Q3 2023 DTE Energy Company Earnings Call

Good morning, My name is Emma and I hope your confidence operator today.

At this time I would like to welcome everyone to the D. T E energy third quarter earnings call.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session.

If you would like to ask a question. During this time simply pressed star followed by the number one on your telephone keypad.

If you would like to withdraw your question again press the star one thank you.

Barbara Tech field director of Investor Relations.

You may begin your conference.

Good morning, everyone before we get started I would like to remind you to read the safe Harbor statement on page two of the presentation, including the reference to forward. Looking statements are presentation. Also includes references operating earnings which is a non-GAAP financial measures. Please refer to the reconciliation of gafford.

<unk> to operating earnings provided in the appendix.

With us this morning, or Jerry nausea, Chairman, and CEO, and Dave Rude Executive Vice President and C. F L.

And now I'll turn it over to Jerry to starts call. This morning.

Thanks, Barbara Good morning, everyone and thanks for joining us.

I'll give a brief business update and they will provide a financial update before we take your questions.

Let me start by emphasizing a few points, including my confidence in our company and our long term opportunities.

You know we are faced unprecedented headwinds this year.

These events are impacted our financial plan by $370 million.

However, the combination of these headwinds is truly one time in nature.

And the fundamentals of D. T E remain strong.

We have a solid record of achieving our financial targets and we know how to do so without sacrificing safety or reliability.

This year alone, we have offset $270 million of earnings headwinds from the unprecedented combination of unusual storm activity.

Favorable weather and a low rate order driven by a difference in a sales forecast.

The fact that we have been able to offset most of these challenges.

While maintaining service excellence.

Is it clear proof point of are highly engaged team.

<unk> operating excellence.

D. T also benefits from strong cash flows and a solid balance sheet.

<unk> continued investments that will build a grid of the future.

Drive that clean energy transition.

Our longterm Grove plan is robust with numerous opportunities for these investments.

And as I said, we have an incredible team of highly engaged employees, who are committed to our customers.

And who know how to execute safely and efficiently.

Our team continues to operate a top decile engagement levels as measured by the Gallup organization.

I'm proud that our teams excellence in this area was recognized burning the Gallup exceptional workplace award for the 11th consecutive year.

My confidence in D T E and our ability to deliver for our customers.

While being a stabilizing force in our communities and.

Grading significant sustainable value for investors over the long term is unwavering.

We remain focused on continuing to invest the strategic capital a further supports improved red reliability.

In the face of changing weather patterns, and further electrification and the transition to cleaner sources of generation.

The heightened storm activity. This year also highlights the importance of our investment plan.

N D. T is delivering on his commitment to automate pardon and rebuild the grid roof reliability by over 60%.

Over the next five years.

Ah recently file distribution grid plan provides a roadmap.

Prove reliability and automation of our system.

Also supporting our investment agenda is the I R. P settlement.

This plan outlines our investment Michigan's cleaner energy future while.

While remaining very focused our customer affordability.

We are progressing toward a constructive outcome on our electric rate case.

This case is critical to support the customer focused investments that are needed for improved reliability and cleaner generation.

Our customers and political leaders, including the governor legislators and municipal leaders are demanding better outcomes of reliability during heavy storm periods.

This doesn't happen unless we execute our strategic investment plans to Modernise and automate the grid.

We also need the resume our maintenance schedule on non critical work that we differed on a one time basis this year.

It is essential to resume this important scheduled work to.

To continue delivering safe and reliable service.

We met with the intervenors and the electric rate case.

An outline the importance of the infrastructure investments, we need to make while also gaining a deep understanding of their priorities.

While we were not able to reach a settlement in this case, we have put a compelling case together for the work we need to do for our customers. We are confident that the Michigan Public Service Commission.

Will appropriately support your investment that is needed in the state.

Final order is expected in early December.

As I mentioned, our company phase $370 million of unprecedented headwinds this year.

This represents nearly 30%.

Of our total earnings forecast.

We said on the second quarter call, though we were in a position to deliver at the midpoint of our operating EPS guidance range, if normal weather and storm activity occurred through the remainder of the year.

However, unfavourable weather and additional severe storm activity.

Did occur in the third quarter.

<unk> latest challenges brought over $100 million of additional headwinds where financial plan.

So we are revising.

Full year EPS guidance bitcoin from $6.25 per share the $5.75 per share.

This is not the type of resolve that my team and I like to report to you.

At my 10 years as a number one and number two person in D. T's leadership team, we have consistently met or exceeded our targets. So you can imagine that we don't like reporting these results you today.

As I mentioned, we are continuing to wait for final order on our electric rate case.

Therefore, we will delay providing the forward looking disclosures that we typically provide in the third quarter call or a D. E. I conference until we get a final resolution in the case.

We will then provide these disclosures in December including our 2024 early outlook and dividend extent.

Extending the longterm EPS growth rate through 2028 updated five year capital plan upped.

Updated three your equity plan and our long term operating earnings for D. T E vantage.

Let's turn to slide five.

As we discussed through the second quarter the company experienced the impact of the lower than expected rate order that we received at the end of last year <unk>.

Driven by a difference in sales forecast of.

Of approximately $100 million.

Followed by $92 million an impact from storms.

Including the worst ice storm in nearly 50 years.

An unfavourable weather, a $42 million, it electric and $31 million of gas.

On the second quarter call, we said D. T E electric was achieving offsets for over half of it said winds through focused one time cost reduction efforts.

Without sacrificing safety reliability or customer service.

And as a result, we noted that electric would likely fall below its full year guidance.

However, we had fever ability at each of our other business units, helping to overcome the remaining headwinds to achieve our full year EPS guidance.

So at the time, we were on track to be at the midpoint of our guidance range. If we had normal weather and storm activity.

And we had already consumed our contingency.

And the third quarter.

We had additional pressure of $53 million from storms and $53 million from cooler than normal summer weather.

So far this year, we have faced five catastrophic storms, which is double compared to the average number of catastrophic storms over the last five years.

We're very proud of our team's efforts to safely restore power during each of these weather events that being said.

These restoration efforts or costly.

And while we do budget for storm cost the number of catastrophic storms this year, including a historic ice storm.

Significantly impacted D T E electric earnings.

Along with storm activity, we have seen unfavourable weather in our service territory for electric and gas this year.

The winter was the fourth warmest winter since 1960.

Summer was one of the coolest and nearly a quarter century.

This was very different from the record heat that was experienced across most of the country.

Much like for storms, we prepare for unfavourable weather scenarios during our planning process.

Arlene and a best plans or structure to cover whether variability.

This year, the winter and summer weather combined was much more unfavorable.

We have seen.

And it's been an unusual year, having both high storm activity at electric and unfavorable weather at both of our utilities.

This dynamic is certainly create a significant challenge to our company. In addition to the low rate case order.

So we face a combination of three major headwinds.

I'd only two of these occurred we would have been able to achieve our original EPS guidance target <unk>.

Having all three factors stack up against us exceeded all reasonable planning scenarios.

It's a matter of fact, we had our statisticians look at the probability of greater than one standard deviation temperature patterns of both utilities and the number of storm customers impacted all occurring in the same year and it is a once in a 50 year probability.

Overall the team has made excellent progress on one time management actions across the entire company and finding opportunities within our portfolio.

However, with the additional challenges in the third quarter. We are now lowering the operating a P. S guidance for 2023.

Now, let's move to the opportunities we have in front of us on slide six.

D. T is on track to make some <unk> customer focused capital investments across our businesses.

Two important factors affecting our grid or climate change in emerging electrification technologies, we need to build a grid of the future to ensure we can continue to provide clean safe.

Safe reliable and affordable energy.

We are also making investments to transform the way we produce power as.

As we shift towards renewables and natural gas and away from coal generation.

An important part of our clean energy program is our voluntary renewable program migraine power.

This program continues to grow with a number of new large customers subscribing this year.

We have 2400 megawatts described including over 90000 residential customers.

Highlighting our success the national renewable energy Laboratory is recognized D. T E as having the largest green tariff program in the country fulfilling more load under contract to subscriptions than any other program.

Additionally, at our gas utility we continue our important main real work, which further reduces greenhouse gas emissions.

B T. He makes all of these investments with a sharp focus on customer affordability.

Our distinctive continuous improvement culture thrives cost management.

The shift from coal the natural gas and renewables also helps to further reduce on M costs.

Our diverse energy mix helps to reduce fuel costs as well.

And allows us to maintain flexibility the depth of future technology advancements.

The I R. A supports this transition to renewable energy, while achieving customer affordability goals and further enhances opportunities for growth a D. T E advantage.

Before I turn the call over to Dave re more details on the financials.

Want to reiterate what I said at the start of the call.

D. T has a strong operating foundation and an excellent team with a proven record of execution.

A long runway of investment opportunities and a solid balance sheet to support these investments. So we remain well positioned to deliver premium total returns while.

While providing cleaner reliable and affordable energy to our customers.

<unk> over to you.

Thanks, Gerry good morning, everyone.

Let me start on slide seven to review, our third quarter financial results.

Operating earnings for the quarter with $298 million.

Translates into one dollar and 44 cents per share.

You can find a detailed breakdown of EPS by segment, including our reconciliation to gape reported earnings in the appendix.

I will start the review at the top of the page with or utilities.

D C electric earnings were $268 million for the quarter.

This is $95 million lower than the third quarter of 2022.

The main driver of the earnings variance was cooler weather and hire storm expenses Jerry discussed.

Other drivers include higher rate based cost and accelerated deferred tax amortization in 2022.

This was partially offset by the one time, but would M cost reductions that we implemented in 2023.

Moving onto D. T gas operating earnings were $18 billion higher than the third quarter last.

The earnings variance was driven by one time O&M cost reductions and increased I R. M revenue in 2023.

Shall we offset by higher rate base costs.

Let's move to <unk> vantage on the third row.

Operating earnings were $56 million in the third quarter of 2023. This.

This is a 30 million dollar increase from the third quarter last year.

Primarily due to new orangy projects and earnings related to steal projects.

In the next row, you can see your energy trading finished the quarter with earnings of $31 million.

We had continued performance favor ability this quarter due to robust contracted premiums and our physical power portfolio.

This favor ability is expected to continue for the remainder of the year.

Finally, corporate another was unfavorable by $17 million quarter over quarter primary.

Primarily due to the timing of taxes and higher interest expense.

Overall teachey earn one dollar and 44 cents per share in the third quarter.

Let's move to slide eight to go over a revised twenty-twenty three guidance by business unit.

The continued unfavourable weather and storm activity is causing us to decrease our operating EPS guidance for the year.

As we said on the second quarter call electric would be below its original guidance range.

And gas vantage and energy trading would be above their guidance ranges.

We are now decreasing the guidance range for D T electric and we're increasing the guidance range for D T gas vantage and energy trading.

Overall this resulted a decrease two R D T operating EPS guidance midpoint.

As we discuss we face significant headwinds D T electric throughout the year <unk>.

Starting with a challenging rate case, followed by unprecedented unfavourable weather and storm activity.

We've also continue C favorability at our other business units.

Ever ability I T. T gas is driven by one time O&M cost reductions.

A D T vantage, we have seen stronger orangy pricing and new RMG projects place in service.

As well as opportunistic contracted sales and additional favorability in the steel business.

Energy trading is seeing favor ability and it's contracted and highly hedged power portfolio, which will continue to provide additional upside.

Again, all business units implemented one time O&M cost reductions.

It also benefit from one time corporate O&M cost reductions the Cascade all the business units.

As we faced approximately $370 million in total headwinds.

The efforts of our team of offset much of this challenge.

But we are revising our operating EPS guidance from mid point of $6.25 per share.

Mid point of $5.75 per share.

I just want to stress again, what a remarkable achievement. It is for our team to offset $270 million of challenges this year.

Proud of what our team is accomplished and we feel this experience makes us stronger as we continue to focus on improving our processes and better serving our customers.

It's also important to reiterate that the combination of these three distinct headwinds is truly one time in nature.

And doesn't impact or long term fundamentals. So we remain solidly positioned for longterm growth.

Let's move to slide nine to highlight are strong balance sheet credit profile.

We continue to focus on maintaining a solid balance sheet strung metrics and a solid investment grade credit rating, which is supported by continued strong cash flow.

This will ensure we remain well positioned for continued growth.

Let me wrap up on Slide 10, and then we'll open the lines for questions.

Our team continues our commitment to deliver for all our stakeholders.

2023, operating EPS guidance is updated to reflect the additional headwinds experienced in the third quarter.

Our team continues to execute the plan to offset the majority of the unprecedented headwinds in 2023.

Remains highly engaged in focused on delivering for our customers and our communities.

The electric rate case continues to advance as we look forward to a constructive order.

Early December.

A robust capital plan support strong longterm operating EPS growth as we execute on the critical investment that we need to make for our customers for improved reliability and cleaner generation, while focusing on customer affordability.

D. T E continues to be opposition to deliver the premium total shareholder returns their investors have come to expect.

With a strong balance sheets supports our future capital investment plan.

As Jerry mentioned, we look forward to sharing the details or a longterm plan after the rate cases finalized.

With that.

Thank you for joining us today.

And we can open the line for questions.

As a reminder.

Like to ask a question <unk>, followed by the number of lines on your telephone keypad.

Your first question comes from the line at sharp or any of that with <unk>.

Your line is open.

Hey, guys yeah. Good morning.

Sure sure.

Morning morning, just appreciate the tough decisions this quarter I mean, obviously you moved the language around the 6% to 8% growth rate, but reiterated no longterm fundamentals and you stepped a bit of outside of the normal cadence as we think about the 24 early outlook I guess can you just say the elaborate a bit more.

More on your thoughts going into 24 hours, we think about the cadence of updates for guidance in Capex I mean, obviously the rate case decision is is a gaming item for 24 would that be the new base for longterm growth and will you extend the groceries into 20th just a little bit more color would be helpful.

Yeah, you bet sure. So certainly the fundamentals of our business remain really strong in the long term you know the opportunities to make tremendous amount of investment in our grid and transition to clean energy those the opportunity remains intact.

We are awaiting the commission order and that will happen. The first week of December. The next scheduled meeting December 1st but it has to be essentially dealt with before December 10th. So some time of that first week of December we expect an order.

We feel is prudent at this point in time to post that right order is when we will basically rollout shortly right. After the order we will rollout.

2024 guidance are longterm growth rate and also are kept capital investment profile and we'll do that for both utilities an advantage. So that's that's the plan going forward sharp.

God you don't want to get ahead and <unk>, we don't want to get ahead, we don't want to get ahead of the regulatory process at this point, but.

Right, Yeah that makes sense, but just I guess curious like obviously this year has some anomalistic conditions right shell.

When you when you when you guide with 24 be the base.

And would you extend out.

I guess typically what we like to the question.

Yeah, typically what we do share and we plan to do the same going forward as we will go back to original guidance for 2000 twenty-three that we've posted.

And and then we will go from there.

Got it does that answer your question and then just.

It does thank you Jerry that's the <unk> and then just lastly, you know the 270 million offsets yeah, sorry go ahead.

I was gonna say the reason for that is because much of what's happened as sure. As you said, we view as in almost seven and one time in nature and that's why we will go back to the original twenty-three guidance.

<unk> our growth rates from there.

Got it. Thank you for that and then just one last thing the 270 million offsets that that's obviously pretty impressive number and you call. The response out as being one time current events I guess do you anticipate under normal weather. The full amount can be replenished or is there some carryover of savings through <unk>.

24, I mean, I guess, they're deferred maintenance that would need to come back I'm, just trying to get a sense about these these cost cuts and also the potential read through they may have on the G. R. C. As he tried to you know.

Get this case over the finish line with some very tough intervenors. Thanks, guys.

Thank you so.

What you'll see is that much of the cops will flow back in some will stick I think when you go through one of these periods of severe challenge you always learn new things about your company, but much has to flow back and so a maintenance that wasn't critical this year becomes very critical next year that we can't continue to postpone we've made that very clear and our final reply brief.

<unk>.

And I think we'll see much of that flow back in some of that that will stick will help for next year and but what we planned <unk> plan to return to our normal planning process, where we would anticipate you know certain levels of storm activity in certain levels of weather variation in our planning going forward. So.

That is our goal at this point in time.

Okay Perfect. Let me, let me jump back in the temperature that others have questions. Thank you guys. So much appreciate it.

Thank you.

Your next question comes from the line of David Kyle with Morgan Stanley. Your line is open.

Unknown Executive: Good morning.

Hey, good morning, Thanks for taking my questions.

Barbara Tuckfield: My name is Emma, and I will be your conference operator today.

<unk>.

Could you elaborate a bit on the settlement discussions that you had in the rate case, just went challenges me. If a reason that that prevented you from getting across the finish line there any any kind of learning and and did that potentially continue forward into future challenges another <unk>.

Barbara Tuckfield: At this time, I would like to welcome everyone to the DTE Energy Third Quarter earnings call. All lines have been placed on mute to prevent any background noise.

Barbara Tuckfield: After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you.

Pieces in the future or are they are unique factories here that came into play.

Certainly so as you know we had a very successful integrated resource planning settlement and then we quickly transition to rape settlement discussions I would say this that the the major agencies that would be involved.

Barbara Tuckfield: Barbara Tuckfield, Director of Investor Relations. You may begin your conference. Thank you.

Jerry Norcia: And good morning, everyone. Before we get started, I would like to remind you to read the Safe Harbor Statement on page two of the presentation, including the reference to forward looking statements. Our presentation also includes references to operating earnings, which is a non-gap financial measure. Please refer to the reconciliation of gap earnings to operating earnings provided in the appendix.

Significantly and representing the economic interests of our customers were at the table and we're moving towards settlement, but that was a handful of parties key parties very important parties, but there was another 25 or so parties that were intervenors and a rate case that uhm essentially did not want to engage in right K settlement discussions.

Jerry Norcia: With us this morning, our Jerry Norcia, Chairman and CEO, and David Ruud, Executive Vice President and CFO. And now, I'll turn it over to Jerry to start the call this morning. Thanks, Barbara. Good morning, everyone, and thanks for joining us. I'll give a brief business update, and David will provide a financial update before we take your questions.

That was unfortunate.

But I think the practice in Michigan. So far is not the pursuit infested right settlements. When you say what learning is are there that might be something we have to explore in the future is the ability to pursue.

That's a great settlements when you have the bulk of the economic address were represented at the table not a common practice in Michigan, but a common practice another other jurisdictions.

Jerry Norcia: Now, let me start by emphasizing a few points, including my confidence in the company. And our long-term opportunities. As you know, we have faced unprecedented headwinds this year, and these events have impacted our financial plan by $370 million. However, the combination of these headwinds is truly one-time in nature, and the fundamentals of DTE remain strong. We have a solid record of achieving our financial targets, and we know how to do so without sacrificing safety or reliability.

Jerry Norcia: This year alone, we have offset $270 million of earnings headwinds from the unprecedented combination of unusual storm activity, unfavorable weather, and a low rate order driven by a difference in the sales forecast. The fact that we have been able to offset most of these challenges while maintaining service excellence is a clear proof point of our highly engaged team and commitment to operating excellence. DTE also benefits from strong cash flows and a solid balance sheet that support continued investments that will build the grid of the future and drive the clean energy transition.

Got it that's helpful context with her uhm specific aspects within the case, whether it was the underground during the Iran.

Or or specific requests here that that led to the sticking points with those other intervenors.

I would say not I think.

Simply said it was <unk>.

The reluctance to engage them I would say that the handful apart as it did engage we were moving towards what I would call a productive outcomes. So we were feeling positive until I would say the last moments of the discussions where there was a reluctance to engage by somebody other artists.

Okay understood thanks for that color.

Thinking about the go forward earnings power, you know looking at 2023 vantage and trading results quite a bit stronger than the original guidance on 2023.

Wondering if those could be considered new baselines for growth or if you could give a sense for how much one time or non repeatable strength, we sign those two businesses to those also kind of revert to the original 20 twenty-three midpoint as you think about the growth going forward.

Jerry Norcia: Our long-term growth plan is robust with numerous opportunities for these investments. And, as I said, we have an incredible team of highly engaged employees who are committed to our customers, and who know how to execute safely and efficiently. Our team continues to operate a top-design engagement levels as measured by the Gallup organization. I'm proud that our team's excellence in this area was recognized by earning the Gallup Exceptional Workplace Award for the 11th consecutive year.

Hi, This is Dave Rude Yeah. We you know we did see some strong growth in those businesses here.

Advair.

Advantage, we had three new Orangy projects, New <unk> service project commencing.

The growth that we expected.

They're also with some one time things in there as we as we mentioned on some up to six deal.

Jerry Norcia: My confidence in DTE and our ability to deliver for our customers while being a stabilizing force in our communities and creating significant sustainable value for investors over the long term is unwaverable. Engineering. We remain focused on continuing to invest a strategic capital that further supports improved red reliability in the face of changing weather patterns and further electrification and the transition to cleaner sources of generation. The heightened storm activity this year also highlights the importance of our investment plan and DTE is delivering on its commitment to automate, harden, and rebuild the grid to improve reliability by over 60% over the next five years.

Steeled contracts that we that we did this year too. So we look forward on vantage, we will be growing that off of 2023 original guidance, but you know still see them some great growth there and some great opportunity this year.

Trading also like as you saw is having a great year and we've increased the guidance there too.

Out of that Favre ability that we've seen has been through contracted <unk>.

For a full retire at full requirement services Smith I'd also at our gas business.

We've seen them. So some of these higher margins on these contracts and we'll be looking at what that means for for 2024, but right now I'm not in not increasing any of the guidance, but it will give you a full update as Jerry mentioned earlier will give you a full update on that and in December.

Jerry Norcia: Our recently filed distribution grid plan provides a roadmap to improve reliability and automation of our system. Also supporting our investment agenda is the IRP settlement. This plan outlines our investment in Michigan's cleaner energy future while remaining very focused on customer affordability. We are progressing toward a constructive outcome on our electric gray case. This case is critical to support the customer focused investments that are needed for improved reliability and cleaner generation. Our customers and political leaders, including the governor, legislators and municipal leaders, are demanding better outcomes of reliability during heavy storm periods.

Okay, great. Thanks, so much.

Your next question comes from the line and <unk> <unk> <unk> <unk>. Your line is open.

Hey, good morning team good morning.

Good morning, Gary.

Really appreciate all the details that you provided around the cost mitigation impacts and so thank you for that Hey, listen I, just wanted to kind of think through.

The implications of an ear like this pretty aggressive storms. Your go forward earnings profile.

Can you remind us so this yeah right when you add all those numbers together, it's 150 million named back which is roughly 10% of your.

Earnings Normalised earnings forward. This year can you remind us what level of allowance or costs are baked in four storms in this current ongoing rate case and going forward.

Jerry Norcia: This doesn't happen unless we execute our strategic investment plans to modernize and automate the grid. We also need to resume our maintenance schedule on non-critical work that we deferred on a one-time basis this year. It is essential to resume this important scheduled work to continue delivering safe and reliable service. We met with the innovators in the electric gray case and outlined the importance of the infrastructure investments we need to make while also gaining a deep understanding of their priorities.

Yeah, and the Erasers about 55 million pretax that's in their first storms right.

But we got it we budget budget differently than that have been building some contentious as well.

Okay.

Are there other opportunities like trackers or deferrals that you could pursue or would that be more legislative.

Jerry Norcia: While we were not able to reach a settlement in this case, we have put a compelling case together for the work we need to do for our customers. We are confident that the Michigan Public Service Commission will appropriately support the investment that is needed in the state.

I think those trackers and deferrals I've been pursued in the past <unk> and can be pursued in the future.

Like as a matter of fact, I think our sister utility is pursuing some of that as well as their current rate case.

Jerry Norcia: The final order is expected in early December. As I mentioned, our company faced $370 million of unprecedented headwinds this year. This represents nearly 30% of our total earnings forecast. We said on the second quarter call that we were in a position to deliver at the midpoint of our operating EPS guidance range if normal weather and storm activity occurred through the remainder of the year. However, unfavorable weather and additional severe storm activity did occur in the third quarter and these latest challenges brought over $100 million of additional headwinds to our financial plan.

And is that part of your current request as well like are you asking for.

<unk>.

It is not in our current rate case at this point in time, but as Dave said typically we budget for one standard deviation and weather variances.

That deal with weather variances as well as storm activity variances I think what was unusual. This year is that we had a much cooler than normal summer light up with excessive starve activity, which is.

Usual and very anomalous.

And beyond our planning beyond our planning scenarios certainly.

Jerry Norcia: So we are revising our full year EPS guidance midpoint from $6.25 per share to $5.75 per share. This is not the type of result that my team and I like to report to you. In my 10 years as the number one and number two person and DT's leadership team, we have consistently met or exceeded our targets. So you can imagine that we don't like reporting these results to you today. As I mentioned, we are continuing to wait for a final order on our electric rate case.

And while we think about the totality of but we had about 30 per cent.

Of our earnings Challenge then will you responded with 21 per cent of our spots and uhm. So pretty significant response in light of extraordinary challenges. So we feel it is very anomalous year.

Got it okay perfect I appreciate the color and then maybe just quickly hit on storm investigation I know the Liberty consulting group was hard what do you expect as next steps there and you know when could we see sort of a final recommendation timeline there.

Jerry Norcia: Therefore, we will delay providing the forward looking disclosures that we typically provide on a third quarter call, or at the EEI conference until we get a final resolution in the case. Let's turn to slide five. As we discussed through the second quarter, the company experienced the impact of the lower than expected rate order that we received at the end of last year, driven by a difference in sales forecast of approximately $100 million.

So there's been a very positive set of interactions with Liberty you know the exchanges have been very collaborative they are requesting information, which we are providing I think the the next series of steps as bill conduct some field work as part of their tabletop exercise and we <unk>.

<unk> Ah report sometime next summer.

Final report.

Okay. Thank you so much guys I appreciate the time.

Thank you.

Your next question comes from the line and Jeremy <unk> like J P. Morgan.

Your line is open.

Hi, good morning.

Jeremy Jeremy.

I think the question has been touched on a number of different ways, but I just wanted to be very precise and very clear here as you think about the base business does he think about going forward.

Jerry Norcia: Followed by $92 million in impact from storms, including the worst ice storm in nearly 50 years, an unfavorable weather of $42 million at electric and $31 million at gas. On the second quarter call, we said DTE electric was achieving offsets for over half of its headwinds through focused one-time cost reduction efforts, without sacrificing safety, reliability or customer service. And as a result, we noted that electric would likely fall below its full-year guidance.

Does it rate case, it's gonna have some impact on 2024 unknown at this point.

Jerry Norcia: However, we had free mobility at each of our other business units, helping to overcome the remaining headwinds to achieve our full-year EPS guidance. So at the time, we were on track to be at the midpoint of our guidance range if we had normal weather and storm activity, and we had already consumed our contingency. In the third quarter, we had additional pressure of 53 million from storms and 53 million from cooler than normal summer weather.

But if you think about the base business past 20, 2024 does D T E still grow 6% to 8%.

Jeremy we're gonna have to finalize all those details I know everybody is anxious to get those details, but again, we certainly don't want to get in front of the regulatory process.

What I will say at the highest level is all of the opportunities that we've discussed before that supported the longterm growth of our company are all there today and what we need is you know strong support from the regulatory construct to support 24 and beyond for that matter. So.

We're waiting for a strong signal and we will continue to move forward I'd execute these great investments for our customers, but I will tell you is that the governor our customers are commission legislators every mayor I talk to are clamoring for these investments. This is something that our customers want and any rate relief there were requesting is not.

Jerry Norcia: So far this year, we have faced five catastrophic storms, which is double compared to the average number of catastrophic storms over the last five years. We are very proud of our team's efforts to safely restore power during each of these weather events. That being said, these restoration efforts are costly, and while we do budget for storm costs, the number of catastrophic storms this year, including a historic ice storm, significantly impacted DTE electric earnings.

Not extraordinary if you look at just the the capital lower deploying you know somebody interest expense that we have to recover as well as the correction in the sales figure since may of 2020, we'd be looking at you know an increase of.

Roughly 1.6 per cent per year, well below national inflation rates are 5.5% since that period in time and well below some of our peers, where they've seen over five per cent Bill girls since that period of time since 2020. So we feel like we're delivering a very compelling and what I would say <unk>.

Jerry Norcia: Along with storm activity, we have seen unfavorable weather in our service territory for electric and gas this year. The winter was the fourth warmest winter since 1960, and the summer was one of the coolest in nearly a quarter century. This was very different from the record heat that was experienced across most of the country. Much like for storms, we prepare for unfavorable weather scenarios during our planning process. Our lean and invest lands are structured to cover weather variability.

Pettitte a package to pursue now for the commission and we we're confident that we'd get strong support for the investments we need to make for our customers.

Got it got it understood maybe pivoting a little bit here you know as you look forward. There's been just a change in regime in rates being you know rates moving up a lot recently.

Jerry Norcia: This year, the winter and summer weather combined was much more unfavorable than we have seen. It has been an unusual year, having both high storm activity at electric and unfavorable weather at both of our utilities. This dynamic has certainly created a significant challenge to our company in addition to the low rate case order. So we faced a combination of three major headwinds. Not only two of these occurred, we would have been able to achieve our original EPS guidance target.

And we were kind of tracking holdco refinancing risk in note that D. T. E has a number of hedges in place to mitigate some of this risk I was wondering if you could provide.

Jerry Norcia: Having all three factors stack up against us, exceeded all reasonable planning scenarios. As a matter of fact, we had our statisticians look at the probability of greater than one standard deviation temperature patterns of both utilities and a number of storm customers impacted all occurring in the same year. And it is a once in a 50 year probability. Overall, the team has made excellent progress on one time management actions across the entire company and finding opportunities within our portfolio.

Civic details on those hedges as far as what the refi it looks like if there's something that just kind of a short term hedges is the longer term hedge what type of levels, just trying to get a sense for how much of a headwind refinance risk at the hold <unk>.

Hey, Jeremy this is Dave so for today at the highest level.

Incorporated these increasing interest rates in our plan and had and had considered it and contemplated it had the flexibility in our plans prior to this so we're monitoring this and will continue to manage the.

The interest expense increased through timing and structure and 10 of our future that you're referring to the parents at that we have that will come due at the end of 24 <unk>. We have we have put in hedges for over a quarter 25 per cent of that yeah through the year and what will continue to look for opportunity.

Jerry Norcia: However, with the additional challenges in the third quarter, we are now lowering the operating EPS guidance for 2023. Now, let's move to the opportunities we have in front of us on slide six. DTE is on track to make significant customer focused capital investments across our businesses. Two important factors affecting our grid are climate change and emerging electrification technologies. We need to build the grid of the future to ensure we can continue to provide clean, safe, reliable, and affordable energy.

<unk> you don't monitor monitor the market for additional opportunity for that as well.

So just to clarify that 25 per cent would be whatever the new tenor of that refinance a BB at three 510 years 25 per cent.

Alright with that length of time got it right.

And then maybe just you know as you think about forward planning and in weather and you provided a lot of helpful thoughts there that that's been great. Thank you, but if you think about I guess.

Jerry Norcia: We are also making investments to transform the way we produce power as we shift towards renewables and natural gas and away from cold generation. An important part of our clean energy program is our voluntary renewable program, my green power. This program continues to grow with a number of new large customers subscribing this year. We have 2,400 megawatts subscribed, including over 90,000 residential customers. Highlighting our success to national renewable energy laboratory has recognized DTE as having the largest green care program in the country, fulfilling more load under contract descriptions than any other program.

The sample set that you apply that the standard deviation again.

Is the reason to revisit that just given the severity of this year or anything can happen in one year. Just wondering how to think about I guess, you know how to best budget for storm impact in future years.

Typically what we do as we look at our 50 and your weather patterns and we build a plan offer that our rates are also built off a 15 year average if you will and then we build into one standard deviation and whether for consumption.

Jerry Norcia: Additionally, at our gas utility, we continue our important main real work, which further reduces greenhouse gas emissions. DTE makes all of these investments with the sharp focus on customer affordability. Our distinctive continuous improvement culture drives cost management. The shift from cold and natural gas and renewables also helps the further reduce on M costs. Our diverse energy mix helps to reduce fuel costs as well. It allows us to maintain flexibility to adapt to future technology advances. The IRA supports this transition to renewable energy while achieving customer affordability goals and further enhances opportunities for growth at DTE Vantage.

And in addition to that we carry a storm budget. That's based typically on five to seven year average. So we'll we'll revisiting we're revisiting some of that as we speak because we've experienced more severe.

Weather patterns in the last handful of years, so that that'll continue to track against those types of averages. So that's how we build our portfolio and we've been quite successful in delivering in the last 60 and hears about using that approach and and even in the last five to seven years and so I will continue with that approach and will continue.

<unk> Ah modifying it as we see patterns continue to change and we were all for you know our 15 year averages for weather and that's just temperature so that I'm talking about their D V D's and H D DS.

Jerry Norcia: Before I turn a call over to Dave, we read more details on the financials. I want to reiterate what I said at the start of the call. DTE has a strong operating foundation and an excellent team with a proven record of execution, a long runway of investment opportunities, and a solid balance sheet to support these investments. So we remain well positioned to deliver premium total returns while providing cleaner, reliable, and affordable energy to our customers.

And then we'll also look at the storm activity as it continues to build as it has will continue to increase contingencies for that.

Got it that's very helpful. Thank you for all your thoughts a and looking forward to seeing the team and he I.

Thank you.

<unk>.

Your next question comes from the line <unk> Bank of America. Your line is open.

David Ruud: Dave, over to you. Thanks, Jerry.

Hey, Tim Good morning. Thank you guys at the time I appreciate it uhm look in the same way to Jeremy.

David Ruud: Good morning, everyone. Let me start on slide seven to review our third quarter financial results. Operating earnings for the quarter were $298 million. This translates into $1.44 per share. You can find a detailed breakdown of EPS by segment including our reconciliation to gap reported earnings in the appendix. I will start the review at the top of the page with our utilities. [inaudible] the page with the top Questions, and also benefit from one-time corporate O&M cost reductions that cascaded all the business units.

Yeah. Good morning, Jack Uhm, It just stay in the same vein.

Jeremy which is asking about an on off that's here you know you've got this <unk> 31 of upset here against these headwinds how do you think about the sustainability of them, but also how do you think about some of the pull forward items that you pulled in 23 that could come back in 24 I get that there's a question about sustainability going forward. If some of these items, but how much flip back.

You know call it in a one time basis in 24, how do you think about that in setting up a baseline here you know it. It you know as you think about <unk> you know rolling forward if you will.

Sure.

What kind of items are they are I'll leave it open.

Yeah, no good great question Julianna and so some portion of the dollar 31, there'll be sustainable, but I just wanted to make it clear that we're not slope snow plowing incremental costs and to 2024, we <unk>, we will return to our normal levels of maintenance as you know over the many years, where we had.

We had favor ability in our plan, we pulled forward maintenance and banked. It uhm. So we were able to take these one time pauses and non critical preventative maintenance.

And so but next year, we're going to return to our normal patterns. So I don't want people to think that we're snow appalling any kind of cost and to and to 2024 will return to normal levels of maintenance expenditures hopefully that helps drive.

<unk>, it's not an outsized you're at 24 to get back to run right and twenty-five of you up just to make sure. That's correct. That's correct, we're going back to our normal run rate that we otherwise would have had an 22 and 23 and and returned to normal maintenance Ah level of expenditures.

Got an accident and Jerry in the same direction of things residential whether norm sales off 2.6 year to date here I mean that seems like an outsized impact, but obviously with leather years, yeah with outside sweating impacts. It's it's hard to be precise I mean, how do you think about that impacting 24 onwards, and and and and whatever this returned to office.

<unk> is that for you guys on <unk>.

Sure. So I'll I'll start with the weather part and I'll, let Dave talk about residential load and what we've seen this year compared to what we had forecasted for for this year and what we plan to forecast for next year.

So from our weather perspective.

You know, Michigan believe it or not when we do the analysis was the only state in the Midwest that experience cooler than normal weather and by more than one cooler than normal weather for sure and and then we also experienced more than one standard deviation and warmer than normal weather in the winter. So very unusual combination then package that.

Like a storm activity twice the number of catastrophic storms and that's essentially a unicorn of a year and we had a I had my statisticians.

All through that analysis, and it's a one in 50 year probability. So you know of course will work with 50 and your average is it will impact their 15 your average in our five year storm activity average and we'll build that into our plans going forward.

You want to comment on residential sales.

Sure Yeah our.

Our sales this year have come in pretty much as expected for the year consistent with our budget consistent with the rate case finally, we had.

Said residential is down a little as we knew people would be returning returning to work. So we saw that we saw that come down.

As far as our forecast in.

In the in the rate case before cash residential sales remain somewhat flat and there there has been no.

No dispute in our forecasts going forward here, either so we should get that it shouldn't be an issue here coming up in this rate case.

David Ruud: As we faced approximately $370 million in total headwinds, the efforts of our team have offset much of this challenge, but we are revising our operating EPS guidance from midpoint of $6.25 per share to a midpoint of $5.75 per share. I just want to stress again what a remarkable achievement is for our team to offset $270 million of challenges this year. We're proud of what our team has accomplished and we feel this experience makes us stronger as we continue to focus on improving our processes and better serving our customers. It's also important to reiterate that the combination of these three distinct headwinds is truly one-time in nature and doesn't impact our long-term fundamentals, so we remain solidly positioned for long-term growth.

Okay, Alright fair enough, so, but you see consistent pressure going into 24, just as you can think about building out the plan on 24 and 25.

<unk> or is it more of a.

More of a transient.

We we won't see we won't see uhm pressure from the residential forecast in 24.

Okay, Alright, great. Thank you guys.

Alright.

Your next question comes from the line of Anthony <unk>, what can you <unk> your.

Your line of them.

Good morning, Good morning, Dave.

Morning at Anthony.

<unk> quick balance sheet question and a follow up.

Moody heavy put out an update earlier this year with a company that's already get Netflix probably the lowest they've been in several years I guess.

David Ruud: Let's move to slide 9 to highlight our strong balance sheet and credit profile. We continue to focus on maintaining a solid balance sheet, the strong metrics and a solid investment grade credit rating, which is supported by continued strong cash flow. This will ensure we remain well positioned for continued growth.

Packed of this year, she no storm activity mild weather and the right decision I guess, just what do you think you end up in the end up 23, and how does that rate relative to downgrade thresh hold on what are you thinking of 24.

Anthony where we remain in it, especially with our balance sheet. We <unk>, we did meet with all the rainy agencies this year and even added this call.

David Ruud: Let me wrap up on slide 10 and then we'll open the line for questions. Our team continues our commitment to deliver for all our stakeholders. 2023 operating EPS guidance is updated to reflect the additional headwinds experience in the third quarter. Our team continues to execute the plan to offset the majority of the unprecedented headwinds in 2023, remains highly engaged and focused on delivering for our customers and our communities. The electric rate case continues to advance as we look forward to a constructive order in early December.

The episode of that from 22 was.

Really do to lower F O from our fuel cost and that's giving recovered. This year. So we'll see that episode of that and twenty-three come back as we recover our PSC are primarily at our electric company. So we we remain on good position good head room to the thresholds to need downgrade threshold to any of our rating agencies with.

This point.

Great and then if I can.

Are you, having a longer term question.

David Ruud: Our road bus capital plan supports strong long-term operating EPS growth as we execute on the critical investment that we need to make for our customers from proof reliability and cleaner generation while focusing on customer affordability. DTE continues to help position to deliver the premium total shareholder returns, their investors have come to expect with a strong balance sheet to support our future capital investment plan. But Jerry mentioned we look forward to sharing the details of our long-term plan after the rate cases finalized with that.

I know, there's a pending right case, we're all waiting for a decision, but when you think of the volatility as you just said, Michigan was the only state in the mid west that had mild weather. It seems that there's much more volatility in weather and storm activity or getting in Michigan.

It seemed every year or two there is a catastrophic storm or an ice from is something I mean, when you file your future rate cases.

Thoughts on maybe the the risk when in terms of the risks involved in operating on the challenges.

But in operating utility, Michigan, you maybe change what do you think.

<unk> did you need goes up higher.

I think two things Anthony could go that route which is a more challenging route in terms of lifting are always but and it's certainly a possibility, especially in the light of rising. It's continued rising interest rates are there will be pressure to moves are always up.

Unknown Executive: Thank you for joining us today and we can open the line for questions. As a reminder, if you would like to ask a question, press star followed by the number one on your telephone keypad.

Char Parisa: Your first question comes from the line of Char Parisa with Guggenheimen. Your line is open. Hey guys, good morning. Good morning, Char. Good morning, morning, morning. Jerry, just to appreciate the tough decisions this quarter, I mean obviously you removed the language around the 68% growth rate but reiterated no long-term fundamentals and you stepped a bit outside of the normal cadence as we think about the 24 early outlook. I guess you just maybe elaborate a bit more on your thoughts going into 24 as we think about the cadence about dates for guidance and catbacks.

In the future if if this.

Interest rate <unk> continues to get worse or remains at a level of <unk>, but I I feel that in the past if you <unk>.

Researcher history, and when we entered periods of very volatile storm activity in order to not the whips the level of investment that we can make in our maintenance practices and also capital deployment. There have been storm trackers that have existed in Michigan in the past and to me that can be a very viable path going forward.

Great. Thanks for taking my questions.

Thank you.

Your next question comes from the line is Andrew <unk> wait to discuss your bank.

Char Parisa: I mean obviously the rate case decision is is a gating item for 24 would that be the new base for long-term growth and will you extend the growth rate into 28 just a little bit more color would be out. You bet, Sherry. Certainly, the fundamentals of our business remain really strong in a long term. You know, the opportunities to make tremendous amount of investment in our grid and our transition to clean energy, those the opportunity remains intact.

Your line is open.

Hey, good morning, everybody <unk> morning, other details and Andrew.

I appreciate all the details on the mitigation efforts and that headwinds obviously, it's been a tough year. Most of might've been entered just to to follow ups. Please first of all <unk> expectations around the rate case timing let's.

Let's assume we get a reasonable are normal or constructive outcome whichever adjective you Wanna use.

Char Parisa: We are awaiting the commission order, and that will happen the first week of December. The next scheduled meeting is December 1st, but it has to be essentially dealt with before December 10th. So sometime in that first week of December, we expect an order. We feel as prune at this point in time to post that rate order is when we will basically roll out shortly right after the order. We will roll out our 2024 guidance, our long-term growth rate, and also our capital investment profile.

Should we expect the next rate cases in other words not trying to get ahead of the current outcome, but should we assume the more or less and you will finally, he's going forward.

Andrew I would say that.

We have a infrastructure recovery mechanism built into the current rate case request.

If that's adopted by the commission, which we hope it will be we will be an annual rate cases until that builds an into a large enough.

Char Parisa: And we'll do that for both utilities and advantage. So that's that's the plan going forward, Shar. We don't want to get ahead of the regulatory process at this point in time. Right, no, that makes sense, but just I guess curious, like, obviously this year has some anomalous conditions, right? So when you when you when you guide would 24 be the base, and would you extend out? I guess typically what we was the question.

Uhm infrastructure recovery mechanism for distribution capital primarily.

They keep us out of rate cases for longer periods of time like if you look at our gas company, we're able to stay out between one and three years depending on.

And what's transpiring inside the gas company so it will.

Reduce the frequency of rate cases, if the commission chooses to adopt an infrastructure recovery mechanism it'll it'll just take a couple of years for it to happen until that Mecca.

The mechanism built into a large enough amount to track enough capital to keep yourself for awhile.

Char Parisa: Yeah, typically what we do, Shar, and we plan to do the same going forward as we will go back to original guidance for 2023 that we posted. And and then we will grow from there. Got it. Did I answer your question? And then just it does. Thank you, Jerry, that's the top. And then just lastly, you know, the 270 million offsets. Yeah, sorry, Jerry, go ahead. I was going to say the reason for that is because much of what's happened this year, as you said, we've used anomalous and one time in nature.

Okay that <unk> that sounds consistent with what you said in the past.

Second question is totally unrelated question about supply chains, you're spending a lot of capital both on renewables and unimproved and reliability. How do you see the availability these grade level equipment like transformers or switch gears and if you do see shortages is there a risk that might slow down your plan piece of spending.

Well certainly we're very well aware of you know supply chain challenges with relation to Transformers and switch gear and we've expanded our our our reach beyond U S borders and are bringing in that equipment from international sources, which is working out quite well so far we've got a lot of testing.

Char Parisa: And that's why we will go back to the original 23 guidance and build our growth rates from there. Got it. Thank you for that. And then just on lastly, the 270 million offsets. And that's obviously a pretty impressive number. And you call the response out as being one time kind of events. I guess do you anticipate under normal weather, the full amounts to be replenished or there's some carryover of savings through 24.

And a lot of investigation and due diligence over the last several years and that's taken some pressure off of our supply chain. So right now we feel good about it Andrew in terms of how're position to execute our our large capital programs both in the in the distribution business as well as the renewables business.

Char Parisa: I mean, I guess as they're deferred maintenance that would need to come back. I'm just trying to get a sense about these these cost cuts. And also the potential re-through they may have on the GRC as you try to, you know, get this case over the finish line with some very tough interveners. Thanks, guys. Thank you. So what you'll see is that much of the cost will flow back in some will stick.

Very good thank you.

Thank you.

Your next question comes from the line S T Fleischman, which both free search your line is open.

Hi, good morning, Thank hi, Jerry <unk> good morning, good morning space.

Char Parisa: I think when you go through one of these periods of severe challenge, you always learn new things about your company, but much has to flow back in. So maintenance that wasn't critical this year becomes very critical next year that we can't continue to postpone. We've made that very clear in our final reply briefs. And I think we'll see much of that flow back in some of that that will stick will help for next year.

Great. So.

Just so like in the past you tried re cases and.

Able to give guidance <unk> cases pending so.

We think about this being different just because of what happened last year.

The surprising that sounds forecast or.

Char Parisa: But we plan to return to our normal planning process where we would anticipate, you know, certain levels of storm activity and certain levels of weather variation in our planning going forward. So that that is our goal at this point in time. Okay, perfect. Let me jump back in the cam, show the other self-questions. Thank you guys so much. Appreciate it. Thank you.

You know orange.

Tough conditions. This year, just how should we think about what's different this time.

Nurses in the past.

I would say realistically, Steve you know our pastures, probably got a little more conservative based on what happened last year.

And you know all signals are positive I mean, there's a strong consensus you know prior to filing a rate case with commissioners and even in their public statements are supporting.

David Arcaro: Your next question comes from the line of David Arcaro with Morgan Stanley. Your line is open. Good morning. Thanks for taking my questions. Morning. Could you elaborate a bit on the settlement discussions that you had in the rate case? Just what challenges may have arisen that prevented you from getting across the finish line there? Any kind of learnings and does that potentially continue forward into future challenges and other rate cases in the future or are there unique factors here?

Large levels of investment into the grid and into renewables. We're also getting that from the Governor's office, where they're strong support for investments in infrastructure and again are clamoring from customers as you've probably seen especially this summer wanting for us to invest in and make the grid better and also support strong support for the clean under your tree.

<unk>, so we're likely in a more conservative posher based on the challenges that we've had in the regulatory process as well as some of the challenges we've experienced this year. So we we want to make sure. When we tell you we're gonna do something we're gonna deliver on it.

David Arcaro: That came into play. Certainly. So as you know, we had a very successful integrated resource plan settlement. And then we quickly transitioned to rate settlement discussions. I would say this that the major agencies that would be involved significantly and representing economic interests of our customers were at the table and we were moving towards settlement. But that was a handful of parties, key parties, very important parties. But there was another 25 or so parties that were interveners in a rate case that essentially did not want to engage in rate case settlement discussions.

Okay and it's.

How much if anything's related to just other.

Other things than just three case.

In terms of just wanting to take more time.

No we don't need more time, we just need a data point here to finalize our plans for 24 and I learned longterm plan. There is nothing else really that we're worried about other than it's a significant data point in our plan and we don't want to get ahead of our condition.

Okay. That's helpful. Thank you.

Thank you Steve.

Your next question comes from the line a stuffy carpet with Keybanc. Your line is open.

David Arcaro: That was unfortunate. But I think the practice of Michigan so far is not to pursue contested rate settlements. When you say what learnings are there, that might be something we have to explore in the future. Is the ability to pursue contested rate settlements when you have the bulk of the economic interest for represented at the table? Not a common practice in Michigan, but a common practice and other other jurisdictions. Got it.

Hi, Good morning, guys and thank you for taking my good morning, Sophie morning Sophia.

So a couple of questions if I may.

What they expected a storm activity. So we seen them now it seems like every year once and assist here 50 year storm, alright, something like that in different predictions.

David Arcaro: That's helpful context where there are specific aspects within the case, whether it was, you know, the undergrounding the IRM or specific requests here that led to the sticking points with those other interveners. I would say not. I think it simply said it was a reluctance to engage. I would say that the handful of parties that did engage. We were moving towards what I call a productive outcome. So we were feeling positive until I would say the last moments of the discussions where there was a reluctance to engage by some of the other parties.

And is this type of <unk>.

<unk>, Michigan is there in your mind need for M. More I guess structural solution to that maybe it should be done to legislature that goes beyond.

Trackers and the writers and what have you been <unk> the securitization program for storms, some sort of a surcharge on customer bills system escrow those mechanisms have been employed like in the south way I'll storms that in any other then is that something to learn from that and potentially it may be implement in that in Michigan.

I think the straight answer that in simple answer Sophie to that is absolutely. Yes, we have to consider all of the above and those are great thoughts that you've offered and certainly we're thinking about similar similar approaches as to how to take this volatility out of the plan because as you mentioned what it does to a utility.

David Arcaro: Okay, understood. Thanks for that color. And thinking about the Go Forward earnings power, you know, looking at the 2023 vantage and trading results quite a bit stronger than the original guidance on 2023 was wondering if those could be considered new baselines for growth or if you could give a sense for how much one time or non-repeatable strength we saw in those two businesses. To those also kind of revert to the original 2023 midpoint as you think about the growth going forward.

When you get into these volatile environment storm environments as it starts to what's your maintenance plans and and potentially even your capital deployment plans and and we don't want that to happen we want to make the study investments in and perform the regular maintenance we need to we.

You need to have in order to run a high quality grid and a high quality operation. So very good thoughts were very supportive of your thoughts that will be it will be pursuing them in the future.

David Arcaro: Hi, this is Dave Rood. Yeah, we, you know, we did see some strong growth and to those businesses this year. Advantage. We had three new RNG projects, a new custom energy service project commences the growth that we expected. There also is some one time things in there as we as we mentioned on some up to six feel. Field contracts that we that we did this year, too. So we look forward on vantage.

Got it thank you and my other question is this.

Hypothetically speaking if you were not entirely happy with it you know right outcome in the current rate case.

What is I guess, a way for you to.

David Arcaro: We will be growing that up at 2023 original guidance, but you know still see some great growth there and some great opportunity. You know this year. Trading also, as you saw, is having a great year and we've increased the guidance there to a lot of that favorability that we've seen has been through contracted elect full retirement services and also in our gas business. We've seen some of these higher margins on these contracts and we'll be looking at what that means for 2024. But right now, not increasing any of the guidance, but we'll give you a full update.

Communicate that to the stakeholders right and some of your peers in other jurisdictions when they were in such situations chose to.

Signal signal that by cutting some of the <unk> sequential investment, but that is politically more charge that chose may be easy infrastructure and things like that and I was just curious if you've given some thoughts S. Too Hollywood proceed in that situation.

So <unk> Sophia I'll say this much certainly any good company faced with uncertainty any type of uncertainty we do scenario planning.

David Ruud: As Jerry mentioned earlier, we'll give you a full update on that in December.

And we're in the midst of that I think we're about wallet vast in our thinking and once we receive a right order will will rollout.

David Ruud: Okay, great. Thanks so much.

Our plans and our reaction.

Don't want to.

Durgesh Chopra: Your next question comes from the line of Durgesh Chopra with Evercore ISI. Your line is open. Hey, good morning team. Thank you for all. Good morning, Jerry. Really appreciate all the detail that you provided around the cost mitigation impacts and so thank you for that. Hey, listen, I just wanted to kind of think through the implications of an year like this, a pretty aggressive year on storms, your go forward earnings profile.

Get ahead of our ourselves at this point in time and will await the order from the commission and I will provide are.

Guidance, and longterm plan, which I I believe at this point will all be very positive I don't sense at this point.

That there would be a disruption in our ability to invest feel confident about the need to make the investment and that there's alignment.

But then again in order to be prudent we're also doing a lot of scenario planning.

To ensure that we can respond to whenever it happens.

Got it got it. Thank you that's all for me.

Durgesh Chopra: Can you remind us so this year right when you add all those numbers together, it's 150 million in impact, which is roughly 10% of your of your earnings normalized earnings powers this year. Can you remind us what level of allowance or cost are baked in for storms in this current ongoing radius and going forward. Yeah, in the interrates, there's about 55 million pretax that's in there for storms right now. But we budget, we budget differently than that and build in some contingencies as well.

Your next question comes from the line of <unk> with morning style.

Your line is open.

<unk> good morning, everyone.

Good morning traffic Travis you've answered most of my questions. Sir So just too real quick ones in terms of the coming announcements in terms of guidance and capital investment longterm growth what about the dividend quarterly dividend announcement will that also come after the rate case the.

The planning.

Yes, yeah that'll come that'll come then I think.

It may come or even a little bit before that depending on when the when that final rate case comes out.

Durgesh Chopra: Okay, are there other opportunities like trackers or deferrals that you could pursue or would that be more legislative? I think those trackers and the pearls have been pursued in the past, their guess and can be pursued in the future. Like as a matter of fact, I think our sister utility is pursuing some of that as well in their current rate case. And is that part of your kind of request as well, like are you asking for in this case?

Okay. So so definitely after the rate case, but.

Essentially.

Yeah. So yeah, so it'll be in the first get December 6th.

Okay, perfect and then the intervenors that you mentioned that really weren't all that keen on settling.

Have they been in previous <unk>.

Cases have they been interested in settling before did you know these.

These people before and were they familiar with the right guys process.

I would say that.

Durgesh Chopra: It is not in our current rate case at this point in time, but as Dave said, typically we budget for one standard deviation and weather variances that deal with weather variances as well as storm activity variances. I think what was unusual this year is that we had a much cooler than normal summer lineup with excessive storm activity, which is very unusual and very anomalous. And beyond our planning, beyond our planning scenarios, certainly what we think about the totality of it, we had about 30% of our earnings challenged and we responded with 21% response.

You know the we know them of course, we know them, we've been involved with them and many other rate cases, as we tried to bring all these parties to settlement I would say the party that typically don't have.

Durgesh Chopra: And so pretty significant response and light of extraordinary challenges. So we viewed as a real anomalous year. Got it. Okay. Perfect. I appreciate the color. And then maybe just quickly hit on storm investigation. I know the Liberty Consulting Group was hired. What do you expect as next steps there? And you know, when could we see sort of a final recommendation timeline there? So there's been a very positive set of interactions with Liberty.

Strong interest in the economics of the of the case are the ones that we had challenged bringing to the table not all not exclusively all but but I would say most of the majority of the parties that uhm, we were not able to engage in settlement discussions probably had typically their function or <unk>.

This not.

Tied significantly through the economic interests of our customers.

Okay got it. Thanks, so much that's all I had.

Thank you.

Your next question comes from the line, Brian Levine Lake City. Your line is open.

Good morning, Uhm morning, Ryan Unclos, Alright. This morning on cost cutting where there additional tools that were decided not to use in the third quarter or should we think is Q3 is the Max from a cost slash.

Durgesh Chopra: You know, the exchanges have been very collaborative. They're requesting information which we're providing. I think the next series of steps is they'll conduct some field work as part of their tabletop exercise and we expect a report sometime next summer. Final report. Okay, thank you so much guys. I appreciate the time. Thank you.

For the company.

Yeah, we looked we can across our company ever since the end of last year for any opportunities that we had and.

Yeah, we we saw that we we put all we had in place for the bit through the beginning of the year you saw the 270 million of upsets that we had so.

We've.

You know a lot of this plays out still through the end of the year. I mean these are annualized number so they play out through the end of the year, but.

Jeremy Tonet: Your next question comes from the line of Jeremy Tonet with JP Morgan. Your line is open. Hi, good morning. Morning, Jeremy. Hi, Jeremy.

But it's gonna be a consistent number with what we've done now for <unk>.

Okay.

And then on storms and all that's been asked and answered in.

Jerry Norcia: I think the question has been touched on a number of different ways, but I just wanted to be very precise and very clear here. As we think about the base business as we think about going forward. There's a rate case. It's going to have some impact on 2024. Unknown at this point, but if you think about the base business past 2020, 24, does DTE still grow 68%? Jeremy, we're going to have to finalize all those details.

In terms of the longer term outlets and your neighbor utility to some studies out talking to any bad Directionally 25 per cent increase in start Starnes 320, 50 is there any comparable analysis.

I bet that applies to your jurisdiction or or how you're thinking about the longer term.

Impacting is at 55 million dollar number appropriate or what kind of with our growth rate that you think's appropriate so if I could.

Jerry Norcia: I know everybody is anxious to get those details, but again, we certainly don't want to get in front of the regulatory process. What I will say at the highest level is all of the opportunities that we've discussed before that supported the long term growth of our company. We are all there today and what we need is strong support from the regulatory construct to support 24 and beyond for that matter. So we're waiting for a strong signal and we'll continue to move forward and execute these great investments for our customers.

Yeah. We we continue to look at that you know we've seen the increasing weather patterns also and look at the look at the increasing storm impact that has so we you know we we do build in some contingency beyond what's in rates, but again <unk>.

We've talked about we're gonna look at what what we need to budget going forward.

Well as what are some of the other mechanisms we can use to manage storm going forward.

I appreciate it thank you.

Jerry Norcia: What I will tell you is that the governor, our customers, our commission, legislators, every mayor I talk to are clamoring for these investments. This is something that our customers want. And the rate relief that we're requesting is not extraordinary. If you look at just the capital that we're deploying, you know, so many interests expense that we have to recover as well as the correction and the sales figure. Since May of 2020, we'd be looking at, you know, an increase of roughly 1.6% per year.

Your next question comes from the line is Greg around with you B S. Your line is open.

Hi, Thanks for squeezing man.

Okay, great good morning, Ma'am.

Good morning, you you mentioned you were expecting to get some cashback. This here in the in the P. S. C R.

Can you quantify that.

Yeah are under recovery last year was about $420 million and so we'd been recovering that throughout the year. So we're gonna get the majority of that back through them. This year. So it's a little.

Jerry Norcia: Well below national inflation rates of 5.5% since that period in time. And well below some of our peers where they've seen over 5% bill growth since that period of time since 2020. So we feel like we're delivering a very compelling and what I would say competitive package to pursue for the commission and we're confident that we get strong support for the investments we need to make for our customers. Got it. Understood.

$380 million will be getting back to this year. So that's you know.

Obviously swings the cash Netflix O four is quite a bit by $800 million a year over year.

[noise]. Thank you.

This can contact you and ask for today I turn the call back <unk> Max.

David Ruud: Maybe pivoting a little bit here, you know, as we look forward, there's been just a change in regime and rates being, you know, rates moving up a lot recently. And we're kind of tracking hold code with financing risk and note that DTE has a number of hedges in place to mitigate some of this risk. I was wondering if you could provide specific details on those hedges as far as what the REFI looks like.

Well. Thank you everyone for joining us today, just close by saying I'm excited about the opportunities. We have ahead of us, including further strengthening of our electric grid and.

In preparing for increased demand for electrification on our system and accelerating our path to cleaner generation to continue to be wall position for future growth and will provide some details after our break case wraps up <unk>.

<unk>, everyone has a great morning at a safe day.

David Ruud: Is this something that's just kind of a short term hedge? Is this the longer term hedge with type of levels? Just trying to get a sense for how much of a headwind refinance risk at the hold code. Who could be? You're referring to the parent that we have that will come do at the end of 24. We have put in hedges for over a quarter, 25% of that through the year. We'll continue to look for opportunities to monitor the market for additional opportunities for that as well. So just to clarify that 25% would be whatever the new tenor of that refinance would be be at 3, 5, 10 years, 25% is headed for that length of time. Right.

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[music].

Jerry Norcia: And then maybe just, you know, as you think about forward planning and weather and you provided a lot of helpful thoughts there that's been great. Thank you. But if you think about, I guess the sample set that you apply the standard deviation against is the reason to revisit that just given the severity of this year or anything could happen in one year, just wondering how to think about I guess, you know, how to best budget for storm impacts in future years.

Jerry Norcia: Typically what we do is we look at our 15 year weather patterns and we build a plan off of that. Our rates are also built off a 15 year average, if you will. And then we build in a one standard deviation and weather for consumption. And in addition to that, we carry a storm budget that's based typically on a five to seven year average. So we'll we're revisiting we're revisiting some of that as we speak as we've experienced the more severe weather patterns in the last handful of years so that that'll continue to track against those types of averages.

Jerry Norcia: That's how we build our portfolio and that we've been quite successful in delivering in the last 16 years by using that approach. And even in the last five to seven years and so I will continue with that approach and will continue modifying it as we see patterns continue to change and we roll forward in our 15 year averages for weather. And that's just temperature that I'm talking about their DDDs and HDDs.

Jerry Norcia: And then we'll also look at storm activity as it continues to build as it has will continue to increase contingencies for that. Got it. That's very helpful. Thank you for all your thoughts say and looking forward to team the team at EI. Thank you. Thanks.

Julien Molensmith: Your next question comes from the line of Julian Molensmith with Bank of America. Your line is open. Hey team, good morning. Thank you guys for the time. I appreciate it. Look in the same way as Jeremy was just asked. Hey, good morning, Jerry. It's just in the same vein as Jeremy was just asking about on offsets here. You know, you get this bug 31 of offsets here against these headwinds. How do you think about the sustainability of them, but also how do you think about some of the pull forward items that you pulled in 23 that could come back in 24.

Julien Molensmith: I get that there's a question about sustainability going forward of some of these items, but how much flip back, you know, caught in a one time basis in 24. How do you think about that and sending up a baseline here, you know, you know, as you think about rolling forward, if you will.

Jerry Norcia: Sure. And again, what kind of items are they? I'll leave it open. Yeah, good, great question, Julien. So, some portion of the $1.31 will be sustainable, but I just want to make it clear that we're not slow, snow-plowing incremental costs into 2024. We will return to our normal levels of maintenance. As you know, over the many years where we had, you know, we had favorability in our plan. We pulled forward maintenance and banked it.

Jerry Norcia: So, we were able to take these one-time pauses and non-critical preventative maintenance. And so, but next year we're going to return to our normal patterns. So, I don't want people to think that we're snow-plowing any kind of cost into 2024. We'll return to the normal levels of maintenance expenditures. Hopefully, that helps. Right. IE, it's not an outsized year in 2040. Get back to run rate in 25 of you up. Just to make sure that's correct. That's correct. We're going back to our normal run rate that we otherwise would have had in 22 and 23 and return to normal maintenance level of expenditures. Got it. Excellent.

Jerry Norcia: And, Jerry, in the same direction of things, residential, weather, norm, sales, off 2.6 year-to-date here. I mean, that seems like an outsized impact, but obviously with weather years, you know, with outsized weather impacts. It's hard to be precise. I mean, how do you think about that impacting 24 onwards and whatever this return to office environment is for you guys on resume? Sure. So, I'll start with the weather part and I'll let Dave talk about residential load.

Jerry Norcia: And what we've seen this year compared to, you know, what we had forecasted for this year and what we planned to forecast for next year. So, from a weather perspective, you know, Michigan, believe it or not, when we do the analysis, it was the only state in the Midwest that experienced cooler than normal weather. And by more than one cooler than normal weather for sure. And, and we also experienced more than one standard deviation and warmer than normal weather in the winter.

Jerry Norcia: So, very unusual combination and then packaged that with like some storm activity twice the number of catastrophic storms. And it's essentially a unicorn of a year, you know, and we had, I had my statisticians roll through that analysis and it's a one and 50 year probability. So, you know, of course, we'll work with 15 year averages. It'll impact our 15 year average and our five year storm activity average and we'll build that into our plans going forward.

Jerry Norcia: But Dave, you want to comment on residential sales? Sure. Yeah. Our, our sales this year come in pretty much as expected for the year consistent with our budget, consistent with the rate case filing we had, you know, as you said, residential is down a little as, you know, we knew people would be, you know, returning, returning to work. So we saw, we saw that come down as far as our forecast, you know, we in the, in the rate case that we forecast residential sales remain somewhat flat.

Jerry Norcia: And there's been no, you know, no dispute in our forecast going forward here either. So we should get that, that shouldn't be an issue here coming up in the tray case. Okay, fair enough. So, but do you see consistent pressure going into 24 just as you think about building out the plan on 24 and 25 on, on resi or is it more of a more of a transient. We won't see pressure from the residential forecast in 24. Okay. All right. Great.

Unknown Executive: Thank you guys.

Anthony Crodell: Your next question comes from the line of Anthony Crodell with Mizzouho. Your line is open. Good morning, Jeremy. Good morning, Dave. Good morning, Anthony. Just a quick balance sheet question and a follow-up. I think Moody had you put out an update earlier this year with the company's FFO detect metrics. Probably the lowest they've been in several years. I guess the impact of this year's storm activity, mild weather and the rate decision.

Anthony Crodell: I guess just what do you think it end up in the end? The end of 23 and how does that rate relative to your down rate threshold and what are you thinking in 24? Anthony, we remain in a position with our balance sheet. We met, we did meet with all the reigning agencies this year and even ahead of this call. Now the FFO to debt from 22 was really due to lower FFO from our fuel cost.

Anthony Crodell: And that's getting recovered this year. So we'll see that FFO to debt in 23 come back as we recover our PSCR primarily at our electric company. So we remain in good position, good headroom to the thresholds, any downgrade thresholds and any of our rating agencies at this point.

David Ruud: Great.

Jerry Norcia: And then I think of a, Jerry, a longer term question. I know there's a pending rate case we're all waiting for decision. But when you think of the volatility, as you just said, Michigan was the only state in Midwest that had mild weather. It seems like there's much more volatility in weather and storm activity. We're getting in Michigan. It seemed every year or two. There's a catastrophic storm or an ice storm or something.

Jerry Norcia: I mean, when you file your future rate cases. So it's on maybe the risk return or the risk involved in operating or the challenges in operating utility Michigan. Do you maybe change what you think the far away that you need goes up higher? I think two things Anthony could go that route, which is a more challenging route in terms of lifting our ease, but. And certainly a possibility, especially in the light of rising and continued rising interest rates, there will be pressure to move our ease up in the future.

Jerry Norcia: If this. Interest rate construct continues to get worse or remains at the levels that's at. But I feel that in the past, if you. Researcher history when we entered periods of very volatile storm activity in order not to whips the level of investment that we can make in our maintenance practices and also capital deployment. There have been storm trackers that have existed in Michigan in the past. And to me, that could be a very viable path going forward.

Unknown Executive: Great. Thanks for taking my questions.

Andrew Rifle: Thank you. Your next question comes from the line of Andrew rifle with Scotia bank. Your line is open.

Andrew Rifle: Hey, good morning, everybody. Appreciate all the details. I appreciate all the details on the mitigation efforts and the headwinds. Obviously it's been a tough year. Most of them have been answered to two, uh, two follow-ups, please.

Andrew Rifle: First of all, just to set expectations around the rate case timing. Let's assume we get a reasonable or normal or constructive outcome, whatever adjective you want to use. How soon should we expect the next rate cases? In other words, not trying to get ahead of the current outcome, but should we assume the more or less annual filing is going forward? Andrew, I would say that we have an infrastructure recovery mechanism built into the current rate case request.

Andrew Rifle: If that's adopted by the commission, which we hope it will be, we will be in annual rate cases until that builds into a large enough infrastructure recovery mechanism for our distribution capital. Primarily, they keep us out of rate cases for longer periods of time. If you look at our gas company, we're able to stay out between one in three years depending on what's transpiring inside the gas company. So it will reduce the frequency break cases that the commission chooses to adopt on infrastructure recovery mechanism.

Andrew Rifle: It'll just take a couple years for it to happen until that mechanism builds into a large enough amount to track enough capital to keep us out for a while. Okay, that's our goal. That's not consistent with what you said in the past.

Andrew Rifle: Second question is totally unrelated. The question about supply chains. You're spending a lot of capital both on renewables and on improving reliability. How do you see the availability of these grid level equipment like transformers or switch gears? And if you do see shortages, is there a risk that might slow down your plan and pay for spending? Well, certainly, we're very well aware of supply chain challenges with relation to transformers and switch gear.

Andrew Rifle: And we've expanded our reach beyond US borders and are bringing in that equipment from international sources, which is working out quite well so far. We've done a lot of testing and a lot of investigation and due diligence over the last several years. And that's taking some pressure off of our supply chain. So right now we feel good about it. Andrew in terms of how we're positioned to execute our large capital programs both in the distribution business as well as the renewables business. Very good. Thank you.

Steve Fleischmann: Your next question comes from the line of Steve Fleischmann with wolf research. Your line is open. Hi, good morning. Thanks. Hi, Jerry. Good morning, Steve. Good morning. Yes, good morning, Steve. Hey, great.

Jerry Norcia: So just so like in the past, you've had raycases and been able to give guidance and raycases, you know, with raycases pending. So should we think about this being different just because of what happened last year with the surprise in the sales forecast or you know, or just tough conditions this year, just how should we think about what's different this time versus in the past? I would say realistically, Steve, you know, our posture is probably gotten a little more conservative based on what happened last year.

Jerry Norcia: And you know, all signals are positive. I mean, there's strong consensus, you know, prior to filing a raycase with commissioners and even in their public statements supporting large levels of investment into the grid and into renewables. We're also getting that from the governor's office, whether strong support for investments and infrastructure. And again, a clamoring from customers, as you've probably seen, especially this summer, wanting for us to invest and make the grid better and also support strong support for the clean energy transition.

Jerry Norcia: So we're likely in a more conservative posture based on the challenges that we've had in the regulatory process as well as some of the challenges we've experienced this year. So we want to make sure when we tell you we're going to do something, we're going to deliver on it. Okay. And it's, and how much if anything's related to just other things than just the three case in terms of just wanting to take more time?

Jerry Norcia: No, we don't need more time. We just need a data point here to finalize our plans for a point four and our long term plan or nothing else really that we're worried about other than it's a significant data point in our plan. And we don't want to get ahead of our commission. Okay, that's helpful. Thank you. Thank you, Steve.

Sophie Karp: Your next question comes from the line of Sophie Karp with Keybank. Your line is open. Hi, good morning, guys. Thank you for taking like morning, Sophie. Morning, Sophie.

Sophie Karp: Morning, so a couple of questions if I may. Well, we expect with a storm activity, right? So we've seen them now. It seems like every year, once in the 50 year, 50 year storm, right? Something like that in different positions. And is this type of weather volatility increases? And you see now it's in Michigan. Is there in your mind a need for a more, I guess, structural solution to that? Maybe it should be done for legislature.

Sophie Karp: That goes beyond, you know, trackers and riders and what have you, but maybe the securitization program for storms and sort of a surcharge and customables for storm escrow. Those mechanisms have been employed like in the south where the storm died in annual event. Is there something to learn from that? And potentially it may be implement in Michigan?

Jerry Norcia: I think the straight answer to that and simple answer, Sophie, that is absolutely us. We have to consider all of the above. And those are great thoughts that you've offered. And certainly we're thinking about similar, similar approaches as to how to take this volatility out of the plan because as you've mentioned, what it does to a utility when you get into these volatile environments, storm environments, as it starts to whips up your maintenance plans and potentially even your capital deployment plans.

Jerry Norcia: And we don't want that to happen. We want to make the study investments and perform the regular maintenance. We need to have in order to run a high quality grid and a high quality operation. So very good thoughts. We're very supportive of your thoughts. And we'll be pursuing them in the future.

Jerry Norcia: Thank you.

Jerry Norcia: And my other question is this. Hypocetic was thinking if you were not entirely happy with the, you know, rate outcome in the current rate case. What is, I guess, a way for you to communicate that to the stakeholders, right? And some of you appear in other jurisdictions when they were in such situations chose to signal that by cutting some of the non-consequential investment, but that is politically more charged, such as maybe EV infrastructure and things like that.

Jerry Norcia: And I was just curious if you've given some thought as to how you would proceed in that situation. So Sophie, I'll say this much certainly any good company faced with uncertainty, any type of uncertainty we do scenario planning. And we're in the midst of that. I think we're well well advanced in our thinking. And once we receive a rate order, we'll roll out our plans and our reaction. I don't want to get ahead of ourselves at this point in time and we'll await the order from the commission and then we'll provide our guidance and long term plan, which I believe at this point will all be very positive.

Jerry Norcia: I don't sense at this point that there would be a disruption in our ability to invest. I feel confident about the need to make the investment and that there's alignment. But then again, in order to be prudent, we are also doing a lot of scenario planning to ensure that we can respond to whatever happens.

Unknown Executive: Thank you, that's all for me.

Travis Miller: Your next question comes from the line of Travis Miller with Morningstar. Your line is open. Thank you.

David Ruud: Good morning, everyone. Morning, Travis. You've answered most of my questions here, so just two real quick ones. In terms of the coming announcements, in terms of guidance and capital investment, on-term growth, what about the dividend, the quarterly dividend announcement? Will that also come after the rate case and the planning? Yes, that, yeah, that'll come, that'll come then. I think it may come even a little bit before that, depending on when the, when that final rate case comes out. Okay, so definitely after the rate case, but potentially. Yes, so it'll be in the first case of December, yes.

Jerry Norcia: Okay, perfect. And then the interveners that you mentioned that really weren't all that keen on settling. Have they been in previous cases, have they been interested in settling before? Did you know these, these people before and were they familiar with the rate case process? I would say that, you know, we know them. Of course we know them. We've been involved with them in many other rate cases. As we tried to bring all these parties to settlement, I would say the parties that typically don't have, you know, strong interest in the economics of the case or the ones that we had challenge bringing to the table.

Jerry Norcia: Not all, not exclusively all, but, but I would say most of the majority of the parties that we were not able to engage in settlement discussions, probably had typically their function or mission is not tied significantly to the economic interests of our customers. Okay, got it. Thanks so much.

Travis Miller: That's all I had. Thank you.

Ryan Levine: Your next question comes from the line of Ryan Levine with city. Your line is open. Morning. Morning, Ryan. On cost. Morning.

David Ruud: On cost cutting, were there additional tools that were decided not to use in the third quarter, or should we think of Q3 is the max from a cost for the company? Yeah, we looked, we've been looking across our company ever since the end of last year for any opportunities that we had. And, you know, we saw that we put all we had in place through the bit through the beginning of the year.

David Ruud: You saw the 270 million of offsets that we had. So, you know, we've, um, you know, a lot of this plays out fill through the end of the year. These are annualized numbers. They play out through the end of the year. But it's going to be a consistent number with what we've been out for cost cuts.

Jerry Norcia: Okay. And then on storms, you know, that's been asked and answered. But in terms of the longer term outlook, you know, your neighbor utilities, some studies out, talking about directly 25% increase in stores, storms through 2050. Is there any comparable analysis that that applies to your jurisdiction or how are you thinking about the longer term? Impact and that 55 billion dollar number appropriate or kind of was our growth rate that you think appropriate to apply.

Jerry Norcia: Yeah, we continue to look at that. You know, we've seen the increasing weather patterns also. And, you know, look at the look at the increasing storm impact that has. So, you know, we do build in some contingency beyond what's in rates. But, again, as we've, as we've talked about, we're going to look at what we need the budget going forward, as well as what are some of the other mechanisms we can use to manage strong goals.

David Ruud: Thank you.

David Ruud: Your next question comes on the line of Gregg Orrill with UBS. Your line is open. Hi, thanks for squeezing me in. Hey, good morning. You mentioned you were expecting to get some cash back this year in the PSCR. Can you quantify that? Yeah, our under recovery last year was about $420 million. And so we've been recovering that throughout the year. So we're going to get the majority of that back through in this year. So it's over 380 million. We'll be getting back through this year. So that's, you know, obviously swings the cash and FFO for us quite a bit by 800 million year over here.

Jerry Norcia: Thank you. This concludes our Q&A for today.

Jerry Norcia: I turn the call back over to Jerry Northia for closing remarks. Well, thank you everyone for joining us today. Just closed by saying I'm excited about the opportunities we have ahead of us, including further strengthening of our electric grid and preparing for increased demand from electrification on our system. And accelerating our path to cleaner generation. We continue to be well positioned for future growth and will provide sufficient details after our great case wraps up. Hope everyone has a great morning and a safe day.

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