California Water Service Group (CWT) 2024 Q3 法說會逐字稿

Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the California Water Service Group third-quarter 2024 Earnings Call.

謝謝你的支持。我叫凱瑟琳，今天我將擔任你們的會議操作員。此時此刻，我歡迎大家參加加州水務集團 2024 年第三季財報電話會議。

(Operator Instructions)

（操作員說明）

Now I would like to turn the call over to Jim Lynch, Senior Vice President and Chief Financial Officer. Please go ahead, sir.

現在我想將電話轉給高級副總裁兼財務長吉姆·林奇 (Jim Lynch)。請繼續，先生。

Thank you, Kathleen. Welcome, everyone, to our third-quarter 2024 results call for California Water Service Group. With me today is Marty Kropelnicki, our Chairman and CEO and Greg Milleman, Vice President of Rates and Regulatory Affairs.

謝謝你，凱瑟琳。歡迎大家參加我們的加州水務集團 2024 年第三季業績電話會議。今天與我在一起的有我們的董事長兼首席執行官馬蒂·克羅佩爾尼基 (Marty Kropelnicki) 和費率與監管事務副總裁格雷格·米勒曼 (Greg Milleman)。

Replay dial-in information for this call can be found in our quarterly results earnings release, which was issued earlier today. A replay will be available until December 30, 2024. As a reminder, before we begin, the company has a slide deck to accompany today's earnings call. The slide deck was furnished with an 8-K and is also available at the company's website at www.calwatergroup.com.

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收益報告中找到。重播將持續到 2024 年 12 月 30 日。滑梯配有 8-K，也可在公司網站 www.calwatergroup.com 上取得。

Before looking at third-quarter 2024 results, I'd like to take a few moments to address 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.

在查看 2024 年第三季業績之前，我想花一些時間來討論前瞻性陳述。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。

As a result, 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, Form 10-Qs, press releases, and other reports filed from time to time with the Securities and Exchange Commission.

因此，本公司強烈建議所有現有股東和利害關係人仔細閱讀和理解公司在我們的 10-K 表格、10-Q 表格、新聞稿和其他不時提交的報告中披露的風險和不確定性資訊。與證券交易委員會聯繫。

And now I'll turn the call over to Marty.

現在我將把電話轉給馬蒂。

Thanks, Jim. Good morning, everyone, and happy Halloween. We're happy you can join us here today. I'm very pleased to share with you our results for the third quarter of 2024. There's really five main topics that we want to cover today.

謝謝，吉姆。大家早安，萬聖節快樂。我們很高興您今天能加入我們。我很高興與您分享我們 2024 年第三季的業績。

The first one being our strong third-quarter financial performance that continues to benefit from the regulatory release in the State of California. We want to give an update on the 2024 general rate case, where during the quarter, we had our initial pre-conference hearing, and we've been assigned an administrative law judge and a commissioner to oversee our case.

第一個是我們強勁的第三季財務業績，繼續受益於加州的監管發布。我們想提供 2024 年一般費率案件的最新情況，在本季度，我們舉行了初步會前聽證會，並指定了一名行政法法官和一名專員來監督我們的案件。

We received approval of certain advice letters from the California Public Utilities Commission that's going to allow us to collect $94.2 million in certain regulatory balances through 2027. We want to talk about the record amount of capital that we've invested this year and what that looks like going into year end. And then lastly, take a moment to talk about our continued environmental leadership and corporate recognition and talk about a few awards that we won during the quarter.

我們收到了加州公用事業委員會的某些建議函的批准，這將使我們能夠在2027 年之前從某些監管餘額中收取9,420 萬美元 我們想談談我們今年投資的創紀錄的資本金額以及具體情況就像進入年底一樣。最後，花點時間談談我們持續的環境領導和企業認可，並談談我們在本季贏得的一些獎項。

But to start things off, let's do like we typically do and have Jim Lynch take you through some of the financial analysis that highlights the quarterly results.

但首先，讓我們像往常一樣做，讓吉姆林奇帶您完成一些突出季度業績的財務分析。

Jim, back to you.

吉姆，回到你身邊。

Thanks, Marty.

謝謝，馬蒂。

So as Marty mentioned, our Q3 2024 financial results continue to benefit from new rates and the rate structure authorized in our 2021 California GRC. As a result, our operating revenue for the quarter increased 17.5% to $299.6 million compared to our prior year Q3 operating revenue of $255 million. Net income for the quarter was $60.7 million or $1.03 per diluted share compared to $34.4 million or $0.60 per diluted share in Q3 of 2023. The $44.6 million increase in Q3 2024 revenue was driven primarily by a $42.2 million increase in rates billed to customers as authorized in our regulatory filings and an increase in customer usage, including usage by new customers of $9.6 million. These increases were offset by a $9.4-million reduction in our Monterey Water Rate Adjustment Mechanism, or our MWRAM. Recall that the MWRAM is a rate adjustment mechanism that includes a tiered rate structure tied to usage. In periods of warm dry weather when usage increases, the MWRAM typically decreases. The balance typically increases in cooler wet weather when usage declines.

正如 Marty 所提到的，我們 2024 年第三季的財務表現繼續受益於 2021 年加州 GRC 中授權的新費率和費率結構。因此，與去年第三季 2.55 億美元的營業收入相比，我們本季的營業收入成長了 17.5%，達到 2.996 億美元。本季淨利為6,070 萬美元，即稀釋後每股收益1.03 美元，而2023 年第三季淨利為3,440 萬美元，即稀釋後每股收益0.60 美元。 ，主要是由於授權向客戶收取的費率增加了4,220 萬美元。這些增加被蒙特利水費調整機制 (MWRAM) 940 萬美元的減少所抵消。回想一下，MWRAM 是一種速率調整機制，包括與使用相關的分層速率結構。在溫暖乾燥的天氣期間，當使用量增加時，MWRAM 通常會減少。當使用量下降時，在涼爽潮濕的天氣中，餘額通常會增加。

Q3 2024 operating expenses were $232.8 million compared to Q3 2023 operating expenses of $211.5 million. The $21 million increase was primarily driven by $2.7 million in higher water production costs due to an increase in wholesale rates and higher customer usage, a $3.2 million increase in depreciation and amortization due to new assets placement in service and $11.5 million in higher income taxes related to higher pretax earnings. In addition, net other income increased $3.8 million during the third quarter, primarily due to an increase in unrealized gains on nonqualified benefit plan investments of $5 million.

2024 年第三季的營運費用為 2.328 億美元，而 2023 年第三季的營運費用為 2.115 億美元。增加2,100 萬美元的主要原因是：由於批發費率增加和客戶使用量增加，導致水生產成本增加270 萬美元；由於新資產投入使用，折舊和攤提增加320 萬美元；以及相關所得稅增加1,150 萬美元。此外，第三季其他淨收入增加了 380 萬美元，主要是由於非合格福利計劃投資的未實現收益增加了 500 萬美元。

The impact of the Q3 2024 activity on diluted earnings per share is presented on slide 6. The more significant growth drivers were rate and usage increases of $0.56 and $0.13 per diluted share, respectively. In addition, gains on nonqualified benefit plan investments contributed $0.09 per diluted share. These drivers were partially offset by the change in MWRAM balance of $0.12 per diluted share and increases in water production expenses and depreciation and amortization expenses of $0.04 per diluted share, respectively.

投影片 6 介紹了 2024 年第三季活動對稀釋每股盈餘的影響。此外，非合格福利計劃投資收益貢獻稀釋後每股 0.09 美元。這些驅動因素被 MWRAM 餘額變動（稀釋後每股 0.12 美元）以及水生產費用和折舊及攤銷費用增加（稀釋後每股 0.04 美元）部分抵銷。

Year-to-date 2024 results benefited from the same regulatory mechanisms as the quarterly results. Year-to-date operating revenue increased $234.5 million to $814.6 million in 2024 compared to $580 million year to date in 2023. Year-to-date 2024 net income was $171.1 million or $2.93 diluted share compared to year-to-date net income in 2023 of $21 million or $0.38 per diluted share.

2024 年迄今的業績受惠於與季度業績相同的監管機制。 2024 年迄今的營業收入增加了2.345 億美元，達到8.146 億美元，而2023 年迄今的營業收入為5.8 億美元。 1.711 億美元，即攤薄份額為2.93 美元。

The growth in revenue was primarily driven by cumulative rate increases, including 2024 IRMA of $95 million, 2023 interim rate relief from the 2021 GRC of $87.5 million, and the recognition of deferred WRAM revenue of $15.6 million.

收入的成長主要是由累積費率成長所推動的，包括 2024 年 IRMA 9,500 萬美元、2021 年 GRC 的 2023 年臨時費率減免 8,750 萬美元，以及遞延 WRAM 收入的確認 1,560 萬美元。

In addition, the change in our 2024 MWRAM balance added $12.4 million and increased usage contributed $8.8 million. Year-to-date 2024 operating expenses were $621.8 million compared to year-to-date 2023 operating expenses of $538.2 million. The $83.6 million increase was primarily driven by an increase in water production cost of $15.4 million due to increases in wholesale water rates and higher usage.

此外，2024 年 MWRAM 餘額的變化增加了 1,240 萬美元，使用量增加貢獻了 880 萬美元。 2024 年年初至今的營運費用為 6.218 億美元，而 2023 年年初至今的營運費用為 5.382 億美元。增加 8,360 萬美元主要是由於批發水費上漲和用水量增加導致水生產成本增加 1,540 萬美元。

Water production costs increased an additional $3.3 million due to the incremental cost balancing account or ICBA that was authorized in the 2021 GRC. We also recognized $13.1 million in deferred costs associated with the recognition of deferred WRAM revenue and higher depreciation and amortization expense of $9.3 million.

由於 2021 年 GRC 中授權的增量成本平衡帳戶或 ICBA，水生產成本額外增加了 330 萬美元。我們也確認了與確認遞延 WRAM 收入相關的 1,310 萬美元遞延成本以及 930 萬美元的較高折舊和攤提費用。

Also, year-to-date income tax increased $41.1 million, primarily due to higher pretax earnings. The impact of year-to-date 2024 activity on diluted earnings per share is presented on slide 8. The more significant earnings drivers include cumulative rate increases in 2023 interim rate relief and recognized deferred WRAM revenue of $1.29, $1.19, and $0.21 diluted earnings per share, respectively.

此外，年初至今所得稅增加了 4,110 萬美元，主要是由於稅前收益增加。幻燈片8 介紹了2024 年迄今為止的活動對攤薄每股收益的影響。美元攤薄每股收益。

The change in our 2024 MWRAM balance and increased usage added another $0.17 and $0.12 diluted earnings per share, respectively. These increases were partially offset by higher water production expenses and the recognition of WRAM related deferred water expenses of $0.25 and $0.18 diluted earnings per share, respectively and higher depreciation and amortization of $0.13 diluted earnings per share.

2024 年 MWRAM 餘額的變化和使用量的增加分別增加了 0.17 美元和 0.12 美元的稀釋每股收益。這些增長被較高的水生產費用和確認與WRAM 相關的遞延水費用分別為0.25 美元和0.18 美元的稀釋每股收益以及更高的折舊和攤銷（0.13 美元的稀釋每股收益）所部分抵消。

As a reminder, our 2021 GRC was adopted in Q1 of 2024 and included 2023 interim rate relief, totaling $64 million. $15.2 million of the interim rate relief was attributed to Q3 2023 and $50.4 million would have been attributable to the 2023 nine-month period year to date.

提醒一下，我們的 2021 年 GRC 於 2024 年第一季通過，其中包括 2023 年中期利率減免，總額為 6,400 萬美元。臨時利率減免中的 1,520 萬美元歸因於 2023 年第三季度，5,040 萬美元則歸因於 2023 年迄今為止的九個月期間。

Turning to our capital. We continue to make significant investments in our water infrastructure to help ensure the delivery of safe and reliable water service. Company capital investments during the nine-month period ended September 30, 2024, totaled $332.2 million which is 86% of our $385 million 2024 capital budget.

轉向我們的首都。我們繼續對供水基礎設施進行大量投資，以協助確保提供安全可靠的供水服務。截至 2024 年 9 月 30 日的九個月期間，公司資本投資總額為 3.322 億美元，占我們 2024 年 3.85 億美元資本預算的 86%。

As a reminder, our planned 2024 capital investments and our estimated capital investments for the period from 2025 through 2027, do not include $226 million of estimated PFOS projects that will be constructed over multiple years beginning in the fourth quarter of 2024. Greg will discuss planned 2025 and 2027 increases applied for in the 2024 GRC and infrastructure improvement plan later on in the call.

提醒一下，我們計劃的 2024 年資本投資和預計的 2025 年至 2027 年資本投資不包括預計 2.26 億美元的 PFOS 項目，這些項目將從 2024 年第四季度開始分多年建設。在電話會議中，2024 年GRC 和基礎設施改善計畫申請了2025 年和2027 年的成長。

The positive impact of our capital investment program is having on regulated rate base is presented on slide number 10. Our overall rate base is projected to grow to $2.36 billion by the end of 2024. This is an increase of 7.3% over 2023. If approved, as requested, the 2024 California GRC and infrastructure improvement plan, coupled with planned capital investments in our utilities and other states would result in a compounded annual rate base growth of 11.7%.

我們的資本投資計畫對監管利率基礎產生的正面影響如幻燈片 10 所示。 ，2024 年加州GRC 和基礎設施改善計劃，加上我們的公用事業和其他州計劃的資本投資，將導致複合年利率基數增加11.7%。

Moving to slide 11. We continue to maintain a strong balance sheet with a capital structure of 61% equity and 39% debt. During the quarter, the CPUC issued a final decision granting Cal Water Authority to issue up to $1.3 billion in new debt and equity securities to finance water system infrastructure investments from 2023 to 2027.

轉到投影片 11。本季度，CPUC 發布了一項最終決定，授權加州水務局發行最多 13 億美元的新債務和股本證券，為 2023 年至 2027 年的供水系統基礎設施投資提供資金。

We raised approximately $34.5 million during the quarter from the sale of 639,000 shares of common stock under our at-the-market or our ATM stock equity program. Year to date, we've raised approximately $86.5 million from the sales of [1.6 million -- 390,000] (sic - press release, "639,000") shares under the ATM program. We have approximately $43.1 million remaining under the program that can be raised for general corporate purposes in the future, including planned capital investments and strategic opportunities.

本季度，我們根據市場或 ATM 股票股權計劃出售 639,000 股普通股，籌集了約 3,450 萬美元。今年迄今為止，我們已透過 ATM 計劃銷售 [160 萬股 - 390,000]（原文如此 - 新聞稿，「639,000」）股票籌集了約 8650 萬美元。該計劃剩餘約 4,310 萬美元，可在未來籌集用於一般企業用途，包括計劃的資本投資和戰略機會。

On the debt side, Cal Water completed the sale and issuance of $125 million of first mortgage bonds, the bonds in a private placement that closed October 22, 2024. The bonds bear interest at a rate of 5.22% and mature on October 22, 2054. Cal Water used the bond proceeds to refinance certain existing borrowings on its short-term bank line of credit.

債務方面，加州水務公司完成了1.25億美元第一抵押貸款債券的銷售和發行，該債券為私募債券，於2024年10月22日結束。期加州水務公司利用債券收益為其短期銀行信貸額度的某些現有借款進行再融資。

And just to note, yesterday, our Board of Directors declared a $0.28 per share dividend for stockholders of record on November 11, 2024 -- I believe that's November 12, 2024. This is our 319th consecutive quarterly dividend.

需要注意的是，昨天，我們的董事會宣布向2024 年11 月11 日記錄在案的股東派發每股0.28 美元的股息——我相信那是2024 年11 月12 日。季度股息。

Moving to slide 12. We continue to maintain a strong liquidity position. As of September 30, 2024, the company had cash and cash equivalents of $105.2 million of which $45.6 million was classified as restricted. Further, we had additional short-term borrowing capacity on our company and Cal Water lines of credit of $340 million.

轉向投影片 12。截至2024年9月30日，該公司擁有現金及現金等價物1.052億美元，其中4,560萬美元被列為限制性資產。此外，我們公司和加州水務公司還擁有 3.4 億美元的額外短期借款能力。

With that, I'll turn the call over to Greg to give an update on our 2024 general rate case and other regulatory matters. Greg?

接下來，我會將電話轉給 Greg，以提供有關 2024 年一般費率案例和其他監管事宜的最新資訊。格雷格？

Thanks, Jim. On slide 13, we discuss the 2024 General Rate Case. I'm pleased to report that we continue to make progress with our 2024 General Rate Case filing. We've completed the initial prehearing conference and a judge and commissioner have been assigned to our case. The assigned commissioner to the case is Commissioner Baker. We are pleased with this assignment given his past work at the California Public Advocates to educate CPUC on a negative customer impacts associated with rate case delays.

謝謝，吉姆。在投影片 13 上，我們討論 2024 年一般利率案例。我很高興地報告，我們的 2024 年一般費率案件歸檔工作繼續取得進展。我們已經完成了最初的預聽證會議，並已為我們的案件指派了一名法官和專員。負責此案的指定專員是貝克專員。鑑於他過去在加州公共倡導者組織 (California Public Advocates) 的工作，讓 CPUC 了解與費率案件延遲相關的負面客戶影響，我們對這項任務感到很滿意。

As Jim mentioned earlier, we're proposing to invest $1.6 billion in our districts from 2025 to 2027, including approximately $1.3 billion of newly proposed capital investments to continue providing reliable, high-quality water service. This application includes our innovative, low-use water equity program designed to decouple revenue from water sales while keeping rates affordable and reinforcing conservation goals.

正如吉姆之前提到的，我們建議從 2025 年到 2027 年在我們的地區投資 16 億美元，其中包括新提議的約 13 億美元的資本投資，以繼續提供可靠、高品質的供水服務。該應用程式包括我們創新的低用量水公平計劃，旨在將收入與水銷售脫鉤，同時保持價格實惠並加強保護目標。

Our proposal includes rate increases to generate an additional $140.6 million for 2026, $74.2 million for 2027, and $83.6 million for 2028. We are now 4 months into the standard 18-month review process with the PUC and are actively responding to data requests. We've completed all our district tours and are preparing for public participation hearings later in the year.

我們的提案包括提高費率，以便在2026 年額外產生1.406 億美元、2027 年額外產生7,420 萬美元、2028 年額外產生8,360 萬美元。 ，並且正在積極回應數據請求。我們已經完成了所有地區巡演，並正在為今年稍後的公眾參與聽證會做準備。

With that, I'll return the call back to Marty.

這樣，我就會回電給馬蒂。

Greg, just out of curiosity, the volume of data requests kind of consistent with past rate cases.

Greg，出於好奇，資料請求量與過去的費率情況一致。

Yes, consistent with past rate cases.

是的，與過去的費率案例一致。

Okay, great. Thank you.

好的，太好了。謝謝。

Moving ahead, I'm on slide 14. I want to take a moment to talk about our cost of capital for 2025. As many of you know, we have in California, what's called a cost of capital adjustment mechanism. Cost of capital adjustment mechanism basically tracks the utilities AA -- utilities bond index from October 1 to September 30 of the following year. In the event there's a 100-basis-point change or greater, the company can make -- apply for an adjustment to its ROE, both up and down. So I'm very happy to report that the period ended September 30, it was less than 100-basis-point change and therefore, it locks in our ROE for 2025 at 10.27%, which we think is a very good ROE.

繼續，我在幻燈片 14 上。資本成本調整機制基本上追蹤公用事業AA－公用事業債券指數，從10月1日到隔年9月30日。如果發生 100 個基點或更大的變化，公司可以申請對其 ROE 進行上下調整。因此，我很高興地報告，截至 9 月 30 日的期間，變化不到 100 個基點，因此，我們 2025 年的 ROE 鎖定在 10.27%，我們認為這是一個非常好的 ROE。

Moving on to the next slide. Other regulatory mechanisms. There's a few things that happened in the quarter that I think are important. As I mentioned in my opening comments, we filed a number of advice letters for recovery that have been approved by the CPUC here in California. There's three primary filings that I want to emphasize. One is the IRMA, which is the incremental rates memo account, the 2023 MWRAM balance, and the 2023 incremental cost balance account. The combination of those three things total approximately $94.2 million that we will be collecting over the next three years. For 2024, we expect to collect about $11.6 million from these balances as we move into the new year.

轉到下一張投影片。其他監管機制。我認為本季發生的一些事情很重要。正如我在開場白中提到的，我們提交了許多恢復建議函，這些建議函已獲得加州 CPUC 的批准。我想強調三項主要文件。一是 IRMA，即增量費率備忘帳戶、2023 年 MWRAM 餘額和 2023 年增量成本餘額帳戶。這三件事加在一起，我們將在未來三年內籌集約 9,420 萬美元。 2024 年，隨著新年的到來，我們預計將從這些餘額中收取約 1,160 萬美元。

Going on to slide number 16. I want to take a moment to talk about our environmental leadership and corporate recognition. First of all, I continue to be very proud of the recognition we received for our environmental stewardship and workplace excellence. The Alliance for Water Efficiency recently published a study that highlighted the important impact of our conservation programs, which have reduced customer bills by approximately 21% over the last 15 years compared to projections with customers that did not have the same type of conservation program. So we're very happy with the results of the survey and what we've helped our customers has achieved over the last 15 years.

繼續看第 16 號投影片。首先，我仍然為我們的環境管理和卓越工作場所獲得的認可感到非常自豪。節水聯盟最近發布了一項研究，強調了我們的節約計畫的重要影響，與未實施同類節約計畫的客戶的預測相比，在過去15 年中，該計畫已將客戶帳單減少了約21% 。因此，我們對調查結果以及過去 15 年來我們幫助客戶的成就感到非常滿意。

In addition, the US Environmental Protection Agency awarded California Water Service the WaterSense Excellence Award for the second consecutive year. This recognizes the promotion of our water-efficient products that we have in our conservation programs. The products that we've implemented to date will save an additional 395 million gallons over the life of the devices useful life for our customers.

此外，美國環保署連續第二年授予加州水務局「WaterSense 卓越獎」。這是對我們在保護計劃中推廣節水產品的認可。我們迄今為止實施的產品將在設備的使用壽命內為我們的客戶節省額外 3.95 億加侖的水。

Additionally, during the quarter, we were named one of the World's Most Trustworthy Companies by Newsweek for its second consecutive year. This places us among only five water utilities that are recognized and honored in the energy and utility category. And then lastly, for the ninth consecutive year, we were recognized as a great place to work, reflecting our ongoing commitment to creating an exceptional workplace environment and supporting our employees.

此外，在本季度，我們連續第二年被《新聞周刊》評為全球最值得信賴的公司之一。這使我們成為能源和公用事業類別中僅有的五家獲得認可和榮譽的水務公司之一。最後，我們連續第九年被評為理想工作場所，這反映了我們對創造卓越工作環境和支持員工的持續承諾。

I think as many of you have probably heard me say that, yes, we are a -- fixed assets, pipes and pumps, but our most important assets are our employees because they're the ones that make it all happen and they're the ones that interface with our customers.

我想你們很多人可能都聽過我說過，是的，我們是——固定資產、管道和泵，但我們最重要的資產是我們的員工，因為他們是讓這一切發生的人，他們是那些與我們的客戶互動的人。

Lastly, I want to take a moment to mention our 8-K that we filed during the quarter that announced the retirement of Ron Webb, who is our Vice President and Chief Human Resource Officer. Ron will be retiring on April 1, 2025. Ron has done an excellent job as our Head of HR and has been an outstanding HR colleague and friend who has made countless contributions here at Cal Water.

最後，我想花點時間提一下我們在宣布 Ron Webb（我們的副總裁兼首席人力資源官）退休的季度提交的 8-K。 Ron 將於 2025 年 4 月 1 日退休。

I want to take a moment to personally thank Ron and wish him all the best as him and his wife, Tina, prepare for retirement, and he will be dearly, dearly missed. I think as everyone can appreciate, as the CEO, one of your closest confidence is your HR executive. And Ron, it's been just a fantastic 10 years working with you, and I'm going to miss working with you and wish you all the best in retirement. Having said that, we have started a national search for Ron's replacement, and I hope to be in a position to announce his replacement by year end or early 2025.

我想花點時間親自感謝羅恩，並祝他和他的妻子蒂娜在準備退休時一切順利，我們將深深地懷念他。我認為每個人都可以理解，作為首席執行官，您最信任的人之一就是您的人力資源主管。羅恩，與你一起工作的十年真是太棒了，我會懷念與你一起工作的時光，並祝你退休後一切順利。話雖如此，我們已經開始在全國範圍內尋找羅恩的繼任者，我希望能夠在年底或 2025 年初宣布他的繼任者。

So where does that take us for the quarter? Very happy with the results for the quarter. Results were in line with our expectations. They are a little bit confusing. I think Jim did a good job laying out all the moving parts and how they fit together given the delayed 2021 general rate case.

那麼本季我們會走向何方呢？對本季的結果非常滿意。結果符合我們的預期。他們有點令人困惑。我認為 Jim 做得很好，考慮到 2021 年一般費率情況被推遲，他列出了所有活動部件以及它們如何組合在一起。

Moving forward, it's really simple. The strategy is focused on getting the capital on the ground as in the press release. And as Jim mentioned, we've invested a record amount of capital this year. So we're going in the fourth quarter very strong and doing investments in our infrastructure improvement plan. We want to stay focused on customer service and servicing our customers and then also on the 2024 General Rate Case. As Greg said, so far, things are moving and tracking the plan. We want to make sure we do everything we can to make sure that we conclude that rate case by the end of 2025 with new rates in effect January 1, '26.

繼續前進，這真的很簡單。正如新聞稿中所述，該策略的重點是讓資本落地。正如吉姆所提到的，我們今年投資了創紀錄的資本金額。因此，我們在第四季度的表現將非常強勁，並對基礎設施改善計劃進行投資。我們希望繼續專注於客戶服務和為客戶提供服務，然後也關注 2024 年一般費率案例。正如格雷格所說，到目前為止，事情正在按計劃進行。我們希望確保盡一切努力確保我們在 2025 年底前完成該利率案例，並於 2026 年 1 月 1 日生效新利率。

So there's a lot going on. The other thing I'd just point out is, as Jim said, on the rate base growth side. We've historically been about a -- three times the depreciation rate investment rate and that's bumping up in this next cycle or two. And it's given that the growth of the internal capital needs of the existing infrastructure plus the incremental $226 million that's not reflected in that 11.7% CAGR number on rate base growth that will be incremental.

所以發生了很多事情。正如吉姆所說，我剛剛指出的另一件事是在利率基礎增長方面。從歷史上看，我們的投資率一直是折舊率的三倍，並且在下一兩個週期中還會上升。考慮到現有基礎設施內部資本需求的成長加上 2.26 億美元的增量，這並沒有反映在增量利率基礎成長 11.7% 的複合年增長率中。

So overall, we have a lot of stuff happening within the company, and it's really -- the strategy really straight forward. We're going to stick to what we do, which is getting the capital on the ground and serving the customers. And I guess one thing I'd wrap up before we open the comments. It's just fire season this year. Surprisingly, for our service areas have been -- has been relatively light. We had three major fires this year that were close to our service areas, none of which did damage to our service areas, at the Thomson Fire, the Park Fire, and the Boreal fire.

總的來說，我們公司內部發生了很多事情，策略真的很簡單。我們將堅持我們所做的事情，即投入資金並為客戶服務。我想在我們打開評論之前我要總結一件事。今年剛好是火災季節。令人驚訝的是，我們的服務區域一直相對較少。今年，我們發生了三起靠近我們服務區的重大火災，分別是湯姆森火災、公園火災和北方火災，但沒有對我們的服務區域造成損害。

So nothing major that affected our service territory. I'm very happy to report that we are getting the first snowfall this week in the Sierra, which is a good sign that winter's off to a start will help bring down the last few weeks of fire season that we have here, which typically goes on until the end of November.

所以沒有什麼重大影響我們的服務範圍。我很高興地向大家報告，本週內華達山脈將迎來第一場降雪，這是一個好兆頭，表明冬天的開始將有助於結束我們這裡最後幾週的火災季節，通常情況下，一直持續到11月底。

So with that, Kathleen, we will open it up for questions, please.

那麼，凱瑟琳，我們將開放提問。

(Operator Instructions)

（操作員說明）

Jonathan Reeder, Wells Fargo.

喬納森·里德，富國銀行。

I wanted to start out just to get your view on the CPUC's recent decision to hold the PD and CalAm's rate case? I know the PDs language was pretty strongly against restoring pool decoupling. But do you think there are enough commissioners that are supportive of decoupling? Or might we just see some of the rationale language in that section revised?

我首先想了解您對 CPUC 最近決定保留 PD 和 CalAm 費率案件的看法？我知道 PD 的語言非常強烈反對恢復池解耦。但您認為有足夠的委員支持脫鉤嗎？或者我們可能會看到該部分中的一些基本原理語言被修改？

Jonathan, this is Greg. And the feeling of the industry right now is -- it was a strong sign that the PD was held almost a little over a month, maybe two months to the December meeting. But there is not a consensus on exactly what that could mean. That could potentially mean that we are tightening up the language around disallowing it or going the other way and putting in the language that would allow it. It's just too soon to tell.

喬納森，這是格雷格。目前業界的感覺是——這是一個強烈的跡象，表明 PD 的召開距離 12 月會議還有一個月多一點，也許還有兩個月。但對於這到底意味著什麼，尚未達成共識。這可能意味著我們正在收緊禁止它的語言，或採取其他方式並加入允許它的語言。現在說還太早。

Okay. Fair enough. (laughter) I can't tell either.

好的。很公平。 （笑）我也說不出來。

Jonathan, one thing I would add to that, and I haven't read the full decoupling application for any of our peer companies in California. But I do know in our application, we were keenly focused on two things that I think are important. And I think this may be a strategy differential for us.

喬納森，我想補充一點，我還沒有閱讀加州任何同行公司的完整脫鉤申請。但我確實知道，在我們的申請中，我們非常關注我認為重要的兩件事。我認為這對我們來說可能是一個戰略差異。

One, we were very focused on conservation as we originally were when we originally decoupled back in the early 2012, I guess (inaudible) that was number one. The other thing we focused on in our new rate design in our application was kind of underserved communities and having a rate design that helps low-income customers with a lifeline rate that first year.

第一，我們非常注重保護，就像 2012 年初我們最初脫鉤時一樣，我想（聽不清楚）這是第一位的。我們在應用程式的新費率設計中關注的另一件事是服務不足的社區，並採用費率設計來幫助低收入客戶在第一年獲得生命線費率。

So in our application, it wasn't just about conservation. It was also about low-income communities and making sure there's like a lifeline rate there that reduces customers on the lower term of the economic -- or the lower range of the economic spectrum. And we think that's going to be really, really important.

因此，在我們的應用中，這不僅僅是關於保護。它還涉及低收入社區，並確保那裡有一個生命線利率，以減少處於經濟較低階段或經濟範圍較低範圍的客戶。我們認為這將非常非常重要。

Yeah. No. And that's where, I think, if it is even just softening the language in that BD, it then opens the door to right -- some of these reimagined ways of, I guess, designing the decoupling where it really focuses on some of the goals you just mentioned, Marty.

是的。不。到的目標，馬蒂。

Right. And I think what's important about this community piece for the people on the lower economic scale is -- that's a stated goal of the commission. It's -- they've made that very public. They're very interested in it. And I give the team here a lot of credit. We took that to heart in the design of our decoupling mechanism that we filed for in our rate case.

正確的。我認為這個社區計畫對於經濟規模較低的人來說最重要的是——這是委員會的既定目標。他們已經非常公開了。他們對此非常感興趣。我非常感謝這裡的團隊。我們在設計費率案例中申請的脫鉤機制時牢記了這一點。

Okay. Great. I look forward to that -- to see how that plays out. Also, I know the CPUC recently issued a decision lowering the energy utilities allowed ROEs by 42 basis points in 2025 by effectively reducing the magnitude of the 2024 cost of capital mechanism increase. Is there any avenue for the CPUC to do something similar for the waters for 2025?

好的。偉大的。我很期待——看看結果如何。另外，我知道 CPUC 最近發布了一項決定，透過有效降低 2024 年資本成本機制增加的幅度，將 2025 年能源公用事業允許的 ROE 降低 42 個基點。 CPUC 是否有途徑在 2025 年對水域採取類似的措施？

I'll go first, Greg, and you can add a comment. I mean, I think that's always a possibility. Our ROEs have historically lagged the energy industries. So we're not coming off real high ROEs. In fact, I think our ROE at $10.27 is about where it was when I joined the company back in 2006, and then it went down for a number of years and recently went back up above 10% just recently.

我先走了，格雷格，你可以添加評論。我的意思是，我認為這總是有可能的。我們的股本回報率歷來落後於能源產業。所以我們並沒有達到真正高的股本報酬率。事實上，我認為我們的 ROE 為 10.27 美元，大約是我 2006 年加入公司時的水平，然後它下降了很多年，最近又回升至 10% 以上。

So I think that's a possibility. I think there's a number of factors going on in the electric industry. It's a little different than water. One, as you see, we have a growing appetite to get capital in the ground and we have to step it up, getting that capital on the ground just to keep up with our current demands that we have in the existing rate case, which is great for stockholders. That means we're growing rate base and potentially future earnings for customers.

所以我認為這是有可能的。我認為電力產業正在發生很多因素。它和水有點不同。一，正如你所看到的，我們對獲得資金的興趣越來越大，我們必須加大力度，讓資金到位只是為了滿足我們在現有利率情況下的當前需求，即對股東來說非常好。這意味著我們正在為客戶提高費率基礎和潛在的未來收入。

I think the other thing, though, on the electric side is in California, you have a lot of wildfire costs that are being recovered in electrical rates, which have put multiple layers of rate increases on customers and I think there may be some pressure on the commission and just political pressure overall in California given some of the incremental increases that were outside the general rate case that were added to electric bills.

我認為另一件事是，在電力方面，在加州，有很多野火成本正在透過電價來收回，這給客戶帶來了多層電價上漲，我認為可能會面臨一些壓力考慮到電費中的一些增量增長超出了一般電費情況，加州的委員會和整體政治壓力。

And so I don't think we know until we get there. But I think for us, we will most likely have to file a cost of capital application in 2025. It would be great if we can defer it again, but that -- I think that might be hard to do and we'll do our best to defend the company's position on its ROE.

所以我認為直到我們到達那裡我們才知道。但我認為對我們來說，我們很可能必須在 2025 年提交資本成本申請。好地捍衛公司在股本報酬率的地位。

Greg, anything you want to add on that?

格雷格，你還有什麼要補充的嗎？

The only thing else I would add is the -- unlike the water companies, the energies have an option to file an application to change their cost of capital in between their scheduled time. And they did that, I believe, in 2022 if there's an emergency, which was COVID. And so I think that might also be to why there's different treatment on the cost of capital between the two of us, energies as well and water.

我唯一要補充的是——與自來水公司不同，能源公司可以選擇提交申請，以在預定時間之間改變其資本成本。我相信，如果 2022 年出現新冠疫情等緊急情況，他們就會這麼做。因此，我認為這也可能是為什麼我們兩個之間對資本成本、能源和水的成本有不同的處理方式。

Right. So obviously, Jonathan, this will be a hot topic for '25, and we'll provide updates on our cost of capital as we go through the process with the commission in 2025.

正確的。顯然，喬納森，這將成為 25 年的熱門話題，我們將在 2025 年與委員會一起完成這項流程時提供有關資本成本的最新資訊。

Yeah. I think the takeaway, at least in the near term, is that for 2025, we have the 10.27% in terms of -- as Marty mentioned, in terms of the recalculation this year at September 30, we didn't trigger any kind of movement from what we are currently experiencing in our ROE.

是的。我認為，至少在短期內，我們的結論是，對於 2025 年，我們有 10.27%——正如馬蒂所提到的，就今年 9 月 30 日的重新計算而言，我們沒有觸發任何形式的我們目前在交戰規則中所經歷的變化。

And I think we haven't had any pushback from the commission about the 10.27%. Have we Greg?

我認為委員會對 10.27% 的稅率沒有任何反對。我們有格雷格嗎？

No, we made a filing to demonstrate just what Jim said and haven't heard back from them.

不，我們提交了一份文件來證明吉姆所說的內容，但尚未收到他們的回應。

Okay. So good. So it sounds like two point -- or the 10.27% is safe for 2025 and then, yeah, we'll just see if there's -- I mean, I guess, would you be open to an extension that maybe include some adjustment to the ROE if you know maybe in exchange, you get some multiyear certainty extension in whatever that new ROE would be?

好的。超好的。所以這聽起來像是兩點——或者10.27% 在2025 年是安全的，然後，是的，我們會看看是否有——我的意思是，我想，你是否願意接受延期，其中可能包括對如果你知道淨資產收益率，也許作為交換，無論新的淨資產收益率是什麼，你都會得到一些多年的確定性延期？

It's hard to speculate on something like that on the future. I will say, I have been a big supporter of the cost of capital adjustment mechanism because it does float up and down, and it's a two-way mechanism. And again, our ROEs have lagged the electric industry, and we have a growing need to increase our capital investment.

很難對未來進行類似的推測。我想說，我一直是資本成本調整機制的大力支持者，因為它確實上下浮動，而且是雙向機制。再說一次，我們的股本回報率落後於電力產業，我們越來越需要增加資本投資。

So I think -- obviously, we'd love to settle anything if we can because it's just a cleaner process that we can do it. But it's really hard to speculate because we don't have any facts and circumstances around it. And obviously, what we want to do is what's right for Cal Water, which is make sure we have an ROE that's appropriate enough that allows us to attract capital to allow us to continue our rate base growth. So I think we'll have a lot more certainty on it as we get into it, but it's really hard to speculate not being in a dialogue with the commission about it.

所以我認為——顯然，如果可以的話，我們很願意解決任何問題，因為這只是我們可以做到的一個更乾淨的過程。但確實很難推測，因為我們沒有任何事實和情況。顯然，我們想做的是對加州水務公司來說正確的事情，即確保我們擁有足夠合適的股本回報率，使我們能夠吸引資本，使我們能夠繼續我們的利率基礎增長。所以我認為，當我們進入這個問題時，我們會對它有更多的確定性，但很難推測不要與委員會就此進行對話。

Sure. And then last on the cost of capital. Slide 11 kind of indicates your authorized California capital structures, 60.8% equity. How does that reconcile with the 53.4% approved under the last cost of capital (multiple speakers)--?

當然。最後是資本成本。投影片 11 顯示了您授權的加州資本結構，60.8% 的股權。這與上次資本成本下批准的 53.4%（多位發言者）如何協調？

Yeah. That's our actual cap structure as of right now. So Jim, you can talk a little bit about that?

是的。這是我們目前實際的上限結構。吉姆，你能談談這個嗎？

Yeah. And again, Jonathan, that's at group, right? So if you -- we are working to manage that structure to mirror as close as possible, our authorized amounts in other -- our operating utilities. I mentioned on the call, subsequent to the quarter end, we did a first mortgage bond in which we raised $125 million in debt financing, so we're starting to balance the debt and the equity.

是的。再說一次，喬納森，那是在團體裡，對吧？因此，如果您 - 我們正在努力管理該結構，以盡可能接近反映我們在其他營運設施中的授權金額。我在電話會議上提到，在季度末之後，我們發行了第一筆抵押貸款債券，籌集了 1.25 億美元的債務融資，因此我們開始平衡債務和股本。

And really, it's -- to get it more in line with what our authorized amount is at the operating utilities to get that more in line with what we've got at group. And we'll work through the capital structure at group to take the most optimal path to get that closer in line, but the first step was this $125 million that we issued subsequent to quarter end.

事實上，這是為了讓它更符合我們在營運公用事業部門的授權金額，以使其更符合我們在集團的授權金額。我們將研究集團的資本結構，採取最優化的途徑，使其更接近一致，但第一步是我們在季度末後發行的 1.25 億美元。

Okay. Great. I appreciate that clarity. And then last question for me. What are the potential impacts on the CapEx budget from the EPA's recently finalized lead and copper rule? Is that a major issue for your California service area?

好的。偉大的。我很欣賞這種清晰度。然後是我的最後一個問題。 EPA 最近最終確定的鉛和銅規則對資本支出預算有哪些潛在影響？這對您的加州服務區域來說是一個主要問題嗎？

It's really not. I mean, frankly, one of the nice things about being out on the West Coast is our infrastructure is newer than the East Coast. So based on what we've seen in all of our updated testing, we have one district that has hit that action level. But as we went in the testing in that district, our wells and our purchased water is fine, we think it's more associated with a couple of customers' homes.

確實不是。坦白說，我的意思是，在西海岸外出的好處之一是我們的基礎設施比東海岸更新。因此，根據我們在所有更新的測試中看到的情況，我們有一個地區已達到該行動等級。但當我們在該地區進行測試時，我們的水井和購買的水都很好，我們認為這與幾個客戶的家更多相關。

So I don't think it's that big of an impact for us, which, frankly, is nice because PFOS is the big kahuna for us in the next 20 -- the next 3 years because that's an incremental $226 million we got to invest, and we want to be ahead of schedule on that. So I'm not losing too much sleep on the lead and copper rule being out West.

所以我不認為這對我們有那麼大的影響，坦白說，這很好，因為 PFOS 是我們未來 20 年——未來 3 年的最大財富，因為我們需要增加 2.26 億美元的投資，我們希望在這方面提前完成。所以我不會因為西方的鉛和銅規則而失眠。

(Operator Instructions)

（操作員說明）

There are no questions at this. I will now turn the conference back over to Martin Kropelnicki, Chairman and CEO, for closing remarks.

對此沒有任何疑問。現在我將把會議轉回主席兼執行長 Martin Kropelnicki 致閉幕詞。

Kathleen, thank you. Thanks, everyone, for joining today. Please if you have questions, feel free to reach out to one of us and we'll answer them the best that we can.

凱瑟琳，謝謝你。謝謝大家今天的加入。如果您有任何疑問，請隨時聯繫我們，我們將盡力回答。

Just closing, we closed the third quarter strong. We're going into the fourth quarter with a lot of momentum. But again, the overall goal going into the fourth quarter is just stay focused on the core business plan of the company and executing our existing strategy and we look forward to giving everyone an update at the end of February when we announce our earnings results for 2024.

剛剛結束，我們以強勁的勢頭結束了第三季。我們將以強勁的勢頭進入第四季。但同樣，進入第四季度的總體目標只是專注於公司的核心業務計劃並執行我們現有的戰略，我們期待在 2 月底公佈 2024 年盈利結果時向大家提供最新情況。

So happy Halloween. Be safe, and we'll talk to everyone soon. Thank you.

萬聖節快樂。請注意安全，我們很快就會與所有人交談。謝謝。

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝大家的加入。您現在可以斷開連線。