Exelon Corporation

Hello and welcome to Exelon's second quarter earnings call. My name is Dilem and I'll be your event specialist today. All lines have been placed on mute to prevent any background noise. Please note that today's webcast is being recorded. During the presentation, we'll have a question and answer session. You can ask questions by pressing star 1 1 on your telephone keypad. If you'd like to view the presentation in a full screen view, Click the full screen button by hovering your computer mouse cursor over the PowerPoint screen. Press the Escape key on your keyboard to return to your original view. And finally, should you need technical assistance, as best practice, we suggest you first refresh your browser. If that does not resolve the issue, please click on the Help option in the upper right-hand corner of your screen for online troubleshooting. It is now my pleasure to turn today's program over to Jean Jones, Senior Vice President of Corporate Finance. The floor is yours.

Thank you, Dilem. Good morning, everyone, and thank you for joining our second quarter 2022 earnings conference call. Leading the call today are Chris Crane, Exelon's President and Chief Executive Officer, and Joe Nigro, Exelon's Chief Financial Officer. They're joined by other members of Exelon's senior management team, who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning along with the presentation, all of which can be found in the investor relations section of Exelon's website. The earnings release and other matters which we discussed during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call. Please refer to today's 8 and other SEC filings for discussions of risk factors and other factors that may cause results to differ from management's projections, forecasts, and expectations. Today's presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. We've scheduled 45 minutes for today's call. I'll now turn the call over to Chris Crane, Exxon's CEO.

Thanks, Jane, and good morning, everyone. Thanks for joining us. Before I get into the quarter, I want to spend a minute talking about the Inflation Reduction Act, a bill that's being considered in Congress. We appreciate those who have been working to position the United States as a leader in clean energy future and combating climate change. The bill extends tax benefits for familiar renewable technologies like solar and wind. It creates new ones for clean energy sources like nuclear and hydrogen. It also focuses on energy efficiency, electrification, and very importantly, equity. These aspects of the bill will enable this transformation for customers while building a domestic clean energy sector. However, the bill also proposes a corporate minimum tax that could undermine the benefits of those incentives and slowly investment needed to make this transformation. The lower cost of clean energy technology and efficiency investments will be offset by higher taxes on companies making investments. With this language currently proposed, we and other utilities could face an increase in cash tax. While the bill has yet to pass and specifics could change, as currently drafted, we could see an impact of incremental cash tax of approximately $300 million per year starting in 2023. The higher tax would ultimately limit our ability to invest in infrastructure needed to accommodate the clean energy needs our customers want and our jurisdictions are pursuing. But the situation remains very fluid. We continue to monitor the bill closely as it moves toward a vote in the Senate and beyond. In the meantime, we're working to advocate for language that better aligns the incentives to achieve what we all want, a cleaner, resilient, reliable, and affordable grid. We're not getting a grill today. Turning now to the quarter, our first one since separating on February 1st, we continue to execute on our plan, focusing on operational and financial excellence to serve our customers in our communities while supporting their environmental and social equity needs. We earned 47 cents per share on a GAAP basis and 44 cents per share on a non-GAAP basis. We continue to expect our full-year results in line with the 218 to 232 range we provided on our analyst day. We've updated on previously announced plans to financing a small portion of our $29 billion capital investment program with equity. Joe will provide additional details on our financing plan along with his commentary on the quarterly results. We're on track to limit the number of rate cases we have this year. In May, Delmarva Power Maryland filed its first multi-year plan covering investments from 23 to 25 period. The filing highlights improvement in Delmarva's reliability and customer service in Maryland, 21 marked its second straight year of record-setting outage frequency performance. We look forward to building on the successes of the multi-year plans we have in place and leverage the lessons learned to deliver value for Delmarva Power of Maryland customers. In Illinois, ComEd continues to work on a new rate setting process, including proposed performance metrics. We expect a final order by the end of the third quarter. In addition, on July 1st, ComEd filed its first beneficial electrification plan with the Illinois Commerce Commission as required by the CEJA. ComEd proposes spending approximately $300 million from 23 to 25. The plan is designated to reduce barriers to beneficial electrification, including barriers to electric vehicles like adoption of costs and charging availability. And the plan approaches and emphasizes equity and environmental justice as we implement. Our plan will ensure ComEd's investment strategy delivers on the CEJA's groundbreaking environmental and social equity goals. As a reminder, Comet's first distribution rate case under the new rate case structure will be filed in early 2023 for rate effective in 2024. And of course, we continue to support our communities and provide transparency We recently published our ninth annual corporate sustainability report, our first as a T&D only utility. It details all the ways in which Exelon is a responsible steward of the energy transition and delivers sustainable value for our jurisdictions. For instance, there's many programs going on 180 young women in urban centers. I've been joining each of the three academies to talk with the participants. In May, the Exelon Foundation selected nine young women that have graduated from our STEM program academies to receive a scholarship for the college education, totally speak to them directly, and tell them what they have just achieved. So I kind of broke down when I did it, but it was really powerful. The report also highlights 20 million climate change investment initiatives, a program that supports startups with potential to have wide-scale impact on climate change risks. In mid-July, Exelon and Exelon Foundation third round of the program. It's a 10-year program. These companies' business models address climate-related products in services like EV charging, repair, carbon accounting platforms, and other focus areas. We're very proud of the work that all our employees do every day to support the customers and the communities. and you can find all the details in our sustainability report. Switching to slide five, let me talk about our operational performance for the quarter. We continue to provide safe, reliable service for our customers. From a reliability perspective, we've seen improvement from the first quarter. We now are in top quartile for outage duration across all jurisdictions, and ComEd and PHI scored in the top decile. ComEd delivered its best KD performance on record despite severe storms in June. We met the restoration targets early, restoring 80% of 125,000 impacted customers in less than a day. And ComEd's distribution automation investment avoided almost 70,000 additional customer interruptions. Our outage frequency performance remains at top high levels, with ComEd achieving top test. On a safety front, PHI improved to top quartile, but we did have a slip at PECO into the second quartile. We're doing additional training to address the primary drivers of the underperformance at both PECO and BGE. As always, safety remains our number one priority. BG, ComEd, and PECO continue to earn top quartile customer satisfaction performance through the second quarter. And lastly, we maintain the top decile performance in odor response across our three gas utilities. PHI continues its streak of perfect execution, responding to all gas odors reported in less than one hour. for the first half of 2022. And this is very important for us to maintain confidence in the system, our gas distribution system, that we can find, fix, and repair anything that comes up. So it's really good to see. And now let me turn it over to Joe, and he can provide the financial update.

Thank you, Chris, and good morning, everyone. Today I will cover our second quarter results. our quarterly financial updates, and highlight several ways in which our utilities are powering the economic health and well-being of the diverse communities in which we serve. I'll begin on slide six, where we show our quarter-over-quarter adjusted operating earnings walk. Exelon's continuing operations earned 44 cents a share in Q2 of this year versus 36 cents a share in Q2 of last year. As a reminder, the prior year's second quarter reflects a 9-cent impact for discontinued operations adjustment for certain corporate overhead costs that were previously allocated to our generation segment that are required by accounting rules to be presented as part of Exelon's continuing operations. As a reminder, these costs were paid for by generation and are not indicative of our corporate overheads post-separation. Additional information including the full year impact of the discontinued operations adjustment on 2021 results can be found in the recast 10-K on which we filed on June 30th. Excluding the nine cent impact quarter over quarter of the discontinued operations accounting adjustment for service company allocations, Exelon's second quarter results were a penny lower than the second quarter of 2021. We did benefit from higher distribution rates associated with completed rate cases, including higher treasury rates impacting Commonwealth Edison's distribution returns. But this was offset by higher depreciation and amortization, bad debt, timing of other costs of utilities, and the impact of rising rates on the debt at the holding company. As Chris mentioned, we continue to reaffirm our 2022 EPS guidance rate to $2.32 per share. Our year-to-date operating earnings results of $1.08 per share are exactly in line with the historical percentage of full-year earnings in which we outlined in analyst day. Growth in the balance of the year will occur primarily in Q4 as we continue to realize the benefits of higher distribution and transmission revenues, including the net impact of higher treasuries on ComEd. It will also include the absence of unfavorable weather and storms from the previous year and the timing of taxes and O&M spend that impacted us in the first two quarters this year. Any updates to guidance will be provided on our next call for Q3. Moving on to slide seven, looking at our utility returns on a consolidated basis, we expect to be in our consolidated 9% to 10% target by year end. As of the second quarter, our trailing 12-month ROE of 8.8% was slightly below our targeted range. As we discussed on our last call, the timing of equity infusion supporting capital investments across all utilities outpaced the higher earnings, driven primarily by distribution and transmission rates. We remain focused on delivering stronger returns at the utilities, which sustain the investment we make on behalf consumers. Turning to slide 8, it was another quiet quarter on the regulatory front with one notable rate case development. On May 19th, Delmarva Power filed its first multi-year plan with the Maryland PSC, a third of its kind in the state preceded only by its sister utilities of BG&E and PEPCO. The filing outlines the company's plans to invest hundreds of millions of dollars in the local energy grid and other customer experience improvements during the three-year period from 2023 to 2025. As we've noted before, the multi-year plans approach allows us to align with all stakeholders on where the company is focusing its investments. Among the hundreds of projects, the plans specifically include Vestas, to continue to improve reliability and customer service, advance technologies to modernize the distribution system, and provide tools to assist customers in managing their usage. We expect an order by the end of the year. We also have three rate cases that are still in progress. Delmarva, Delaware has a gas case with rates going into effect on August 14th, subject to refund, and an expected decision in the first quarter of 23rd. Additionally, we expect a decision on the PECO gas case in the fourth quarter this year and on ComEd's final formula rate filing in December. Each case is proceeding in line with our expectations. Overall, we are pleased with the progress in advancing progressive regulatory designs that benefit our customers, ease regulatory burden, and improve visibility for our utilities. As a reminder, we expect nearly 100% of our rate-based growth will be covered by alternative mechanisms by the end of our planning period. And more details on the rate cases can be found on slides 18 to 21 of the appendix of our earnings presentation. On slide 9, we want to spend a moment discussing the work that our utilities do to partner with local, state, and federal agencies. as well as community groups to ensure we are maximizing opportunities for our customers to benefit from the various bill assistance programs available to them. With the challenges presented in the last couple years by the pandemic and recent inflationary pressures on customers, there have been increases in the funding available to support our most vulnerable customers. For instance, the LIHEAP program has grown since 2017 by $400 million to $3.8 billion in total. However, the percentage of households taking advantage of this assistance has remained flat nationwide, implying additional opportunity to support our customers that has gone untapped. Our utilities, with their capabilities around billing and customer service, have stepped up to this challenge, looking for innovative ways to support the governmental agencies and ensure more eligible customers are taking advantage of the programs available. And I'd like to touch on just a couple of examples. ComEd introduced a community energy assistance ambassador program whereby it offered employment to over 100 local residents to serve as trusted partners to educate customers about financial assistance as well as energy efficiency. With support from these ambassadors, ComEd was able to expand its reach into hard-to-engage communities, distribute more than 11,000 energy efficiency kits, and connect customers to a record $146 million in financial assistance, representing a 95% increase in the number of grants customers received relative to 2020. While at the PHI utilities, Ace, Delmarva, and Pepco also took advantage of local outreach strategies. leveraging a data-driven approach to ensure they were targeting the highest opportunity areas. Furthermore, they also partnered closely with the relevant governmental agencies to identify and reduce logistical pain points around applications, eligibility verification, and disbursement. These efforts resulted in customers securing $125 million of energy bill assistance, an I can say similar approaches were also employed at our PECO BGE operating companies, and Exelon's efforts across all utilities resulted in over $450 million of funding, making its way to more than 650,000 customers, which lowers arrearages and thus bills for all consumers. This level of funding represents a 22% increase in the assistance we were able to connect to our customers relative to the prior year. In fact, these efforts were recognized by EEI, who selected Exelon as an Edison Award finalist in 2022, specifically for the innovative ways we helped our customers obtain this assistance. Connecting customers to financial support is just one of the ways in which Exelon is ensuring its customers are making the transition to a cleaner and more resilient grid in an affordable and equitable manner. If I move on to slide 10, during the second quarter, we continue to invest capital for the benefit of our customers and are on track to meet our $6.9 billion commitment for 22. These investments will improve reliability and resiliency, enhance service for our customers, and prepare the grid for a clean energy future. Today, I would like to talk about the impressive effort led by BG&E to replace a half-century-old underground underwater circuit nearing the end of its useful life in the heart of Baltimore Harbor. BGE's Key Crossing Reliability Initiative installed a double-circuit 230kV overhead electric transmission line across the two-mile-wide Patapsco River. Proactive outreach and early engagement with stakeholders significantly reduced permitting durations and allowed BG&E to incorporate feedback into the project's design that benefited both BG&E and its customers. The reduced durations allowed overhead construction to begin in May of 2020 and complete 15 months early. Eight transmission monopoles were installed, including two of the tallest towers on the continent, which contemplated adequate clearance for cargo and cruise ships entering the port of Baltimore today and into the future. Grid reliability improvements improvements stemming from the Key Crossing Initiative were made possible by the estimated 300 to 350 talented women and men who contributed to this project and all the constituents engaged in each phase of it. BGE opted to replace the segment with overhead transmission lines because the environmental impact was minimal and it was cost effective and it better supported the port of Baltimore shipping operations while having the greatest potential for local and domestic job creation. This project perfectly embodies our mission of providing clean, reliable, affordable, and innovative solutions to all our key stakeholders. Lastly, I want to provide an update on our balance sheet, which we committed to keeping strong to support the investments made for the benefit of our customers and community. As we announced in February of 2021, and reaffirmed as recently as last quarter's call, we plan to issue $1 billion of equity at the Holden Company by 2025 as part of a balanced funding strategy. We are establishing a $1 billion ATM program, and we plan to issue $500 million of equity in 2022, leveraging either the ATM program or a one-time offering or some combination of both methods. We will complete the remaining $500 million over 2023 to 2025, and we commit to continuing to update you as we make progress on these plans. Beyond our equities plans, as we noted in the first quarter, we have completed our long-term debt financings at corporate for the year. There is no change to our expectation that our consolidated corporate metrics S&P and Moody's over the 2022 to 2024 period. And with a number of financings completed this quarter at our utilities, we continue to benefit from robust demand for that debt, backed by extremely strong credit ratings at our operating companies. As you've heard from Chris, we are monitoring the Inflation Reduction Act and its potential impact on cash taxes shifting past. We will continue to update you on that as needed. Thank you, and I'll turn back the call to Chris for his closing remarks.

Thanks, Joe. And turning to slide 12, I'll close by reiterating that Exelon's value proposition and position in this sector. Exelon is the premier T&D-only company in the nation, consistent of delivery and reliability results. There are several key attributes that distinguish us. We have an unmatched size and scale leveraging a common platform across all our utilities. We consistently and reliably offer best-in-class operation performance. This drives a superior customer experience and facilitates a positive regulatory engagement in our jurisdictions. A purpose of powering a clean, brighter future for our customers and communities. is how important ESG principles are to our company. And we maintain a strong balance sheet that drives investment needed to sustain our success. The net results in our opportunity to invest the $29 billion of capital over the next four years for our customers with an annualized 6% to 8% operating earnings growth through 2025 and we expect to pay out 60% of those operating earnings each year to our stakeholders, shareholders. Thank you for your time, and now we'll turn it over to Q&A.

Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone keypad. Please stand by while we compile the Q&A roster. I show our first question comes from the line of Sharia Parisa from Guggenheim Partners. Please go ahead.

Hey, good morning, guys.

Good morning.

Chris, just on the Inflation Reduction Act, just given your comments, any thoughts on prospects for ultimate passage? I think Sinema's stance is still unclear, and we may get a vote this week. And, Joe, if the 15% AMT passes as it stands today, would you be sort of able to update the financing plan by the EEI timeframe? And just remind us, the multi-year plans, would they adjust for the tax changes on the fly, or would you require separate proceedings in most jurisdictions? Thanks.

Yeah, I'll take the first half and let Joe take the second half. We have been working with... significant amount of outreach, not only as a company but as an industry, to make sure that the message is heard, that there is a technical fix that's a potential or other methods. But I don't think we all know enough now. It's very fluid. you know, as you talk to the senators, they're getting up to speed as we're getting up to speed. So it came quick. It came out of the closet. And we have to, you know, continue to dive in with EEI and as a company to communicate the unintended consequences of where we're at. Melissa, anything else?

It remains fluid. We know that senators are working to review the bill and understand the impacts and expectations are that they are going to try to vote on a bill, but again, things remain fluid.

Did I misspeak on the technical fix?

I think as we look at the bill, we continue to talk with the centers about potentially unintended consequences of how the minimum tax might be applied and its impact on our ability to continue the robust investments that we're making. And so we are talking with them about some of the tax policy that has existed over time that's enabled us to cost-effectively and affordably invest and talk about ways to look at the way that the minimum tax is currently structured and see what changes could be made.

Thanks, Melissa. Joe? Yeah, and I'll pick up the second two questions, Char. Good morning. Good morning. The 15% passes, as you mentioned, we wouldn't expect to update our financing plans by EEI. Our normal cadence is that we would do that on the Q4 call after the first of the year. The reason we do that is it gives us time to get through our year-end budgeting process and mark things to that point, whether it's treasuries, very transparent at that point. As for your last question.

Yep.

Go ahead.

No, sorry, Joe, you go, please.

So as for your last question, you know, do the multi-year plans adjust for tax changes? I think what we would say, it's unclear at this point how, you know, these taxes will flow through to our customers. This obviously, as Melissa and Chris just talked about, this situation is very fluid. As it's currently written, we've reached the threshold for the tax at the consolidated level. And, you know, so we're working through all this real time.

Got it. Got it. And then just lastly, Joe, a little bit of confusion, I guess, this morning around the language around the equity plans for 22. I guess, what are sort of the puts and takes of doing it via the ATM versus just a pure block? I guess, what are you trying to work through? Why not just do an ATM? Thanks.

Yeah, I think there's a couple answers to that, Char. I think the first thing is if we were having this conversation the first of the year, we might have even had a different view of that, but as market conditions change, we have to change with it, i.e., you know, the way interest rates have moved, for example. So what we've tried to do is be transparent that, you know, we're putting a billion-dollar ATM in place between now and 25, which is what we had told you, you know, the equity needs were We're going to do $500 million of it this year, but I think it's important for us to maintain flexibility. And that's why we're saying that we would do it in probably the one of two ways that I mentioned.

Great. All right. Thank you, guys. Terrific. Appreciate it.

Yep.

Thank you. And I show our next question comes from the line of Paul Zimbardo from Bank of America. Your line is open.

Hi, thank you. Good morning. Just following up on the IRA and minimum tax, so is the right way to think about it that you could probably absorb that reduction in cash flows, just looking at the 12% trigger versus your guidance range, or can we think about that as potentially increasing equity needs?

Yeah, as I said, this is obviously a very fluid situation, and we're not ready to commit to either of those. It all gets tied up, and if this were to pass in its current form, this would all get tied up in our end-of-year planning process. What I can say, though, is on Analyst Day, we committed to you a 68% earnings gain through 2025, and we're still committed to that.

Okay. Great.

Thank you. And then you mentioned the performance-based rates. We've been watching and comment. Do you embed any kind of benefit, and not just in Illinois, but across the footprint from potential positive incentives under the performance-based rates at that CAGR midpoint you mentioned?

No. In our plan, we don't embed any incremental benefits from performance.

But strategically, Calvin, we're trying to head in that direction.

We are. So as you mentioned, We've been working with stakeholders and filed our performance-based metrics outline and goal, which would add, if ComMed is able and we're confident to sit back and afford reliable and electricity to our customers, as well as help the state achieve its goals, the reliability metrics as outlined could add 60 basis points. And we also provided an alternative to the commission if they wanted to consider adding up to 40 basis points, but all based on ComEd rising to the standards that have been outlined in collaboration with the stakeholders.

Okay, great. Thank you. Claire, have a good one. Sure.

Thank you. And I show our next question. comes from the line of Steve Fleischman from Wolf Research. Your line is open.

Yeah, thanks. Good morning. Hey, Chris, could you just give us – I'll calculate this later, but just if you have handy – $300 million of cash flow potentially impacted by the IRA. What is that in terms of FFO to debt percentage?

Yeah, Joe – Yeah, Steve, I don't think we're ready to get into that because the way we look at this is not in isolation. We have to go through a year-end planning process and see what portion of this we can offset with other actions that we can take across the enterprise. And then net of that, what falls to the impact on our metrics. And obviously, this is so fluid, we haven't gone through that.

schedules there's there's multiple ways to to avoid any impact on our metrics and that's what we'll be focused on when we figure out where this thing is going you know what we've heard is it's by the end of the week potentially over the weekend things could happen and but once we get the final We want to keep our capital spend plan where it's at, our growth where it's at for reliability and affordability while we're maintaining a system that will take on the renewables. So there's a few balls in the air that we'll have to juggle. we'll see how we prevail as an industry as we go forward.

Okay. And then second question is just in terms of, Joe, your thought process on the equity issuance timing and doing half of it in kind of the first year as opposed to just spread out. Could you maybe just give some flavor why kind of you decided that?

Yeah, I think, Steve, a couple of reasons. You know, this is the first window we have open post-separation. You know, we had to file the updated 10-K at the end of June, which we did, and then we went into blackout. So as we previously disclosed, you know, we executed some short-term debt at the time of separation that we're now planning to use the equity to pay down, and that's all part of the balanced funding structure. You know, we went through an evaluation of the type of equity issue, and as I said earlier, it's been very fluid given changing market conditions, and we want to maintain as much flexibility as we can, and that's why we're saying we're putting an ATM in place, but we do have the flexibility to do this at one time.

Okay. Thank you.

Thank you. And I show our next question comes from the line of David Acaro from Morgan Stanley. Please go ahead.

Oh, hi. Thanks so much for taking my question. Could you maybe just speak to, as you look out over the EPS growth forecast period, your current thoughts on maintaining that linearity of annual kind of cadence in achieving the growth each year through the forecast?

Yeah. Thanks, David, for the question, and good morning. We've talked about this. You know, we're confident in that 68% growth rate that we've given you through 2025 as it relates to earnings. We've said there is some variability between the years, and it's really driven by three factors, right? One is the distribution return through 2023 is still tied to treasuries, which obviously we don't control. That's a mark-to-market exercise. And that's priced on a daily average throughout the year, so it's continuing to obviously change. PICO is on a three-year rate case cadence. And the way that that cadence works is they're higher earning in the early years than they are the later years. And that has some variability. And then lastly, you know, we're transitioning to different rate making in Illinois, 2024 and beyond. And we have to make an assumption of what that looks like. And we've done that and we're comfortable with, you know, ranges around that and that 68% growth rate, but that drives some variability as well.

Okay, got it. Thanks. That's helpful. And on the, just the ROE, so I ticked down slightly in this quarter. Could you just refresh us on the confidence level in that rising in the back half of this year? And then any latest thoughts as to when? you might be able to achieve something in the middle, like 9.5% ROE level as you look out in the forecast.

Yeah, I think the reason you see the lower ROEs early in the year, and you saw the same trend last year, is it is tied to the equity we're infusing in the utilities. We do a majority share of our debt offerings early in the year across the enterprise. We infuse the equity, which over the course of the year takes time for the earnings to catch up, and that's really the big driver. So we're confident. We target 9% to 10% for all of our utilities. We're confident at the year end we'll be in that range on average across the utilities.

The key on this is the rate cases, as Joe said, and we've seen downward pressure in other jurisdictions on that. 9.5% to 10%. So we have to work through that and explain with the higher interest rate environment, we need to be able to move that back up as we're working through our rate cases. So it's, you know, it's reversing the trend of what we've seen in the industry to accommodate the interest rate rise and come down when interest rates come down.

It's a crawl back when interest rates go back up, but that's what we're focusing on. Chris, if I can add, this is Calvin, David. I would also point out, Joe alluded to ComEd's earnings being tied to the treasury. But I understand ComEd is also one of the lowest in earnings of any utility that impacts that 9% and 10% average. So as ComEd begins to transition, out of the formula rate, you will see that have a greater impact on the collective of the utilities. And it's also important to note, when we talk about the multi-year plans, those three-year plans that we've been putting in place in Maryland as well as in the District of Columbia, that's a process that is done in collaboration with the stakeholders and commission. So when we talk about investments across the utilities, that transparency is giving stability to those ROEs. and also the growth projection that Joe talks about, that 6% to 8% a year. That's how we feel confident that we can come in here and tell you what that growth plan looks like because it is done in collaboration with our commissioners and all of our stakeholders.

Great. That all makes sense. Thanks so much.

Thank you. And I show our last question comes from the line of Dergesh Chopra from Evercore ISI. Dergesh, your line is open.

Hey, guys. Thank you. I'll keep it quick. Joe, I just want to go back to the $300 million per year cash impact from the alternative minimum tax. Just given that your cash-effective tax rate is going up each year, so I'm looking at this slide, which shows 2022. This is slide 16 in the appendix, I believe. which shows the effective cash tax rate going from like less than a half a percent to 4% in 2023. As I'm thinking about 24, 25, shouldn't that 300 million cash tax impact be actually lower given that you're going to pay some cash taxes just by the effective tax rate going up naturally in the plan?

I think there's a lot of variables that go into that equation. I mean, you know, we, given the size of our enterprise, And the number of operating companies we have, obviously, there's a lot of things that move around in a given year with taxes. I mean, we see that each and every year and then, quite frankly, each and every quarter. So, you know, this is very fluid, the situation we're dealing with. As, you know, Melissa and Chris alluded to here, we've still got to get to the goal line on this and see where it plays itself out. You know, I'm not going to sit here and commit to you to say it's going to do this or that impact looks like over, you know, our planning horizon that we've disclosed.

Got it. Thanks, guys. Much appreciated.

Thank you. This concludes our Q&A session. At this time, I'd like to turn the call back over to Chris Crane, President and CEO, for closing remarks.

Yeah, thank you all for joining the call today. We look forward to continuing to execute on our plan. And with that, I'll close out the call and thank you for your continued support.

Thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.