Q1 2023 Exelon Corporation Earnings Call

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Speaker 1: Hello and welcome to Exelon's First Quarter Earnings Call. My name is Gigi and I will 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.

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Speaker 1: And finally, should you need technical assistance, as a 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 Andy Plenge, Vice President of Investor Relations. The floor is yours. It is now my pleasure to introduce you to our special guest, Miss Professorerc KLAR. I've alwayspackaged you to do this report, because it's found a lot of good Seat-ing information on all of our competing delicious freeurers. Unlike any other event outside the yard, this report is not covered, asrowd us wooden end This survey was done in ingenuity to replace and taper web tease the information that entered therees of the

Thank you Gigi good morning, everyone, we're pleased and happy with US for our 2023 first quarter earnings call.

The call today are Calvin Butler Excellence, President and Chief Executive Officer, and Jane Jones Excellence, Chief Financial Officer. Other members of Excellence Senior management team are also with US today and they will be available to answer your questions. Following our prepared remarks.

Speaker 2: Thank you, Gigi. Good morning, everyone. We're pleased to have you with us for our 2023 first quarter earnings call.

You may have seen we issued our earnings release. This morning that release, along with the presentation being used for today's call can be found in the Investor Relations section of Exxon's website.

Speaker 2: We in call today are Calvin Butler, Exxon's President and Chief Executive Officer, and Gene Jones, Exxon's Chief Financial Officer.

As a reminder, the earnings release and other matters that we will discuss during today's call contain forward looking statements and estimates that are subject to various risks and uncertainties. As a result 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 you.

Speaker 2: Other members of the Excellence Senior Management team are also with us today and they will be available to answer your questions following our prepared remarks.

Speaker 2: You may have seen that we issued our earnings release this morning. That release, along with the presentation being used for today's call, can be found in the investor relations section of Exelon's website. As a reminder, the earnings release and other matters that we will discuss during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties.

You can find in today's 8-K and exxon's other SEC filings for discussions of risk factors and other factors that may cause results to differ from management's projections forecast and expectations in.

Speaker 2: As a result, 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. You can find in today's AK and X1's other SEC filings discussions of risk factors and other factors that may cause results to differ from management's projections, forecasts, and expectations.

In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures. Both the appendix of our presentation and our earnings release contain information and reconciliations between the GAAP measures and the nearest equivalent GAAP measures.

We scheduled 45 minutes for today's call and it is now my pleasure to turn the call over to Calvin Butler Excellence, President and CEO . Thank.

Speaker 2: In addition, today's presentation includes references to adjusted operating earnings and other down-to- GAAP measures . Both the appendix of our presentation and our earnings release contain information on reconciliation between the GAAP measures and the nearest equivalent GAAP measures . We've scheduled 45 minutes for today's call and it is now my pleasure to turn the call over.

Thank you Randy and good morning, everyone. We appreciate you joining us for our first quarter earnings call. Our team of 19000 plus employees have entered this first full year of operations. After the separation excited to lead the energy transformation as a premier T&D utilities and it shows in our results we are delivering.

Speaker 2: to Calvin Butler, Exelon's President and CEO . Thank you, Andy, and good morning, everyone. We appreciate you joining us for our first quarter earnings call. Our team of 19,000 plus employees have entered this first full year of operations after the separation, excited to lead the energy transformation as a premier T&D utility.

<unk> plans on course.

I'll start on slide four covering our key messages, we delivered strong year over year growth in the first quarter, earning 67 cents per share on a GAAP basis, and 70 cents per share on a non-GAAP basis. These results keep us on track to deliver earnings within our guidance range of $2 30 to $2 42.

Speaker 2: and it shows in our results. We are delivering our plan on course.

Speaker 2: I'll start on slide four, covering our key messages.

<unk> per share for 2023.

Speaker 2: We delivered strong year-over-year growth in the first quarter, earning 67 cents per share on a GAAP basis and 70 cents per share on a non-GAAP basis.

This is despite the impact of mild weather, which is a testament to the stability offered by the progressive largely decoupled ratemaking mechanisms in our jurisdictions.

Speaker 2: These results keep us on track to deliver earnings within our guidance range of $2.30 to $2.42 per share for 2023.

Operationally, we had our best on record reliability performance at all four of our utilities with cockpit continuing to operate in the top decile.

Speaker 2: This is despite the impact of mild weather, which is a testament to the stability offered by the progressive, largely decoupled rate making mechanisms in our jurisdictions.

As it pertains to our rate cases, we are well underway in a number of jurisdictions with three new filings initiated since the fourth quarter earnings call.

Speaker 2: Operationally, we had our best on record reliability performance at all four of our utilities, with ComEd continuing to operate in the top decile.

A stronger smarter resilient and cleaner grid requires the investment we are engaging with our stakeholders to align on our shared goals and ensure this investment is compensated fairly.

Speaker 2: As it pertains to our rate cases, we are well underway in a number of jurisdictions, with three new filings initiated since the fourth order earnings call. Building a stronger, smarter, resilient, and cleaner grid requires investment.

It is integral to our strategy.

On February 15th Atlantic City Electric filed a distribution base rate case, with the New Jersey Board of public utilities to support investments in infrastructure to maintain safety reliability and customer service for our customers.

Speaker 2: We are engaging with our stakeholders to align on our shared goals and ensure this investment is compensated fairly, as is integral to our strategy.

It also includes initial recovery for Asia, smart meter deployment, which brings a host of benefits that she will highlight shortly.

Speaker 2: On February 15th, Atlantic City Electric filed a distribution base rate case with the New Jersey Board of Public Utilities to support investments in infrastructure to maintain safety, reliability, and customer service for our customers. It also includes initial recovery for ACES Smart Meter deployment.

B G E filed the second multiyear plan on February 17th and Pepco D. C filed its second M Y P. On April 13.

Both N Y P rate cases incorporate investments that enable the energy transformation guidance by jurisdictional policy, whether it be the climate solutions now app in Maryland, or D. CS transformative energy policies like the D C climate action plan.

Speaker 2: which brings a host of benefits that Chief will highlight shortly.

Speaker 2: BGE filed its second multi-year plan on February 17th, and PEPCO DC filed its second NYPD on April 13th.

Finally, pepco expects to file a second M Y P. R final anticipated base rate filing for the year with the Maryland Public Service Commission later this month.

Speaker 2: Both MYP rate cases incorporate investments that enable the energy transformations guided by jurisdictional policy, whether it be the Climate Solutions Now Act in Maryland, or DC's transformative energy policies like the DC Climate Action Plan.

Jim will take the time to highlight the next steps across our open rate cases, and provide additional details on our regulatory calendar shortly.

Speaker 2: Finally, PEPCO expects to file its second NYP, our final anticipated base rate filing for the year, with the Maryland Public Service Commission later this month. Gene will take the time to highlight the next steps across our open rate cases and provide additional details on the regulatory calendar shortly.

Now in working through these rate cases, we have several new commissioners expected across our jurisdictions, including new chairs in place or pending in Illinois, Maryland, and Pennsylvania and to appoint teased in Illinois and Maryland.

We appreciate the service will be outgoing commissioners and are excited to begin working with the newest members on this next phase of the energy transformation.

Speaker 2: Now, in working through these rate cases, we have several new commissioners expected across our jurisdictions, including new chairs in place or pending in Illinois, Maryland, and Pennsylvania, and new appointees in Illinois and Maryland.

Given this transformation will be measured in decades. It reinforces the importance of building a shared forward looking understanding our priorities and needs across a variety of stakeholders, which is accomplished through transparency and collaboration.

Speaker 2: We appreciate the service of the outgoing commissioners and are excited to begin working with the newest members on this next phase of the energy transformation.

This type of approach supports continuity through the inevitable evolution as legislative and regulatory bodies over time.

Speaker 2: Given this transformation will be measured in decades, it reinforces the importance of building a shared, forward-looking understanding of priorities and needs across a variety of stakeholders, which is accomplished through transparency and collaboration.

Lastly, we continue to reaffirm our existing expectations to be at the midpoint or better of our 2021 to 2025 and 2022 to 2026, 6% to 8% annualized earnings growth ranges with dividend growth to match underpinned by the investments, we're making on behalf of customers.

Speaker 2: This kind of approach supports continuity through the inevitable evolution in legislative and regulatory bodies over time.

Speaker 2: Lastly, we continue to reaffirm our existing expectations to be at the midpoint or better of our 2021-2025 and 2022-2026 6-8% annualized earnings growth ranges, with dividend growth to match, underpinned by the investments we are making on behalf of customers.

And Ernie and annual consolidated ROE and the 9% to 10% range during that time.

Our diverse be concentrated capital expenditure plan and predictable investment recovery frameworks contribute to the compelling risk adjusted total shareholder return of 9% to 11% that we offer investors between our dividend and earnings growth through 2026.

Speaker 2: and earning an annual consolidated ROE in the 9% to 10% range during that time.

Our results are built on an operating philosophy that relentlessly pursues excellence as is highlighted on the next slide.

Speaker 2: Our diverse, deconcentrated capital expenditure plan and predictable investment recovery frameworks contribute to the compelling, risk-adjusted total shareholder return of 9 to 11 percent that we offer investors between our dividend and earnings growth through 2026.

Slide five reviews, our operating performance for the start of 2023.

Beginning first with reliability you can see that our utilities continued to operate at industry, leading levels. Both in terms of outage frequency and outage duration.

Speaker 2: Our results are built on an operating philosophy that relentlessly pursues excellence as is highlighted on the next slide.

Both comment M. P jot achieved best on record outage frequency performance.

Speaker 2: Slide 5 reviews our operating performance for the start of 2023. Beginning first with reliability, you can see that our utilities continue to operate at industry leading levels both in terms of outage frequency and outage duration. So ComEd and PHI achieve best on record outage frequency performance.

And all four utilities utilities achieved best on record system outage duration performance now.

Now consistent with our focus on continually improving operations and customer value. We are now using total system outage time versus average customer outage duration as one of our reliability metrics.

This refined metric better ensures we are comprehensively capturing the customer experience on an absolute basis in each of our service territories.

This performance is a testament to the hard work that our employees put in each and every day.

Speaker 2: as one of our reliability metrics.

It also speaks to the effectiveness of the investments in reliability and resiliency that our utilities have made providing a great foundation as we discussed with our stakeholders. The next phase of investments to support their energy transformations.

Speaker 2: This refined metric better ensures we are comprehensively capturing the customer experience on an equitable basis in each of our service territories.

Speaker 2: This performance is a testament to the hard work that our employees put in each and every day.

As it pertains to safety ph is now operating at top decile levels and Pico is in the top quartile both up from the second quartile last year, while Beach P. T improved the second quartile from third quartile.

Speaker 2: It also speaks to the effectiveness of the investments in reliability and resiliency that our utilities have made, providing a great foundation as we discuss with our stakeholders the next phase of investments to support their energy transformations.

Now while we are encouraged by the progress we have made on the safety front and the company. We have a safety focused zero tolerance culture, we are using targeted training at each of our utilities such as ergonomics awareness training at comment in light of its moved out to second quartile to address the areas driving underperformed.

Speaker 2: As it pertains to safety.

Speaker 2: PHI is now operating at top decile levels and PICO is in the top quartile, both up from the second quartile last year, while BGE improved to second quartile from third quartile.

Thats.

Gas odor response continued its run of top decile performance with all three utilities performing at World class levels in 2023.

Speaker 2: culture. We are using targeted training at each of our utilities.

Speaker 2: such as ergonomics awareness training at ComEd in light of its move down to second quartile to address the area's driving under performance.

P. H I responded to all gas orders in less than an hour achieving a perfect rig.

Lastly, I want to spend a moment talking about customer satisfaction.

Speaker 2: Gas Motor Response continues its run of top-decile performance with all three utilities performing at world-class levels in 2023.

As you can see.

Our four utilities operating in the second quartile after three out of the four closed out 2022 and top quartile well each operating company has unique areas to address there are a few common trends.

Speaker 2: PHI responded to all gas orders in less than an hour, achieving a perfect rating. Lastly, I want to spend a moment talking about customer satisfaction.

For instance, the block for communicating with customers around outages and reliability continues to be raised as our customers increasingly rely on their grid, whether it be working remotely are charging their cars. They need access to information real time, we are excited about the investments we have made and the tools they already have.

Speaker 2: As you can see, our four utilities are operating in the second quartile after three out of four closed out 2022 in top quartile.

Speaker 2: While each outgrading company has unique areas to address, there are a few common trends.

Speaker 2: For instance, the bar for communicating with customers around outages and reliability continues to be raised.

At their disposal, such as mobile apps, and we will continue to invest in enhanced and enhancements focused on improving communications.

Speaker 2: As our customers increasingly rely on the grid, whether it be working remotely or charging their cars, they need access to information real-time. We are excited about the investments we have made in the tools they already have at their disposal, such as mobile apps. And we will continue to invest in enhancements focused on improving communications.

Although another area of focus is new technology through upgrades to our customer care and billing software.

These investments will allow us to provide more options to meet customer needs around billing and other services and enhanced self service options for those experiencing slower turnaround times.

Speaker 2: Although, another area of focus is new technology through upgrades to our customer care and billing software. These investments will allow us to provide more options to meet customer needs around billing and other services and enhance self-service options for those experiencing slower turnaround times.

But perhaps the primary driver of lower customer satisfaction scores relative to the latest available benchmark as with 2021 is one that is not unique to X a lot while the inflationary environment has shown signs of abating recently, particularly around energy supply costs that are a pass through for us customers.

Speaker 2: But perhaps the primary driver of lower customer satisfaction scores relative to the latest available benchmark as of 2021 is one that is not unique to Exelon.

<unk> had been impacted by increased cost in many aspects of their lives and businesses.

That's why we will continue to focus on maintaining more than average rates and overall bill levels.

While the inflationary environment has shown signs of abating recently...

Again rates in our cities are 23% below the average rate in the largest cities in the United States and.

particularly around energy supply costs that are a pass-through for us, customers have been impacted by increased costs in many aspects of their lives and businesses. That's why we will continue to focus on maintaining more than average rates and overall bill levels. Again, rates in our cities...

And we have connected customers to increasing amounts of assistance as well totaling over $1 billion. The last two years.

But we have to continue to articulate the value customers are receiving and we will maintain focus on managing our own cost to live to deliver our product as efficiently as possible.

Are 23% below the average rate in the largest cities in the United States?

And we have connected customers to increasing amounts of assistance as well, totaling over $1 billion the last two years.

We also address bill impacts in our approach to rate cases.

Our proposed deferral of 35% of comet when he 24 rate increased to 2026 is just one example.

But we have to continue to articulate the value customers are receiving, and we will maintain focus on managing our own costs to deliver our products as efficiently as possible. We also address bill impacts in our approach to rate cases.

At this <unk> D C proposed expansion of the residential aid in our records management programs.

Ensuring we are leading the industry in customer satisfaction remains a top priority for us.

Our proposed deferral of 35% of ComEd's 2024 rate increase to 2026 is just one example. At this PICO's, DC proposed expansion of the residential aid and arrearage management programs.

Now gene will provide an update on our financial performance for the first quarter Chi.

Thank you.

Hey, good morning, everyone today, I will cover our first quarter financial update and progress on their 2023 maintain capital and I'm also kind of like the ways in which our utilities are advancing a smarter stronger and cleaner energy.

In short, we are leading the industry and customer satisfaction remains a top priority for us.

Now Gene will provide an update on our financial performance for the first quarter. Thanks for joining me.

For our customers.

So I have like that Michel our quarter over quarter adjusted operating earnings.

Thank you Calvin and good morning everyone. Today I will cover our first quarter financial updates and progress on our 2023 rate change schedule. And I will also highlight the ways in which our utilities are advancing a smarter, stronger, and cleaner energy grid to better serve all customers.

As Kelvin mentioned Exxon earn 70 cents per share in the first quarter of 2023 person 64 cents in the first quarter of 2022, reflecting growth of six cents per share over the same period.

Earnings growth was driven primarily by 10 cents up higher distribution and transmission rate.

Starting on slide 6, we show our quarter-over-quarter adjusted operating earnings block.

This incremental adoption and completed rate cases, including the uplift from higher treasury rates impacting comments distribution Harley.

As Calvin mentioned, Exxon earned 70 cents per share in the first quarter of 2023 versus 64 cents in the first quarter of 2022, reflecting growth of 6 cents per share over the same period.

Yeah.

Three of them from their own right, but the other one time items from 2022, including the discontinued operations adjustment from the separation and the customer refund in Illinois.

Surrains growth was driven primarily by 10 cents of higher distribution and transmission rates associated with incremental investments and completed rate cases, including the uplift from higher treasury rates impacting commerce distribution hourly.

These items were partially offset by five tenths of lower earnings.

Themed warmer than normal temperatures throughout the lincare impacting our non decoupled jurisdictions in Pennsylvania, and Delaware as well.

We also benefited 3 cents from the workflow of other one-time items from 2022, including the discontinued operations adjustment from the separation and the customer refund in Illinois. These items were partially offset by 5 cents of lower earnings due to the sustained warmer than normal temperatures throughout the winter impacting our non-decoupled jurisdictions in Pennsylvania and Delaware, as well as 2 cents of higher interest expense from the

Interest expense.

And interest rates and higher levels of debt at the holding company.

There's also 70 cents per share in the first quarter reflects an approximate 30% contribution at the midpoint of our projected 2023 operating earnings guidance range.

Dorothy we embarked on average 28% of full year earnings in the first quarter.

due to the rise in interest rates and higher levels of debt at the holding company. Results of 70 cents per share in the first quarter reflects an approximate 30% contribution of the midpoint of our projected 2023 operating earnings guidance range.

Heading into 2023, we expect Q1 to be a slightly ahead of historical patterns Geneva completion everything he said at the time he got rising treasury rate impacting comments army relative to 2022, and the absence of the onetime items from separation.

Historically, we have earned, on average, 28% of full-year earnings in the first quarter.

We are also seeing we're also seeing the impact of unfavorable weather at Peco and E tail, Delaware well.

Heading into 2023, we expect Q1 to be a slight ahead of historical patterns due to the completion of rate cases at PHI and PICO, rising treasury rates impacting comments that are a wee relative to 2022 and the absence of the one-time items from separation.

Temporary some of that upside we still delivered earnings ahead of that.

Patients get a tiny I cant Tao and the recognition of carrying costs related to the cargo mitigation credit balance that come out.

Looking ahead to next quarter after factoring in some thia and year over year timing items.

However, we were also seeing the impact of unfavorable weather at Pico and DPL Delaware. While the weather tempered some of that upside, we still delivered earnings ahead of expectations due to timing at PHI and the recognition of carrying costs related to the carbon mitigation credit balance at COMED.

So you've got contribution in the second quarter is expected to moderate at approximately 17% of the midpoint of our projected full year earnings guidance.

The combination of Q1 and Q2 will result in achieving approximately 47% are protected while your earnings through the first half of 2020 right.

Looking ahead to next quarter, after factoring in some PHI year-over-year timing items, the relative EPS contribution in the second quarter is expected to moderate at approximately 17% of the midpoint of our projected full year earnings guidance range.

[laughter] affected results for the first half of 2023 in line with how we performed last year delivering 48% roughly your earnings in the first half of 2022.

The combination of Q1 and Q2 will result in achieving approximately 47% for projected while you're earning through the first half of 2020 grades.

On a full year basis, we expect a nightstand of unfavorable weather experienced in the first quarter to be up that with a combination of O&M library across the platform.

This puts expected results for the first half of 2023 in line with how we performed last year, delivering 48% of our full year earnings in the first half of 2022.

But I've.

I picked out and the full year earnings.

Carrying costs, if they need it with the carbon mitigation credits regulatory asset balance.

On a full year basis, we expect the five steps of unfavorable weather experienced in the first quarter to be offset with a combination of O&M levers across the platform, favorable depreciation of PICO, and the full year earnings impact of the curing costs associated with the carbon mitigation credit regulatory asset balance. With this continued increase in rate base as we display capital for the benefit of our end spice.

They continue to increasingly as we deploy capital for the benefit of our customers and our disciplined approach to cost management, we remain on track to deliver expected returns at utilities within our 9% to 10% targeted range by year end and affirm our full year operating earnings of $2 30 to $2.42 per share in 2002.

Great.

In the past practice, we are not a factor of it protect the 2023 guidance until the third quarter and recall our goal is always to achieve the midpoint or better of that range.

Lastly, we are reaffirming the fully regulated operating EPS compounded annual growth targets of six 8% from 2021 and 2022 guidance midpoint through 2025, and 26, respectively with the expectation to be at the midpoint or better of that correctly.

to 2023 guidance until the third quarter. And recall, our goal is always to achieve the midpoint or better of that range.

Okay and stuff like that and as Kevin mentioned, there are big and important developments on the regulatory front since our last earnings call.

Lastly, we are reaffirming the fully regulated operating EPS compounded annual drift targets of 68% from 2021 and 2022 guidance midpoints through 2025 and 2026 respectively, with the expectation to be at the midpoint for better of that growth range.

Let me start by reminding you to electric distribution rate cases in prior first.

Birch Delmarva power, Delaware has revised the revenue aircraft for $47 8 million increase based on an updated petcare it and its electric distribution rate case.

Turning to slide seven, as Calvin mentioned, there have been some important developments on the regulatory front since the last earnings call.

The proposed rates going into effect on July 15th subject to refund.

Let me start by reminding you of two electric distribution rate cases in progress.

They expect their decision a decision in the second quarter of 2024.

First, Delmarva Power Delaware has revised the revenue request for a $47.8 million increase based on an updated test period in its electric distribution rate case, with full proposed increase going into effect on July 15, 2021, subject to refund.

Additionally, as discussed previously how they filed a collector distribution multiyear rate plan in January and the effect intervenor testimony from the Illinois Commerce Commission staff on May 22nd an evidentiary hearings to be held in late August at the next key milestones.

We expect a decision in the second quarter of 2024. Additionally, as discussed previously, ComEd filed its electric distribution multi-year rate plan in January , and we expect intervener testimony due from the Illinois Commerce Commission staff on May 22.

A final order in the comment multiyear pancake is affected no later than December 20th.

How about also about 2022 formula rate reconciliation seeking recovery of 247 million in rates effective January one 'twenty 'twenty four.

and evidentiary hearings to be held in late August as the next key milestone. A final order in the COMET will say your planned case is expected no later than December 20th. COMET also filed its 2022 formula rate reconciliation, seeking recovery of $247 million in rates, effective January 1, 2024.

A key driver of the increase is the impact of U S treasury yield starting to increase from their depressed levels experienced during the COVID-19, pandemic, which have your call was reflected in 2020 two.

First back in order and the fact that on the reconciliation by December 17.

Since our last earnings call there were three new rate cases filed.

A key driver of the increase is the impact of U.S. Treasury yields starting to increase from their depressed levels experienced during the COVID-19 pandemic, which as you will recall was reflected in 2022 earnings.

First on February 15th.

<unk> filed a distribution base rate case, with the New Jersey Board of public utilities seeking a rapid increase of $105 million, reflecting an army of pinpoint passes back.

First statute in order as expected on the reconciliation by December 17th.

The filing supports critical investments to enhance our it and deliver safe reliable and sustainable energy for customers.

Since the last earnings call, there were three new rate cases filed. First, on February 15th, Atlantic City Electric filed a distribution-based rate case with the New Jersey Board of Public Utilities seeking a revenue increase of $105 million, reflecting an R&D of 10.5%.

Program, including the company E D Smart electric vehicle program and deployment of the Smart Energy Network program, which I will highlight later in the presentation.

Because of these sustained effort to modernize the energy grid eight customers experienced the most reliable energy service ever in 2020 sale.

The filing supports critical investments to enhance service and deliver safe, reliable, and sustainable energy for customers.

through key programs including the company's EV smart electric vehicle program and deployment of the smart energy network program, which I will highlight later on the presentation. Because of these sustained efforts to modernize the energy grid, ACE customers experienced the most reliable energy service ever in 2022.

That's because we have electric outages on record.

Permitted by New Jersey law easily implement full proposed rates on November 17th that victory times and a final order is expected in the first quarter of 2024.

Yeah speaking he filed its second multi year plan with the Maryland Public Service Commission on February 17th.

with the lowest frequency of electric outages on record.

We provided a preview into on our fourth quarter earnings call.

As permitted by New Jersey law, aides may implement full proposed rates on November 17th, subject to refunds, and a final order is expected in the first quarter of 2024.

Covering the years 'twenty 'twenty four through 2020, SEC the multiyear plan detailed obeche going back nearly two 3 billion annually and the electric grid and natural gas system and nearly 400 million to go at all an electric vehicle and building efficiency program.

Next, BGE filed its second multi-year plan with the Maryland Public Service Commission on February 17th, which we've provided preview into on our fourth quarter earnings call.

These investments will in fact, nearly 36 billion into the local economy and support an estimated 72000 jobs as indicated in our studies before them based off of the University.

Covering the years 2024 through 2026, the multi-year plan details how BGE will invest nearly $2.3 billion annually in the electric grid and natural gas system and nearly $400 million total in electric vehicle and building efficiency programs.

Importantly, the Ge's infrastructure plan includes more than 300 projects and maintenance program designed to continue meeting customers needs and lay the foundation for the state of Maryland to reach its goal of net zero emissions by 2045.

These assessments will inject nearly $36 billion into the local economy and support an estimated 72,000 jobs, as indicated in a study performed by Towson University.

An order is expected on the proposed plan in December 2023.

Importantly, BGE's infrastructure plan includes more than 300 projects and maintenance programs designed to continue meeting customers' needs and lay the foundation for the state of Maryland to reach its goal of net-zero emissions by 2045.

As you have noticed we also where I said that the commission provided Warner on the tonnage reconciliation of 2021 and 2022 clos totaling $77 million of under recovery in parallel with the order on the second multiyear plan.

An order is expected on the proposed plan in December 2023. As we have noted, we also requested that the Commission provide an order on the proposed reconciliation of 2021 and 2022 costs totaling $77 million of underrecovery in parallel with the order on the second multi-year plan.

That brings me to slide eight where I wanted to take a moment highlights Pepco D. C. I'm not ready pathway multiyear plan that was filed with the public service Commission of the district of Columbia on April 13.

Pepsico is requesting 100 and $919 7 million revenue increase over the 2024 to 22006 period sure I'll cover planned capital investment that are intended to enhance the reliability resiliency and security of the local energy grid.

That brings me to slide 8 where I want to take a moment to highlight PEPCO DC's climate-ready pathway, multi-year plan, that was filed with the Public Service Commission of the District of Columbia on April 13.

And to further support the district school to be carbon neutral by 2045.

TESCO is requesting $190.7 million revenue increase over the 2024 to 2026 period to recover planned capital investments that are intended to enhance the reliability, resiliency, and security of the local energy grid, and to further support the District's goal to be carbon neutral by 2045.

One of the most ambitious climate goals in the nation.

Specifically this will be done through investments in equipment and infrastructure that will enable the integration of more renewable energy such as solar.

They will also help customers access and adopt cleaner energy technologies like electric vehicles, and they will allow pepco to manage load to ensure the electric service customers depend on what's available when they need it.

one of the most ambitious climate goals in the nation.

Specifically, this will be done through investments in equipment and infrastructure that will enable the integration of more renewable energy, such as solar.

Many maintenance program included and Pepco proposed multiyear plan.

One involves replacing nearly 24 miles of aging power cables with newer and more modern cable so that all customers experienced high quality of service and high reliability.

They will also help customers access and adopt cleaner energy technologies, like electric vehicles. And they will allow PEXO to manage load to ensure the electric service customers depend on is available when they need it.

It is the customers and the communities that are at the forefront of this type of climate ready pathway.

Of the many maintenance programs included in PEPCO's proposed multiple-year plan, one involves replacing nearly 24 miles of aging power cables with newer and more modern cables so that all customers experience high quality of service and high reliability. It is the customers and communities that are at the forefront of PEPCO's climate-ready pathway plan.

But that's that's all focused on improving the social equity and advancement of affordability of electric service.

That's part of that commitment that's something you called the European filing proposes several measures to address affordability.

Expanding enrollment for the residential agent Count program to include any customer who qualified for any low income program in the district.

Well I can't think you're Weird management program.

Expansion of these programs will help to further extend the reach of valuable energy assistance, which in 'twenty 'twenty. Two alone provided approximately 21 million to nearly 30000 pepco customers in D. C on average $700 per customer.

any customer who qualifies for any low-income program in the district.

as well as enhancing the awareness management program. Expansion of these programs would help to further extend the reach of valuable energy assistance, which in 2022 alone provided approximately $21 million to nearly 30,000 PEPCO customers in DC.

How close multiyear plan comprehensively work to keep service affordable Foster a cleaner energy future and improve reliability resiliency and security through significant about that.

This influx of resources directed toward accommodating the next phase of D. C. The energy transformation is expected to inject more than 518 million local economy and support more than 3800 full time job.

or on average $700 per customer.

PECCO's multi-year plan comprehensively works to keep service affordable, foster a cleaner energy future, and improve reliability, resiliency, and security through significant investments.

In order of their practice in the D. C. T. S. D. By February 2024 based on a proposed 10 months procedural schedule.

This influx of resources directed toward accommodating the next phase of DC's energy transformation is expected to inject more than $580 million in the local economy and support more than 3,800 full-time jobs. An order is requested from the DCPSC by February 2024 based on a proposed 10-month procedural schedule.

Our ongoing rate cases are proceeding in line with expectations and you can find further detail on slides 20 through 24 of the appendix.

Moving to slide nine during the first quarter, we continued to invest capital for the benefit of our customers and are on track to meet our $7 2 billion commitment for 2023.

All our ongoing rate cases are proceeding in line with expectations, and you can find further detail on slides 20 through 24 of the appendix. Moving to slide 9, during the first quarter, we continued to invest capital for the benefit of our customers and are on track to meet our $7.2 billion commitment for 2023. These investments in energy infrastructure are vital to meet our goals and goals.

These investments in energy infrastructure are vital to maintaining the highest standard of service that we have in serving our customers. While also preparing the grant for the clean energy transformation.

Today, I would like to talk about how Atlantic City electric is enhancing the customer experience in South Jersey did the smart Energy network program. The last major initial smart meter deployment programs planned spracklen utility.

maintaining the high standards of service that we have in serving our customers while also preparing the grid for the clean energy transformation.

Smart meters are foundational to smarter power grid, they enable customers to better understand real time energy usage in homes and businesses and they can provide enhanced information to make our systems more efficient and resilient.

Today I would like to talk about how Atlantic City Electric is enhancing the customer experience in South Jersey through the Smart Energy Network Program, the last major initial smart needle deployment program planned to scratch on utilities.

But the broad installation beginning in September of 2020 to easily and their contract partners have been steadily upgrading approximately 30000 meters per month, and all 560000 meters are expected to be replaced by mid 2024.

Smart meters are foundational to a smarter power grid. They enable customers to better understand real-time energy usage in homes and businesses, and they provide enhanced information to make our systems more efficient and resilient.

When fully installed and operational the smart energy network is expected to deliver 416 million in operational and customer benefits over the next 15 years.

With a broad installation beginning in September of 2022, ACE employees and their contract partners have been steadily upgrading approximately 30,000 meters per month. And all 568,000 meters are expected to be replaced by mid-2024.

Most notably these benefits include the ability to restore power faster and more efficiently.

They provide tools that help customers use less energy and save money.

When fully installed and operational, the Smart Energy Network is expected to deliver $416 million in operational and customer benefits over the next 15 years.

Well as a reduced need for estimated filling and the capability to provide more detailed outage information when outages occur.

It also allows for better integration of new clean energy technology, including store, which has experienced the highest penetration in Asia territory relative to all of our other jurisdictions at approximately 25% of that peak demand.

Most notably, these benefits include the ability to restore power faster and more efficiently.

They provide tools that help customers use less energy and save money, as well as a reduced need for estimated billing and the capability to provide more detailed outage information when outages occur. They also allow for better integration of new clean energy technologies, including solar, which has experienced the highest penetration in ACES territory.

Does that have to handle that kind of fits into perspective on an annual basis is expected to eliminate 134000 truck roll with it.

Major corporation and cost by 10% and say four and a half million in annual contracted meter reading costs.

relative to all of our other jurisdictions at approximately 25% of net peak demand. To put a stand-alone of their benefits into perspective, on an annual basis, ACE expects to eliminate 134,000 truck rules, reduce major store operation and costs by 10%, and save $4.5 million in annual contracted meter reading costs.

The Smart energy network is a critical step in advancing a cleaner energy future for South Jersey, that's helping the state meet its kind of cool.

Leveraging expertise from our sister utilities atheist committed to using our collective resources to ensure all customers realize the full benefits of the theater upgrade initiatives. This is the power of excellence platform.

The smart energy network is a critical step in advancing a cleaner energy future for South Jersey and helping the state meet its climate goals.

I don't think place, especially on our balance sheet on slide 10.

It's been part of our last earnings call, we protect hundreds to 200 basis points of cushion on average well work items periods for our consolidated corporate credit metrics above S&P and Moody's downgrade thresholds of 12% over the guidance period.

Leveraging expertise from its sister utilities, ACE is committed to using its collective resources to ensure all customers realize the full benefits of this meter upgrade initiative. This is the power of Exelon platform.

I will conclude with a discussion on our balance sheet and slide trends.

Demonstrating our commitment to maintaining a strong balance sheet.

As you heard on our last earnings call, we project 100 to 200 basis points of cushion, on average, over our guidance period for our consolidated corporate credit metrics above S&P and Moody's downgrade threshold of 12% over the guidance period.

It's a poor alternative minimum tax does not mitigate it through an inclusion of repairs and its calculation, we anticipate being at the Lora end about 13% to 14%. We continue to await guidance from the Treasury, which we are optimistic they will issue before you are at and we remain encouraged spending even if they have an understanding how its implementation can impact.

demonstrating our commitment to maintaining a strong balance sheet.

If the corporate alternative minimum tax is not mitigated to an inclusion of repairs in its calculation, we anticipate seeing a lower end of that 13 to 14 percent. We continue to await guidance from the Treasury, which we are optimistic they will issue before year end. And we remain encouraged by the engagement they have in understanding how its implementation can impact energy infrastructure providers like us.

Angie infrastructure providers like asthma.

From a financing perspective, we have successfully raised two and a half million at corporate and approximately 2 billion of combat in the ph I entities.

They have completed over 80% of our planned 2023 long term debt financing needs.

It shows up well for any unexpected market volatility and the balance of the year.

From a financing perspective, we have successfully raised $2.5 billion at corporate and approximately $2 billion for ComEd and the PHI entities. To date, we have completed over 80% of our Plan 2023 Long-Term Debt Financing Need.

We continue to see strong investor demand for our debt offerings, which is a testament to the strength of our balance sheet and so our value proposition as a premier T&D utility with low risk attributes.

To reiterate our equity needs. There has been no change in our guidance gives you 425 million of equity at the holding company by 2020 that will continue to update you as we make progress on the health plan. Thank.

This position is up well for any unexpected market vols who will be in the balance of the year.

We continue to see strong investor demand for our debt offerings, which is a testament to the strength of our balance sheet and to our body proposition as a premier T&D utility with low risk attributes.

Thank you and I'll now turn the call back to Calvin for building of heart failure.

Let me conclude our prepared remarks, with a reminder of our priorities and commitments for 2023 as the Premier T&D utility.

It starts with the operations.

Operating safely and reliably is our core mission and you can count on us to focus on that every hour of every day.

Secondly, as you heard from Jim we have a full set of rate case proceedings, well underway that will set our path for the next three to four years, given our multiyear plan frameworks the.

The transformation of our energy system requires a lot of coordination and alignment we welcome the opportunity to engage with stakeholders on the most effective and efficient means to meet our jurisdictional goals and third we are focused on executing financially.

We're looking to deploy $7.2 billion of capital this year more than ever before while maintaining earned rovs in the 9% to 10% range and delivering on our 2023 earnings guidance range of $2 30 to $2.42 per share.

We have made great progress on our financing plan for the year, while also laying groundwork for future financing needs and we continue to focus on ensuring our balance sheet is strong.

Last we continue to focus on maximizing the value we provide our customers and ensuring we are serving them in an equitable manner.

As an example of how we are innovating to support a more affordable energy transformation I'll point to beach ease recent partnership with the city of Baltimore.

Specifically beachy equal share responsibility for improving the city 700 mile conduit infrastructure, reducing the amount that should be paid for maintenance capital improvements and allowing D. G to take advantage of its contracting in construction and fishing season, all while ensuring a healthy contoured system to provide more reliable and affordable.

Paul.

And beyond our direct operations, we will continue to support our communities beyond providing cleaner more reliable energy such as through our more than 75 workforce development programs across our six utilities.

Indeed investments like Asus Smart energy network, the gene highlighted benefit greatly from those programs in anticipation of this investment program is six years $6 5 million dollar job training program was established in 2018 to educate the workforce needed to fill the energy jobs of the future in New Jersey.

14 of our talented employees deploying smart meter technology, our graduate so that development program established five years ago, and we expect to hire more than 15 additional graduates by the end of June reinforcing our vision of facilitating an energy transformation that will stretch over generations of thoughtful.

Danny and coordination.

We look forward to building on the progress made in these first three months and meeting our commitments from 'twenty to 'twenty three.

We are delivering on course.

And we welcome your questions.

Thank you if you would like to ask a question simply press Star one one on your telephone keypad. Please standby for your first question.

Your first question comes from the line of Shar Flores from Guggenheim.

Hey, good morning, guys.

Sure.

Good morning.

Hey, guys.

Start with Illinois, I mean, we obviously saw the trial outcome last night.

I've taken a lot of steps in 2020 to improve but any sort of high level read throughs to the regulatory construct at this point or anything remaining for combat from illegal or judicial standpoint. Thanks.

Yeah. Thank you sure.

So first from the start as you know sure we've cooperated fully with the investigation conducted by the government and our regulators other.

The deferred prosecution agreement signed in 2020 and resolve the Justice Department's investigation into common, but we want to be clear that we have gotten much more than that we have made substantial changes to our contracting lobbying and compliance operations to ensure that the contract that was at issue in the trial does not happen again.

At all levels from my office after a weak throughout the leaders of the organization and the 6300 employees, who keep the lights on everyday in Illinois, we are committed to the highest standards of integrity and ethical behavior for our business we.

We have the privilege and responsibility abruptly well over 10 million customers that we could not take that lightly but I wanted to have cheap spent some time talking about the other issues that have come as a result of this and then I'm going to ask Joe CEO of comet to kind of walk through your question, the regulatory and legislative proceedings.

We move forward G. Yeah, Thanks, Alan and good morning, Shar, So as Kelvin mentioned, the deferred prosecution agreement in that regard.

Our matter with the department of Justice, but there.

There have been a couple of things that we've outlined in our 10, Ks and Qs that or legal matter surrounding the event.

Yeah, and I'll just touch briefly on this and again this is all being disposed in the Q comes out and they continue to be up here and you'll see it when the coupons out later today, but we did have a security to a derivative and derivative suits and consumer prices and then there it was yes.

Obligations, so just picking through the.

Security suit was filed in 19.

And then the next court status for that that's what they choose but based on recent developments, we have put a probable loss in it.

173 million, but that is expected to be fully covered by insurance or there's no earnings or cash impact for months on.

There are three of them rather than sending them, including one ball in 'twenty, one and there were a couple of ones filed in April and May of this year. They all have similar claims and there's no updates from a financial perspective on those but I would remind you that that one is a little bit different in that any analysis on.

We're covered would result in cash proceeds to the company and those types of losses.

And then there were three consumer fraud cases, so much had been dismissed and we just started our motion to dismiss the remaining case in late April and then lastly, the FTC investigation continues to continues to cooperate fully but no update on that and so that's just kind of a status update that again, we got kind of a play by play in the queue.

So maybe I'll turn it over to bill to talk through that Philadelphia fan.

Our proposed grid modernization plan and multiyear rate plans support and it's in 100% alignment with the goals of the climate equitable jobs.

And the Illinois energy policy energy and environmental policy goals of an orderly equitable energy transition here in our space.

It is a product of extensive stakeholder process with multiple parties parties over the past couple of years.

We filed our proposed a rate case in January of this year and we look forward to continue working with all parties open late and collaboratively.

As gene mentioned before of the Intervenors are scheduled to file their testimony in this month.

Hearings will be in August and the order in December of this year.

So sharp we're on course and I appreciate that question.

Perfect and then just lastly, Maryland, obviously, Calvin set a pretty aggressive offshore wind target last month.

0.5 gigs by 31 is I guess as we look at the plan today could we see incremental transmission opportunities. The Delmarva I guess put differently. What are you embedding plan at this point thanks guys.

So if I can what youre, what youre asking is that from Merrill Lynch offshore legislation that they just recently passed could that have a spillover that's happening along and Delmarva.

That's the question, they're sure perfect and then as we're thinking about transmission opportunities, yes, correct yeah.

Yeah, I think first and foremost shard the legislation does present, an opportunity for exelon to participate and transmission.

The amended legislation as you know requires that P. J M conduct a study of the transmission system and taking a more holistic approach with that but what's nice about it it will prioritize leveraging existing infrastructure permitting risk grid challenges use of open access of collective transmission system and avoiding.

Any single contingency items.

So.

This all goes to how extra line can differentiate itself from others.

As you know the state has a goal of reaching 8500 megawatts of offshore wind energy capacity by 2031, and I think we are well positioned to be a part of that and I have like David will ask was mixed to meet who oversees our transmission did you say.

Anything that happened charters that we do think that there the potential for incremental opportunities on transmission. There are we've not included anything in the current plan for opportunities that are there and.

The way the legislation reads by the beginning of July in 2025 T. S. C R to.

P S. You'll direct PJM issue kind of a competitive transmission solicitations for the transmission that's needed to support the offshore wind.

Perfect. Thank you guys. So much I appreciate it.

Sure.

Thank you one moment for next question.

Our next question comes from the line of Paul Zimbardo from Bank of America.

Hi, Good morning, Jane Thank you.

Paul.

Greg if you could could you discuss the O&M savings drivers you mentioned in the script and just at what segments, you're expected to realize the offsets from unfavorable weather I think you said across the platform it sounds broader than with Pico and Pepco what are the impacts from weather.

Yeah I'll hit on it and then Calvin feel free to add to so what do you think about the five times, it's a combination of libraries and I'll start with them you know what we did to sort of enter this year and our conservative stance will matter. So we you know you may remember, we had some weather and storm people told me last year and we did some derisking at the end of.

The year to help us in 'twenty, three and beyond and for that that's helpful heading into the year and second as you think about where other volatility lies in interest rates as I said, we really mitigated that risk by having completed our sole corporate financing in the first quarter. So locking that in and you can see that in the sensitivities in our exactly have no exposure really on that.

And then as you talked about I need you to help wherever it is across the business. It would be more focused on areas that hit the bottom line, but then remember at our corporate entity a dollar saved filter down to all the areas as well and so it'll be a combination across the platform.

In addition to that you know they mentioned, we do see some favorable depreciation that could go relative to expectations and then finally you know we had them do you think about the fact that in totality, we had a penny of the favorability from that part of the mitigation credit deposit rate on that rig out that on a full year basis, that's probably going to be about 3%. So when you put.

All of that together Carolina say to offsetting the five and and and and feeling good about the rest of the year and delivering in the in the range at midpoint or better.

Okay excellent. Thank you.

And then changing topics I saw that.

I think the opportunity could you quantify how much that could be and just confirming if theres any offset to rate base those kind of items are factored into the plan.

I can assure you cut you cut out midway through your question would you mind repeating that please I mean Paul.

Sure I was asking about the Iga that infrastructure jobs that just I saw that headline during the quarter. If you could quantify what the opportunity could be for Exelon and just if there were any offsets to rate base, Bob kind of federal financing if that's incorporated in the plan today.

Yeah, Let me take that and then we'll go from there Felicia yeah. Thank palin.

100 million is what we apply it for us so it's a really competitive process and so you know it's hard to estimate what portion of that will get but what I can tell you is we haven't factored it in so if there's you know we're not expecting any meaningful impact to rebates to finance. It means we're reaffirming everything and then we will continue to uptick.

With that update you on that as that progresses, and I would just add Paul understanding as we said before the I G and the eyrie create tremendous opportunity for us as Exelon utilities, specifically to partner with our jurisdictions and drive this energy transition faster and it also goes to the affordability.

The factor of what we do and how we do it in our jurisdictions. So we're working it hard and we're partnering with looking for all the opportunities to really increase in our investments, but more importantly partner with our communities in this endeavor.

Yes, no I know you all right. Thank you both very much appreciate it.

Thanks, Paul.

Okay.

Thank you one moment for our next question.

Our next question comes from the line of Steve Fleishman from Wolfe.

Hey, Steve Good morning.

Morning Kelvin.

So just on the Illinois, I guess, we're going to get the recommendation soon on the multiyear.

The new framework.

So obviously things like capital structure in a row.

I assume rate base are the key.

Variables are there any other and then I guess, maybe incentives or those kind of.

The key issues to monitor.

The recommendations or any other things.

Yes, we should be watching for.

Yeah. Thank you I'm Gonna look I'll, let Jill take that in because he's been intimately involved in the process Gil I think you've pretty much captured those are the items that we are.

Anticipate our.

Parties are going to be interested in.

Okay.

And then I do I think there was a <unk>.

<unk> capital structure allowed under the Bill.

Is that still is kind of like Peru.

Yes, Yeah same park harbor at 50%.

Okay.

And I guess my other question the carrying charge.

Or a recovery on the CMC deferral. This is just CMC.

Cost, but you're not you're recovering in rates that you're earning.

Carrying charge off.

That's right, yeah, and it's and that's it.

The customer deposit rate, which was zero in 'twenty two and then.

With reset it at 5%.

At the end of last year early part of this year and so oh, sorry about that.

Expectations for this year, but that Reg asset is expected to be collected and wind down by may of 'twenty, four but not up you know.

Future years earnings, but it but it is helpful. This year.

Okay, and then finally on the.

The IRS implementation IRI.

And the minimum tax is there any.

Has there been any developments or sense of outcome there.

I guess on the I guess, particularly the repair tax issue.

Just kind of sitting and waiting.

Yeah same thing that so still about 200 million per year lease that's all reflected in our guidance and so from an earnings and a credit metric forecasts. When we give you a kind of a sensitivity of.

Wherever I E. If it isn't alleviated and where it will be if it is so I'm optimistic we got regulations by the end of the year and still ongoing discussions with index.

Industry on Treasury on a well on the repairs deduction and in general.

Alternative minimum tax.

Energy providers like Exxon and some further dialogue with them. The other day about widen slightly industry is different.

Each of our business.

So just I'm going to I'll ask that no new changes to the assumptions there.

Okay, great. Thank you.

Thank you.

Thank you one moment for next question.

Our next question comes from the line of David Arcaro from Morgan Stanley .

Hey, good morning, good morning, Thanks, so much for taking my question.

Theres, a new chair in Illinois, I was just wondering if you had it.

Any initial dialogue or perspectives that you might offer on how it might be to work together with our with the ICC going forward, especially given that it's such a busy regulatory year.

Okay.

Thank you for the question I think as I said in my opening comments the transition of leadership and commissioners.

As part of the process and so we are really engaging with all stakeholders in a very collaborative process will move forward, but directly to your question.

The Governor Governor Pritzker did accept the resignation of chair so.

So, let's keep and has nominated the incoming first Doug Scott, who as you know it used to be the former chair of the commission and was very instrumental in the drafting of creating of the climate equitable and jobs Act.

And there has been communication, but if the communications had been around.

Moving to these states goes forward.

And we have heard nothing to date that is taking that are drilling those efforts and as Gil alluded to earlier chain, we're still expecting a final order on comments for your multi year plan by December 20th So.

Also along with the new chair, they're getting a couple of new commissioners and again that process continues to move forward.

Okay, great Thanks and.

I was also wondering with the.

Comet and BJ Reconciliations I was just wanted to check to those that do.

Does it tend to be big swing factors in those regulatory processes or are they pretty standardized just in terms of what costs sit in them and they smoothed recovery process is typically.

Yeah.

Oh comment.

Please you may file.

For the 20th 22 under the 2022 formula rate. So this is a reconciliation that has been going on for 10 years I think that that one is a little bit more straightforward and as I mentioned in my prepared remarks part of that is just the cash collection of the true up on the Treasury under the program our rate is that the rates based on prior year's treasuries and then.

We can recognize it in earnings, but then you true it up in rates later on so that was pretty.

The standard and the fact that it's been going on and it's pretty clear that.

The BG eat one though is there for a reconciliation of the multiyear plan in Maryland, and so this will be the first time or going through it.

But there's a framework there it took to work through and so that's but that order will come in December of this year as well and I think it's you know it's important for this year, but I think it's really important in terms of kind of what you mentioned like setting a precedent going forward. So that we know you know what what is where comparable what's not and you get into a place where you can say, okay. If theres a variance here I can put it.

Of all the people that got that or Conversely, if we do well.

We put up a liability and we'll get that back to customers. So they can go into that will be helpful. As it has been we've seen it come out once you get through it the first time its very helpful going forward.

Okay got it that's helpful. Thanks, so much.

Thank you Dave.

Thank you one moment for next question.

Our next question will be the last one coming from the line of Jeremy Tonet from J P. Morgan Securities L. L C.

Hi, Good morning, Hi, Thank Gordon.

Just wanted to dial into Maryland, a little bit more because we've seen changes in the commission and there are these kind of policy calls out there.

Just wondering how you see that affecting B J.

The electric and gas side or is that kind of offsetting over time or just wondering updated thoughts about the future of gas there and how the impact excellent.

Yes, so great question and a with me the room I have green Kusama use the C O P G, but let me take initial.

Piece, and then I'll turn it over to Craig to see if he has any additional information so just like Illinois, Jeremy we're having a transition of a chair.

Of our commission as well as a couple of governor more point cheese.

Governor more has taken a very aggressive position to continue to push them de carbonization and transportation electrification throughout the state of Maryland.

Right, when we get with California, and Illinois, and the like are moving forward.

<unk> said that.

If there is an alignment with the jurisdictional goals of what D. G is doing as well as Pepco, Maryland.

The gas portfolio within our business is we believe is critical to the long term de carbonization of the industries as we're going through the process of replacing the gas infrastructure within Maryland, we continue to reduce greenhouse gas emissions and that effort and we've attacked.

As a portfolio approach because reliability of the system and affordability for our customers is critical in our endeavors. So we have communicated that with the state D. G. E has been very involved in those conversations and I'll, let Craig just taking a step further if you choose.

Thank you Gavin and good morning.

Good 0.1 of the key points to highlight due to last year's Legislative session. The climate solution Now act, which are set forth big goal for us to achieve it doesn't cost us economy, what's laid out a number of working groups, where they would determine what is the right path for Maryland going forward B G.

Utilities are at the table with all the other interested parties and we're working through those issues now and that'll be including at the end of this year with recommendations.

Robin mentioned, there are a number of ways to get to the state goal. Each theater pathway that is the most affordable reliable and resilient.

You'd want to still includes GAAP as part of the infrastructure and we're working with the groups, but kind of talk through what is the right path forward for Maryland.

Cockpits that gas will be part of the future.

Got it that's very helpful. There and then just pivoting to results and just a smaller question overall, but I was hoping you could illuminate a little bit of color on the GAAP to non-GAAP reconciliations there as far as the changing environmental liabilities and the change in per quarter liability, if just a little bit more color on what those items were.

Sure Yeah sure. So on the environmental liabilities that that Oh Thia is that a legacy issue, where we continue to update estimates estimates for remediation of that so we just slightly increased the reserve on the comment I'd come at them on I forgot it had an audit began in 'twenty one.

We got drafts findings earlier this year and just based on ongoing discussions with them about $15 million of a probable loss of that ongoing, but but that's kind of in each other too and they're an infrequent unusual we carved them out.

Operator.

Got it that makes sense that's helpful I'll leave it there.

Thank you thank you Jim.

Thank you.

I did kind of at the last question, Yes that was the last question at this time I would like to turn the conference back over to Calvin Butler for closing remarks.

Thank you Gigi and I just wanted to take a moment to say thank you for joining us today I appreciate your engagement and all your questions and with that it concludes the call have a great day.

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