PG&E Corporation (PCG) Q3 2015 Earnings Report, Transcript and Summary

Good morning, everyone. This is Janet Loduca, and thank you for joining us for the Pacific Gas and Electric Corporation's Third Quarter Earnings Call. Before I turn over to Tony Earley, I want to remind you that our discussion today will include forward-looking statements about our outlook for future financial results, which is based on assumptions, forecasts, expectations, and information currently available to management. Some of the important factors that could affect the company's actual financial results are described on the second page of today's slide deck. We also encourage you to review the Form 10-Q that will be filed with the SEC later today and the discussion of risk factors that appears there and in the 2014 Annual Report. With that, I'll hand it over to Tony. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Thank you, Janet, and good morning, everyone. Thanks for joining us. Our key focus areas remain unchanged. California continues to lead the U.S. in driving clean energy policies and PG&E will play a critical role in helping to achieve the state's goals. We also know that safety must be at the core of all of our decisions and our commitment to that is unwavering. We continue to make progress towards resolving outstanding regulatory and legal issues, while strengthening our safety and compliance programs. We believe that executing our strategies in these focus areas will provide the foundation for both operational and financial success. So I'm going to touch on some of the key developments this quarter before I turn it over to Kent, to discuss our financial results. Geisha Williams and Nick Stavropoulos are also with us today and they'll be available to take any questions that you have. In terms of our focus on clean energy, PG&E has a long history of action on climate change and we've been a vocal advocate for policies that will move us forward. In fact, I recently participated in a meeting with President Obama and talked about the actions PG&E is taking to help drive clean energy policy and greenhouse gas reductions. We supported Governor Brown's recent move to increase the renewable energy target to 50% by 2030 and we're confident that we can get there. We've been investing in the electric grid to enable both utility scale renewables and the growing distributed resources such as rooftop solar, electric vehicles and energy storage. During the quarter, we filed our proposal to update the current net metering rates. Our proposal supports the continued growth of rooftop solar, while beginning the transition to a sustainable rate structure that also supports the necessary grid investments. Our 2017 General Rate Case includes detailed proposals for continued grid modernization to ensure that we have the visibility and flexibility we'll need to enable all of the new distributed resources. Our General Rate Case also supports our goal on delivering customer expectations by providing customers with safe, reliable, and affordable service. Using a risk based approach, we proposed safety related investments across the system, including replacing aging infrastructure, taking targeted actions to reduce risk and improving our emergency response, and we balanced the necessary investments with affordability. Average residential bills will increase less than 3% and will remain below the national average. In terms of reliability, the most significant event this quarter were the fires in Northern California. As you know, California is in its fourth year of a severe drought and we've been partnering throughout the year with CAL FIRE and other stakeholders to address a challenging fire season. Our efforts have included things like increased patrols and vegetation management, as well as enhanced emergency response coordination. At one point, the state was simultaneously fighting three major wildfires across 300,000 acres of our service territory. In addition to restoring power to impacted customers, our crews came up with creative ways to meet our community's needs in a very challenging time. So for example, we leveraged the new exportable power technology from our electric trucks, to provide an evacuation shelter with backup electricity when its generator failed. The response from our customers and other stakeholders has been positive and we're really proud of how safely and quickly our crews were able to perform the work. As we've publically reported, CAL FIRE is investigating whether one of our electric clients could potentially been the source of the Butte Fire. That investigation is still underway and could take quite a while to complete, so we don't have any updates on that at this time. On the heels of the state's historic drought, we're now hearing forecasts about an El Niño winter, which could bring significant rainfall and cause mudslides and floods. Our team has been preparing for this possibility through a wide array of actions, including updating our meteorological models and performing drills that simulate potential flood scenarios. Finally, in terms of resolving outstanding regulatory issues, we recently received a report from the Safety and Enforcement Division in the Gas Distribution Record-keeping Investigation. While the report identified a number of potential past violations, which we'll be responding to in the next month, we were pleased to see that it also acknowledged the progress we've made to improve our records. Over the last few years, we've implemented a number of new procedures that have been informed by extensive benchmarking and industry best practices. As we said from the beginning, we know we have more work to do to enhance our distribution records and practices, and we're absolutely committed to getting that right. Geisha and Nick recently had a chance to share some of the actions we've taken to improve our safety culture at the California Public Utilities Commission's first-ever safety en banc. This was an opportunity for all five commissioners, the presidents of California's investor-owned utilities and a number of interveners to talk about what each of the utilities is currently doing around safety, and what changes the Commission might make to better incorporate safety into its proceedings. Nick and Geisha talked about the changes made by our board of directors to focus on safety, the strong link between our executive compensation programs and safety performance, our use of third-party experts and benchmarking and the way we engage our front-line crews around safety. The Commission also had the opportunity to hear from other utilities and to start thinking about how to create common metrics to track and measure progress. I can tell you that we thought it was a really positive step forward in the conversation and we look forward to continuing the dialog with all the parties. So, before I turn this over to Kent, I just want to take a moment to thank him for all that he has done for PG&E. As you know after 33 years with the company, Kent has decided to retire next year. Kent has done a tremendous job managing PG&E's financial activities during challenges that were some of the most complex in our industry. He has also been a great source of leadership and inspiration across the company. We're working through the succession process right now, and I'm thankful that Kent has agreed to stay on to ensure a smooth transition. So, thank you, Kent and with that I'll turn it over to you. Kent M. Harvey - Chief Financial Officer & Senior Vice President: Thank you, Tony. Good morning, everyone. I plan to first cover our results for the quarter and then I'll go through our updated guidance. Let me say upfront that the complexity of our rate case timing issues has made it especially difficult for you to forecast quarterly results. However, we do expect solid results for the full-year and you'll see that when I get to guidance. So, I'll start with our quarterly results, which is on slide five. Earnings from operations were $0.84 in the third quarter and GAAP earnings, including our items impacting comparability, were $0.63. Our pipeline-related expenses in the quarter were $32 million pre-tax, or $19 million after tax shown in the table. This includes our costs to remediate encroachments on our pipeline rights-of-way and to complete the remaining expense work for our Pipeline Safety Enhancement Plan. Our legal and regulatory-related expenses in the quarter were $14 million pre-tax, or $8 million after tax in the table, and here we have our costs for litigation and enforcement activities related to natural gas matters and regulatory communications. Fines and penalties in the quarter were $142 million pre-tax as shown in the table below. This amount represents the disallowed capital work coming out of the final San Bruno penalty decision, which we're accruing as we do the work. Finally, we received insurance recoveries in the quarter of $10 million pre-tax, or $6 million after tax, as shown in the table above. I'm pleased that we've now resolved all San Bruno claims with our insurance carriers, and in total, we recovered $515 million through insurance. Moving to slide six, you'll see our quarter-over-quarter comparison of earnings from operations of $1.73 in Q3 last year and $0.84 in Q3 this year and this is where it gets a little complicated due to all the timing issues. In Q3 last year, we've recorded three quarters worth of revenue increase associated with our 2014 General Rate Case. That's the biggest difference from Q3 of last year, worth $0.47. $0.16 is associated with the lower cost recovery this year due to the timing of the Gas Transmission rate case. As you know, a lot of our transmission work is seasonal and the Q3 amount reflects a higher level of activity in the summer months. When we receive a final decision in the case next year, the revenue increase will be retroactive to January 1, 2015. $0.09 relates to the timing of taxes, which will reverse to zero by year-end. $0.05 relates to regulatory and legal matters. This includes the impact of some favorable regulatory decisions in Q3 of last year, as well as some legal costs incurred in Q3 of this year. Another $0.05 is associated with an increase in shares outstanding and the impact here of share count is magnified by the fact that earnings in Q3 last year were so much higher as a result of booking three quarters worth of revenue increase to the GRC. $0.03 relates to the disposition of SolarCity stock in Q3 last year, and $0.09 relates to a variety of smaller miscellaneous items, many of which are timing. And we've had positive miscellaneous items in previous quarters. These factors are partially offset by a $0.05 increase due to growth in rate base earnings. That's it for our Q3 results. On slide seven, you'll see our 2015 guidance. Previously, we've had a guidance range for earnings from operations of $2.90 to $3.10. Year-to-date, we've been trending towards the upper end of this range. Therefore, today, we're narrowing our range to between $3.00 – $3.10. There are few other changes to this slide. We've reduced our range for pipeline related expenses, and I'll say more about that in a moment. We've also updated our insurance recoveries just to reflect the amount we've recovered in the quarter. Our resulting GAAP guidance is shown at the bottom of the table. On slide eight, we've updated our 2015 CapEx assumptions from $5.5 billion previously to $5.3 billion. There are really two main reasons for this update. First, our response to the recent wildfires displaced some of our planned work in electric operations. And second, we're realizing some efficiencies in gas operations, primarily related to our distribution pipe replacement program. The other assumptions for 2015 on this slide remained consistent with what we've previously provided. Slide nine reflects the updated range for pipeline-related expenses that I mentioned earlier. You can see we've decreased the upper end of that range from a $150 million to $125 million. The lower end remains at $100 million. You'll recall that this item is primarily associated with our rights-of-way work, and we continue to expect that the cost of the overall program will not exceed $500 million. Moving on to slide 10. Our total equity needs for 2015 remain the same at $700 million to $800 million. Through the end of Q3, we've issued roughly $700 million of equity. This includes about $350 million through a block trade done in August, about $75 million through our continuous equity offering program earlier in the year, and then about $275 million through our internal programs. Those are our 401(k) and dividend reinvestment programs. We do not expect to issue any additional equity this year other than through our internal programs. Slide 11 shows our estimated CapEx through 2019 and other than the change to 2015 that I previously covered, the ranges for 2016 through 2019 remain the same. Slide 12 shows our estimates of authorized rate base through 2019 and these are consistent with the CapEx ranges on the previous slide. As a result, we estimate that 6% to 8% annual growth in our authorized rate base over this period. As Tony discussed, California's clean energy policies and our focus on system safety and reliability are driving significant investment in the coming years and support this strong growth profile. I'll stop here so that we can now open the lines for your questions.

Our first question comes from the line of Jonathan Arnold with Deutsche Bank.

Good morning, guys. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Good morning, Jonathan. Kent M. Harvey - Chief Financial Officer & Senior Vice President: Good morning.

A quick question, just on the CapEx and I guess therefore the rate base ranges. Could you talk to what it is in the base, the bottom-end of the range? Is that just authorized spending? And then the other things that you mentioned are what defines the shaded sections, or is there some other way of being a little more clear about what exactly is in and out of the two pieces, two different levels? Kent M. Harvey - Chief Financial Officer & Senior Vice President: So, Jonathan, this is Kent. Let me kind of go through by parts of the business, which really relate to the regulatory proceedings. So, for the electric and gas distribution and generation, which is our General Rate Case, the high end reflects the amounts that we've requested in the 2017 General Rate Case. For gas transmission, the high end in 2017 reflects the amount that we requested in the gas transmission rate case. And then in 2018 and 2019, we've just kept that amount flat with the 2017 request. And then for electric transmission, which is our TO Case, we've really only requested an amount through 2016, our TO17 case. And so, our 2017 through 2019 levels are flat at the 2016 request. For the low end basically, it's consistent with the low end that we've had out there already for 2016 across the board.

Okay. And how about your distributions resource plan, for example? Where does that fit into this – the range? Is that in the high end or not? Kent M. Harvey - Chief Financial Officer & Senior Vice President: We did not have a specific ask in that proceeding, but a lot of those types of investments for automating the system and so forth, are included in our General Rate Case. So those components are included in the overall ask, and therefore in the overall range, the upper end of the range.

Okay. So put simply, if you got everything you've asked for in both of the big outstanding cases, you would come in at the high end? Kent M. Harvey - Chief Financial Officer & Senior Vice President: That's correct. And then of course, we'll have updates because at some point we'll file another gas transmission case for beyond 2017, and we'll also file additional transmission owner cases for beyond 2016.

Great. Thank you, Kent. That was my question. Thanks.

Thank you. Our next question comes from the line of Dan Eggers with Credit Suisse. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Hey. Good morning, guys. Can I just ask about with the El Niño concerns about the storms in the preparations there? How do you guys address cost recovery if you end up with some disproportionally high storm costs this year, I guess, next year? And how would that affect the numbers as we think about ongoing earnings estimates? Kent M. Harvey - Chief Financial Officer & Senior Vice President: This is Kent. We do have the balancing account treatment in our current General Rate Case for major storms. In addition, for things like the wildfires, we just had where – in cases where the Governor declares a disaster area, we also have the ability to seek recovery through a catastrophic event memorandum account. So, there is a few different mechanisms that are in place in California. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Okay. Thank you. And I guess the next question, Tony, with the electric vehicle charging station decision it was kind of a deviation from what you guys seem have been messaged from the Governor as far as his priorities are concerned, A, how do think this is going to work out from meeting the Governor's rules on vehicles? But second, when you look at the DRP is there a disconnect between the goals of the Governor and what the Commission's proving to be supportive of you guys investing in? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Well, obviously, we thought that our initial proposal was totally consistent with the Governor's goals on electric vehicles. I think the Commission felt it was overly aggressive and wants to phase it in, and in terms of our spending estimates since, it takes a while to gear up, it really doesn't affect any of the numbers that Kent is talking about. We just want to get the program up and running, and we think that once we get it running, we'll show that it's very well received and is consistent with the electric vehicle strategy in California. So it was disappointing, we didn't get the full green light, but we're going to continue to work to get still a fairly aggressive program out there. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): And then I guess, just what it means as far as the pacing of DRP capital. Is there going to be more of a test for each one of these new initiatives along the way rather than maybe a more wholesale buy in of what you need to do to accomplish the bigger state goals? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Yeah, I think, as Kent just said a minute ago that the DRP capital is spread among the various regulatory cases. So our General Rate Case has some of it in – and that's where it will be addressed, and it's being addressed now. We've submitted that case and it will go through the hearing process. So I don't expect a separate rate making proceeding for DRP. DRP expenditures will just be rolled into various other proceedings. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Okay. And I guess one last question, just with the Edison case where the manufacturing tax deductions are, they're trying to slap them as a reduction in rate base and the next rate case to claw back those earnings. How is that affecting you guys from maybe the way you're thinking about recognizing those earnings, those benefits during this GRC process and if there was a precedent that the Commission was pulling those back, would you guys need to change how you're recognizing them in your numbers? Dinyar B. Mistry - Vice President & Controller: Hi, Dan. This is Dinyar Mistry, the Controller. We've taken a look at the Edison PD and we think that our situation is different from Edison. We just filed our 2017 GRC, so prospectively the Commission will consider our request over there. But at this point in time, we don't anticipate changing our treatment. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Okay. Very good. Thank you.

Thank you. Our next question comes from the line of Steve Fleishman with Wolfe Research.

Yeah. Hi, good morning. So, first of all, Kent, I guess an early good-bye. We will miss you. Secondly, on the similar question regarding the Edison PD on their GRC. Is there any policy issues there that concern you at all, relative to your case? Kent M. Harvey - Chief Financial Officer & Senior Vice President: The major issue we've seen has been the repairs issue, which Dinyar just addressed and we do think we are in a little bit different situation. That's the biggest one that we've been watching.

Great. And then the – maybe just on the criminal case. I know there has been a lot of activity. Can you maybe just give us an update on whether any of the allegations have been thrown out at this point and do we still have some kind of trial in March of next year? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Yeah. This is Tony. Let me start off and then I'll let Hyun jump in. Those of you who have been involved in major litigations, this is just the pre-trial motions stage, there is a lot of activity going on, there will continue to be more activity leading up to the trial. The trial is still scheduled for next spring. We'll see what happens as we get closer to it, but, Hyun, why don't you comment on where we are. Hyun Park - Senior Vice President & General Counsel: Yeah. So, Steve, we did file a number of motions, and all the motions have been submitted to the Judge, so we're just waiting for the Judge to issue his ruling on our motions.

Okay. Great. And then on the GT&S case, I know there is oral arguments today, but in terms of – is any relevant updates there in terms of potential outcomes we should be aware of? Steven E. Malnight - Senior Vice President-Regulatory Affairs, Pacific Gas & Electric Co.: Hi, this is Steve Malnight from Reg Affairs. Really, we don't have any additional updates, timing still looks like next year for the case. We'll look forward to the oral argument later today.

Okay. Thank you.

Thank you. Our next question comes from the line of Michael Weinstein with UBS.

Hi, guys. Congratulations, Kent, by the way. Kent M. Harvey - Chief Financial Officer & Senior Vice President: Thanks, Mike.

Hey, when do you guys think you will be in a position to discuss 2016 guidance and dividend policy? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Well, that's something that we look at every time I'm with my board of directors. We discussed that dividend policy. We've not tied it to any specific outcome at the Commission, what we are focusing on is, what is the right time to address that. I'm well aware that our investors have been very patient on this. We're committed to getting our dividend in line with our peers, but it's got to be at the right time and we continue to assess that. Kent M. Harvey - Chief Financial Officer & Senior Vice President: In terms of timing of guidance, I'd just say we're looking towards hopefully getting back in a regular rhythm with guidance. And I'd like to think we'll be in a position to do that in the first quarter.

Great. And just one follow-up question on the repairs deduction issue. Can you just refresh how are you guys treating it and how – is there any simple way to explain why your situation is different than the Edison's? Dinyar B. Mistry - Vice President & Controller: Yeah. This is Dinyar again. So, the rate making for repairs is that customer rates are reduced for taxes that aren't currently paid to the IRS. That's the fundamental principle of the flow through rate making, and to the extent that there is a forecast difference between what was in the rate case and what actually occur, during that rate case period, up or down that forecast difference affects the bottom line. I would say the primary difference between us and the Edison Case is that, in the Edison PD it's indicated that its previous GRC request was based on a different methodology for calculating the tax repairs than was actually applied during that period. But for us we've applied the same methodology for our actuals that we used to develop the forecast, and so I think that's probably the key difference.

That's very helpful. Thank you very much.

Thank you. Our next question comes from the line of Michael Lapides with Goldman Sachs. Michael J. Lapides - Goldman Sachs & Co.: Yeah, guys. Just curious when you think about longer-term, do you expect to be a company that winds up growing earnings kind of in pace with rate base growth? Is there anything structural that can make it something different than that over time? Kent M. Harvey - Chief Financial Officer & Senior Vice President: Michael, this is Kent. I think at the levels of rate base growth and CapEx frankly that we are having right now, they do require some equity issuance. And so, generally you'll see earnings grow with rate base, but you'd have to net out whatever equity issuance you need to support that level of CapEx. At lower levels you could see that, but we're at higher levels and I do think that requires some level of equity issuance. Michael J. Lapides - Goldman Sachs & Co.: Got it. Okay. Second, Tony, you made the comment about you talked to the board about dividend and dividend policy. Can you dive a little bit into the – when you think about dividend policy, are we talking a payout ratio, a growth rate, a dividend yield target relative to the peer group? I'm just going to think about what are the metrics you and the board are looking at, when you all have the discussions about dividend policy. Kent M. Harvey - Chief Financial Officer & Senior Vice President: This is Kent. I'll just say, generally, probably the primary metric we look at is payout ratio. We look at the industry and it's pretty nicely clumped. So it's pretty easy to see where the industry is and we're a bit below that. And so, that's the primary issue we'll be addressing. Michael J. Lapides - Goldman Sachs & Co.: Got it. Okay, guys. Thank you. Much appreciated.

Thank you. Our next question comes from the line of Hugh Wynne with AllianceBernstein. Hugh D. Wynne - Sanford C. Bernstein & Co. LLC: Hi. Thank you. Two questions. One, I was just wondering if you might bring us up to date on any developments that could shed light on potential outcomes of the Gas Distribution Records OII? And then similarly whether there been any developments with respect to the CAL FIRE investigation into the origins of the Butte bush fire? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Yeah, let me comment on the CAL FIRE. Their investigation is ongoing, we're cooperating with it, we don't have any updates. Traditionally, those investigations take quite some time, because it's hard because all the evidence is burned up. So it takes a lot of work to figure out exactly what happened. With respect to other proceedings, Steve, you – I don't think we have any updates there. Steven E. Malnight - Senior Vice President-Regulatory Affairs, Pacific Gas & Electric Co.: No, we don't really have any updates on the OII. We saw the SED filing as was mentioned earlier, we'll file our rebuttal testimony in November, and then we'd expect hearings on that in January, first part of the year. Hugh D. Wynne - Sanford C. Bernstein & Co. LLC: Great. Thank you.

Thank you. Our next question comes from the line of Brian Chin with Bank of America Merrill Lynch.

Hi. Good morning. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Good morning, Brian.

Question on dividend, going back to that. Given some of the changes that will take place in the C-Suite over the next 12 months, does that to some degree make you think that you ought to maintain flexibility on the dividend until the next set of C-Suite executives comes in or does that not factor into your thinking about how you think about the timing of a dividend policy going forward? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: I don't think it has any connection at all to dividend policy. Dividend policy is based upon our financial situation and our assessment of what's going on on the regulatory front and doesn't have anything to do with the C-Suite changes.

Okay. Understood. Secondly, on the cost of capital mechanism and the proceedings that will come up next year, it seems like mechanically, the numbers are shaping out where an extension, perhaps, may not be too difficult of a suggestion to different stakeholders. I guess what I'm wondering is, are you aware of any issues out there that may prevent some of the stakeholders from wanting to consider an extension of the current mechanism, any issues that may need to be worked through that could prevent that and instead make a full-blown cost of capital proceeding take place? Kent M. Harvey - Chief Financial Officer & Senior Vice President: Brian, this is Kent. So as you alluded to the normal process would have us file a cost of capital application next spring and that would be for rates effective January 2017. And I think what you are alluding to, I think everybody knows that last year we and the other parties all agreed to extend the existing cost of capital as well as trigger mechanism by one year. And so the question is will that happen again this year. And I'd just say, we are open to exploring that again given that as you said forecast bond rates haven't changed all that much since the proceeding was originally litigated, but whether or not that occurs depends on the extent to which all the parties are able to reach agreement.

So, I guess at this point you're not aware of any specific issues that may cause one or two of the stakeholders to say, we really ought to revisit this despite the mathematics looking fairly similar versus last year? Kent M. Harvey - Chief Financial Officer & Senior Vice President: Brian, if I were, I wouldn't be talking about it with investors.

Understood. And then lastly, there has been a lot of consolidation happening in the industry. If, Tony, you could give just your quick thoughts on consolidation, how you think about it in the industry here. A lot of your peers have been using their balance sheets and I think it's safe to say that the California utilities are in a much better balance sheet position than others. Just your latest thoughts there? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Yeah. I mean generally we don't comment on specifics on M&A opportunities. I will say one interesting observation though is, everyone is buying a gas company, we've already got 4.5 million gas customers. I think we're in a pretty good shape.

Excellent. Thank you very much.

Thank you. Our next question comes from the line of Gregg Orrill with Barclays. You may proceed.

Yes. Thank you. You mentioned that as you get out to 2017 and 2018 your forecast for rate base on – your forecast includes flat assumptions for the gas and electric transmission. Is there maybe, since you are going to update it at some point, is there a better modeling assumption that we might use? Or with those updates maybe get you to the higher end of rate base growth that you are thinking about? Kent M. Harvey - Chief Financial Officer & Senior Vice President: This is Kent. We've just done that because it's a fairly mechanical way to do it, and we don't want to call future cases that we've not yet filed, so, but you can apply judgment to it, you can look at our historic track record, what we've done over the last few years, adjust that. Whatever you think is appropriate, we just try to keep it simple and objective when we present it to you for your consideration.

Okay. Thank you.

Thank you. We have a follow-up question from the line of Michael Lapides. Michael J. Lapides - Goldman Sachs & Co.: Hey, guys. Thank you for taking my follow-up. Real quick, on the rate base chart, or exhibit, slide 12, that still excludes the incremental CWIP that actually generates some earnings. I think that is the number of around $1 billion, $1.7 billion, $1.8 billion, somewhere in that range. You have commented historically that, that earnings from CWIP, while not in rate base, would largely be offset by corporate costs that aren't recoverable in rates. Do you still see that trend or is there the potential to manage some of those corporate costs down over time? Kent M. Harvey - Chief Financial Officer & Senior Vice President: This is Kent, again. No, I think nothing has really changed there. I think that's a reasonable assumption to make going forward. I think, I've said several times a lot of the stuff we do that is below the line is really important to the longer-term success of the company and our financials. It includes our advertising, a lot of our charitable contribution, just bread and butter for a utility, and we're going to continue to make those necessary investments. Michael J. Lapides - Goldman Sachs & Co.: Got it. Thank you, Kent. Once again, congratulations. Kent M. Harvey - Chief Financial Officer & Senior Vice President: Thanks, Michael.

Thank you. Our next question comes from the line of Travis Miller with Morningstar.

Good morning. Thank you. Going back to the long-term outlook for CapEx and that discussion, what is the impact from SB 350? How long out and is that included in any kind of near-term CapEx or GRC? Just your thoughts around that. Kent M. Harvey - Chief Financial Officer & Senior Vice President: Well, SB 350, really one of the primary components of it is the RPS requirements in the state. And generally, we have already been on track to meet the 33% RPS, this would now take us to 50% eventually. We do that primarily through long-term contracting. So it doesn't have a direct implication for our own CapEx, which are primarily our distribution and transmission businesses. Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: Although, I will add one place we may see some opportunities, is in additional transmission out there. We've been successful in the competitive transmission bidding process here in California in the last couple of years, we continue to intend to stay involved in that process. But all of that is outside any of the years that we've been showing on the slides, because recall that the current 33% is a 2020 objective. And so the new SB 350 requirements will start showing up in the 2020s and you'd see transmission in that timeframe. So, I think the only conclusion you can draw is given California's commitment to a clean energy environment, it's going to require the utilities to have continued investment to upgrade the system.

Okay, great. Thanks. And then, different subject, what is your appetite right now for ex-California, outside of California or unregulated type of investments? Obviously, the SolarCity moves you have made here seem to be a pullback on that front. What's your thoughts and appetites for that unregulated type of investment? Anthony F. Earley Jr. - Chairman, President & Chief Executive Officer: We continue to look at those opportunities. I think I've said this before, the California affiliate rules make it very difficult to start from scratch, because there is – it's very hard to take your utility expertise and without taking them away from the utility and moving into a totally separate company and they can't even talk to their colleagues back at the old business, it's hard to justify when we've got so many growth opportunities in the utility right now.

Okay, great. Appreciate the thoughts.

Thank you. There are currently no additional questions waiting from the phone lines.

All right. This is Janet, again. I want to thank everyone for joining us and we hope you have a safe day. Thank you.