Patricia Poppe: Great. Thanks Julien.
Operator: Our next question comes from the line of Gregg Orrill with UBS. Please go ahead.
Gregg Orrill: Yes. Thank you, good morning. Just coming back to the cash flow slide. I was wondering if you could help fill in some of the drivers between 2024 and 2025. 2025, the dot looks to be around $10 billion in cash flow versus the $8 billion in 2024 in but you’ve got the wildfire recoveries coming down. So obviously, depreciation is a driver growth just struggling to connect the dots a little bit.
Patricia Poppe: So the $5 billion to the $8 billion from 2023 to 2024 million is your question. What’s driving that? Just making sure I’m…
Gregg Orrill: Well really to 2025 because you got the wildfire recoveries coming down, but you’ve got the cash flow going up.
Patricia Poppe: Yes. Well, primarily, that is our GRC from 2024 to 2024, the additional revenues from there. In addition to that, just remember, we have our 2% savings being compounded. And so we see that. The other key part of 2024 versus 2025 as we see a decrease in litigation as it relates to our wildfire has been part of our puzzle. And then as we — our outlook on commodity prices, we have lower collateral postings as well. So there’s a lot of moving parts, but the primary driver of the increase really is our rate base recovery from our GRC. That is the main part of the story, but there’s a lot of other moving parts.
Gregg Orrill: Okay, got it. Thanks.
Operator: Our next question comes from the line of Ryan Levine with Citi. Please go ahead.
Ryan Levine: Good morning. What would be the rate payer impact of a year delay to potential PacGen sale as you see it?
Patricia Poppe: Just the savings from PacGen sale, is that in terms of the benefits from that — I’m sorry I’m just making sure.
Ryan Levine: Yes. I mean you’ve articulated publicly or mine that there is rate benefits this transaction. So I’m just trying to get a sense of why you see a delay or a year?
Carolyn Burke: Yes. We think this is a great transaction for customers, right? It provides customer affordability primarily through financing costs at PacGen as well as because it’s improving our balance sheet, we expect to be able to up and we expect to lower financing costs for our customers G&A as well. But as Patti mentioned, we also see significant benefits for customers because these assets are so key to the clean energy goal. And having a partner that is bringing both the resources and the interest and expertise in supporting these future capital growth needs of this very important portfolio, we think that’s where it’s particularly going to benefit customers. So there are the two things I would point to.
Ryan Levine: Okay. And what is the enterprise lean majority percentages in your scorecard measuring, it seems very specific around 44% for the recent year?
Patricia Poppe: Yes. We do an assessment of all of our leaders and what their maturity is of the adoption and implementation of our 5 basic place, and it’s a self-assessment. So the team reviews what’s the standard and how are they performing to the standard of these 5 plays. And the point of the 44% score is that, that means that we have lots of room to grow our maturity. And so if you can imagine, delivering 5.5% non-fuel O&M savings, at a maturity level in the 40s, just think of the potential benefit for customers and our processes and our O&M savings over time when we grow that maturity enterprise-wide.
Ryan Levine: Okay. And then what are the practical implications of bills going out for gas in February and in March for electric, if the cost of capital trigger doesn’t hold?
Patricia Poppe: So if the cost of capital trigger does not hold with the implications. It’s very minor in terms of the monthly bill rate for the cost of capital adjustment. It was a couple of bucks.
Ryan Levine: Would that get reimbursed or in future years? Or mechanically, how does that work?
Patricia Poppe: I think it would depend on the determination and how that determination is implemented.
Ryan Levine: Thanks for taking my questions.
Patricia Poppe: Thanks, Ryan.
Operator: Our next question comes from the line of Anthony Crowdell with Mizuho Securities. Please go ahead.
Anthony Crowdell: Hey good morning team. Just I wanted to have a quick follow-up to one of Nick’s questions, I guess, on the credit rating. Curious, Carolyn, on S&P, I think you had stated there waiting for one more season. Do you know what they want to see in the one season prior to an upgrade?
Carolyn Burke: I think it’s another season of performance by our team. I think there are some folks, and we’ve heard this from even in analyst calls that the last two winters have been not significantly in terms of a wildfire season. But we’ve proven with our numbers when you even adjust for the weather that we are continuing to reduce wildfire risk. And I know Patti has a…
Patricia Poppe: And I would just say in our conversations with S&P, they focus on three main things. I would say, first, it’s management and governance post-bankruptcy. So I do believe that’s what they’re looking at first, and then they want to see additional wildfire performance, which we feel very confident about. And then finally, obviously, the financial metrics. And so, we do — we’re — we’ve been on positive outlook with them. They put us on positive outlook at the end of the year. So we look forward to them moving on that sometime in 2024.
Anthony Crowdell: Great. And then just one follow-up on the cost of capital challenge. Is there a date where — I don’t know if the right term is the challenge gets dismissed or I know it’s already in rates. I know it’s not going to impact the company’s 2024 guidance. But just is there a date where the commission denies the challenge?
Patricia Poppe: There is nothing firm or definitive about that. You’re right. Your thoughts are correct, though, that it is in rates and it doesn’t have a bearing on our 2024 earnings other than to say that we have planned conservatively for either outcome.
Anthony Crowdell: Great. Thank you.
Operator: Our final question comes from the line of David Arcaro with Morgan Stanley. Please go ahead.
David Arcaro: Hey good morning. Thanks so much. Great to see you’re extending the EPS growth rate here. I was just wondering kind of what gave you the confidence now to provide those EPS growth assumptions through 28 [ph] given that there’s another cost of capital proceeding another GRC in the midst of that planning period?
Patricia Poppe: We have a great plan, and it’s anchored in our simple, affordable model. We have ample capital demand. And this is the thing that I want to just acknowledge for our customers who are feeling the catch-up in our bills right now. We know that we can deliver this capital infrastructure, which they have been demanding and requesting and asking for us to deliver in an affordable way. So as we look forward, we have a conservative plan. We ride that roller coaster so we can deliver a consistent outcome for investors and better service every single year for customers. And frankly, we look forward to a time in the not-too-distant horizon where we’re going to be lowering bills for customers as we do that. The simple affordable model will work here in California.
We are in the early days. But as we look forward, we see the capital demand matched by our cost savings, load growth and efficient financing, which allows for affordable bills for customers. That’s a formula that can work for a long time forward. It gives us a lot of confidence as we give forecasted EPS growth guidance in the next 5-year plan.
Carolyn Burke: And David, I’ll just remind you, we always plan conservatively. And so that’s what gives us also lots of confidence.
David Arcaro: Okay. Excellent, thanks. And then maybe on load growth, it’s the data center backdrop seems to have changed quite a bit maybe since you’ve given that 1% to 3% load growth figure. And it sounds like you might address that in upcoming Analyst Day. I was just wondering if that’s reflective of what you’ve seen in your service territory in terms of that data center demand, is that accelerating ramping up from what your prior expectations had been?
Patricia Poppe: Yes. Well, I can share that just in 2023, we had a 3x increase in data center applications versus the prior four years. So as we look at the 5-year forward load growth forecast, the back end of that forecast will reflect then the additional data center demand. And look, I think we all can agree that the only thing that’s happening with data centers is they need more of them. And so part of the deal here is we need to make ourselves available and accessible and show that we can in fact serve that load here in California, which is what we’re doing. And we’ll look forward to sharing more about that in June.
David Arcaro: Okay, great. Much appreciated
Patricia Poppe: Thanks, David.
Operator: I would now like to turn the call over to Patti Poppe for closing remarks.
Patricia Poppe: Thank you, Mandeep [ph]. Well, thank you, everyone, for joining us today. I know it was a busy one, and we appreciate your time and attention. We look forward to staying in touch with you. I just want to give a final remark and thank the entire PG&E team for delivering an outstanding 2023 for customers. They deliver for our hometowns. We’re serving our planet, and we’re leading with love at PG&E, and I couldn’t be more proud to stand alongside with the men and women of PG&E to do just that. So feel really great about our turnaround. We know that, that turnaround is on track. Thanks to all those great people here at the company, and we look forward to seeing all of you in the coming months and definitely in June, on June 12 in New York. Thanks so much. Have a safe day.
Operator: This concludes today’s call. You may now disconnect.
