Q2 2023 SJW Group Earnings Call
Okay.
Welcome to the SJW group's second quarter 2023 financial results conference call at.
At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again please.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Andrew Walters Chief Financial Officer. Please go ahead.
Thank you operator.
Welcome to the second quarter 2023 financial results conference call for SJW group.
Presenting today with Eric Thornburg Chair of the Board, President and Chief Executive Officer.
For those who would like to follow along slides accompanying our remarks are available on our web site at <unk>.
<unk> Dot com.
Yeah.
Before we begin today I would like to remind you that this presentation and related materials posted on our website may contain forward looking statements. These.
These statements are based on estimates and assumptions made by the company in light of its experience historical trends current conditions and expected future results as well as other factors that the company believes are appropriate under the circumstances.
Many factors could cause the company's actual results and performance to differ materially from those expressed or implied by the forward looking statements.
A description of some of the factors that could cause actual results to be different from statements in the presentation. We refer you to the financial results press release and to our most recent forms 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission copies of which may be obtained on our web.
Site.
All forward looking statements are made as of today and SJW group disclaims any duty to update or revise such statements.
You will have an opportunity to ask questions at the end of the presentation.
And as a reminder, this webcast is being recorded and an archive of the webcast will be available until October 23 2023.
You can access the press release and the webcast at our corporate website I will now turn the call over to Eric Thornburg Eric.
Welcome everyone and thank you for joining us I'm, Eric Thornburg and it is my honor to serve as chair President and CEO of SJW group.
23 continues to be a successful year for our company with a strong second quarter performance that is advanced key elements of our growth strategy.
We achieved constructive regulatory outcomes on our California cost of capital proceeding that allows for an increased return on equity and balances the needs of customers and capital providers.
<unk> Wicca effective on April one.
And approval in Texas of our K T water resources acquisition.
Future earnings growth will be driven by the California water cost of capital mechanism system improvement charge in Texas, and general rate cases, and infrastructure investment surcharges in Connecticut and Maine.
We also invested $115 $7 million in water and wastewater utility infrastructure through the second quarter, which is 45% of our 255 billion 2023 capital expenditure plan and continued to progress towards our <unk>.
30 goal of 50% reduction in scope, one and scope two emissions through the electrification of our vehicle fleet and expanded use of Biofuels in California, 8% of our fleet is electrified and 24% now runs on biofuel.
We also delivered earnings per diluted share a 58.
Which is in line with our guidance.
Andrew will review, our financial results and regulatory updates in our state operations Andrew.
Thank you Eric.
This morning prior to the market opening we released our second quarter 2023 operating results.
As we noted in the first quarter quarter over quarter comparisons between 2023 and 2022 operating results are affected by and reflect the delay in San Jose water Company's 2022 to 2024 general rate case proceeding.
As a reminder, while the California public Utilities Commission approved the settlement agreement in San Jose Water recorded the authorized revenue increased from the general rate case in the fourth quarter of 2022. The revenue increase was retroactive back to January one 2022.
This delay in recognizing the revenues authorized in the general rate case effect quarter over quarter comparisons through 2023.
Operating results for the second quarter were affected by the.
And of the declared drought emergency in mandatory conservation as well as unusually cool and wet season in California.
We have experienced reduced water usage in Maine, and Texas, principally due to weather.
And in Texas most of our service area is in stage III drought condition and a small portion is in stage four.
The U S drought monitor has classified our service area as extreme to exceptional drought.
In California as of April 11th San Jose water is no longer afford it the regulatory revenue protection mechanisms that were in place during the declared a drought emergency results.
Results for the quarter do not include any benefit from these mechanisms beyond April 11th.
I will discuss this in water usage in greater detail shortly.
In the second quarter.
We reported revenue of $156 9 million and net income of $18 3 million.
Our diluted earnings per share of <unk> 58.
This compares to 2022 quarterly revenue of $149 million.
Reflecting a 5% increase in net income of $11 $6 million, reflecting a 58% increase.
Core diluted earnings per share of <unk> 38, reflecting a 53% increase.
As you can see the quarter over quarter increase in diluted earnings per share for Q2, 2023 was primarily driven by rate filings of <unk> 41 per share.
Which I will break down for you shortly <unk> related to partial release in income tax reserves.
<unk> related to regulatory mechanisms.
Partially offsetting the quarter over quarter increase was an 18% decrease due to water supply costs, and a 13% decrease related to lower water usage.
As well as <unk> and higher interest expense.
Now a breakdown of the increase in revenue compared to the second quarter of 2022.
The revenue increase was mostly driven by $14 7 million in cumulative rate filings that.
The total includes California second quarter 2023 revenue increase and the 2022 portion of the general rate case that was approved in Q4 2022.
A benefit of the five general rate case approvals in Maine that were authorized after Q1, 2022, and a water infrastructure and conservation adjustment increase in Connecticut that was effective in Q2 of 2022.
The revenue increase was partially offset by $9 million decreased due to lower usage.
Since drought conditions in California have vastly improved the.
Drought declaration and mandatory water conservation that were in place in the first quarter of 2023 ended April 11th.
We're still waiting to see how usage will be effected longer term by these changes.
As noted earlier, we are seeing weather effects on usage in Maine, and Texas as well.
There was a slight increase in water production expense when compared to the second quarter of 2022.
Increase was largely driven by $6 6 million increase in average per unit cost for water supply.
Purchased water and groundwater extraction charges.
Partially offsetting the increase expenses was $4 $3 million decrease in production costs related to lower customer usage.
The 1% increase in total other operating expenses compared to the prior year was primarily driven by depreciation and amortization and taxes other than income taxes.
The increase was partially offset by reduced expenses due to lower maintenance expenses and other factors.
Year to date, we reported revenue of $294 2 million and net income of $29 8 million or diluted earnings per share of <unk> 95.
This compares to 2022 year to date revenue of $273 $3 million, reflecting an 8% increase.
And net income of $15 3 million, reflecting a 95% increase.
Or the diluted earnings per share of <unk> 50.
Reflecting a 90% increase.
As you can see the year to date increase in diluted earnings per share for 2023 was primarily driven by rate filings of <unk> 90 per share in California in Maine that were approved after the second quarter of 2022, including delay or SDA Ewc's 2022 general rate case.
<unk> from a partial release of income tax reserves related to the repair tax and <unk> <unk> attributed to regulatory mechanisms and one time true ups of <unk> that occurred in 2022.
Partially offsetting the increase was a 40 <unk> increase in water supply costs are nonrecurring 15th St gain on sale of non utility property and year to date 2022, and a decrease due to lower water usage of 12.
Okay.
Turning to our financing activity.
$65 million has been raised in the first six months through our at the market program.
$50 million is for general corporate purposes, and the additional amount was raised for acquisitions expected to close in the third quarter.
At the end of the quarter, we had $267 million available and $83 million drawn on our bank lines of credit for short term financing of utility plant additions and operating activities.
The average borrowing rate for the line of credit advances during the first six months was approximately 596%.
The average borrowing rate in the same period of 2022 was approximately 144%.
The effective consolidated income tax rate for the first six months ended June 32023, and 2022 were approximately negative 1%.
And 18% respectively.
The lower effective tax rate was primarily due to a partial release of uncertain tax position reserves.
The CPUC issued a final decision in our cost of capital proceeding for San Jose water in the state.
Other class a water utilities for the years 2022 through 2024.
The constructive and prospective decision maintained the previously authorized water cost of capital mechanism for.
<unk> W. CCM.
And to establish the capital structure of 50, 455% equity, which is an increase of 127% and 45, 45% debt.
The overall rate of return of 7% to 8%.
Based on a eight 8% return on equity.
The WCS is triggered when the average moodys double AA utility bond index rate varies by more than 100 basis points between October one and September 30, when compared to the same period in the prior year for the years, two and three in the three year rate case cycle.
For the period ended September 32022, the index rate increased by 103 basis points, surpassing the required WCC M trigger, which then allows for a 50% of the change or 51 basis points to be added to our ROE.
San Jose water filed advice letter number $5 98 to trigger the 2023 <unk> on June 32023.
On July 31, 2023, the company expects to file a separate advice letter to implement new rates that reflect the <unk> adjusted return on equity of 931%.
Cost of debt of $5, two 6% and an overall rate of return of 747%.
In accordance with the final decision the new rates will be effective as of July 31 filing.
Okay.
As mentioned earlier the declared a drought emergency in mandatory conservation in California ended on April 11.
As a result, <unk> water no longer afforded the revenue protections of the water conservation memorandum account or W. CDMA.
And what the water conservation expense memorandum account or the W. CDMA.
That were in place to offset the effects of lower water usage due to mandatory conservation.
The temporary 20 basis point reduction that was in place, while the <unk> and the WC EMA where in effect has since been restored.
However, our water wholesaler valley water declared a 15% voluntary water use reduction goal when the drought emergency was lifted in an effort to.
To make water conservation a way of life as climate change indicate the likelihood of future droughts.
On April 20th based on this voluntary water use reduction goal, we filed with the CPUC requesting continuation of the <unk>.
And WC EMA.
The CPUC has not issued a decision on our filing.
In the meantime, there has been reduced water usage in California.
It is unclear how quickly and fully water usage will recover and with the end of the mandatory conservation period.
As I mentioned earlier uncharacteristically cool and wet weather has contributed to lower usage in the second quarter we.
We expect weather and usage will continue to be a factor in California for the rest of 2023.
For the remaining months, we are well prepared for typically hotter and peak usage months in San Jose area as usage recovery following the drought.
Our California water supply is best is the best it has been in years because of plentiful precipitation during the rainy season that continued into the spring and early summer.
The increased production from our owned surface water supplies benefits customers, because it costs less to produce than purchasing higher priced water from our water wholesaler.
In Connecticut, we filed an application with the Connecticut public utilities regulatory authority for 119% increase in the water infrastructure and conservation adjustment.
This application covers $11 5 million and completed projects and would generate $1 3 million in annualized revenues if approved as filed the.
The decision is expected and any authorized wicca increase would be effective in Q4.
Connecticut water is also planning to file a general rate case in the fourth quarter of 2023.
In Maine.
We filed for a temporary annualized rate increase of $1 5 million in the better for it Soco Division and if approved as requested it would be retroactive to July one.
The filing was related to the general rate case application filed last March that requested a $2 9 million increase in annualized revenues to recover the operating expenses and increased borrowing costs of the Soco River drinking water resource Center that went in service last summer.
The amount of the temporary request is related to the uncontested portion of the total request between the main water and office of public advocate.
The Maine public Utilities Commission will determine whether a temporary rate increase is granted a final decision on the $2 9 million requested increase as expected in the fourth quarter of 2023.
Maine water has also filed an application with the MPC to recover $1 7 million and completed infrastructure investments into Camden, Rocklin division through the water infrastructure surcharge or risk it.
If approved as requested it would generate 158000 annualized revenues at.
The decision is expected in the third quarter of 2023.
General rate cases are also planned in two other divisions later this year.
On April 24th the public utility Commission of Texas approved our acquisition of Kt water development of 570 connection of residential water system.
Closing is expected in the third quarter 2023.
The Puc's final order that transferred the certificate of convenience and necessity to Texas water is expected in the fourth quarter and we expect approval at that time on our request for fair market value and applied right Doctor in treatment.
The PUC approved the application for the transfer of 520 acres of water service area and 314 acres of sewer service area from San Antonio water system to Texas water.
No customers were transferred as part of the transaction.
Texas Water also filed an application with in April with the PUC to acquire the Elm Ridge water system that serves 21 residential customers and Comal County, Texas.
Texas water has asked for the filed rate doctrine treatment, which allows the acquiring utilities current rates to be applied to the time of the acquisition.
We continue to advance our application for a system improvement charge or sick.
In Texas, the thick would allow Texas water to add certain utility plant additions made since 2022 its rate base.
Thereby increasing revenue and avoiding the immediate need for a general rate case.
<unk> is projected to increase Texas water's revenue by $1 6 million within one year the puc's approval.
Decision is expected by the end of Q1 2024.
As mentioned earlier, our service area has systems in stage, three and stage four drought conditions.
We are targeting a 20% reduction in water use and the stage three area and a 25% reduction in the stage four area.
Texas water is quadruple that service connection since 2007, and we intend to continue this momentum through prudent acquisitions.
Organic growth and securing water resources to support that growth, Texas.
Texas water is currently serves more than 26000 water connections and 900 wastewater connections in the rapidly growing area between Austin and San Antonio and it serves three of the five fastest growing counties in the U S. According to the census Bureau.
We are reaffirming our 2023 guidance of $2 40 to $2 50 per diluted share.
And our five year capital investment outlook of $1 6 billion, which includes estimated P. Fast treatment based on the Epa's proposed maximum contaminant levels.
Through June we issued $65 million in equity through our at the market mechanism as stated in our guidance, we plan to issue $40 to $50 million in 2023, excluding acquisitions.
The additional $15 million raised is to fund acquisitions are expected to close in the coming months.
Factors impacting the 2023 guidance include no significant rate case decisions expected in 2023 continued inflation affecting interest costs labor costs and other expenses.
Usage recovery associated with the end of the mandatory conservation and the end of the temporary decoupling mechanisms in California, as well as charges and changes in the effective tax rate.
We also reaffirm our long term growth rate of 5% to 7% anchored off of our 2022 diluted earnings per share of $2 43.
We anticipate EPS will be non linear because of rate case cycles.
With that I will turn the call back over to Eric.
Eric.
Thank you Andrew S.
<unk> group strongly supports the proposed U S EPA standard for <unk> and drinking water where.
We're pleased to share that SJW group utilities were among the members of the class action lawsuits against some P. Fast manufacturers that were recently settled for approximately $11 $5 billion.
There was and remains important to us to hold the manufacturers of <unk>.
And polluters and general responsible for the costs to address this contamination.
It's too early to know when and how the settlement will be disbursed, but we will keep you updated on this progress.
In addition to the lawsuit against P. Fast manufacturers, we continue to advocate that all water and wastewater utilities have access to available state and federal funding sources for <unk> treatment.
The current estimated capital expenditures for addressing <unk> at our local utilities is approximately $230 million and is split between California and Connecticut.
The estimate is based on testing to date and an assumption that the epa's proposed maximum contaminant level is adopted as proposed.
We endeavor daily to be stewards of the environment and leaders in sustainability.
So far this year in 2023, we're moving forward with new initiatives to reduce our use of fossil fuels and greenhouse gas emissions.
We expect more than 25 battery electric vehicles will be added to our fleet to replace internal combustion engines.
The vehicles will be charged at new EV charging stations at our facilities, including some that are solar powered.
Further in California, we're preparing for a Mega pack energy storage battery to replace a diesel fueled generator by 2025.
We're also fueling some of our generators with biodiesel this year.
That we estimate will reduce the use of 23000 gallons a standard diesel fuel.
These are among the many projects planned to help the company meet its goal to reduce greenhouse gas emissions by 50% in 2023 compared to 2019.
Our efforts for our community and towards corporate social responsibility have resulted in a prime status ESG corporate rating from institutional shareholder services or ISS.
Further our environmental social and governance scores are among the best of our long term use.
S water utility peers.
We will continue to work towards achieving rankings that reflect our long term commitment to our environment customers employees and communities.
As I shared before our people are what makes the difference at SJW group are people allow us to provide an essential service with integrity.
<unk> ability and peace of mind for our customers as.
As an example in September 2020 to Connecticut water acquired a small 118 customer water system and old line that had been out of compliance with drinking water regulations since 2016.
In less than nine months, our people had that infrastructure in place and made the operational changes needed to bring the system back into full compliance.
Customers again, I have confidence in their drinking water regulators know that were the problem solver and shareholders will earn a return on that investment.
That's our brand promise.
I continue to be inspired by the contributions of our talented teams across our national footprint.
Serving customers communities, the environment and shareholders I.
I have confidence our team will continue to excel and reinforce SJW group's strong positioning for a successful future.
With that I'll turn the call back over to the operator.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced soon withdraw your question. Please press star one again.
One moment, while we compile the Q&A roster.
Okay.
Okay.
Okay.
Our first question comes from the line of Richard Sunderland with Jpmorgan. Your line is open.
Hi, Good morning can you hear me yes.
Yeah, we can Richard thanks for calling in.
Great. Thank you for your time today.
Guidance can you walk through <unk> results relative to plan and particularly curious on the tax benefit and the sales impacts.
I guess also curious how the CPUC cost of capital.
Composition Chi for two weeks, you get guidance as well.
Excellent excellent questions rich and I'll talk.
A couple a couple of the items. So first of all from the tax aspects. We did expect the release of the of the reserve that was included in this quarter.
That was largely budgeted came out a little bit better than we expected, but was largely in line with <unk>.
What we expected.
As it relates to the cost of capital the cost of capital actually came in better than we had originally planned for the year. However, our usage has come in below what we expected for them for the year. So theres been a balance between those two areas.
We've been effective at putting and measures in place to kind of balance out any of the risks so far associated with.
Lower usage and as long as things are.
Continue the way, we expect we should be within our range of guidance and that's why we've reaffirmed it.
Understood very helpful. There I wanted to turn to the guidance.
You may request any.
Thanks on timing of an outcome there.
Extra that retroactive treatment.
They've got some retroactive to April 11.
How much of how much of that <unk> drag is California, I guess, just thinking how much that mechanism would cover if approved.
So what I would encourage you to look at the usage numbers. So the usage numbers are aware that Q2 drag.
Shows up in our in our numbers in particular, if you look at the EPS numbers, that's where it nets the difference between the revenue impacts as well as the <unk>.
Production cost impacts associated with the with the lower usage.
If the <unk> is.
Reenacted it should be back to the date that the.
April 11th as we've highlighted that being said.
Oh wait.
Commissions approval Theres clearly.
Issues related to usage in our California utility that's the main driver, but it's not the only driver.
Texas and Maine have also have lower usage this year for.
For different reasons, Texas was lower earlier, just due to rain that was enough to water, but not enough to recharge our facilities. There. So it did drive down usage now what they have is usage reductions due to conservation.
So we've got two areas that are reduced conservation and maintenance just suffered from lower usage due to.
Overall weather as well as some other factors.
Understood very helpful. Maybe just one last one the <unk> capex.
For Connecticut, and California, any thoughts on how you would seek recovery there or is it three.
Our rate cases or potentially separate mechanisms.
So as of today it is going to be through rate cases, but where there is an opportunity to use separate mechanisms will avail ourselves of that.
Okay.
Great I'll leave it there. Thank you for your time today.
Thank you so much rich.
Just one moment our next question.
Our next question comes from the line of Gregg <unk> with UBS. Your line is open.
Yes. Thank you.
The.
20 basis points.
Rho <unk>.
Related to the WCS.
WC EMA.
How does how does that factor into the.
Into the forecast.
Okay.
Sure. So it's not so much how does that factor into the forecast, but it factors into what the impact is on our on our revenues and earnings.
Anytime that we're utilizing the <unk> that 20 basis point reduction goes into the calculation of how much we could recover associated with the <unk>. So I will just give some some numbers just for.
Gross consumption, if we have $5 million reduction in revenues relative to authorized and then let's say that we added $3 million a reduction associated with the production cost.
That would mean that we would have a $2 million shortfall in this particular case.
Then lets us Furthermore, say that we had $1 million associated with the <unk>.
ROE adjustment that means we would only be able to recover the $1 million as opposed to the full $2 million shortfall.
In the case that I just highlighted the ROE.
<unk> will go away, but we are not getting any coverage for that $2 million shortfall that we have to start with.
So the net impact year over year would be the $1 million change as opposed to the full $2 million change.
Okay extend I think I.
Got it.
Yes.
And Greg feel free if you want to if you have any more follow up to reach out we can be very happy to talk through that with you, but I tried to use just broad numbers to make it easy to easy to understand.
Or at least easy okay.
I appreciate it thank.
Thank you Greg Thank you Greg.
One moment for our next question.
As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
Yes.
Our next question comes from the line of Jonathan Reeder with Wells Fargo Securities. Your line is open.
Hey, How's it going Aragon Andrew.
Hi, Jonathan Thanks for calling in.
Yes, Thanks for having me so Andrew just to follow up real quickly on your last comment is that ROE reduction the.
20 basis points.
The lack thereof.
Included in that lower usage net category or is it just purely the usage.
That usage is just purely the usage when you when we look at the <unk>.
Look at that that would be in the other regulatory mechanisms I believe is where we were we would've put that.
Okay.
Okay, and then how much is usage below what is contemplated in the 2022 to 24 <unk>.
How has that trend been in.
And the more recent months May and June once the restrictions.
Were lifted like in other words have you seen a ramp up and the usage more closer to the <unk> levels or not necessarily.
I don't want to I don't want to speculate on July when it's been Super Hot.
Whether its been working in the other way I'm trying to get to more of like a weather normalized field.
Sure so.
I think I think the answer is that from kind of a range over the over the months say it would be kind of in that 10% to 12% range of what it's been relative to to the previous year.
The.
It seems to keep in mind is there was a very cool.
June .
April and May with rain I Couldnt believe it I was looking outside my office window.
And it was raining on June six, which I don't think in my nine years of employment with SJW group, if I ever seen rain out of my window in June so that kind of gives you a sense of.
What it's been like it has continued to remain cool generally in the in the Bay area and San Jose So San Jose has not been outperforming.
The previous weather patterns from a from a.
Keith perspective, so I would say that that weather pattern has not necessarily been as beneficial to us as maybe some of the other areas.
On the other hand has had huge heat, but now we've got conservation thats going to hold that back.
Okay. So.
One we're hearing about these scorching temperatures in California, and stuff Thats not necessarily true in the Bay area, where youre certain editorial okay.
Generally speaking no Eric there almost every day in.
I ask them, often and it's like no it's not that high.
Lucky for Eric.
Prior to that you've already but anyway.
The $65 million of equity raised does that complete your total 23 issuances that or do you will.
Do you need to do a little more under the ATM in the second half of 2023.
Yes, we will need to do a little bit more in the ATM.
For the second half, but it is enough to cover the acquisitions that we have in the in the Hopper.
Okay.
Okay any guidance in terms of what the total value of those acquisitions are that are expected to close this year.
Well I did give some guidance on how much more equity that we expected to do and it will be if I remember right it was $15 million.
$15 million above the 65 already yes.
Yes.
Okay.
Okay that helps.
And then.
Is that is that incremental to the $255 million Capex budget.
The deal closure values.
The deal closure value is not associated with our Capex, we do that separately from our from our transactions. So that's that's the difference.
<unk>.
Those transactions are funded for and are not included in Capex Capex really relates to utility plant that we're trying to put in place or other non rig capex that we might have which is minimal in our particular case.
Got you, Okay and then.
Lastly, can you give an update on I guess, where aquariums appeal of their Connecticut race.
That stands.
No.
Potential I think decision on their appealing.
How that potentially impacts your plan filing and the state later this year.
Sure I think from our perspective, obviously aquarian is going through the.
Yeah.
Courts in order to to change.
Have them here out through what happened with theirs.
What it does for us, though it's more it goes back to the fundamentals of where.
<unk> had comments on their case. So we have spent more time on preparing our testimony associated with our capital programs to make it.
More fulsome than it has been in the past in the prior standard and we are.
Gaming and working hard to achieve what PURA is looking for there.
We also have <unk>.
Implemented and increased our focus on our testimony to make sure that we have our testimony in order to make it easy to understand.
And then finally, we changed our timing to be this latter part of the year with a focus on filing a notice in September and filing a case in the fourth quarter.
Okay.
Alright, and then I guess the gas question.
I think a key Jonathan I am sorry to interrupt but the key for US is we have done our best to learn from what has happened before in order to prepare better for the 2023.
<unk> filing that we will be doing.
Right right Okay.
And then I was just going to.
Try to sneak one more and if you don't mind just due.
Can you just discuss I guess the increase in the water production expense this quarter and year to date I guess I was just a little surprised to see the water supply costs exceed the benefits from lower usage.
The more favorable mix.
Can you kind of just talk about is that just purely related to a 15% increase from from a wholesale or is there something else in there.
Yes.
Really as the increase with the wholesalers. The major driver that is in place and I think that's going to be the biggest factor. The other thing just to keep in mind from our full cost balancing account.
Any benefit that we would have received by the mix is no longer something that we have received it actually goes to our customers and so that's the other aspect that you that youll have to note in the overall when you are looking at that kind of combined.
Production cost and as you model that production cost the mix no longer has a major impact on the company.
Right right.
Okay.
The 15% increase from the wholesalers to driver there on that is it's not just it's not just one wholesaler, but theres increases in in Texas. There is also an increase there as well, but the biggest one is the valley water increase.
Okay.
Okay. Thanks, so much for taking my questions today I appreciate it youre very welcome. Thank you.
As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Okay.
I am showing no further questions at this time I would like to turn the call back to Eric Thornburg for closing remarks.
Thank you operator, SJW group is a leading pure play water utility with a strong platform for growth an elite dividend track record and a recognized leader in ESG performance. We thank you for your interest in our company and support of US and our people look forward to talking to you next quarter.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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