9-month high for the company and we are on track in the fourth quarter for a record capital investment year. Again, overall, we don't see the capital needs slowing down anytime soon. And anything that's used for PFOA or PFAS treatment will be incremental to the numbers that you see on the slide. Likewise, this slide will get trued up when we get the final decision from the CPUC. The slide is based on what we've asked for in the rate case and also what we have actually spent the last couple of years while going through the rate case process.

轉到幻燈片 20。您會看到我們今年迄今的收入為 2.74 億美元。這再次創下了該公司 9 個月以來的新高，我們預計在第四季度實現創紀錄的資本投資年度。總的來說，我們認為資本需求不會很快放緩。用於 PFOA 或 PFAS 處理的任何物質都會增加您在幻燈片上看到的數字。同樣，當我們得到 CPUC 的最終決定時，這張幻燈片將會得到修正。該投影片是基於我們在費率案例中要求的內容以及我們過去幾年在完成費率案例流程時實際花費的內容。

Looking at Slide 21, that investment flows through to our rate base. This is what our forecasted rate base looks like based on the current assumptions. And again, this will get trued up when we have a decision from the commission based on the 2021 general rate case. So going to Slide 22, in summary, kind of where are we. Obviously, we're very happy that it's been a mild fire season and we didn't sustain any damage to our systems in West Maui. The cost of capital adjustment mechanism has put our ROE starting in January 1, and Greg, thank you for that correction, to 10.27%. We haven't had an ROE above 10.2% in at least the last couple of decades. CapEx continues to remain strong and there's infinite places to put capital. So on the capital side of the business, things are going well.

看投影片 21，該投資流入我們的利率基礎。這就是我們根據當前假設預測的利率基礎。同樣，當我們根據 2021 年一般費率情況做出委員會決定時，這一點將會得到糾正。總而言之，請看投影片 22，我們現在處於什麼位置。顯然，我們很高興這是一個溫和的火災季節，我們西毛伊島的系統沒有遭受任何損壞。資本成本調整機制已將我們的 ROE 從 1 月 1 日開始調整為 10.27%，謝謝格雷格的修正。至少在過去幾十年裡，我們的 ROE 從未超過 10.2%。資本支出持續保持強勁，並且有無限的資本投入空間。因此，在業務的資本方面，一切進展順利。

Obviously, as I mentioned earlier, the fog of the delay in the general rate case can be very frustrating. The revenue shortfalls we are experiencing is due to the temporary absence of regulatory mechanisms and we anticipate recognition of that revenue and those mechanisms when we have a decision from the California Public Utilities Commission.

顯然，正如我之前提到的，一般費率情況下的延遲迷霧可能會非常令人沮喪。我們遇到的收入短缺是由於暫時缺乏監管機制，我們預計當加州公用事業委員會做出決定時，我們會承認收入和這些機制。

Like Greg, I'm encouraged to see that the rate case is being worked on. But I also know it's very frustrating, where we have to wait for administrative delays and it causes a lot of confusion in the financial reporting. The current deadline for the commission that they have on file to conclude our 2021 general rate case is December 31, 2023. So hopefully, we will be near the end.

和格雷格一樣，我很高興看到費率案例正在研究中。但我也知道這非常令人沮喪，我們必須等待行政延誤，這會導致財務報告出現許多混亂。他們登記的委員會目前完成 2021 年一般費率案例的截止日期是 2023 年 12 月 31 日。所以希望我們會接近結束。

In addition to that, as we work to answer their questions on the 2021 rate case, we have been busy working on the 2024 rate case, which is going to be a big effort within the company. And it's thousands and thousands and thousands of pages of documentation and testimony that gets filed. So the team has been busy working on that. And obviously, we are pushing forward with our PFOA or PFAS programs to treat the wells that we have in our service territory that may show trace elements of those chemicals.

除此之外，當我們努力回答他們關於 2021 年費率案例的問題時，我們一直忙於研究 2024 年費率案例，這將是公司內部的一項巨大努力。歸檔的文件和證詞有成千上萬頁。因此，團隊一直忙於這方面的工作。顯然，我們正在推進 PFOA 或 PFAS 計劃，以處理我們服務區域內可能含有這些化學物質微量元素的油井。

So [Krista], with that, we will open up for questions, please.

[Krista]，接下來，我們將開放提問。

(Operator Instructions). Your first question comes from the line of Davis Sunderland from Baird.

（操作員說明）。你的第一個問題來自貝爾德的戴維斯桑德蘭。

Good morning, just going through the slide deck, I noticed there is no update on the business development pipeline. I just wanted to ask in this regards it's simple the (inaudible) share or maybe a difference in how you guys are looking at this going into 2024? Or any thoughts there?

早安，剛剛瀏覽投影片，我注意到業務開發管道沒有更新。我只是想問一下，在這方面，（聽不清楚）分享很簡單，或者你們對 2024 年這個問題的看法可能有所不同？或有什麼想法嗎？

No. Actually, good question, Davis. No. No change in how we look at 2024. The business development pipeline continues to be very, very strong. The only real activity that we had in the third quarter was that we closed on the Stroh system and we previously announced that. And so obviously, with the additional disclosures we wanted to put in this deck associated with the overhang of the rate case being delayed, we just didn't think there were a lot of substantial changes in the last 90 days that we -- and there were no new announcements during the last 90 days of the (inaudible) Stroh's system closing. We didn't want to use the space right now. We thought that space for this discussion was better served talking about what are the effects of the delayed rate case, both on the revenue and EPS line.

不，事實上，這是個好問題，戴維斯。不會。我們對 2024 年的看法沒有改變。業務發展管道仍然非常非常強勁。我們在第三季進行的唯一實際活動是我們關閉了 Stroh 系統，我們之前曾宣布過這一點。很明顯，隨著我們希望在這副牌中加入與被推遲的利率案件懸而未決相關的額外披露，我們只是認為在過去 90 天內我們並沒有發生很多重大變化——而且在（聽不清）Stroh 系統關閉的最後90 天內沒有新的公告。我們現在不想使用這個空間。我們認為，討論延遲利率狀況對收入和每股盈餘的影響是更好的討論空間。

Got it. And that was very helpful. And then my only other question is just on the CPUC filing for $1.3 billion in equity and debt. Any estimates on when this specifically come back or if there would just be a continued (inaudible) tradings and deployment and maybe other changes due to the rising rates environment. I guess any other thoughts there would be helpful.

知道了。這非常有幫助。我唯一的另一個問題是 CPUC 申請 13 億美元的股權和債務。關於何時具體恢復的任何估計，或者是否會繼續（聽不清楚）交易和部署，以及由於利率上升環境而可能發生的其他變化。我想任何其他想法都會有幫助。

Greg, you want to take that one?

格雷格，你想拿走那個嗎？

I heard part of it and that's the timing -- an application like that generally takes somewhere between 6 to 12 months to process. It's generally very noncontroversial but the commission does have the process that they need to go through.

我聽到了其中的一部分，那就是時間安排——這樣的申請通常需要 6 到 12 個月的時間來處理。這通常是沒有爭議的，但委員會確實有他們需要經歷的流程。

Yes. And I'll come back on the second part of your question, Davis. You saw the cost of capital mechanism do what it's designed to do. And frankly, I believe the cost of capital mechanism is very unique to California. I'm not aware of other states that have a cost of capital adjustment mechanism. So when we're in a increasing interest rate environment, that mechanism has helped and this is the second time, right, we had a second step up on our ROE from increasing interest rate environment.

是的。戴維斯，我將回到你問題的第二部分。您看到資本成本機制發揮了其設計的作用。坦白說，我認為資本成本機制對加州來說是非常獨特的。我不知道其他州有資本成本調整機制。因此，當我們處於利率上升的環境中時，該機制發揮了作用，這是第二次，對吧，我們的淨資產收益率在利率上升的環境中第二次提高。

So the application itself, we filed this in the ordinary course of business. It's basically a shelf, similar to the shelf that we file with the Securities and Exchange Commission. And basically, the commission is authorizing us to sell more debt and equity for our needs in terms of financing our capital program and running the company. So it's an administrative step with the commission, they approve it and then we have to have a shelf on file with the SEC.

因此，我們在正常業務過程中提交了申請本身。它基本上是一個架子，類似於我們向證券交易委員會提交的架子。基本上，委員會授權我們出售更多債務和股權，以滿足我們在資本計劃融資和營運公司方面的需求。所以這是委員會的行政步驟，他們批准了，然後我們必須向 SEC 備案。

It's not an indicator we're going to go out and do a great big stock deal tomorrow or all of a sudden sell a bunch of new debt. It's basically used to do the financing needs of the company as we continue to grow our rate base and we have increasing rate base needs. And then, again, I would just want to highlight that, that cost of capital adjustment and mechanism is working the way it's designed to work. And I think that's kind of a real benefit of California regulation in that we don't have to wait a couple of years to file for an increase in ROE given the increasing interest rate environment. We're allowed to adjust that every year based on the change in that Moody's utility bond index.

這並不表示我們明天會出去進行一筆大額股票交易，或突然出售一堆新債務。它基本上用於滿足公司的融資需求，因為我們不斷擴大我們的利率基礎，並且我們的利率基礎需求不斷增加。然後，我想再次強調一點，資本成本調整和機制正在按照其設計的方式發揮作用。我認為這是加州監管的真正好處，因為考慮到利率環境不斷上升，我們不必等待幾年才能申請增加股本回報率。我們可以每年根據穆迪公用事業債券指數的變化進行調整。

Your next question comes from the line of Jonathan Reeder from Wells Fargo.

您的下一個問題來自富國銀行的喬納森·里德（Jonathan Reeder）。

Not too bad, just getting into the swing of earnings now. So I know you made the filing to increase the ROE under the water cost of capital mechanism. Have any intervenors opined on that increase? Or by what date must intervenors weigh in if they want to?

還不錯，現在才剛進入收益波動階段。所以我知道你們在水資本成本機制下提交了提高淨資產收益率的備案。有乾預者對這種增加有何看法嗎？或者如果幹預者願意的話，他們必須在什麼日期之前進行權衡？

Yes. Jonathan, no one has intervened at this point in time. We filed it October 13 and the intervenors have 20 days. So that would be November 7. I believe I did the math right. But it's 20 days from October 13. I did the math wrong. I think it would be more like November 3 and 4.

是的。喬納森，目前還沒有人介入。我們於 10 月 13 日提交，幹預者有 20 天的時間。那就是 11 月 7 日。我相信我算對了。但距離10月13日還有20天。我算錯了。我認為更像是11月3日和4日。

Got you. Okay. And Greg that's the Tier 2 advice letter, correct?

明白你了。好的。格雷格，這是二級建議信，對嗎？

Yes. It's a Tier 2 advice letter, which -- where water division approves it, they make sure that we follow the rules of the water cost of capital adjustment mechanism in our approved tariffs. And then basically, they also make sure we did the math right. But that's the extent of it.

是的。這是一封二級建議信，在水務部門批准的情況下，他們確保我們遵守批准的水價中的資本調整機制的水成本規則。基本上，他們也會確保我們的數學計算正確。但這就是它的範圍。

Got you. Okay. Can you talk about maybe the strategy for the next cost of capital application, I believe it'd be due to be filed next year in theory, is their interest in trying to extend the current parameters given the 2022 to 2024 application, just recently got a final order.

明白你了。好的。您能否談談下一次資本成本申請的策略，我相信理論上將於明年提交，考慮到最近剛獲得的 2022 年至 2024 年申請，他們有興趣嘗試擴展當前參數最終訂單。

We are currently discussing that with the other 3 water companies that are also supposed to file on May 1, 2024. And at this point, we haven't settled on a strategy.

我們目前正在與其他 3 家自來水公司討論此事，這些公司也應於 2024 年 5 月 1 日提交文件。目前，我們尚未確定策略。

Okay. All right. I think that's it for my question at this point as we continue to await the [PD]. And that at least sounds good if the ALJs are coming back to you guys for information requests and it's consistent with them, certainly working on the case but hopefully buttoning it up. So good luck at that.

好的。好的。我想這就是我現在的問題，因為我們繼續等待 [PD]。如果 ALJ 回來向你們索取訊息並且與他們一致，肯定會處理此案，但希望能解決這個問題，那麼這至少聽起來不錯。祝你好運。

Your next question comes from the line of Angie Storozynski from Seaport.

您的下一個問題來自 Seaport 的 Angie Storozynski。

So just going back to that slide, which basically attempts to bridge the year-to-date results with what they would have been had the commission actually made a decision, so Slide 13. So can I ask that this big range for this first line for IRMA, right, $1.01 million to versus $0.5 million, well, say, a big range. So what is it -- is it -- why is there a range here? I mean, if you could just explain it to me from a -- from like a -- I mean there is a partial settlement in the case. So just again, so that I understand why the range is here.

回到那張幻燈片，它基本上試圖將年初至今的結果與委員會實際做出決定時的結果聯繫起來，所以幻燈片 13。所以我可以問第一行的這麼大的範圍嗎？IRMA（右）為101 萬美元到50 萬美元，嗯，可以說是一個很大的範圍。那麼它是什麼——是嗎——為什麼這裡有一個範圍？我的意思是，如果你能從一個——從一個——角度向我解釋一下，我的意思是這個案子得到了部分和解。再次強調一下，以便我理解為什麼範圍在這裡。

Certainly. The partial settlement really was basically on rate design matters. It did not address any of the capital projects that we included in the program and it did not address the disputed expense items, O&M expense items that we had in the case. And so the high range is what we filed in our application that would be our position. And the low range is what the consumer advocates group, what they felt that we should achieve. So that's the really the big reason for the range. The settlement was, not a lot of items settled and it was not a lot of revenue requirement and, of course, basically no revenue requirement items settled.

當然。部分和解實際上基本上是關於費率設計問題。它沒有解決我們在該計劃中包含的任何資本項目，也沒有解決我們在該案中的有爭議的費用項目、營運和維護費用項目。因此，我們在申請中提交的高範圍就是我們的立場。低範圍是消費者權益團體的目標，他們認為我們應該實現這一目標。這就是該系列的真正重要原因。結算時，結算的項目不多，收入要求的項目也不是很多，當然，基本上沒有收入要求的項目結算。

Okay. And then the DREMA line, right, you're mentioning that, that's going to get -- be decided in 2024, right? So I guess it all depends, when in '24. But is it fair to assume that we should just move that decision or that earnings stream from '23 earnings to '24? What if the decision is for instance, made in, I don't know, January or February? Would that still be allocated to '23?

好的。然後 DREMA 線，對吧，你提到的是，這將在 2024 年決定，對吧？所以我想這一切都取決於24年的時間。但是，假設我們應該將該決定或收益流從「23 年收益」轉移到「24 年」是否公平？如果這個決定是在一月或二月做出的，我不知道該怎麼辦？那還會分配給'23嗎？

I think, Dave, you would need to answer that one.

我想，戴夫，你需要回答這個問題。

Yes. So the way that the advice letter filing process works is, we're going to get -- if we get a proposed decision that's going to be finalized at the end of the year and then we would prepare the advice letter filing in the first quarter of 2024 and it's a Tier 3 filing, which would take several months to get approval. So it's going to be towards the end -- the second half of 2024. So there's -- it will not be reported in 2023.

是的。因此，建議信歸檔流程的運作方式是，如果我們得到一項擬議決定，該決定將在年底敲定，那麼我們將在第一季度準備建議信歸檔2024 年，這是一個Tier 3 申請，需要幾個月的時間才能獲得批准。所以這將是在年底——2024 年下半年。所以——它不會在 2023 年被報導。

Okay. And then -- sorry, I'm jumping like that. But the filing with the -- the permission to issue a mixture of equity and bonds, is it fair to assume that basically equity component is equivalent to the allowed equity ratio? I mean, so basically, roughly 53% of that would be equity.

好的。然後——抱歉，我就那樣跳了。但是，在允許發行股票和債券混合體的情況下，假設基本股權成分等於允許的股權比例是否公平？我的意思是，基本上，其中大約 53% 是股權。

Yes, that's a good assumption.

是的，這是一個很好的假設。

Okay. And then lastly, what's -- I should be able to infer it from the earnings (inaudible). But what's the drag, year-to-date drag associated or if at all associated with the performance of your nonqualified pension funds? Maybe not the year-over-year, maybe what's the absolute number?

好的。最後，我應該能夠從收益中推斷出來（聽不清楚）。但是，年初至今的拖累是什麼？或者是否與您的不合格退休基金的業績相關？也許不是同比，也許絕對數字是多少？

I think we have the details in Slide 15. Are you referring to the -- you see that where we have the unrealized loss in 2022 versus the unrealized gain in 2023.

我想我們在投影片 15 中有詳細資訊。您是否指的是 - 您看到我們 2022 年的未實現損失與 2023 年的未實現收益。

Okay. I see it. Okay. So those are not year-over-year numbers. Those are actually actual numbers. Okay. Very good. Good. And then maybe one more. So again, I know that we're still waiting for the GRC decision but you now have presumably the visibility into the high ROE. We -- you guys raised the dividend this year, relatively little, right, only 4%. Is there -- I mean, I'm assuming that, that was sort of a transitory issue. So should we expect that the dividend increases will go back to the historical cadence? Or I mean, are we in simply a different interest rate environment and that somehow will suppress the dividend growth going forward?

好的。我看到了。好的。所以這些不是同比數字。這些實際上是實際數字。好的。非常好。好的。然後也許還有一個。再說一遍，我知道我們仍在等待 GRC 的決定，但您現在大概已經了解了高 ROE。我們——你們今年提高了股息，相對較少，對吧，只有4%。有沒有——我的意思是，我假設這是一個暫時性的問題。那麼我們是否應該預期股利增加將回到歷史節奏呢？或者我的意思是，我們只是處於不同的利率環境中，這會在某種程度上抑制未來的股息成長？

No. Our overall strategy, Angie, is to have and keep our payout ratio between 50% to 60%. And we have stayed kind of well within that range. Obviously, with the growing capital program, right, there's always the need to finance that program. And when you pay a dividend, it takes away from your ability to help pay for that program. Nonetheless, I think we recognize that we are a total return type of stock and the company has had a long history of increasing its dividend every single year.

不。Angie，我們的整體策略是讓我們的派息率保持在 50% 到 60% 之間。我們一直保持在這個範圍內。顯然，隨著資本計劃的不斷增長，總是需要為該計劃提供資金。當您支付股息時，您幫助支付該計劃費用的能力就會被削弱。儘管如此，我認為我們認識到我們是一種總回報類型的股票，而該公司有著每年增加股息的悠久歷史。

So I would look at 2 things. I think the financials right now and that's why I use the fog of the delayed rate case. It's very foggy. It's hard to see because as you just pointed out, we have estimates and we're giving you kind of a goalpost of where we think the decision is going to come out but we ultimately don't know. But certainly, when we book everything and get everything kind of caught up from the delayed rate case, the fog starts to go away and you'll see what the financial statements look like.

所以我會看兩件事。我認為現在的財務狀況，這就是為什麼我使用延遲利率案例的迷霧。霧很大。這很難看出，因為正如你剛才指出的，我們有估計，我們給你一個目標，我們認為決定會在哪裡出現，但我們最終不知道。但當然，當我們預訂所有內容並讓所有內容都從延遲的費率情況中恢復過來時，迷霧開始消失，您將看到財務報表的樣子。

And I do not expect the company to deviate from its policy of increasing the dividend every year. I think that will likely continue. The question is how much. And obviously, we are in a rising interest rate environment, your risk-free rate of return is now at 4% or above depending on what duration bonds you're looking at and what type of bonds you're looking at. I'm also acutely aware that, that compound annual growth rate or the CAGR number associated with our dividend growth helps drive stock valuation. So it's hard to say right now. But look, I would anticipate a dividend increase next year, consistent with the history of the company for the last 70 years. The question will be kind of how much and is the rate case concluded. And I don't think we're prepared to say more on that right now. But history will repeat itself, I think, with Cal Water. It's just a question of what size increase will it be.

我預期公司不會偏離每年增加股利的政策。我認為這種情況可能會持續下去。問題是多少。顯然，我們正處於利率上升的環境中，您的無風險回報率現在為 4% 或更高，具體取決於您正在尋找的債券期限和債券類型。我還敏銳地意識到，與我們的股息成長相關的複合年增長率或複合年增長率有助於推動股票估值。所以現在還很難說。但你看，我預計明年的股息會增加，這與該公司過去 70 年的歷史一致。問題是多少以及費率案例是否已結束。我認為我們現在不准備就此發表更多言論。但我認為，卡爾水公司的歷史將會重演。這只是規模增加多少的問題。

Okay. And I know that I promised that was the last question but now just one more. So you guys did numerous -- well, number of, a couple of acquisitions. That's -- so the question I basically have, is that strategy going to continue in this higher financing environment? Is there more of refocusing on organic growth? Again, that's a question I think we hear from investors across the utility space. Again, as you said, PFAS would potentially give you this incremental organic growth. But again, like strategically speaking, is there a shift towards organic growth in a way of -- from an M&A?

好的。我知道我答應過這是最後一個問題，但現在只剩下一個問題了。所以你們做了很多事——嗯，很多，幾次收購。那就是我基本上的問題是，在這種更高的融資環境中，該策略是否會持續下去？是否會更多地重新關注有機成長？我想這也是我們從公用事業領域的投資者那裡聽到的問題。正如您所說，PFAS 可能會為您帶來增量有機成長。但同樣，從策略上來說，是否會從併購轉向有機成長？

Yes. I think I'll kind of point our annual report that we have for this year, steady at the helm, right? I mean, certainly, it's been a turbulent market. I think the last 18 months to 2 years, your interest rates, 2 years ago, we could borrow money at sub [0.5%]. And now our borrowing rate today, what, 6.5% on the line.

是的。我想我會指出我們今年的年度報告，穩定掌舵，對嗎？我的意思是，當然，這是一個動盪的市場。我認為過去 18 個月到 2 年，以 2 年前的利率，我們可以以低於 [0.5%] 的利率借錢。現在我們今天的借款利率什麼的，6.5%就行了。

We're a A+ stable issuer. So it means the cost of capital is going up. And I think it's going to shake out buyers and sellers. Having said that, Angie, we've always been kind of value focused on our buys. And I think as deals may slow down a little bit, we're always going to be out there looking for those systems that we can bring onto our platform, improve service and hopefully bring new capital into a system that may be underinvested.

我們是 A+ 穩定發行人。因此，這意味著資金成本正在上升。我認為這將會撼動買家和賣家。話雖如此，安吉，我們一直注重購買的價值。我認為，由於交易可能會稍微放緩，我們總是會尋找那些可以引入我們平台的系統，改善服務，並希望為可能投資不足的系統帶來新的資本。

So I remain optimistic on the M&A side. I think it might slow down a little bit. And to the question Dave was asked earlier, we didn't include that slide this quarter because we just had the one system closed, the Stroh's system in Washington. That was about 900 connections. It doesn't mean our pipeline has spinned out any, it just means we haven't had any new announcements come out in the last 90 days. And we have a very good business development team. Some of you may have seen we promoted Shilen Patel into that role as -- leading that as our Chief Development Officer. And that's his full-time job. And I think we will continue to look for strategic deals that will be accretive. And again, we have to get to the fog of the delayed rate case but we have a very strong balance sheet. And sometimes when the market gets tough, you find better opportunities. So we're going to be out there looking and continue to look.

所以我對併購方面保持樂觀。我認為它可能會慢一點。對於戴夫之前被問到的問題，我們本季沒有包括那張投影片，因為我們剛剛關閉了一個系統，即華盛頓的斯特羅系統。大約有 900 個連接。這並不意味著我們的管道已經發布，而只是意味著我們在過去 90 天內沒有發布任何新公告。我們擁有一支非常優秀的業務開發團隊。你們中的一些人可能已經看到我們提拔 Shilen Patel 擔任該職位，擔任我們的首席開發長。這就是他的全職工作。我認為我們將繼續尋找能夠增值的策略交易。再說一遍，我們必須了解延遲利率狀況的迷霧，但我們擁有非常強大的資產負債表。有時，當市場變得艱難時，您會發現更好的機會。因此，我們將出去尋找並繼續尋找。

(Operator Instructions) We have no other questions in the queue at this time. I will now turn the call over to Marty Kropelnicki, Chairman and CEO, for closing remarks.

（操作員說明） 目前我們隊列中沒有其他問題。現在我將把電話轉交給董事長兼執行長馬蒂·克羅佩爾尼基 (Marty Kropelnicki) 致閉幕詞。

Great, [Krista]. Thanks, everyone, for calling in on the call today and thanks for staying with us as we go through this delayed rate case. Hopefully, we are getting to the end here, as Greg mentioned and we get this thing kind of wrapped up because certainly as we go into 2024, we have some big things we want to accomplish. That's it for now. We'll look forward to reporting our year-end results at the end of February. Until then, please be safe and we'll look forward to talking to you really soon. Thank you.

太棒了，[克里斯塔]。感謝大家今天打電話，也感謝您在我們處理這個延遲費率案例時與我們在一起。希望我們能在這裡結束，正如格雷格所提到的，我們已經把這件事結束了，因為當我們進入 2024 年時，我們肯定有一些重大的事情想要完成。現在就這樣。我們期待在二月底報告我們的年終業績。在那之前，請注意安全，我們期待盡快與您交談。謝謝。

This concludes today's conference call. Thank you for your participation and you may now disconnect.

今天的電話會議到此結束。感謝您的參與，您現在可以斷開連接。