California Water Service Group (CWT) 2021 Q3 法說會逐字稿

Good day and thank you for standing by. Welcome to the California Water Service Group Q3 2021 Earnings Call. (Operator Instructions) I would now like to hand the conference over to your speaker today, David Healey, Vice President, Corporate Controller. Please go ahead.

Thank you, Laurie. Welcome, everyone, to the 2021 Third Quarter Results call for California Water Service Group. With me today are Martin Kropelnicki, our President and CEO; Thomas Smegal, our Vice President, Chief Financial Officer; and Paul Townsley, our Vice President of Corporate Development and Chief Regulatory Officer. Replay dial-in information for this call can be found in our third quarter results release, which was issued earlier today. The replay will be available until December 29, 2021.

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 an 8-K this morning and is also available at the company's website at www.calwatergroup.com. You can also access the webcast of this earnings call presentation at the same website.

Before looking at the third quarter 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 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-Q, press releases and other reports filed from time to time with the Securities and Exchange Commission. I'm going to pass it over to Tom to begin.

Thanks, Dave, and Good morning, everyone. So we at Cal Water are trying a little bit of new technology here today. We have the traditional conference call, which I know some of you are on. But in addition to that, we are webcasting this at our website. And by that, you get an opportunity to see the slides along with us talking. And hopefully, you'll find that helpful, and you can also hear a replay of that later on.

One other unusual aspect of this quarter is because of what happened last year with our rate case, we're presenting our results in a slightly different order. So I'm mainly going to be talking about the year-to-date earnings and financial results, and you'll see that in the press release that we sent this morning as well as our slide deck, emphasizing the year-to-date over the quarter because the third quarter results of 2020 were a little bit unusual.

So leading off with Slide 5, which is our financial results year-to-date. Here, we see that our net income rose $16.3 million, and that's about --that's $0.25 per share on a per share basis. I will highlight also here, and we'll talk a little bit later that our capital investments are slightly down for the year-to-date from $221.3 million in 2020 to $207.7 million here in 2021.

Flipping very quickly to Slide 6, which is the third quarter financial results. Remember that in the third quarter of 2020, we posted earnings that reflected the effect of the 2018 California General Rate case proposed decision. We incorporated in that quarter results or regulatory assets for interim rates and for regulatory mechanisms that would have been reflected in Q1 and Q2 of 2020, had the decision been rendered timely.

And so you'll see here that the results for 2021, third quarter are down, and it mainly reflects, in fact, almost exclusively reflects the fact that we're not recording that extra Q1, Q2 that we had in 2020. It will be clearer on the bar chart, which I'll get to in just a couple of slides.

Flipping now to Slide 7. The year-to-date financial highlights. As I mentioned, we had increased net income. The big drivers of this are rate increases. So it's the annual step increase in California and various offset filings that added $16.3 million to our revenue. Our operating expense for the year-to-date period increased only $7.8 million, and this reflects reduced bad debt expense at the company, and that bad debt was reduced because of our expectations that our customers are going to be more able to pay their past due balances due to several different state aid programs, and we'll talk in some detail about that a little bit later in the call.

We did see lower sales and a higher decoupling balance here in the third quarter, and that is due to our drought conservation in California that we're promoting. As I mentioned, the capital spending is slightly lower than 2020, but it's on track to meet our target range of $270 million to $300 million for the year.

And finally, impacting the year-to-date period, as we talked a little bit about on the second quarter call, our unbilled revenue accrual is adding $8.7 million above what it added in 2020. And so that's an adder for the year-to-date results.

Flipping to Slide 8 for the earnings to the EPS bridge, again, dealing with the year-to-date first. You can see the impact of rate relief offset by OpEx, depreciation, and local tax changes and the unbilled revenue is a big portion of that. Over on the right-hand side, that's the $0.14 element on the year-to-date.

If you flip to Slide 9, this is the EPS bridge for the company just for the quarter, 2020 to 2021. And there, you can see the large amount, $0.80 that was booked in 2020 Q3, which had been related to Q1 and Q2 regulatory assets. And so you can get an idea from the other bars what it is that's driving our change for the quarter. You will see a reduced OpEx in the middle of that chart. And again, that is due to our lower estimate of uncollectibles as a result of the customer relief mechanisms.

I wanted to take a moment on Slide 10 to talk about earnings and how to think about earnings for the rest of the year. And so we've talked about a number of these items on prior calls, and I just wanted to reiterate each of them so that there's a good understanding of where we are and where we're going.

The first item over on the left-hand side of this slide is the unbilled revenue accrual. The revenue accrual is currently adding $20.1 million to revenue, and that compares to last year where it was adding $11.4 million at this time. The unbilled revenue is a result of a calculation that we do based upon how many of our customers have not yet received a bill at the end of the quarter and how many days that bill represents what the average expected payment under that bill is.

And what we find on a year-to-year basis is that it generally comes back down at the end of the year because we're dealing with cooler weather and smaller bills. And we expect that not to have a big impact on earnings on an annual basis. So when you see $20.1 million being added this year, that means most likely that you're going to see that number come down a long way to year-end. So please keep that in mind.

The second item that I'll address on the right-hand side of the slide is the authorized rate base. We've mentioned this before. A good way to calculate kind of our core earnings, our base earnings is to take the authorized rate base, multiply that by the capital structure, the equity portion of the capital structure and the authorized return on the equity portion of that rate base. And that should give you a general guide to annual earnings.

In addition to the unbilled revenue, other items, which may impact earnings outside the authorized return on rate base are the recognition of equity AFUDC. This year, we have $2.3 million recognized to date. And just to remind you, last year, at this time, I think that number was more like $4 million. That's come down a bit from last year to this year. But nevertheless, it is additive to that core earnings power.

The second item is the gain or loss on any nonqualified retirement assets. This year, we have so far, a gain of $2.1 million in 2021, and the value of these assets is, of course, market-driven, and the year-end values will be based on the market conditions at year-end.

And the last that I mentioned on a couple of other points earlier, the bad debt reserve has been reduced from $5.2 million at the end of 2020 to $2.8 million at the moment, reflecting changes in our estimates of cash recovery, having to do with those state aid programs. And so what you'll notice for the year 2021 is that we actually have a negative uncollectible right now. So we started the year with 5.2% uncollectible. We're currently at 2.8% uncollectible, and that's certainly better than what would be in rates for 2021.

So with all of that said, I'm going to turn it over to Paul Townsley to give us a regulatory update.

Thank you very much, Tom. Turning to Slide 11. Cal Water has 2 proceedings before the California Public Utilities Commission right now. The first, of course, is our cost of capital case, which we filed along with 3 other Class A utilities on May 1 of this year. A schedule has been established in that case in which we expect intervenor testimony on the cost of capital will be filed later this year and a Commission decision on the case probably in the second quarter of next year. We expect that a memorandum account will be established so that any changes in the cost of capital will be made retroactive to January 1, 2022.

The second matter is our Triennial general rate case in front of the California Public Utilities Commission. We filed our application on July 1 and are currently going through discovery with the California Public Advocates office. We expect that their testimony, along with testimony of any other intervenors in either late January or early February of next year and a commission decision either late in the fourth quarter of 2022 or early in 2023. Again, we expect a memorandum account will be established so that any rate changes that are made will be retroactive back to January 1, 2023.

And finally, we also have a rate case underway in Washington in front of the Washington Utilities and Transportation Commission. That rate case includes both our legacy Washington water systems as well as our newly acquired Rainer View Water System. And we expect the decision from that Commission probably early next year. And with that, I will turn it over to Marty.

Thanks, Paul. Good morning, everyone. A couple of operational things I want to update everyone on. Starting off on Page 12, talking about the 2021 California drought. As you may have seen, on October 19, Governor Gavin Newsom, in the state of California expanded the drought declaration to be statewide. Prior to this declaration, it was 50 of the 58 counties. So the majority of the state was under a drought mandate. Now as of October 19, the entire state is under that drought mandate. Cal Water has moved to Stage 2, drought restriction in 6 of our districts, which is really a continuation on voluntary reduction targets, enhanced advertising, more mailers and information going out to customers, promoting conservation programs, et cetera.

The company is posed if we have to implement water budgets in 2022, if the drought continues, we're posed to do that, the team is well prepared. And we continue to focus on our water supply resiliency in all our districts where we track it on a district by district level. Every couple of weeks, we are reviewing that with an officer team and myself.

As you may have seen, 5 days after the governor declared the drought declaration statewide, we had what was known as a Monster storm, or an atmospheric river, which is when the Jetstream pivots towards California and takes all the moisture that's accumulating in the Pacific and points it right at a target. That target on Sunday was the state of California, in particular, in Northern California.

As a result of this atmospheric river or Monster storm, we received a lot of rain in a very short period of time. Rainfall totals in Northern California, which really covers from about San Francisco right about where SFO is north, ranged from a low of 3 inches in 24 hours to a high of over 20 inches, 2-0, 20 inches.

80% of our facilities in Northern California experienced power outages. We had a number of main breaks in Northern California due to the ground getting saturated, mains starting to move around a little bit. I'm very happy to report that our systems overall work very well with this heavy type of rain and that very few of our customers, if any of them experienced any water outages. We had one system that had a fairly large main break that we had to bring in some bottled water for, but they're back online now.

I can tell you, I live in the North Bay. The town I live in, we receive about 9.8 inches of rain in a given year. We received almost 9.2 inches of rain in about a 14-hour period on Sunday. So it certainly was a monster storm and did just that. Also worth noting is that there was very -- while there was select areas of flooding due to a lot of runoff, there really was not a lot of flooding within Northern California because the ground was very dry and started to absorb it all.

Additionally, with the heavy rainfall, we got about 3 feet of very dense heavy snow in the Sierras, which is a very good sign in the early stages as we go into winter here. And so hopefully, that will continue. While this is certainly a big storm, it is a drop in the bucket, so to speak, in terms of the drought. And so we need to see what happens as we go further along into the fall and into the winter to see what our drought conditions will really be like in 2022. And we'll update everyone on that at our year-end conference call, the end of February.

Moving on to Page 13. I want to give everyone an update on where we are with our pandemic response efforts in conjunction with COVID-19. All of our company employees have returned to the office. We remain being vigilant for screening employees every day, temperature checks, et cetera, various testing programs. And so far, things have gone quite well.

New Mexico, Washington, and Hawaii have all allowed us to restart billing collection efforts with some restrictions and the California moratorium is expected to continue through 2021 for collection efforts. As Tom mentioned, the change of estimates on the allowance for doubtful accounts and collections, the state of California allocated $1 billion for arrearage management program. Cal Water has applied for $16.9 million on behalf of our customers who have fallen behind on their water bills during the pandemic, and we expect to see payment from that as early as February or potentially sooner.

Our bills outstanding over 90 days have increased about $16.6 million. And we will anxiously wait for that money coming from the state that has been reserved and allocated. It just hasn't been distributed yet. So we submitted our applications. The applications have been approved. So we're waiting for the allocations, hence, the change in estimate.

The incremental costs associated with COVID-19 as of the end of Q3 was a cumulative amount of about $1.4 million for the pandemic to date. We anticipate filing for recovery of these costs in 2022. The incremental cost that was incurred in Q3 was about $200,000, and that really pertains to increased purchases of PPE, incremental testing, et cetera.

Liquidity remained strong with the company. In the quarter, we had $140.4 million in cash and additional borrowing capacity of about $420 million on our line of credit, subject to various borrowing conditions. And overall, like I said, liquidity remains very, very strong.

As we talked about in the previous quarters, business development remains strong with the company. And Paul, I think you want to give us a quick update on where we are for our business development efforts.

I do. Thank you very much, Marty. Turning to Slide 14. As far as acquisitions go, California Water has been very busy. We have 4 announced acquisitions right now going through Public Utility Commission approvals in New Mexico and Hawaii with up to over 8,000 equivalent dwelling units included in those acquisitions.

And on the slide, you can see we have the Preserve at Millerton, which is here in the Central Valley of California. We have Animas Valley Water, which is a water system in Northern New Mexico with 2,000. We have the Keauhou Resort Wastewater System on the big island of Hawaii with 1,500 and the HOH utilities, which is, again, a wastewater system on the island of Kauai with 1,800.

We have other acquisitions that we're working on and hope to make announcements. And in Texas, our partnership with BVRT continues to grow. As of this month, we have over 5,500 connections and commitments in place. So with that, I will turn it back to Tom.

Thanks, Paul. I will briefly go over slides 15 and 16. You've seen these slides many times before. We just want to keep everyone on track. On Slide 15, the only update here is the recording of the year-to-date capital. And I realized at the beginning of the call, I mentioned we'd be talking in a little bit more detail about the capital, and I don't think we did that. So just very briefly. I think there's 2 bigger explanations for why the capital is slightly slower this year than last year.

The first has to do with the supply chain issues that you've been hearing about. A lot of the materials that we use in our construction have had significant delays, particularly in the early part of the year with the PVC pipe in the Texas winter storm, later in the year with other materials just through the general logistics issues that we're having as a country.

I think we worked well with our suppliers and with our construction companies to try to mitigate a lot of those, but you're still going to see some delays as a result of some of those things. The other thing is just that we're in the middle of the prosecution of the 2021 general rate case.

And Paul, I don't know if you have the number in your head, but I think it's been about 200 data requests from the Commission staff. And a lot of those data requests have to do with capital projects, and they are addressed by the same engineers that will be working on designing and implementing these capital projects. So we often see a little bit of a delay as we are in the summer of the year that we file a general rate case.

So that's some of the explanation of why that capital is lagging a bit this year as compared to last year. Slide 16 is -- there's really no change here. These are just our estimates based upon the rate case filing. And as Paul mentioned, we don't have any additional information on where that might go at this point. And Marty, I'm going to turn it over to you on Slide 17 for a wrap up.

Great. Thank you, Tom. Well, as we reflect back on Q3 of 2021, results are in line with our expectations. As Tom said, it's a little bit bumpy comparing the year-over-year and quarter-over-quarter. So make sure you take time to look at the information in the slides that Tom's laid out, so you can normalize it and look at it and figure out what a normal quarter looks like.

But overall, we're happy with our results for the quarter. As Paul mentioned, we have 2 open CPUC filings, which is the biggest part of our business for a group and then we call that company. That's the state of California. We've completed all our site visits with the PUC here in the state of California. And as Paul and Tom mentioned, we're in the middle of answering a lot of data requests. And so that will continue. And we're also starting to prepare for our public participation hearings that we expect will start sometime in the first quarter of 2022.

As Paul mentioned, the team is busy working on regulatory approvals and the integration of multiple acquisitions across our platforms. And the BD team remains busy, which we're excited about. We don't see that slowing down anytime here soon, and we'll continue our efforts looking for expansion opportunities for California Water Service Group.

On our next quarterly call, which will be the end of February, we'll have a much better sense of winter conditions. Obviously, this is the first storm we just really went through here a few days ago for the West Coast. But when we wrap up the year and go through year-end earnings, we'll have a much better sense of where we are with the snowpack and drought conditions in the state. We'll be able to get better guidance on what the drought would potentially look like in 2022 once we have better data from a few months of our winter season. So with that, Laurie, we're going to open it up for Q&A, please.

(Operator Instructions) Our first question is from Ben Kallo of Baird.

So Tom, Slide 15, 16, I know those are projections there. How do you guys get comfortable with doing that? Because I know there's big step-ups going on there, but, like, how do you get comfortable with that, with the regulatory stuff outstanding? And then just maybe you guys have been doing so much good work in California. Do people recognize that, the PUC? Or how does that work? That's all.

Thanks, Ben. Let me take the first part of it and maybe I'll broke Paul in as well, and Marty can bat clean up on this. So the projections on the yellow bars on slides 15 and 16, they represent what we filed with the Commission. And so we're in the process of working through those requests.

We've done pretty well in the past on requests that we've made to the Commission. Paul could address that particularly. There's kind of 2 things here. One is, can you get the Commission to approve those capital investments? And the second is, can you execute on them? And I think what we've shown over the last 6, 7 years is that our capital execution has really ramped up dramatically.

If you look back, 2014, 2013, when we were only putting in CapEx of just over $100 million. Obviously, we've done a lot with reengineering our process, both on the operations side, on the contracting side, and on the engineering side to allow us last year to invest almost $300 million. And so moving from that number to $360 million, $365 million in a couple of years, I think, is very doable. I think we know what we need to do to get to those numbers. The real question is the regulatory authorization. And Paul, I don't know if you have anything to add on that.

The only thing that I would say, Tom, is that our ability to justify our capital projects at the Commission has significantly improved over the past decade. The kinds of capital projects that we are seeking approval from -- approval -- Commission approval for are really the bread and butter types of utility projects that should, for the most part, really be noncontroversial. These are main replacement programs, treatment for chemicals, IT system upgrades and the like.

And so while I don't expect that the Commission will give us the opportunity to have everything that we've asked for, included in the rate case, I do expect that we will be very successful in getting the vast majority of it included.

Yes. And Ben, I would just add, and you know this, we spend a lot of time internally looking, trying to improve ourselves, improve our forecasting, our planning, our rate case preparation, our community, and governmental affairs. And we always tell people, we sit on a 3-legged bar stool.

One leg, we have customers and affordability. The other leg, we have regulators and really have to look at reasonableness. And then the third leg, we have stockholders where we have to consider rate base growth, dividend growth and book value growth.

And I think over the last decade, we've been able to keep that fairly balanced, where we've been able to meet the needs of what we think the capital program needs, while keeping rates affordable and still growing dividends and growing the rate base and book value of the company. And so we've kept the same approach.

As we move into 2022, we have a lot of exciting initiatives going on, which is basically reexamining how we look at capital again. If you remember, it wasn't too long ago, we kind of redid some of our capital planning processes, and we're doing the same thing going into 2022 and looking at how can we make it better, recruiting some fresh new blood into engineering to help us look at things a little differently and looking at our capital delivery process.

So it's that continuous improvement. And staying focused on those 3 legs of the bar stool. I think that's made us successful so far. And I think I would argue that the 2020 rate case is probably the best prepared rate case we've ever done. And I think that will certainly show up and aide us when we go into settlement discussions with the Commission to try to get to the final number.

And our next question is from Jonathan Reeder of Wells Fargo.

Just kind of curious, what happened to the intervener testimony and the cost of capital? I thought it had been due much earlier in the month. I haven't seen it posted.

Paul. I can start. I think what we had expected there was a prehearing conference with the administrative law judge and a verbal agreement on a schedule. And that verbal agreement had the intervener testimony due, I think it was on -- I want to say it was like Friday, October 9, or some -- whatever that Friday was.

Because -- we suspect that because the schedule actually wasn't published. So the scoping memo that would accompany an adopted schedule was never published. The (inaudible) advocate chose to delay their testimony until such time as that occurs. And so we're in a bit of a holding mode. I assume they're ready to go with their testimony. I assume that it's ready to hit print and send out. But they, it sounds like, are waiting for that actual schedule to be adopted.

And no clarity as to when that might be, the scoping memo gets published?

No. Unfortunately not. We are waiting on the judge. We've made inquiries, but the Commission has lots of things in front of it right now. Judges are very busy, and we are simply, all of us, waiting to see that schedule come out.

Okay. So I guess from our perspective, we shouldn't assume it has anything to do with settlement discussions maybe going on where it could preempt even the necessity of intervenor testimony?

No. You should not presume that. We would not start settlement until we saw their testimony and knew where all the parties were.

And Paul, I think it's -- as we put in the slides, too, we expect the cost of capital to be wrapped up by the -- sometime in the second quarter. So it is definitely delayed.

It's definitely delayed as compared to the last cycle.

And then any updated thoughts on who Governor Newsom might appoint to lead the CPUC with President Batjer's imminent retirement?

Nothing official yet. Obviously, rumors are starting to fly a little bit, but those are all unofficial. So we are anxiously waiting to see. Obviously, we have our opinions and thoughts, and we have shared those with the governor's office, but he ultimately will make that appointment. And I know they are actively working on it.

Maybe slightly differently, some of the names being tossed out or the rumors. Are they -- I know you guys have been advocating that somebody with some good policy experience, maybe even on the water side directly gets put on the Commission. Is that still a possibility at this juncture?

Jonathan, you always ask really good questions. I can't speculate on any of the rumors. But I will say in my last discussion with the governor, I would say he was honing in on the fact he needed to get someone with good utility experience with maybe a decent policy background.

Okay, great. No, I appreciate that color and congrats on a good quarter.

And just to clarify that, Jonathan, that's utility regulation experience.

(Operator Instructions) And we have a question from Angie Storozynski of Seaport.

So just a couple of -- number of questions. So for the bad debt provision falling year-over-year, I appreciate this disclosure. But what is roughly reflected in the rates? And so I would be interested in the delta between where you're tracking now versus what's reflected in the rate?

So the -- we did look this up. The California rate case has $1.9 million of bad debt. And I'm sorry, I didn't look it up in the other states. So it's probably on the order of $2 million on an annual basis that would be covered in rates.

And then unregulated earnings year-to-date?

You'll see the 10-Q later today. I'm not sure that there's any big movements in unregulated earnings for the year as compared to the prior year. I think it's about the same.

Yes. It's about -- there's been no change.

So about -- yes, I see last year, it was about $1.4 million for the year, right? Okay.

Just to clarify one thing. The way that we now book our pension costs, just keep in mind that the regulated pension costs, the nonservice portion of that pension cost is below the line for accounting purposes. So you may see a big difference in the amounts that are reported there. But a lot of that is the pension cost element that I covered in the balancing account in California. And even the nonoperating part of it is covered in that balancing account. So that gets into a little bit of confusing accounting, but that does not represent a change in the profitability of the company.

And then the last one, the repair tax benefit, I'm just looking at it in 2020, it added about -- just about $3 million. How big of a benefit have you recorded year-to-date?

So year-to-date, the benefit is $92 million gross. So that would be the gross deduction. And it's also included in our rates in the regulatory side. So this year, the actual repairs benefit will be slightly lower than the value that's in the -- our rates.

Okay. So there's -- I'm basically trying to solve for all of those additions to the, basically, net income derived from the rate base. So that is not a driver this year.

That's correct. It will not be additive this year. In the prior year it was.

Awesome. And then -- I'm sorry that I'm going through numbers like that. But for next year, for 2022, without accounting for any changes in the ROE or the cost of debt. Is it fair to say that given that it's the last year of the current rate cycle, I should assume that there is some detriment versus the allowed ROE, again, given that costs are catching up, and it's just before the reset of revenues?

I think that if you look back in history, that's been a bit of the pattern that the highest ROEs are in the year of the first test year in the California GRC. I think there's a lot of other things going on, obviously, with the company and growth in other states and other types of items. So I don't know that it would necessarily be true this time, but certainly, the pattern in the past has been this stair-step approach to earnings where the earnings are highest in that first year of the rate case, and then they're very flat from there on out.

Yes. I think I'd just add on, if we weren't in a COVID environment, we were in a normal operating environment, we would be telling people right now, the third year of the rate case, don't expect a whole lot because that's when we tend to see the regulatory lag start to kick in on some of the corporate expense items, et cetera.

It's probably blurred a little bit because of COVID. Our travel budgets have been about 0, and we haven't been sending people out to conferences and doing a lot of the stuff that we normally do. So it's a little harder for us to see that. But certainly, the third year of the rate case is always the most difficult year of the 3-year cycle.

And then lastly, the disclosure on the consolidated rate base, how much of this -- it's 1.82 million, right? How much of that 1.82 million is outside of California?

I think that, that number, if you compare that to what we've asked for in the California rate case, it's about 100 -- it's between 100 million and 150 million in the other states.

It was 110 million last year.

We have investments in Texas, for example, and we've been purchasing systems in Hawaii earlier in the year. Those are adding to rate base as well.

Okay. And then lastly, I mean, I understand that we're still waiting for the filings of the intervenors. But we're starting to hear some rumblings about what the position of those intervenors is going to be. And I think that we had all hoped that the cost of capital proceeding is going to be mostly about the true-up of the cost of debt. It does not seem like that's the case. There's some conviction that the allowed ROES for water utilities in California are too high. I don't know if -- again, if you can say anything, given that we're still waiting for those official positions to be filed.

We have not seen the testimony, and we have heard rumors, just like we've heard rumors about who may be the next Chairman of the Commission. But at this point, we really want to wait and see the positions in writing from intervenors, and then we can make our decisions based on that.

(Operator Instructions) There are no further questions at this time. I will now turn the call over back to Marty Kropelnicki.

Great. Thanks, Laurie. Well, that's it for the third quarter again. Thanks for hanging with us and asking good questions. We'll be around today if anyone has any follow-up. Feel free to reach out to Tom, and he'll get us all together. It's hard to believe we'll be saying happy holidays to everyone, that our next conference call will be the end of February for a year-end conference call.

And so in the meantime, everyone be safe. Thank you for your continued interest in California Water Service Group, and we look forward to talking to everyone really soon. Thanks, Laurie. Thanks, everyone. Have a good day.

Thank you. And this concludes today's conference call. Thank you for participating. You may now disconnect.